Document:

ex_10-2.htm

    TBS
INTERNATIONAL PLC & SUBSIDIARIES                 EXHIBIT
10.2

     

     

    

    

    

    AS AMENDED

    

    

    Date
   7 May 2010

    

    

    

    

    

    ARGYLE
MARITIME CORP.

    CATON
MARITIME CORP.

    DORCHESTER
MARITIME CORP.

    LONGWOODS
MARITIME CORP.

    McHENRY
MARITIME CORP.

    SUNSWYCK
MARITIME CORP.

    as Joint
and Several Obligors

     

    – and
–

     

    THE
ROYAL BANK OF SCOTLAND PLC

    as
Issuer

    

    

    

    

    

    

    

    

    

                                                                                                                 

     

    AMENDING
AND RESTATING AGREEMENT

                                                                                                                 

    

    relating
to

    a
guarantee facility of up to US$84,000,000

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      

      INDEX

       
 

      

        
          	Clause	 	 	 	Page	 
	1	 	
                  INTERPRETATION

                	 	1	 
	2	 	
                  AGREEMENT
      OF ALL PARTIES TO THE AMENDMENT OF THE FACILITY AGREEMENT AND EXISITING
      FINANCE DOCUMENTS

                	 	2	 
	3	 	
                  CONDITIONS
      PRECEDENT

                	 	2	 
	4	 	
                  REPRESENTATIONS
      AND WARRANTIES

                	 	2	 
	5	 	
                  AMENDMENT
      OF FACILITY AGREEMENT AND EXISTING FINANCE DOCUMENTS

                	 	3	 
	6	 	
                  FURTHER
      ASSURANCES

                	 	3	 
	7	 	
                  NOTICES

                	 	4	 
	8	 	
                  SUPPLEMENTAL

                	 	4	 
	9	 	
                  LAW
      AND JURISDICTION

                	 	4	 
	
                  EXECUTION
      PAGES

                	 	5	 
	
                  APPENDIX
      1

                	 	
                  FORM
      OF AMENDMENT AND RESTATED FACILITY AGREEMENT MARKED TO INDICATE AMENDMENTS
      TO THE LOAN AGREEMENT

                	 	7	 
	
                  APPEDIX
      2

                	 	
                  FORM
      OF CORPORATE GUARANTEE SUPPLEMENTS

                	 	8	 

        

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

     

    THIS AGREEMENT is made on
       7
May    2010

     

    BETWEEN

     

    
      	
              (1)  

            	
              ARGYLE MARITIME CORP.,
      CATON MARITIME
      CORP., DORCHESTER
      MARITIME CORP., LONGWOODS MARITIME
      CORP., McHENRY
      MARITIME CORP. and SUNSWYCK MARITIME CORP.,
      each a corporation organised and existing under the laws of the Marshall
      Islands and having its registered office at Trust Company Complex,
      Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 as joint
      and several obligors (the “Obligors”);
      and

            

    

     

    
      	
              (2)  

            	
              THE ROYAL BANK OF SCOTLAND
      PLC, a company incorporated in Scotland having its registered
      office at 36 St. Andrew Square, Edinburgh EH2 2YB, Scotland acting through
      the Shipping Business Centre at 5-10 Great Tower Street, London EC3P 3HX,
      England as issuer (the “Issuer”).

            

    

     

     

    BACKGROUND

     

    
      	
              (A)  

            	
              By
      a facility agreement dated 29 March 2007 as amended by a supplemental
      agreement dated 27 March 2009, a side letter dated 31 December 2009 and a
      supplemental agreement dated 7 January 2010 (the “Facility Agreement”) each made
      between (inter alia) (i) the Obligors as joint and several obligors, (ii)
      the Issuer, it was agreed that the Issuer would make available to the
      Obligors a facility in an amount of up to Eighty four million United
      States Dollars (US$84,000,000).

            

    

     

    
      	
              (B)  

            	
              Subject
      to the terms and conditions of this Agreement the Issuer has agreed with
      the Obligors:

            

    

     

    
      	
              (i)  

            	
              to
      amend certain covenants in the Facility Agreement on the terms and
      conditions set out herein; and

            

    

     

    
      	
              (ii)  

            	
              that
      the Obligors will pay additional
fees.

            

    

     

     

    IT IS AGREED as
follows:

     

    
      	
              1  

            	
              INTERPRETATION

            

    

     

    
      	
              1.1  

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

            

    

     

    
      	
              1.2  

            	
              Definitions.  In
      this Agreement, unless the contrary intention
  appears:

            

    

     

    “Additional Fee
Letter”  means any letter or letters dated on or about the date
of this Agreement between the Obligors and the Issuer in respect of any
additional fees;

     

    “Amended and Restated Facility
Agreement”  means the Facility Agreement as amended and
restated by this Agreement in the form set out in Appendix 1;

     

    “Corporate Guarantee
Supplements”  means letters supplemental to each of the
Corporate Guarantee and the New Corporate Guarantee executed or to be executed
by the Corporate Guarantor and the New Corporate Guarantor for respectively in
favour of the Security Trustee substantially in the forms set out in Appendix
2;

     

    “Effective
Date”  means the date on which the Issuer notifies the Obligors
that the conditions precedent in Clause 3 have been
fulfilled;

     

    “Existing Finance
Documents”  means the Finance Documents which have been
executed prior to the date hereof; and

     

    “Facility Agreement”  means
the facility agreement dated 29 March 2007 as amended and supplemented from time
to time and as first referred to in Recital (A).

     

    
      	
              1.3  

            	
              Application of construction and
      interpretation provisions of Facility Agreement.  Clauses
      1.2, 1.5 and 1.6 of the Facility Agreement apply, with any necessary
      modifications, to this Agreement.

            

    

     

    
      	
              2  

            	
              AGREEMENT
      OF ALL PARTIES TO THE AMENDMENT OF THE FACILITY AGREEMENT AND EXISTING
      FINANCE DOCUMENTS

            

    

     

    
      	
              2.1  

            	
              Agreement of the parties to
      this Agreement.  The parties to this Agreement agree,
      subject to and upon the terms and conditions of this Agreement to the
      amendment of the Facility Agreement and the Existing Finance Documents to
      be made pursuant to Clauses 5.1, 5.2 and
5.3.

            

    

     

    
      	
              2.2  

            	
              Effective Date. The
      agreement of the parties to this Agreement contained in Clause 2.1 shall have effect on and from the Effective
      Date.

            

    

     

    
      	
              3  

            	
              CONDITIONS
      PRECEDENT

            

    

     

    
      	
              3.1  

            	
              General.  The
      agreement of the parties to this Agreement contained in Clause 2.1 is subject to the fulfilment of the
      conditions precedent in Clause 3.2.

            

    

     

    
      	
              3.2  

            	
              Conditions
      precedent.  The conditions referred to in Clause 2.1 are that the Issuer shall have received the
      following documents and evidence in all respects in form and substance
      satisfactory to it and its lawyers on or before 14 May 2010 or such later
      date as the Issuer may agree with the
Obligors:

            

    

     

    
      	
              (a)  

            	
              in
      relation to the Obligors, the New Corporate Guarantor and the Corporate
      Guarantor, documents of the kind specified in paragraphs 2, 3, 4 and 5 of
      Part A of Schedule 2 of the Facility Agreement with appropriate
      modifications to refer to this Agreement, the Additional Fee Letter and
      the Corporate Guarantee Supplements insofar as each is a party
      thereto;

            

    

     

    
      	
              (b)  

            	
              a
      duly executed original of this Agreement duly executed by the parties to
      it;

            

    

     

    
      	
              (c)  

            	
              a
      duly executed original of the Additional Fee
  Letter;

            

    

     

    
      	
              (d)  

            	
              a
      duly executed original of the Corporate Guarantee
    Supplements;

            

    

     

    
      	
              (e)  

            	
              evidence
      that the Issuer has received the fee payable to it pursuant to the
      Additional Fee Letter;

            

    

     

    
      	
              (f)  

            	
              documentary
      evidence that the agent for service of process named in Clause 25 of the
      Facility Agreement has accepted its appointment in respect of this
      Agreement; and

            

    

     

    
      	
              (g)  

            	
              any
      further opinions, consents, agreements and documents in connection with
      this Agreement, the Additional Fee Letter and the Corporate Guarantee
      Supplements and the Finance Documents which the Agent may reasonably
      request by notice to the Obligors prior to the Effective
    Date.

            

    

     

    
      	
              4  

            	
              REPRESENTATIONS
      AND WARRANTIES

            

    

     

    
      	
              4.1  

            	
              Repetition of Facility
      Agreement representations and warranties.  The Obligors
      represent and warrant to the Issuer that the representations and
      warranties in clause 8 of the Facility Agreement, as amended and restated
      by this Agreement and updated with appropriate modifications to refer to
      this Agreement, remain true and not misleading if repeated on the date of
      this Agreement with reference to the circumstances now
      existing.

            

    

     

    
      	
              4.2  

            	
              Repetition of representations
      and warranties under Existing Finance Documents.  The
      Obligors represent and warrant to the Issuer that the representations and
      warranties in the Existing Finance Documents to which they are a party, as
      amended and restated by this Agreement and updated with appropriate
      modifications to refer to this Agreement remain true and not misleading if
      repeated on the date of this Agreement with reference to the circumstances
      now existing.

            

    

     

    
      	
              5  

            	
              AMENDMENT
      OF FACILITY AGREEMENT AND EXISTING FINANCE
  DOCUMENTS

            

    

     

    
      	
              5.1  

            	
              Amendments
      to Facility Agreement

            

    

     

    
      	
              (a)  

            	
              With
      effect on and from the Effective Date the Facility Agreement shall be, and
      shall be deemed by this Agreement to be, amended and restated in the form
      of the Amended and Restated Facility
Agreement.

            

    

     

    
      	
              (b)  

            	
              As
      so amended and restated pursuant to (a) above, the Facility Agreement
      shall continue to be binding on each of the parties to it in accordance
      with its terms.

            

    

     

    
      	
              5.2  

            	
              Amendments to Existing Finance
      Documents.  With effect on and from the Effective Date
      each of the Existing Finance Documents shall be, and shall be deemed by
      this Agreement to be, amended as
follows:

            

    

     

    
      	
              (a)  

            	
              the
      definition of, and references throughout each of the Existing Finance
      Documents to, the Facility Agreement and any of the Existing Finance
      Documents shall be construed as if the same referred to the Facility
      Agreement and those Existing Finance Documents as amended and restated or
      supplemented by this Agreement;

            

    

     

    
      	
              (b)  

            	
              by
      construing references throughout each of the Existing Finance Documents to
      “the Finance Documents” and other like expressions as if the same included
      the Additional Fee Letter and the Corporate Guarantee Supplements;
      and

            

    

     

    
      	
              (c)  

            	
              by
      construing references throughout each of the Existing Finance Documents to
      “this Agreement”, “this Deed”, “hereunder” and other
      like expressions as if the same referred to such Existing Finance
      Documents as amended and supplemented by this
  Agreement.

            

    

     

    
      	
              5.3  

            	
              The Existing Finance Documents
      to remain in full force and effect.  The Existing Finance
      Documents shall remain in full force and effect, as amended
      by:

            

    

     

    
      	
              (a)  

            	
              the
      amendments contained or referred to in Clause 5.1 and 5.2; and

            

    

     

    
      	
              (b)  

            	
              such
      further or consequential modifications as may be necessary to give full
      effect to the terms of this
Agreement.

            

    

     

    
      	
              6  

            	
              FURTHER
      ASSURANCES

            

    

     

    
      	
              6.1  

            	
              Obligors’ obligations to
      execute further documents etc.  The Obligors
      shall:

            

    

     

    
      	
              (a)  

            	
              execute
      and deliver to the Issuer (or as it may direct) any assignment, mortgage,
      power of attorney, proxy or other document, governed by the law of England
      or such other country as the Issuer may, in any particular case,
      specify;

            

    

     

    
      	
              (b)  

            	
              effect
      any registration or notarisation, give any notice or take any other
      step;

            

    

     

    which the
Issuer may, by notice to the Obligors, reasonably specify for any of the
purposes described in Clause 6.2 or for any similar
or related purpose.

     

    
      	
              6.2  

            	
              Purposes of further
      assurances.  Those purposes
  are:

            

    

     

    
      	
              (a)  

            	
              validly
      and effectively to create any Security Interest or right of any kind which
      the Issuer intended should be created by or pursuant to the Facility
      Agreement or any other Finance Document, each as amended and restated or
      supplemented by this Agreement; and

            

    

     

    
      	
              (b)  

            	
              implementing
      the terms and provisions of this
Agreement.

            

    

     

    
      	
              6.3  

            	
              Terms of further
      assurances.  The Issuer may specify the terms of any
      document to be executed by the Obligors under Clause 6.1, and those terms may include any covenants,
      powers and provisions which the Issuer considers appropriate to protect
      its interests.

            

    

     

    
      	
              7  

            	
              NOTICES

            

    

     

    
      	
              7.1  

            	
              General.  The
      provisions of clause 22 (Notices) of the
      Facility Agreement, as amended and restated by this Agreement, shall apply
      to this Agreement as if they were expressly incorporated in this Agreement
      with any necessary modifications.

            

    

     

    
      	
              8  

            	
              SUPPLEMENTAL

            

    

     

    
      	
              8.1  

            	
              Counterparts.  This
      Agreement may be executed in any number of
  counterparts.

            

    

     

    
      	
              8.2  

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

            

    

     

    
      	
              9  

            	
              LAW
      AND JURISDICTION

            

    

     

    
      	
              9.1  

            	
              Governing
      law.  This Agreement and any non-contractual obligations
      arising out of or in connection with it shall be governed by and construed
      in accordance with English law.

            

    

     

    
      	
              9.2  

            	
              Incorporation of the Facility
      Agreement provisions.  The provisions of clause 25 (Law and jurisdiction) of
      the Facility Agreement, as amended and restated by this Agreement, shall
      apply to this Agreement as if they were expressly incorporated in this
      Agreement with any necessary
modifications.

            

    

     

    

    THIS AGREEMENT has been duly
executed as a deed on the date stated at the beginning of this
Agreement.

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

      
        	
                EXECUTION
      PAGES

              	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                OBLIGORS

              	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED            

              	
                )

              	 
	
                by                         

              	
                )

              	 
	
                ARGYLE MARITIME
      CORP.                       

              	
                )

              	 
	
                acting
      by     Ellen Sofie
      Lokholm     

              	
                )

              	 /s/
      Ellen Sofie Lokholm
	 
      	
                )

              	 
	
                its
      duly authorid
      attorney-in-fact         

              	
                )

              	 
	
                in
      the presence of:      /s/ Keith Krut
                       

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED            

              	
                )

              	 
	
                by                          

              	
                )

              	 
	
                CATON MARITIME
      CORP.                     

              	
                )

              	 
	
                acting
      by         Ellen Sofie
      Lokholm          

              	
                )

              	 /s/
      Ellen Sofie Lokholm
	 
      	
                )

              	 
	
                its
      duly authorised
      attorney-in-fact       

              	
                )

              	 
	
                in
      the presence
      of:           /s/
      Keith
      Krut                  

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED            

              	
                )

              	 
	
                by                          

              	
                )

              	 
	
                DORCHESTER MARITIME
      CORP.    

              	
                )

              	 
	
                acting
      by              Ellen
      Sofie Lokholm     

              	
                )

              	 /s/
      Ellen Sofie Lokholm
	 
      	
                )

              	 
	
                its
      duly authorised
      attorney-in-fact       

              	
                )

              	 
	
                in
      the presence
      of:           /s/
      Keith
      Krut                  

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED            

              	
                )

              	 
	
                by                         

              	
                )

              	 
	
                LONGWOODS MARITIME
      CORP.    

              	
                )

              	 
	
                acting
      by              Ellen
      Sofie Lokholm     

              	
                )

              	  /s/
      Ellen Sofie Lokholm
	 
      	
                )

              	 
	
                its
      duly authorised
      attorney-in-fact       

              	
                )

              	 
	
                in
      the presence of:        /s/ Keith
      Krut                     

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED            

              	
                )

              	 
	
                by                         

              	
                )

              	 
	
                McHENRY MARITIME
      CORP.     

              	
                )

              	 
	
                acting
      by               Ellen
      Sofie Lokholm     

              	
                )

              	 /s/
      Ellen Sofie Lokholm
	 
      	
                )

              	 
	
                its
      duly authorised
      attorney-in-fact       

              	
                )

              	 
	
                in
      the presence of:      /s/ Keith
      Krut                       

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED            

              	
                )

              	 
	
                by                         

              	
                )

              	 
	
                SUNSWYCK MARITIME
      CORP.         

              	
                )

              	 
	
                acting
      by               Ellen
      Sofie Lokholm     

              	
                )

              	 /s/
      Ellen Sofie Lokholm
	 
      	
                )

              	 
	
                its
      duly authorised
      attorney-in-fact       

              	
                )

              	 
	
                in
      the presence
      of:           /s/
      Keith
      Krut                  

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                ISSUER

              	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED            

              	
                )

              	 
	
                by                         

              	
                )

              	 
	
                THE ROYAL BANK OF SCOTLAND
      PLC    

              	
                )

              	 
	
                PLC     

              	
                )

              	 
	
                acting
      by      Andreas
      Georgion        

              	
                )

              	 /s/
      Andreas Georgion
	 
      	
                )

              	 
	
                its
      duly authorised
      attorney-in-fact       

              	
                )

              	 
	
                in
      the presence of:        /s/ Philip
      A. Cheesman   

              	 
      	 

      

    

     

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    

    

    APPENDIX
1

    

    FORM
OF AMENDED AND RESTATED FACILITY AGREEMENT AS AMENDED

    

    

    

     

    

    Dated as
of 29 March 2007

    

    

    

    

    

    

    

    ARGYLE
MARITIME CORP.

    CATON
MARITIME CORP.

    DORCHESTER
MARITIME CORP.

    LONGWOODS
MARITIME CORP.

    McHENRY
MARITIME CORP.

    SUNSWYCK
MARITIME CORP.

    as Joint
and Several Obligors

    

    

    – and
–

    

    

    THE
ROYAL BANK OF SCOTLAND PLC

    as
Issuer

    

    

    

    

    

    

    

    

                                                                                                        

     

    GUARANTEE
FACILITY AGREEMENT

                                                                                                        

    

    relating
to

    a
US$84,000,000 guarantee facility

    

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    INDEX

    
      
        	
                Clause

              	 
      	
                Page

              
	 
      	 
      	 
      
	
                1

              	
                INTERPRETATION

              	
                1

              
	
                2

              	
                GUARANTEE
      FACILITY

              	
                9

              
	
                3

              	
                REDUCTION
      OF GUARANTEES

              	
                11

              
	
                4

              	
                SETTLEMENT
      OF GUARANTEES

              	
                11

              
	
                5

              	
                INDEMNITY
      OF THE OBLIGORs

              	
                11

              
	
                6

              	
                DEFAULT
      INTEREST

              	
                14

              
	
                7

              	
                CONDITIONS
      PRECEDENT

              	
                14

              
	
                8

              	
                REPRESENTATIONS
      AND WARRANTIES

              	
                15

              
	
                9

              	
                GENERAL
      UNDERTAKINGS and FINANCIAL covenants

              	
                17

              
	
                10

              	
                CORPORATE
      UNDERTAKINGS

              	
                20

              
	
                11

              	
                PAYMENTS
      AND CALCULATIONS

              	
                21

              
	
                12

              	
                APPLICATION
      OF RECEIPTS

              	
                22

              
	
                13

              	
                EVENTS
      OF DEFAULT

              	
                23

              
	
                14

              	
                FEES
      AND EXPENSES

              	
                27

              
	
                15

              	
                INDEMNITIES

              	
                27

              
	
                16

              	
                NO
      SET-OFF OR TAX DEDUCTION

              	
                29

              
	
                17

              	
                ILLEGALITY,
      ETC

              	
                30

              
	
                18

              	
                INCREASED
      COSTS

              	
                30

              
	
                19

              	
                SET‐OFF

              	
                32

              
	
                20

              	
                TRANSFERS
      AND CHANGES IN ISSUING OFFICE

              	
                32

              
	
                21

              	
                VARIATIONS
      AND WAIVERS

              	
                33

              
	
                22

              	
                NOTICES

              	
                34

              
	
                23

              	
                joint
      and several liability

              	
                35

              
	
                24

              	
                SUPPLEMENTAL

              	
                36

              
	
                25

              	
                LAW
      AND JURISDICTION

              	
                36

              
	
                SCHEDULE
      1  GUARANTEE ISSUE REQUEST

              	
                38

              
	
                SCHEDULE
      2  CONDITION PRECEDENT DOCUMENTS

              	
                39

              
	
                SCHEDULE
      3  FINANCIAL COVENANTS

              	
                42

              
	
                SCHEDULE
      4  FORM OF COMPLIANCE CERTIFICATE

              	
                51

              
	
                EXECUTION
      PAGE

              	
                53

              
	
                APPENDIX
      A  FORM OF DELIVERY SECURITY ASSIGNMENT

              	
                55

              
	
                APPENDIX
      b  FORM OF corporate guarantee

              	
                56

              
	
                APPENDIX
      c  FORM OF guarantee

              	
                57

              
	
                APPENDIX
      D  FORM OF INTERCREDITOR AgreemenT

              	
                58

              
	 
      	 
      	 
      

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    THIS AGREEMENT is made as of
29 March 2007

     

    BETWEEN

     

    
      	
              (1)  

            	
              ARGYLE MARITIME CORP.,
      CATON MARITIME
      CORP., DORCHESTER
      MARITIME CORP., LONGWOODS MARITIME
      CORP., McHENRY
      MARITIME CORP. and SUNSWYCK MARITIME CORP.,
      as Joint and Several Obligors; and

            

    

     

    
      	
              (2)  

            	
              THE ROYAL BANK OF SCOTLAND
      PLC, as Issuer

            

    

     

     

    BACKGROUND

     

    The
Issuer has agreed to make available to the Obligors a guarantee facility of up
to $84,000,000 to provide performance guarantees in relation to the payment of
the second, third and fourth scheduled stage payments payable under the
shipbuilding contracts for each of six newbuilding multipurpose carriers to be
built at Yahua Shipyard, China having hull nos. NYHS200720, NYHS200721,
NYHS200722, NYHS200723, NYHS200724 and NYHS200725.

     

     

    IT IS AGREED as
follows:

     

    
      	
              1  

            	
              INTERPRETATION

            

    

     

    
      	
              1.1  

            	
              Definitions.  Subject
      to Clause 1.5, in this Agreement:

            

    

     

    “Approved
Managers”  means, Roymar Ship Management Inc., a company
incorporated under the laws of New York and having a place of business at 612
East Grassy Sprain Road, Yonkers, New York 10710, USA or such other company as
the Issuer may from time to time approve as manager of the Ships;

     

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

     

    
      	
              (a)  

            	
              30
      April 2007 (or such later date as the Issuer may agree with the Obligors);
      or

            

    

     

    
      	
              (b)  

            	
              if
      earlier, the date on which the Commitment is fully cancelled or
      terminated;

            

    

     

    “Available
Commitment”  means, at any time, the Commitment less the
Outstandings at that time;

     

    “Bank of America
Facilities”  means the credit facilities made available to
Albermarle Maritime Corp and others pursuant to the amended and restated credit
agreement dated as of 28 March 2008 (as amended and in effect from time to time)
and made between Albermarle Maritime Corp, the New Corporate Guarantor, Bank of
America N.A. and others;

     

    “Builder”  means
Nantong Yahua Shipbuilding Co. Ltd., a corporation organised and existing under
the laws of the People’s Republic of Chins, having its registered office at 1
Hongzha Road, Jiuweigang, Nantong Jiangsu P.C. 226 361, The People’s Republic of
China;

     

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

     

    “China
Communications”  means China Communications Construction
Company Ltd, a corporation organised and existing under the laws of the People’s
Republic of China, having its registered office at No. C88, An Ding Men Wai
Street, Beijing 100011, the People’s Republic of China;

     

    “Commitment”  means
$84,000,000 as that amount may be reduced, cancelled or terminated in accordance
with this Agreement;

     

    “Contract
Price”  means, in relation to each Ship, the aggregate amount
payable to the Seller pursuant to the terms of the Shipbuilding Contract for
such Ship being in each case $35,420,000;

     

    “Contractual
Currency”  has the meaning given in Clause 15.4;

     

    “Corporate
Guarantee”  means a guarantee in the form set out in Appendix
B;

     

    “Corporate
Guarantor”  means TBS International Limited, a company
incorporated under the laws of Bermuda having its principal office at Suite 306,
Commerce Building, One Chancery Lane, Hamilton HM12, Bermuda;

     

    “Dispute”  has the
meaning given to that term in Clause 25.6;

     

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

     

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

     

    “Fee Letter”  means
any letter dated on or about the date of this Agreement between the Issuer and
the Obligors setting out any fees referred to in Clause 14.1;

     

    “Finance
Documents”  means:

     

    
      	
              (a)  

            	
              this
      Agreement;

            

    

     

    
      	
              (b)  

            	
              the
      Corporate Guarantee;

            

    

     

    
      	
              (c)             

            	
              the
      New Corporate Guarantee;

            

    

     

    
      	
              (d)             

            	
              the
      Pre-delivery Security Assignments;

            

    

     

    
      	
              (e)             

            	
              the
      Fee Letter;

            

    

     

    
      	
              (f)             

            	
              the
      Intercreditor Agreement; and

            

    

     

    
      	
              (g)             

            	
              any
      other document (whether creating a Security Interest or not) which is
      executed at any time by the 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 the Issuer under this Agreement or any
      of the other documents referred to in this
  definition;

            

    

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

            	
              under
      a financial lease, a deferred purchase consideration arrangement or any
      other agreement having the commercial effect of a borrowing or raising of
      money by the debtor (other than normal trade credit not exceeding 180
      days);

            

    

     

    
      	
              (e)  

            	
              under
      any foreign exchange transaction, 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
      paragraphs (a) to (e) if the references to the debtor referred to the
      other person;

            

    

     

    “Guarantee”  means
each guarantee issued or to be issued in favour of the Seller substantially in
the form set out in Appendix C;

     

    “Guarantee Issue
Date”  means, in relation to a Guarantee, the date requested by
the relevant Obligor for the Guarantee to be issued or (as the context requires)
the date on which the Guarantee is actually issued;

     

    “Guarantee Issue
Request”  means, in relation to a Guarantee, a notice in the
form of Schedule 1 (or in any other form which the Issuer approves or reasonably
requires);

     

    “Guaranteed
Obligations”  means, in relation to a Guarantee, the actual and
contingent, certain and future obligations and liabilities owed by the relevant
Obligor to the Seller and secured by the Guarantee;

     

    “Intercreditor
Agreement”  means the intercreditor agreement executed or to be
executed between the Obligors, the Issuer and the Security Trustee in the form
set out in Appendix D;

     

    “Issuer”  means The
Royal Bank of Scotland plc, acting through the Shipping Business Centre, 5-10
Great Tower Street, London EC3P 3HX (or through another branch or office
notified to the Issuer under Clause 20.6) or its
direct or indirect successor or assign;

     

    “LIBOR”  means, for
any period for which a rate of interest is to be determined under this
Agreement:

     

    
      	
              (a)  

            	
              the
      rate per annum equal to the offered quotation for deposits in Dollars for
      a period equal to, or as near as possible equal to, that period which
      appears on REUTERS BBA Page LIBOR 01 at or about 11.00 a.m. (London time)
      on the Quotation Date for that period (and, for the purposes of this
      Agreement, “REUTERS BBA Page LIBOR 01” means the display designated as
      “REUTERS BBA Page LIBOR 01” on the Reuters Money News Service or such
      other page as may replace REUTERS BBA Page LIBOR 01 on that service for
      the purpose of displaying rates comparable to that rate or on such other
      service as may be nominated by the British Bankers’ Association as the
      information vendor for the purpose of displaying British Bankers’
      Association Interest Settlement Rates for Dollars);
  or

            

    

     

    
      	
              (b)  

            	
              if
      no rate is quoted on REUTERS BBA Page LIBOR 01 the rate per annum
      determined by the Issuer to be the rate at which deposits in Dollars are
      offered to the Issuer by leading banks in the London Interbank Market at
      the Issuer’s request at or about 11.00 a.m. (London time) on the Quotation
      Date for that period for a period equal to that period and for delivery on
      the first Business Day of it;

            

    

     

    “Loan
Agreement”  means the loan agreement of even date herewith made
between (among others) the Obligors as joint and several borrowers, the banks
and financial institutions listed in the Schedule 1 thereto as lenders and the
Security Trustee relating to a loan facility of up to $150,000,000;

     

    “New Corporate
Guarantee”  means the corporate guarantee executed or to be
executed by the New Corporate Guarantor in favour of the Issuer, in such form as
the New Corporate Guarantor and the Issuer may agree;

     

    “New Corporate
Guarantor”  means TBS International Public Limited Company, a
company incorporated in Ireland having its registered office at Arthur Cox
Building, Earlsfort Centre, Earlsfort terrace, Dublin 2, Ireland;

     

    “Obligor A”  means
Argyle Maritime Corp., being a corporation organised and existing under the laws
of the Marshall Islands and having its registered office at Trust Company
Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH
96960;

     

    “Obligor B”  means
Caton Maritime Corp., being a corporation organised and existing under the laws
of the Marshall Islands and having its registered office at Trust Company
Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH
96960;

     

    “Obligor C”  means
Dorchester Maritime Corp., being a corporation organised and existing under the
laws of the Marshall Islands and having its registered office at Trust Company
Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH
96960;

     

    “Obligor D”  means
Longwoods Maritime Corp., being a corporation organised and existing under the
laws of the Marshall Islands and having its registered office at Trust Company
Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH
96960;

     

    “Obligor E”  means
McHenry Maritime Corp., being a corporation organised and existing under the
laws of the Marshall Islands and having its registered office at Trust Company
Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH
96960;

     

    “Obligor F”  means
Sunswyck Maritime Corp., being a corporation organised and existing under the
laws of the Marshall Islands and having its registered office at Trust Company
Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH
96960;

     

    “Obligors”  means
together Obligor A, Obligor B, Obligor C, Obligor D, Obligor E and Obligor F
and, in the singular, means any of them;

     

    “Other Pre-delivery Security
Assignments”  means the Pre-delivery Security Assignments as
defined in the Loan Agreement;

     

    “Outstanding Guarantee
Amount”  means, in relation to a Guarantee, the maximum amount
for which the Guarantee was issued less the aggregate amount of all reductions
to it which have been made in accordance with the provisions of Clause 3.1;

     

    “Outstandings”  means,
at any time, the aggregate of the Outstanding Guarantee Amounts;

     

    “Overall
Agreement”  means the overall agreement dated 24 February 2007
relating to the Shipbuilding Contracts and made between the Corporate Guarantor
and the Seller;

     

    “Payment
Currency”  has the meaning given in Clause 15.4;

     

    “Permitted Security
Interests”  means:

     

    
      	
              (a)  

            	
              Security
      Interests created by the Finance Documents and Other Pre-delivery Security
      Assignments;

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

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

     

    
      	
              (a)  

            	
              England
      and Wales;

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

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

            

    

     

    
      	
              (e)  

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

            

    

     

    
      	
              (f)  

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

            

    

     

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

     

    “Pre-delivery Security
Assignment”  means, in relation to each Shipbuilding Contract
and corresponding Refund Guarantees, an assignment of the relevant Obligor’s
rights under such Shipbuilding Contract and Refund Guarantees to be executed by
the relevant Obligor in favour of the Issuer in the form set out in Appendix
A;

     

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

     

    “Refund
Guarantee”  means, in relation to each Ship each refund
guarantee issued by the Refund Guarantor in favour of the relevant Obligor
pursuant to the Shipbuilding Agreement in respect of such Ship;

     

    “Refund
Guarantor”  means Bank of Communications acting through its
branch at 33 Jin Rong Da Jie, Xichang District, Beijing 100032, The People’s
Republic of China;

     

    “Relevant
Person”  has the meaning given in Clause 13.7;

     

    “Security
Interest”  means:

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

            	
              the
      security rights of a plaintiff under an action in rem;
  and

            

    

     

    
      	
              (c)  

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

            

    

     

    “Security
Party”  means the Corporate Guarantor, the New Corporate
Guarantor and any other person who, as a surety or mortgagor, as a party to any
subordination or priorities arrangement, or in any similar capacity, executes a
document falling within the last paragraph of the definition of “Finance
Documents” (but for the avoidance of doubt “Security Party” shall not
include the Issuer and the creditor parties under the Loan
Agreement);

     

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

     

    
      	
              (a)  

            	
              all
      amounts which have become due for payment by the Obligors or any Security
      Party 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)  

            	
              none
      of the Obligors nor any Security Party has any future or contingent
      liability under Clause 14, 15 or 16 or any
      other provision of this Agreement or another Finance
    Document;

            

    

     

    
      	
              (d)  

            	
              the
      Issuer does not consider 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 a Security Party 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;
      and

            

    

     

    
      	
              (e)  

            	
              each
      Guarantee has been returned to the Issuer by the Seller endorsed to the
      effect that it is cancelled;

            

    

     

    “Security
Trustee”  means The Royal Bank of Scotland plc acting in the
capacity of security trustee in relation to the Loan Agreement and the loan
facility to be made available thereunder;

     

    “Seller”  means
together China Communications and the Builder;

     

    “Settlement
Amount”  means, in relation to a Guarantee, the amount payable
or as the case may be paid by the Issuer to the Seller in respect of the
Guarantee;

     

    “Settlement
Date”  means, in relation to a Guarantee, the date on which
payment of the Settlement Amount is due to the Seller in respect of the
Guarantee;

     

    “Ship A”  means the
multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No.
NYHS200720 to be constructed and sold by the Seller and to be purchased by
Obligor A pursuant to the relevant Shipbuilding Contract;

     

    “Ship B”  means the
multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No.
NYHS200721 to be constructed and sold by the Seller and to be purchased by
Obligor B pursuant to the relevant Shipbuilding Contract;

     

    “Ship C”  means the
multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No.
NYHS200722 to be constructed and sold by the Seller and to be purchased by
Obligor C pursuant to the relevant Shipbuilding Contract;

     

    “Ship D”  means the
multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No.
NYHS200723 to be constructed and sold by the Seller and to be purchased by
Obligor D pursuant to the relevant Shipbuilding Contract;

     

    “Ship E”  means the
multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No.
NYHS200724 to be constructed and sold by the Seller and to be purchased by
Obligor E pursuant to the relevant Shipbuilding Contract;

     

    “Ship F”  means the
multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No.
NYHS200725 to be constructed and sold by the Seller and to be purchased by
Obligor F pursuant to the relevant Shipbuilding Contract;

     

    “Shipbuilding
Contract”  means, in relation to Ship A, the shipbuilding
contract dated 24 February 2007 made between the Seller and Obligor A in respect
of such Ship, in relation to Ship B, the shipbuilding contract dated 24 February
2007 made between the Seller and Obligor B in respect of such Ship, in relation
to Ship C, the shipbuilding contract dated 24 February 2007 made between the
Seller and Obligor C in respect of such Ship, in relation to Ship D, the
shipbuilding contract dated 24 February 2007 made between the Seller and Obligor
D in respect of such Ship, in relation to Ship E, the shipbuilding contract
dated 24 February 2007 made between the Seller and Obligor E in respect of such
Ship and, in relation to Ship F, the shipbuilding contract dated 24 February
2007 made between the Seller and Obligor F in respect of such Ship and in each
case, as supplemented by the Overall Agreement;

     

    “Ships”  means
together Ship A, Ship B, Ship C, Ship D, Ship E and Ship F and, in the singular,
means any of them; and

     

    “Termination
Date”  means:

     

    
      	
              (a)  

            	
              in
      relation to the Guarantee to be issued in respect of Ship A, 28 February
      2010;

            

    

     

    
      	
              (b)  

            	
              in
      relation to the Guarantee to be issued in respect of Ship B, 31 August
      2010;

            

    

     

    
      	
              (c)  

            	
              in
      relation to the Guarantee to be issued in respect of Ship C, 31 January
      2011;

            

    

     

    
      	
              (d)  

            	
              in
      relation to the Guarantee to be issued in respect of Ship D, 31 May
      2011;

            

    

     

    
      	
              (e)  

            	
              in
      relation to the Guarantee to be issued in respect of Ship E, 30 March
      2011; and

            

    

     

    
      	
              (f)  

            	
              in
      relation to the Guarantee to be issued in respect of Ship F, 31 July
      2011.

            

    

     

    
      	
              1.2  

            	
              Construction of certain
      terms.  In this
Agreement:

            

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “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
organisation;

     

    “subsidiary”  has the
meaning given in Clause 1.4; and

     

    “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) if:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

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

     

    
      	
              (d)  

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

            

    

     

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

     

    
      	
              1.5  

            	
              General
      Interpretation.  In this
  Agreement:

            

    

     

    
      	
              (a)  

            	
              references
      in Clause 1.1 to a Finance Document or any
      other document being in the form of a particular appendix include
      references to that form with any modifications to that form which the
      Issuer approves or reasonably
requires;

            

    

     

    
      	
              (b)  

            	
              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;

            

    

     

    
      	
              (c)  

            	
              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;

            

    

     

    
      	
              (d)  

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

            

    

     

    
      	
              (e)  

            	
              Clauses
      1.1 to 1.5 apply
      unless the contrary intention
appears.

            

    

     

    
      	
              1.6  

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

            

    

     

    
      	
              2  

            	
              GUARANTEE
      FACILITY

            

    

     

    
      	
              2.1  

            	
              Availability of guarantee
      facility.  Subject to the other provisions of this
      Agreement, the Issuer shall make available to the Obligors a guarantee
      facility in an amount of $84,000,000 which shall be made available by the
      following Guarantees:

            

    

     

    
      	
              (a)  

            	
              a
      Guarantee in an amount not exceeding $14,000,000 as a performance
      guarantee in favour of the Seller to secure the second, third and fourth
      instalments of the Contract Price due from the relevant Obligor under the
      Shipbuilding Contract for Ship A;

            

    

     

    
      	
              (b)  

            	
              a
      Guarantee in an amount not exceeding $14,000,000 as a performance
      guarantee in favour of the Seller to secure the second, third and fourth
      instalments of the Contract Price due from the relevant Obligor under the
      Shipbuilding Contract for Ship B;

            

    

     

    
      	
              (c)  

            	
              a
      Guarantee in an amount not exceeding $14,000,000 as a performance
      guarantee in favour of the Seller to secure the second, third and fourth
      instalments of the Contract Price due from the relevant Obligor under the
      Shipbuilding Contract for Ship C;

            

    

     

    
      	
              (d)  

            	
              a
      Guarantee in an amount not exceeding $14,000,000 as a performance
      guarantee in favour of the Seller to secure the second, third and fourth
      instalments of the Contract Price due from the relevant Obligor under the
      Shipbuilding Contract for Ship D;

            

    

     

    
      	
              (e)  

            	
              a
      Guarantee in an amount not exceeding $14,000,000 as a performance
      guarantee in favour of the Seller to secure the second, third and fourth
      instalments of the Contract Price due from the relevant Obligor under the
      Shipbuilding Contract for Ship E;

            

    

     

    
      	
              (f)  

            	
              a
      Guarantee in an amount not exceeding $14,000,000 as a performance
      guarantee in favour of the Seller to secure the second, third and fourth
      instalments of the Contract Price due from the relevant Obligor under the
      Shipbuilding Contract for Ship F.

            

    

     

    
      	
              2.2  

            	
              Request for issue of
      Guarantees.  Subject to the following conditions, an
      Obligor may make a request for a Guarantee to be issued by ensuring that
      the Issuer receives a completed Guarantee Issue Request not later than 11
      a.m. (London time) 3 Business Days prior to the intended Guarantee Issue
      Date.

            

    

     

    
      	
              2.3  

            	
              Availability.  The
      conditions referred to in Clause 2.2 are
that:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

            	
              the
      maximum amount of a Guarantee shall be $14,000,000 and shall not, when
      aggregated with the amount of all other issued Guarantees, exceed the
      Commitment;

            

    

     

    
      	
              (c)  

            	
              the
      Issuer must receive, together with the Guarantee Issue Request, a final
      draft of the form of Guarantee which it is being requested to issue on the
      intended Guarantee Issue Date; and

            

    

     

    
      	
              (d)  

            	
              the
      form of each Guarantee has to be approved in writing by the Issuer at
      least 2 Business Days prior to the intended Guarantee Issue Date but it
      must in any event contain express
provisions:

            

    

     

    
      	
              (i)  

            	
              limiting
      the total amount payable by the Issuer under it to a stated maximum amount
      in Dollars; and

            

    

     

    
      	
              (ii)  

            	
              stating
      that it shall expire or be reduced to zero not later than the relevant
      Termination Date.

            

    

     

    
      	
              2.4  

            	
              Cancellation of guarantee
      facility.  The Obligor may cancel the Available
      Commitment in whole or in part subject to the condition that the Issuer
      has received from the Obligor at least 7 Business Days’ prior written
      notice specifying the amount to be cancelled and the date on which the
      cancellation is to take effect.  The Commitment shall be reduced
      permanently by the amount of the Available Commitment so
      cancelled.

            

    

     

    
      	
              2.5  

            	
              Change of beneficial ownership
      of Obligors or the Corporate Guarantor.  If without the
      consent of the Issuer a change occurs after the date of this Agreement in
      the ultimate beneficial ownership of any shares in any Obligor or the
      Corporate Guarantor or in the ultimate voting rights attaching to any of
      those shares from that disclosed to the Issuer pursuant to Schedule 2 Part
      A 10:

            

    

     

    
      	
              (a)  

            	
              the
      Obligors shall promptly notify the Issuer upon becoming aware of that
      event; and

            

    

     

    
      	
              (b)  

            	
              the
      Issuer shall not be obliged to provide a Guarantee requested in a
      Guarantee Issue Request and the Issuer may, by not more than 10 days’
      notice to the Obligors cancel the Available Commitment and require the
      Obligors either to procure the cancellation of any issued Guarantees or to
      provide cash security in respect of such issued Guarantees on the same
      terms mutatis mutandis as set out in Clause
5.6.

            

    

     

    
      	
              3  

            	
              REDUCTION
      OF GUARANTEES

            

    

     

    
      	
              3.1  

            	
              Reduction of Outstanding
      Guarantee Amounts.  The Outstanding Guarantee Amount of a
      Guarantee shall not be treated as reduced for the purposes of this
      Agreement unless and until:

            

    

     

    
      	
              (a)  

            	
              the
      Issuer has received a written confirmation from the Seller of the amount
      of such reduction; or

            

    

     

    
      	
              (b)  

            	
              the
      Issuer has notified the relevant Obligor in writing that (notwithstanding
      the absence of a written confirmation from the Seller) it is satisfied
      that its liability under the Guarantee has been irrevocably reduced or
      discharged; or

            

    

     

    
      	
              (c)  

            	
              the
      amount of the Guarantee irrevocably and unconditionally reduces in
      accordance with its terms; or

            

    

     

    
      	
              (d)  

            	
              the
      expiry date of the Guarantee elapses and the Issuer has notified the
      relevant Obligor in writing that it is satisfied that no claim or demand
      has been made, or may thereafter be made, under the Guarantee, such
      notification not to be unreasonably withheld or
  delayed.

            

    

     

    
      	
              4  

            	
              SETTLEMENT
      OF GUARANTEES

            

    

     

    
      	
              4.1  

            	
              Notification of Settlement
      Amounts.  The Issuer shall, immediately after receiving a
      demand from, or after being notified by, the Seller that it is required to
      make payment under a Guarantee, notify the relevant Obligor that such
      payment is due and of the Settlement Amount and the Settlement
      Date.

            

    

     

    
      	
              4.2  

            	
              Relevant Obligor’s settlement
      obligation.  The relevant Obligor
  shall:

            

    

     

    
      	
              (a)  

            	
              immediately
      after notification from the Issuer under Clause 4.1, acknowledge to the
      Issuer that it will reimburse the Settlement Amount;
  and

            

    

     

    
      	
              (b)  

            	
              pay
      to the Issuer the Settlement Amount in Dollars on the Settlement
      Date.

            

    

     

    
      	
              4.3  

            	
              Relevant Obligor’s failure to
      reimburse.  If the relevant Obligor fails to reimburse
      the Settlement Amount to the Issuer on the Settlement Date pursuant to
      Clause 4.2, it shall pay to the Issuer interest on the Settlement Amount
      from the Settlement Date to the date the Issuer is reimbursed by the
      relevant Obligor at the rate described in Clause 6 such interest to be
      compounded in accordance with Clause 6.6 and payable on
      demand.

            

    

     

    
      	
              5  

            	
              INDEMNITY
      OF THE OBLIGORS

            

    

     

    
      	
              5.1  

            	
              Obligors’ undertaking to
      indemnify.  Each Obligor agrees that it
      shall:

            

    

     

    
      	
              (a)  

            	
              pay
      to the Issuer upon demand by the Issuer an amount equal to each
      amount:

            

    

     

    
      	
              (i)  

            	
              demanded
      from the Issuer under a Guarantee;
or

            

    

     

    
      	
              (ii)  

            	
              paid
      by the Issuer to the Seller under Clause
5.8;

            

    

     

    and which
is not otherwise fully reimbursed, paid or repaid by the Obligors under this
Agreement;

     

    
      	
              (b)  

            	
              indemnify,
      as a principal and independent debtor, the Issuer on demand against all
      actions, claims, demands, liabilities, costs, losses, damages and expenses
      incurred, suffered or sustained or any penalty or other expenditure which
      may result or which the Issuer may incur, suffer or sustain in connection
      with or arising out of or in relation to any Guaranteed Obligations and/or
      the payment under or other performance of a Guarantee (including without
      limitation any correspondent bank
charges).

            

    

     

    
      	
              5.2  

            	
              Guarantee
      payments.  Each
Obligor:

            

    

     

    
      	
              (a)  

            	
              irrevocably
      authorises the Issuer to make any payment demanded from it pursuant to a
      Guarantee if that demand is made in accordance with its
    terms;

            

    

     

    
      	
              (b)  

            	
              accepts
      that any demand for payment made by the Seller pursuant to a Guarantee and
      which is made in accordance with its terms shall be conclusive evidence
      that the Issuer was liable to make payment under the Guarantee and any
      payment which the Issuer makes pursuant to any such demand shall be
      accepted by the Obligors as binding upon the Obligors;
  and

            

    

     

    
      	
              (c)  

            	
              acknowledges
      and agrees that the Issuer shall not in any circumstances whatsoever be
      liable to the Obligors in respect of any loss or damage suffered by the
      Obligors by reason of the Issuer making a payment to the Seller in
      connection with any payment demanded under a
  Guarantee.

            

    

     

    
      	
              5.3  

            	
              Continuing
      indemnities.  The liabilities and obligations of the
      Obligors under the indemnities set out in Clause 5.1 shall remain in force
      as a continuing security until:

            

    

     

    
      	
              (a)  

            	
              the
      full, prompt and complete performance of all the terms of such indemnities
      including the proper and valid payment of all amounts that may become due
      to the Issuer under this Clause 5.3;
and

            

    

     

    
      	
              (b)  

            	
              subject
      to Clause 5.4, an absolute discharge or release of the Obligors signed by
      the Issuer;

            

    

     

    and
accordingly the Obligors shall not have, as regards those indemnities, any of
the rights or defences of a surety.

     

    
      	
              5.4  

            	
              Discharges.  Any
      such discharge or release referred to in Clause 5.3, and any composition
      or arrangement which the Obligors may effect with the Issuer, shall be
      deemed to be made subject to the condition that it will be void if any
      payment or security which the Issuer, may previously have received or may
      thereafter receive is set aside under any applicable law or proves to have
      been for any reason invalid.

            

    

     

    
      	
              5.5  

            	
              No
      impairment.  Without limiting the generality of Clauses
      5.3 and 5.4, the Obligors shall neither be discharged from any of their
      liabilities or obligations under Clause 5.1 by, nor have any claim against
      the Issuer in respect of:

            

    

     

    
      	
              (a)  

            	
              any
      misrepresentation or non-disclosure respecting the affairs or condition of
      the Issuer made to the Obligors by any person;
  or

            

    

     

    
      	
              (b)  

            	
              the
      Seller and/or the Issuer releasing or granting any time or any indulgence
      whatsoever or making any settlement, composition or arrangement with the
      Obligors, the Seller or any other person;
or

            

    

     

    
      	
              (c)  

            	
              the
      Seller and/or the Issuer asserting or pursuing, failing or neglecting to
      assert or pursue, or delaying in asserting or pursuing, or waiving, any of
      their rights or remedies against the Obligors, the Seller or any other
      person; or

            

    

     

    
      	
              (d)  

            	
              the
      Seller and/or the Issuer and/or the Obligors, with the consent of the
      Obligors (or with or without the consent of the Obligors in the case of
      any variation agreed between the Seller and the Obligors or the person
      whose obligations are guaranteed thereby), making, whether expressly or by
      conduct, any variation to any Guaranteed Obligations or a Guarantee;
      or

            

    

     

    
      	
              (e)  

            	
              the
      Seller and/or the Issuer and/or the
Obligors:

            

    

     

    
      	
              (i)  

            	
              taking,
      accepting, varying, dealing with, enforcing, abstaining from enforcing,
      surrendering or releasing any security in relation to the Seller or the
      Issuer or any Obligor or any other person in such manner as it or they
      think fit; or

            

    

     

    
      	
              (ii)  

            	
              claiming,
      proving for, accepting or transferring any payment in respect of the
      obligations and liabilities of any Obligor and/or the Seller relative to
      any Guaranteed Obligations or under this Agreement in any composition by,
      or winding up of, any Obligor and/or any third party or abstaining from so
      claiming, proving, accepting or transferring;
or

            

    

     

    
      	
              (f)  

            	
              any
      assignment or transfer by the Seller of, or any succession to, any of its
      rights relative to any Guaranteed Obligations or a
    Guarantee.

            

    

     

    
      	
              5.6  

            	
              Provision of cash collateral
      security.  Forthwith upon, or at any time following the
      occurrence of an Event of Default which is continuing the Issuer shall be
      entitled (but not obliged) to demand payment by the Obligors of, and the
      Obligors forthwith upon such demand shall pay to the Issuer for credit to
      an account of the Obligors with the Issuer (subject to such Security
      Interest as the Issuer may reasonably specify or require), such amount as
      shall be the aggregate of:

            

    

     

    
      	
              (i)  

            	
              any
      Settlement Amount then due from the Obligors to the Issuer pursuant to
      Clause 4.2 and not reimbursed; and

            

    

     

    
      	
              (ii)  

            	
              the
      Outstandings.

            

    

     

    
      	
              5.7  

            	
              Application of cash collateral
      security.  Subject always to the overriding provisions of
      Clause 15, moneys received by the Issuer pursuant to Clause 5.6 shall be
      applied (as between the Obligors on the one hand and the Issuer on the
      other) in the following manner:

            

    

     

    
      	
              (a)  

            	
              firstly,
      in or towards payment of any Settlement Amount then due from the Obligors
      to the Issuer pursuant to Clause 4.2 and not
  reimbursed;

            

    

     

    
      	
              (b)  

            	
              secondly,
      in payment to the Issuer for application from time to time by it (and the
      Obligors hereby irrevocably authorise the Issuer so to apply any such
      moneys) in or towards payment of, or reimbursement to the Issuer for, any
      amount which the Issuer shall or may at any time and from time to time
      thereafter pay or be or become liable to pay to the Seller under or
      pursuant to or in connection with a Guarantee (including any amount
      payable under Clause 5.8); and

            

    

     

    
      	
              (c)  

            	
              thirdly,
      in or towards payment of all other sums which may be owing to the Issuer
      under or in connection with a
Guarantee.

            

    

     

    
      	
              5.8  

            	
              Negotiation with the
      Seller.  Each
Obligor:

            

    

     

    
      	
              (a)  

            	
              irrevocably
      authorises the Issuer to negotiate with the Seller at any time after the
      occurrence of any Event of Default which is continuing with a view to
      arranging for the prepayment by the Issuer, for the account of the
      Obligors of any Guaranteed Obligations;
and

            

    

     

    
      	
              (b)  

            	
              agrees
      that at any time after the occurrence of any Event of Default which is
      continuing the Issuer shall be entitled (but not, so far as the Obligors
      are concerned, bound) to pay to the Seller, in such manner and upon such
      terms as the Issuer and the Seller shall agree, any Guaranteed
      Obligations.

            

    

     

    
      	
              6  

            	
              DEFAULT
      INTEREST

            

    

     

    
      	
              6.1  

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

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

            	
              if
      such amount has become immediately due and payable under Clause 13.4, the
      date on which it became immediately due and
  payable.

            

    

     

    
      	
              6.2  

            	
              Default rate of
      interest.  Interest shall accrue on an overdue amount
      from (and including) the relevant date until the date of actual payment
      (as well after as before judgment) at the rate per annum determined by the
      Issuer to be 1.5 per cent. above, the rate set out in Clause
      6.3.

            

    

     

    
      	
              6.3  

            	
              Calculation of default rate of
      interest.  The rate referred to in Clause 6.2 is, in
      respect of successive periods of any duration (including at call) up to 3
      months which the Issuer may select from time to
  time:

            

    

     

    
      	
              (a)  

            	
              LIBOR;
      or

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              6.4  

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

            

    

     

    
      	
              6.5  

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

            

    

     

    
      	
              6.6  

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

            

    

     

    
      	
              7  

            	
              CONDITIONS
      PRECEDENT

            

    

     

    
      	
              7.1  

            	
              Documents, fees and no
      default.  The Issuer’s obligation to issue any Guarantee
      is subject to the following conditions
  precedent:

            

    

     

    
      	
              (a)  

            	
              that,
      on or before the service of the first Guarantee Issue Request, the Issuer
      receives the documents described in Part A of Schedule 2 in form and
      substance satisfactory to it;

            

    

     

    
      	
              (b)  

            	
              that,
      on or before a Guarantee Issue Date but prior to the issue of a Guarantee,
      the Issuer receives the documents described in Part B of Schedule 2 in a
      form satisfactory to it;

            

    

     

    
      	
              (c)  

            	
              that,
      on or before each Guarantee Issue Date, the Issuer has received all
      arrangement and commitment fees payable pursuant to Clause
      18.1;

            

    

     

    
      	
              (d)  

            	
              that
      both at the date of each Guarantee Issue Request and at each Guarantee
      Issue Date:

            

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (ii)  

            	
              the
      representations and warranties in Clause 8.1 and those of the Obligors or
      any Security Party which are set out in the other Finance Documents would
      be true and not misleading if repeated on each of those dates with
      reference to the circumstances then
existing;

            

    

     

    
      	
              (e)  

            	
              that
      the Issuer has received, and found to be acceptable to it, any further
      opinions, consents, agreements and documents in connection with the
      Finance Documents which the Issuer may reasonably request by notice to the
      Obligors prior to the Guarantee Issue
Date.

            

    

     

    
      	
              7.2  

            	
              Waivers of conditions
      precedent.  If the Issuer, at its discretion, permits any
      Guarantee to be issued before certain of the conditions referred to in
      Clause 7.1 are satisfied, the Obligor shall ensure that those conditions
      are satisfied within 14 Business days after the Guarantee Issue Date (or
      such longer period as the Issuer may
specify).

            

    

     

    
      	
              8  

            	
              REPRESENTATIONS
      AND WARRANTIES

            

    

     

    
      	
              8.1  

            	
              General.  Each
      Obligor represents and warrants to the Issuer as
  follows.

            

    

     

    
      	
              8.2  

            	
              Status.  It is
      duly incorporated and validly existing and in good standing under the laws
      of the Marshall Islands.

            

    

     

    
      	
              8.3  

            	
              Share capital and
      ownership.  It has an authorised share capital of 500
      registered and/or bearer shares without par value, all of which shares
      have been issued, and the legal title and beneficial ownership of all
      those shares is held, free of any Security Interest or other claim, by
      Westbrook Holdings Limited.

            

    

     

    
      	
              8.4  

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

            

    

     

    
      	
              (a)  

            	
              to
      execute the Shipbuilding Contract to which it is a party and to purchase
      and pay for its Ship under that Shipbuilding
  Contract;

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

            	
              to
      make all the payments contemplated by, and to comply with, those Finance
      Documents.

            

    

     

    
      	
              8.5  

            	
              Consents in
      force.  All the consents referred to in Clause 8.4 remain
      in force and nothing to the best of the Obligors’ knowledge and belief has
      occurred which makes any of them liable to
  revocation.

            

    

     

    
      	
              8.6  

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

            

    

     

    
      	
              (a)  

            	
              constitute
      its legal, valid and binding obligations enforceable against it in
      accordance with their respective terms;
and

            

    

     

    
      	
              (b)  

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

            

    

     

    subject
to any relevant insolvency laws affecting creditors’ rights generally and
subject to any qualifications as to matters of law which are specifically
referred to in any legal opinion delivered to the Issuer pursuant to Schedule
2.

     

    
      	
              8.7  

            	
              No third party Security
      Interests.  Without limiting the generality of Clause
      8.6, at the time of the execution and delivery of each Finance
      Document:

            

    

     

    
      	
              (a)  

            	
              the
      relevant Obligor or Obligors which are a party to that Finance Document
      will have the right to create all the Security Interests which that
      Finance Document purports to create;
and

            

    

     

    
      	
              (b)  

            	
              no
      third party will to the best of the Obligors’ knowledge and belief have
      any Security Interest (except for Permitted Security Interests) or any
      other interest, right or claim over, in or in relation to any asset to
      which a Security Interest created by a Finance Document,
      relates.

            

    

     

    
      	
              8.8  

            	
              No
      conflicts.  The execution by that Obligor of each Finance
      Document to which it is a party and its compliance with each Finance
      Document to which it is a party will not involve or lead to a
      contravention of:

            

    

     

    
      	
              (a)  

            	
              any
      law or regulation in force at the date of this Agreement;
    or

            

    

     

    
      	
              (b)  

            	
              the
      constitutional documents of that Obligor;
or

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              8.9  

            	
              No withholding
      taxes.  No tax is imposed in any jurisdiction in which
      that Obligor is ordinarily resident for tax by way of withholding or
      deduction or otherwise on any payment to be made under this
      Agreement.

            

    

     

    
      	
              8.10  

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

            

    

     

    
      	
              8.11  

            	
              Information.  All
      information which has been provided in writing by or on behalf of the
      Obligors or any Security Party to the Issuer in connection with any
      Finance Document was to the best of the Obligors’ knowledge and belief
      true and not misleading as at the time it was given; all audited and
      unaudited accounts which have been so provided satisfied the requirements
      of Clause 9.6; and there has been no material adverse change in the
      financial position or state of affairs of the Obligors from that disclosed
      in the latest of those accounts.

            

    

     

    
      	
              8.12  

            	
              No
      litigation.  No legal or administrative action involving
      the Obligors has been commenced or taken or, to that 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 Obligors’ financial position or
      profitability.

            

    

     

    
      	
              8.13  

            	
              Validity and completeness of
      Shipbuilding Contracts.  Each Shipbuilding Contract
      constitutes valid, binding and enforceable obligations of the Seller and
      the relevant Obligor respectively in accordance with its terms subject to
      any relevant insolvency laws affecting creditors’ rights generally
      and:

            

    

     

    
      	
              (a)  

            	
              each
      copy of the Shipbuilding Contracts delivered to the Issuer before the date
      of this Agreement is a true and complete copy;
  and

            

    

     

    
      	
              (b)  

            	
              no
      amendments or additions to the Shipbuilding Contracts have been agreed nor
      has any Obligor or the Seller waived any of their respective rights under
      the Shipbuilding Contracts.

            

    

     

    
      	
              8.14  

            	
              No rebates
      etc.  There is no agreement or understanding to allow or
      pay any rebate, premium, commission, discount or other benefit or payment
      (howsoever described) to the Obligors, the Seller or a third party in
      connection with the purchase by the Obligors of the Ships, other than as
      disclosed to the Issuer in writing on or prior to the date of this
      Agreement.

            

    

     

    
      	
              8.15  

            	
              Compliance with certain
      undertakings.  At the date of this Agreement, each
      Obligor is in compliance with Clause 9.12 and (save as disclosed in
      writing to the Issuer) Clauses 9.3 and
9.8.

            

    

     

    
      	
              8.16  

            	
              Taxes
      paid.  Each Obligor has paid all taxes applicable to, or
      imposed on or in relation to it or its
business.

            

    

     

    
      	
              8.17  

            	
              Conformity of Financial
      Covenants.  The financial covenants set out in Schedule 3
      conform to the financial covenants given by the New Corporate Guarantor
      and its subsidiaries under the Bank of America
  Facilities.

            

    

     

    
      	
              9  

            	
              GENERAL
      UNDERTAKINGS AND FINANCIAL
COVENANTS

            

    

     

    
      	
              9.1  

            	
              General.  Each
      Obligor undertakes with the Issuer to comply with the following provisions
      of this Clause 9 at all times during the Security Period, except as the
      Issuer may otherwise permit.

            

    

     

    
      	
              9.2  

            	
              No disposal of
      assets.

            

    

     

    
      	
              (a)  

            	
              No
      Obligor will transfer or otherwise dispose
of:

            

    

     

    
      	
              (i)  

            	
              its
      rights under the Shipbuilding Contract to which it is a party, whether by
      one transaction or a number of transactions, whether related or not save
      where the Guarantee relating thereto has been cancelled or where that
      Obligor has provided cash security in relation to such Guarantee on the
      same terms mutatis mutandis as set out in Clause 5.6;
  or

            

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (b)  

            	
              No
      Obligor will create or permit to arise any Security Interest (except for
      Permitted Security Interests) over its rights under the Shipbuilding
      Contract and the Refund Guarantees to which it is a
  party.

            

    

     

    
      	
              9.3  

            	
              No other liabilities or
      obligations to be incurred.  No Obligor will incur any
      liability or obligation except:

            

    

     

    
      	
              (a)  

            	
              liabilities
      and obligations under the Shipbuilding Contract, the Finance Documents,
      the Loan Agreement and the Finance Document (as defined in the Loan
      Agreement) to which it is a party;
and

            

    

     

    
      	
              (b)  

            	
              liabilities
      or obligations incurred in the ordinary course of supervising the
      construction of, providing supplies for, operating and chartering its Ship
      (and for the avoidance of doubt the management fees payable by the
      Obligors to the Approved Managers shall be a permitted expense);
      and

            

    

     

    
      	
              (c)  

            	
              provided
      the terms of Clause 10.3(c) are complied with, inter-company Indebtedness
      from other companies which are in the same ultimate beneficial ownership
      as the Obligors.

            

    

     

    
      	
              9.4  

            	
              Information provided to be
      accurate.  All financial and other information which is
      provided in writing by or on behalf of each Obligor under or in connection
      with any Finance Document will to the best of that Obligor’s knowledge and
      belief be true and not misleading and will not omit any material fact or
      consideration which, if disclosed would reasonably be expected to
      adversely affect the decision of a person considering whether to enter
      into this Agreement.

            

    

     

    
      	
              9.5  

            	
              Provision of financial
      statements.  Each Obligor will procure that there is sent
      to the Issuer:

            

    

     

    
      	
              (a)  

            	
              as
      soon as possible, but in no event later than 120 days after the end of
      each of the Corporate Guarantor’s and the New Corporate Guarantor’s
      financial years, the annual audited accounts of the Corporate Guarantor
      and the New Corporate Guarantor and each of their consolidated
      subsidiaries;

            

    

     

    
      	
              (b)  

            	
              as
      soon as possible, but in no event later than 30 days after the end of each
      quarter in each of the Corporate Guarantor’s and the New Corporate
      Guarantor’s financial years unaudited accounts of the Corporate Guarantor
      and the New Corporate Guarantor and each of their consolidated
      subsidiaries which are certified as to their correctness by its chief
      financial officer;

            

    

     

    
      	
              (c)             

            	
              by
      the New Corporate Guarantor on a monthly basis, and in no event later than
      the 20th
      day of each month, monthly management information including information
      from the preceding month in respect of sales, operating profit, net
      income, EBITDA and available liquidity each on a consolidated basis and
      each compared against the relevant budget numbers for that month;
      and

            

    

     

    
      	
              (d)             

            	
              by
      the New Corporate Guarantor on a monthly basis, and in no event later than
      the 30th
      day of each month, updated financial projections including but not limited
      to revenues, operating expenses, net income, cash balances, loan balances,
      working capital requirements and equity for the period up to and including
      the following 24 months.

            

    

     

    
      	
              9.6  

            	
              Form of financial
      statements.  All accounts (audited and unaudited)
      delivered under Clause 9.5 will:

            

    

     

    
      	
              (a)  

            	
              be
      prepared in accordance with all applicable laws and generally accepted
      accounting principles of the U.S.A. consistently
  applied;

            

    

     

    
      	
              (b)  

            	
              give
      a true and fair view of the financial condition of the relevant Obligor at
      the date of those accounts and of its profit for the period to which those
      accounts relate; and

            

    

     

    
      	
              (c)  

            	
              fully
      disclose or provide for all significant liabilities of the relevant
      Obligor.

            

    

     

    
      	
              9.7  

            	
              Shareholder and creditor
      notices.  Each Obligor will send the Issuer, at the same
      time as they are despatched, copies of all communications which are
      despatched to its shareholders or creditors or any class of
      them.

            

    

     

    
      	
              9.8  

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

            

    

     

    
      	
              (a)  

            	
              for
      that Obligor to perform its obligations under any
      Finance  Document to which it is a
  party;

            

    

     

    
      	
              (b)  

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

            

    

     

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

     

    
      	
              9.9  

            	
              Maintenance of Security
      Interests.  Each Obligor
will:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              9.10  

            	
              Notification of
      litigation.  Each Obligor will provide the Issuer with
      details of any legal or administrative action involving any Obligor or any
      Security Party promptly upon becoming aware of the same where such legal
      or administrative action might, if adversely determined, have a material
      adverse effect on the ability of that Obligor to perform its obligations
      under any Finance Document to which it is a
  party

            

    

     

    
      	
              9.11  

            	
              No amendment to Shipbuilding
      Contracts.  No Obligor will agree to any amendment or
      supplement to, or waive or fail to enforce, the Shipbuilding Contract to
      which it is a party or any of its provisions (and for the purposes of this
      Clause 9.11 an amendment of a Shipbuilding Contract will always be
      material if alone or with any previous variations it increases the
      Contract Price thereunder by more than
5%).

            

    

     

    
      	
              9.12  

            	
              Chief Executive
      Office.  Each Obligor will maintain its chief executive
      office, and keep its corporate documents and records, at Suite 306,
      Commerce Building, One Chancery Lane, Hamilton, MH12,
    Bermuda.

            

    

     

    
      	
              9.13  

            	
              Confirmation of no
      default.  Each Obligor will, within 2 Business Days after
      service by the Issuer of a written request, serve on the Issuer a notice
      which is signed by the representative director of such Obligor and
      which:

            

    

     

    
      	
              (a)  

            	
              states
      that no Event of Default or Potential Event of Default has occurred and is
      continuing; or

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              9.14  

            	
              Notification of
      default.  Each Obligor will notify the Issuer as soon as
      it becomes aware of:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

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

     

    
      	
              9.15  

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

            

    

     

    
      	
              (a)  

            	
              to
      it and its Shipbuilding Contract;
or

            

    

     

    
      	
              (b)  

            	
              to
      any other matter relevant to, or to any provision of, a Finance
      Document;

            

    

     

    which may
be reasonably requested by the Issuer at any time.

     

    
      	
              9.16  

            	
              Financial
      Covenants.

            

    

     

    
      	
              (a)  

            	
              the
      Obligors undertake to comply at all times with the financial covenants set
      out in Schedule 3;

            

    

     

    
      	
              (b)  

            	
              the
      Obligors shall provide to the Issuer within 60 days after the end of each
      financial quarter of the New Corporate Guarantor’s financial year a
      compliance certificate in the form set out in Schedule 4 executed by the
      chief financial officer of the New Corporate Guarantor and confirming that
      the financial covenants set out in Schedule 3 have been complied with
      during each financial quarter;

            

    

     

    
      	
              (c)  

            	
              a
      formal review of the financial covenants set out in Schedule 3 will be
      undertaken by the Issuer upon expiry and prepayment of the Bank of America
      Facilities whichever is earlier;
and

            

    

     

    
      	
              (d)             

            	
              the
      parties to this Agreement shall review the financial covenants set out in
      Schedule 3 on or around 1 May 2012.

            

    

     

    
      	
              9.17             

            	
              No
      Dividends.  As long as no Event of Default has occurred
      or would occur as a result of the payment of any dividend or the making of
      any distribution the Obligors may pay any dividends or make other forms of
      distributions to the New Corporate Guarantor.  The Obligors
      shall procure that the New Corporate Guarantor does not pay any dividend
      or make any other form of distribution Provided that so long as
      no Event of Default has occurred or would occur as a result of the payment
      of any dividend or the making of any distribution the New Corporate
      Guarantor may withhold stock in order that it be sold and the proceeds
      used solely to pay any payroll withholding taxes as required in connection
      with stock bonuses made to employees of the New Corporate Guarantor and
      its subsidiaries.

            

    

     

    
      	
              9.18             

            	
              Financial Covenants in other
      facilities.  The Obligors undertake to provide and to
      procure that the New Corporate Guarantor provides the Creditor Parties
      with the benefit of any additional or more favourable financial covenants
      provided to other financing parties under other or future financing
      agreements in order that the Creditor Parties shall be treated no less
      favourably than any other of the financing parties to the New Corporate
      Guarantor and/or any of its subsidiaries by providing details of such
      financial covenants in order that appropriate amendments can be made by
      this Agreement and the relevant Finance
  Documents.

            

    

     

    
      	
              9.19             

            	
              Provisions of Loan
      Agreement.  The provisions of clauses 11.23, 11.24, 11.25
      and 11.26 of the Loan Agreement shall apply to this Agreement mutatis
      mutandis.

            

    

     

    

     

    
      	
              10  

            	
              CORPORATE
      UNDERTAKINGS

            

    

     

    
      	
              10.1  

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

            

    

     

    
      	
              10.2  

            	
              Maintenance of
      status.  Each Obligor will maintain its separate
      corporate existence and remain in good standing under the laws of the
      Marshall Islands.

            

    

     

    
      	
              10.3  

            	
              Negative
      undertakings.  No Obligor
will:

            

    

     

    
      	
              (a)  

            	
              carry
      on any business other than in relation to the construction, purchase and
      eventual ownership, chartering and operation of its Ship;
    or

            

    

     

    
      	
              (b)  

            	
              effect
      any form of redemption, purchase or return of share capital;
      or

            

    

     

    
      	
              (c)  

            	
              provide
      any form of credit or financial assistance
to:

            

    

     

    
      	
              (i)  

            	
              a
      person who is directly or indirectly interested in that Obligor’s share or
      loan capital; or

            

    

     

    
      	
              (ii)  

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

            

    

     

    or enter
into any transaction with or involving such a person or company on terms which
are, in any respect, less favourable to that Obligor than those which it could
obtain in a bargain made at arms’ length provided however that prior to an Event
of Default which is continuing that Obligor may provide loans to or incur
inter-company Indebtedness from other subsidiaries of the New Corporate
Guarantor and may service such inter-company Indebtedness provided that in the
case of any such inter- company Indebtedness the relevant lending company has
first executed an agreement in favour of the Issuer fully subordinating the
rights of such lending company in respect of such Indebtedness to those of the
Issuer under the Finance Documents and assigning its rights in respect of any
loan agreements relating to such inter-company Indebtedness made between it and
the Obligors;

     

    
      	
              (d)  

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

            

    

     

    
      	
              (e)  

            	
              acquire
      any shares or other securities other than US or UK Treasury bills and
      certificates of deposit issued by major North American or European banks,
      or enter into any transaction in a derivative;
  or

            

    

     

    
      	
              (f)  

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

            

    

     

    
      	
              11  

            	
              PAYMENTS
      AND CALCULATIONS

            

    

     

    
      	
              11.1  

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

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

            	
              to
      the account of the Issuer at American Express Bank Limited, 3 World
      Financial Centre, 23rd Floor, New York, NY 10285-2300 USA Account No
      000261123 for credit to the Issuer reference “TBS : Argyle and Others :
      Guarantee Facility”, or to such other account with such other bank as the
      Issuer may from time to time notify to the
  Obligors.

            

    

     

    
      	
              11.2  

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

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

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

     

    
      	
              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  

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

            

    

     

    
      	
              11.5  

            	
              Accounts prima facie
      evidence.  If the account maintained under Clause 11.4
      shows an amount to be owing by the Obligors or a Security Party to the
      Issuer, that account shall be prima facie evidence that that amount is
      owing to the Issuer.

            

    

     

    
      	
              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 Issuer
      under or by virtue of any Finance Document shall be
    applied:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              12.2  

            	
              Variation of order of
      application.  The Issuer may, by notice to the Obligors
      and the Security Parties, provide for a different manner of application
      from that set out in Clause 12.1 either as regards a specified sum or sums
      or as regards sums in a specified category or
  categories.

            

    

     

    
      	
              12.3  

            	
              Notice of variation of order of
      application.  The Issuer may give notices under Clause
      12.2 from time to time; and such a notice may be stated to apply not only
      to sums which may be received or recovered in the future, but also to any
      sum which has been received or recovered on or after the third Business
      Day before the date on which the notice is
  served.

            

    

     

    
      	
              12.4  

            	
              Appropriation rights
      overridden.  This Clause 12 and any notice which the
      Issuer gives under Clause 12.2 shall override any right of appropriation
      possessed, and any appropriation made, by the Obligors or any Security
      Party.

            

    

     

    
      	
              13  

            	
              EVENTS
      OF DEFAULT

            

    

     

    
      	
              13.1  

            	
              Events of
      Default.  An Event of Default occurs
  if:

            

    

     

    
      	
              (a)  

            	
              any
      Obligor or any Security Party fails to pay when due or (if so payable) on
      demand any sum payable under a Finance Document (and so that for this
      purpose (i) sums payable on demand shall be treated as having been paid
      when due within 3 Business Days of receipt of the demand and (ii) if the
      failure is caused by a disruption to the payments system referred to in
      Clause 11.1(b) which disruption is beyond the control of the Obligors,
      such failure shall not constitute an Event of Default if payment is made
      within 3 Business days of its due date);
or

            

    

     

    
      	
              (b)  

            	
              any
      breach occurs of Clause 7.2, 9.3, 10.2 or 10.3;
  or

            

    

     

    
      	
              (c)  

            	
              any
      breach occurs of Clause 9.16(a); or

            

    

     

    
      	
              (d)  

            	
              any
      breach by any Obligor or any Security Party occurs of any provision of a
      Finance Document (other than a breach covered by paragraph (a) or (b)) and
      if, in the opinion of the Issuer, such default is capable of remedy, such
      default continues unremedied 10 Business days after written notice from
      the Issuer requesting action to remedy the same;
  or

            

    

     

    
      	
              (e)  

            	
              any
      representation, warranty or statement made by, or by an officer of, any
      Obligor or a Security Party in a Finance Document or in a Guarantee Issue
      Request or any other notice or document relating to a Finance Document is
      untrue or misleading in any material respect when it is made;
      or

            

    

     

    
      	
              (f)  

            	
              any
      of the following occurs in relation to any Financial Indebtedness of a
      Relevant Person:

            

    

     

    
      	
              (i)  

            	
              any
      Financial Indebtedness of a Relevant Person is not paid when due or, if so
      payable, on demand (or in either such case, within any applicable grace
      period); or

            

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (iii)  

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

            

    

     

    
      	
              (iv)  

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

            

    

     

    
      	
              (v)  

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

            

    

     

    Provided
that no Event of Default will occur under this Clause 13.1(f) in relation to the
New Corporate Guarantor if the amount of Financial Indebtedness falling within
paragraphs (i) to (v) above is less than $2,500,000 (or its equivalent in any
other currency or currencies),

     

    
      	
              (g)  

            	
              any
      of the following occurs in relation to a Relevant
  Person:

            

    

     

    
      	
              (i)  

            	
              a
      Relevant Person becomes, in the opinion of the Issuer, unable to pay its
      debts as they fall due; or

            

    

     

    
      	
              (ii)  

            	
              all
      or substantially all of the assets of a Relevant Person are subject to any
      form of execution, attachment, arrest, sequestration or distress in
      respect of a sum of, or sums aggregating, $500,000 or more or the
      equivalent in another currency and is not discharged within 1 month of the
      same being levied or sued out; or

            

    

     

    
      	
              (iii)  

            	
              any
      administrative or other receiver is appointed over any substantial part of
      the assets of a Relevant Person; or

            

    

     

    
      	
              (iv)  

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

            

    

     

    
      	
              (v)  

            	
              any
      formal declaration of bankruptcy or any formal statement to the effect
      that a Relevant Person is insolvent or likely to become insolvent is made
      by a Relevant Person or by the directors of a Relevant Person or, in any
      proceedings, by a lawyer acting for a Relevant Person;
  or

            

    

     

    
      	
              (vi)  

            	
              a
      provisional liquidator is appointed in respect of a Relevant Person, a
      winding up order is made in relation to a Relevant Person or a winding up
      resolution is passed by a Relevant Person;
or

            

    

     

    
      	
              (vii)  

            	
              a
      resolution is passed, an administration notice is given or filed, an
      application or petition to a court is made or presented or any other step
      is taken by (aa) a Relevant Person, (bb) the members or directors of a
      Relevant Person, (cc) a holder of Security Interests which together relate
      to all or substantially all of the assets of a Relevant Person, or (dd) a
      government minister or public or regulatory authority of a Pertinent
      Jurisdiction having jurisdiction over that Relevant Person for or with a
      view to the winding up of that or another Relevant Person or the
      appointment of a provisional liquidator or administrator in respect of
      that or another Relevant Person, or that or another Relevant Person
      ceasing or suspending business operations or payments to creditors, save
      that this paragraph does not apply to a fully solvent winding up of a
      Relevant Person other than an Obligor which is, or is to be, effected for
      the purposes of an amalgamation or reconstruction previously approved by
      the Issuer and effected not later than 3 months after the commencement of
      the winding up; or

            

    

     

    
      	
              (viii)  

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

            

    

     

    
      	
              (ix)  

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

            

    

     

    
      	
              (x)  

            	
              any
      meeting of the members or directors, or of any committee of the board or
      senior management, of a Relevant Person is held or summoned for the
      purpose of considering a resolution or proposal to authorise or take any
      action of a type described in paragraphs (iv) to (ix) or a step
      preparatory to such action, or (with or without such a meeting) the
      members, directors or such a committee resolve or agree that such an
      action or step should be taken or should be taken if certain conditions
      materialise or fail to materialise;
or

            

    

     

    
      	
              (xi)  

            	
              in
      a Pertinent Jurisdiction other than England or Wales or to the
      jurisdiction of whose courts any part of that Relevant Person’s assets are
      subject, any event occurs, any proceedings are opened or commenced or any
      step is taken which, in the opinion of the Issuer is similar to any of the
      foregoing; or

            

    

     

    
      	
              (h)  

            	
              any
      Obligor ceases or suspends carrying on its business or a part of its
      business which, in the opinion of the Issuer, is material in the context
      of this Agreement; or

            

    

     

    
      	
              (i)  

            	
              it
      becomes unlawful in any Pertinent Jurisdiction or
    impossible:

            

    

     

    
      	
              (i)  

            	
              for
      any Obligor or any Security Party to discharge any liability under a
      Finance Document or to comply with any other obligation which the Issuer
      considers material under a Finance Document unless provided that none of
      the interests of the Issuer is prejudiced in any way during the relevant
      period, the discharge of that liability or compliance with that obligation
      or exercise or enforcement of those rights ceases to be unlawful within 30
      days; or

            

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (j)  

            	
              any
      official consent necessary to enable any Obligor or any Security Party to
      comply with any provision which the Issuer considers material of a Finance
      Document or any of the Shipbuilding Contracts is not granted, expires
      without being renewed, is revoked or becomes liable to revocation or any
      condition of such a consent is not fulfilled;
or

            

    

     

    
      	
              (k)  

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

            

    

     

    
      	
              (l)  

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

            

    

     

    
      	
              (m)  

            	
              an
      Event of Default (as defined in the Loan Agreement) occurs;
    or

            

    

     

    
      	
              (n)  

            	
              any
      other event occurs or any other circumstances arise or develop including,
      without limitation a change in the financial position, state of affairs or
      prospects of any Obligor in the light of which the Issuer considers that
      there is a significant risk that any Obligor is, or will later become,
      unable to discharge its liabilities under the Finance Documents as they
      fall due.

            

    

     

    
      	
              13.2  

            	
              Actions following an Event of
      Default.  On, or at any time after, the occurrence of an
      Event of Default and while the Event of Default is continuing the Issuer
      may:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              13.3  

            	
              Termination of
      obligations.  On the service of a notice under Clause
      13.2(a), all the obligations of the Issuer to the Obligors under this
      Agreement shall terminate and the amount specified in Clause 5.6 shall
      become immediately due and payable or, as the case may be, payable on
      demand.

            

    

     

    
      	
              13.4  

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

            

    

     

    
      	
              13.5  

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

            

    

     

    
      	
              13.6  

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

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

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

     

    
      	
              13.7  

            	
              Relevant
      Persons.  In this Clause 13 a “Relevant Person” means
      any Obligor and any Security Party.

            

    

     

    
      	
              13.8  

            	
              Interpretation.  In
      Clause 13.1(f) references to an event of default or a termination event
      include any event, howsoever described, which is similar to an event of
      default in a facility agreement or a termination event in a finance lease;
      and in Clause 13.1(g) “petition” includes an
      application.

            

    

     

    
      	
              14  

            	
              FEES
      AND EXPENSES

            

    

     

    
      	
              14.1  

            	
              Arrangement and commitment
      fees.  The Obligors shall pay to the
    Issuer:

            

    

     

    
      	
              (a)  

            	
              on
      Guarantee Issue Date in respect of each Guarantee an arrangement fee in
      respect of such Guarantee in the amount specified in the Fee Letter;
      and

            

    

     

    
      	
              (b)  

            	
              quarterly
      in arrears during the period from (and including) 27 March 2009 to the
      date of cancellation or termination of the last Guarantee and on the last
      day of that period a commitment fee at the rate of one point five per
      cent. (1.5%) per annum.

            

    

     

    
      	
              14.2  

            	
              Costs of negotiation,
      preparation etc.  The Obligors shall pay to the Issuer on
      its demand the amount of all expenses incurred by the Issuer in connection
      with the negotiation, preparation, execution or registration of any
      Finance Document or any related document or with any transaction
      contemplated by a Finance Document or a related
  document.

            

    

     

    
      	
              14.3  

            	
              Costs of variation, amendments,
      enforcement etc.  The Obligors shall pay to the Issuer,
      on the Issuer’s demand, the amount of all expenses incurred by the Issuer
      (in the case of paragraphs (a) and (b) such expenses to be reasonably
      incurred) in connection with:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

            	
              any
      step taken by the Issuer 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 (c) the full amount of all legal expenses,
whether or not such as would be allowed under rules of court or any taxation or
other procedure carried out under such rules.

     

    
      	
              14.4  

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

            

    

     

    
      	
              14.5  

            	
              Certification of
      amounts.  A notice which is signed by 2 officers of the
      Issuer, which states that a specified amount, or aggregate amount, is due
      to the Issuer under this Clause 14 and which indicates (without
      necessarily specifying a detailed breakdown) the matters in respect of
      which the amount, or aggregate amount, is due shall (save in the case of
      manifest error) be prima facie evidence that the amount, or aggregate
      amount, is due.

            

    

     

    
      	
              15  

            	
              INDEMNITIES

            

    

     

    
      	
              15.1  

            	
              Indemnities regarding issue of
      Guarantees.  Without prejudice to the Obligors’ indemnity
      contained in Clause 5, the Obligors shall fully indemnify the Issuer on
      its demand in respect of all claims, expenses, liabilities and losses
      which are made or brought against or incurred by the Issuer, or which the
      Issuer reasonably and with due diligence estimates that it will incur, as
      a result of or in connection with:

            

    

     

    
      	
              (a)  

            	
              a
      Guarantee not being issued on the date specified in the relevant Guarantee
      Issue Request for any reason other than a default by the
      Issuer;

            

    

     

    
      	
              (b)  

            	
              any
      failure (for whatever reason) by the Obligors 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 Obligors
      on the amount concerned under Clause
6);

            

    

     

    
      	
              (c)  

            	
              the
      occurrence and/or continuance of an Event of Default or a Potential Event
      of Default;

            

    

     

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

     

    
      	
              15.2  

            	
              Breakage
      costs.  Without limiting its generality, Clause 15.1
      covers any claim, expense, liability or loss, including a loss of a
      prospective profit, incurred by the Issuer in liquidating or employing
      deposits from third parties acquired or arranged to fund or maintain any
      overdue amount.

            

    

     

    
      	
              15.3  

            	
              Miscellaneous
      indemnities.  The Obligors shall fully indemnify the
      Issuer on its demand in respect of all claims, expenses, liabilities and
      losses which may be made or brought against or incurred by the Issuer, in
      any country, as a result of or in connection with any action taken, or
      omitted or neglected to be taken, under or in connection with any Finance
      Document by the Issuer or by any receiver appointed under a Finance
      Document other than claims, expenses, liabilities and losses which are
      shown to have been directly and mainly caused by the dishonesty or wilful
      misconduct or reckless action with knowledge of the probable consequences
      of the officers or employees of the
Issuer.

            

    

     

    
      	
              15.4  

            	
              Currency
      indemnity.  If any sum due from the Obligors or any
      Security Party to the Issuer 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 Obligors or any Security Party,
      whether in its liquidation, any arrangement involving it or otherwise;
      or

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

            	
              enforcing
      any such order or judgment;

            

    

     

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

     

    In this
Clause 15.4, the “available
rate of exchange” means the rate at which the Issuer 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 15.4 creates a separate liability of the Obligors which is distinct from
their other liabilities under the Finance Documents and which shall not be
merged in any judgment or order relating to those other
liabilities.

     

    
      	
              15.5  

            	
              Certification of
      amounts.  A notice which is signed by 2 officers of the
      Issuer, which states that a specified amount, or aggregate amount, is due
      to the Issuer under this Clause 15 and which indicates (without
      necessarily specifying a detailed breakdown) the matters in respect of
      which the amount, or aggregate amount, is due shall (save in the case of
      manifest error) be prima facie evidence that the amount, or aggregate
      amount, is due.

            

    

     

    
      	
              16  

            	
              NO
      SET-OFF OR TAX DEDUCTION

            

    

     

    
      	
              16.1  

            	
              No
      deductions.  All amounts due from an Obligor 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 that Obligor
      is 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 Issuer 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 the Issuer 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.

            

    

     

    No
Obligor shall be obliged to pay any additional amount pursuant to paragraph (c)
above in respect of any deduction which would not have been required if the
Issuer had completed a declaration, claim, exemption, or other form which it has
been requested by the Obligors or an applicable taxation authority to complete
and which it is able to complete.

     

    
      	
              16.3  

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

            

    

     

    
      	
              16.4  

            	
              Tax
      credits.  If the Issuer receives for its own account a
      repayment or obtains relief or credit in respect of tax paid or otherwise
      payable by it in respect of or calculated by reference to the increased
      payment made by an Obligor under Clause 16.2, it shall pay to the relevant
      Obligor a sum equal to the proportion of the repayment, relief or credit
      which it allocates to the amount due from that Obligor in respect of which
      that Obligor made the increased
payment:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

            	
              nothing
      in this Clause 16.4 shall oblige the Issuer to arrange its tax affairs in
      any particular manner, to claim any type of relief, credit, allowance or
      deduction instead of, or in priority to, another or to make any such claim
      within any particular time;

            

    

     

    
      	
              (c)  

            	
              nothing
      in this Clause 16.4 shall oblige the Issuer to make a payment which would
      leave it in a worse position than it would have been in if the relevant
      Obligor had not been required to make a tax deduction from a payment;
      and

            

    

     

    
      	
              (d)  

            	
              any
      allocation or determination made by the Issuer under or in connection with
      this Clause 16.4 shall (save in the case of manifest error) be conclusive
      and binding on the Obligors.

            

    

     

    
      	
              16.5  

            	
              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 the Issuer’s overall net
income.

            

    

     

    
      	
              17  

            	
              ILLEGALITY,
      ETC

            

    

     

    
      	
              17.1  

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

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

            	
              contrary
      to, or inconsistent with, any
regulation,

            

    

     

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

     

    
      	
              17.2  

            	
              Notification and effect of
      illegality.  On the Issuer notifying the Obligors under
      Clause 17.1:

            

    

     

    
      	
              (a)  

            	
              the
      Commitment shall be cancelled;

            

    

     

    
      	
              (b)  

            	
              the
      Obligors shall use their best endeavours to procure the prompt
      cancellation of the Outstandings and the return of each Guarantee to the
      Issuer endorsed by the Seller to the effect that it is cancelled;
      and

            

    

     

    
      	
              (c)  

            	
              by
      no later than the date specified in the Issuer’s notice under Clause 17.1
      as the date on which the notified event would become effective, the
      Obligors shall pay to the Issuer the amount due under Clause
      5.6.

            

    

     

    
      	
              17.3  

            	
              Mitigation.  If
      circumstances arise which would result in a notification under Clause 17.1
      then, without in any way limiting the rights of the Issuer under Clause
      17.2, the Issuer shall notify the Obligor and shall use reasonable
      endeavours to transfer its obligations and liabilities under this
      Agreement and the Guarantees and its rights under this Agreement and the
      Finance Documents to another office or financial institution not affected
      by the circumstances but the Issuer shall not be under any obligation to
      take any such action if, in its opinion, to do so would or
      might:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              18  

            	
              INCREASED
      COSTS

            

    

     

    
      	
              18.1  

            	
              Increased
      costs.  This Clause 18 applies if the Issuer notifies the
      Obligors that it considers that as a result
of:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

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

     

    
      	
              18.2  

            	
              Meaning of “increased
      costs”.  In this Clause 18, “increased costs”
      means:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

            	
              an
      additional or increased cost of funding all or maintaining all or any part
      of the Outstandings or other unpaid sums or (as the case may require) the
      proportion of that cost attributable to the Outstandings or other unpaid
      sums; or

            

    

     

    
      	
              (d)  

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

            

    

     

    but not
an item attributable to a change in the rate of tax on the overall net income of
the Issuer (or a parent company of it) or an item covered by the indemnity for
tax in Clause 15.1 or by Clause 16 or an item arising directly out of the
implementation by the applicable authorities having jurisdiction over the Issuer
of the matters set out in the statement of the Basle Committee on Banking
Regulations and Supervisory Practices dated July, 1988 and entitled
“International Convergence of Capital Measurement and Capital Standards”, to the
extent and according to the timetable provided for in the
statement.

     

    For the
purposes of this Clause 18.2 the Issuer may in good faith allocate or spread
costs and/or losses among its assets and liabilities (or any class of its assets
and liabilities) on such basis as it considers appropriate.

     

    
      	
              18.3  

            	
              Payment of increased
      costs.  The Obligors shall pay to the Issuer, on its
      demand, the amounts which the Issuer from time to time notifies the
      Obligors that it has specified to be necessary to compensate it for the
      increased cost (provided that such demand is accompanied by a certificate
      from the Issuer confirming the amount of its increased cost  and
      including a calculation thereof).

            

    

     

    
      	
              18.4  

            	
              Notice of
      cancellation.  If the Obligors are not willing to
      continue to compensate the Issuer for the increased cost under Clause
      18.3, the Obligors may give the Issuer not less than 14 days’ notice of
      its intention to cancel the Commitment and procure the cancellation of the
      Outstandings.

            

    

     

    
      	
              18.5  

            	
              Cancellation.  A
      notice under Clause 18.4 shall be irrevocable; and on the date specified
      in its notice of intended
cancellation:

            

    

     

    
      	
              (a)  

            	
              the
      Commitment shall be cancelled;

            

    

     

    
      	
              (b)  

            	
              the
      Obligors shall procure the cancellation of the Outstandings and the return
      of each Guarantee to the Issuer endorsed by the Seller to the effect that
      it is cancelled; and

            

    

     

    
      	
              (c)  

            	
              the
      Obligors shall pay to the Issuer the amount due under Clause
      5.6.

            

    

     

    
      	
              18.6  

            	
              Mitigation.  If
      circumstances arise which would result in a notification under Clause 18.1
      then, without in any way limiting the rights of the Issuer under Clause
      18.3, the Issuer shall notify the Obligor and shall use reasonable
      endeavours to transfer its obligations and liabilities under this
      Agreement and the Guarantees and its rights under this Agreement and the
      Finance Documents to another office or financial institution not affected
      by the circumstances but the Issuer shall not be under any obligation to
      take any such action if, in its opinion, to do so would or
      might:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              19  

            	
              SET-OFF

            

    

     

    
      	
              19.1  

            	
              Application of credit
      balances.  The Issuer may without prior notice following
      the occurrence of an Event of Default which 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 any Obligors at any office in any
      country of the Issuer in or towards satisfaction of any sum then due from
      the Obligors to the Issuer 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 any
      Obligor;

            

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (iii)  

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

            

    

     

    
      	
              19.2  

            	
              Existing rights
      unaffected.  The Issuer shall not be obliged to exercise
      any of its rights under Clause 19.1; and those rights shall be without
      prejudice and in addition to any right of set-off, combination of
      accounts, charge, lien or other right or remedy to which the Issuer is
      entitled (whether under the general law or any
  document).

            

    

     

    
      	
              19.3  

            	
              No Security
      Interest.  This Clause 19 gives the Issuer a contractual
      right of set-off only, and does not create any equitable charge or other
      Security Interest over any credit balance of the
  Obligors.

            

    

     

    
      	
              20  

            	
              TRANSFERS
      AND CHANGES IN ISSUING OFFICE

            

    

     

    
      	
              20.1  

            	
              Transfer by
      Obligor.  No Obligor may, without the consent of the
      Issuer transfer any of its rights, liabilities or obligations under any
      Finance Document.

            

    

     

    
      	
              20.2  

            	
              Transfer by
      Issuer.  The Issuer may transfer all or any of the rights
      and interests which it has under or by virtue of the Finance Documents
      with the prior written consent of the Obligors, (not to be unreasonably
      withheld or delayed) or without the consent of the Obligors if an Event of
      Default or a Potential Event of Default has occurred and is
      continuing.

            

    

     

    
      	
              20.3  

            	
              Rights of
      transferee.  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
      transferee of any of the Issuer’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 transferee as a result of the breach or
      misrepresentation irrespective of whether the Issuer would have incurred a
      loss of that kind or amount.

            

    

     

    
      	
              20.4  

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

            

    

     

    
      	
              20.5  

            	
              Disclosure of
      information.  The Issuer may disclose to a potential
      assignee or sub-participant any information which the Issuer has received
      in relation to the Obligors, any Security Party or their affairs under or
      in connection with any Finance
Document.

            

    

     

    
      	
              20.6  

            	
              Change of issuing
      office.  The Issuer may change its issuing office by
      giving notice to the Obligors and the change shall become effective on the
      later of:

            

    

     

    
      	
              (a)  

            	
              the
      date on which the Obligors receive the notice;
  and

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              20.7  

            	
              No additional
      costs.  If the Issuer transfers or sub-participates any
      part of its rights and/or obligations under the Finance Documents or
      changes its issuing office pursuant to this Clause 20 and as a result of
      circumstances existing at the date the transfer, sub-participation or
      change occurs, the Obligors would be obliged to make an increased payment
      to the Issuer under any applicable Clauses of this Agreement then the
      Issuer is only entitled to recover payment under those Clauses to the same
      extent as the Issuer would have been if the transfer, sub-participation or
      change of issuing office had not
occurred.

            

    

     

    
      	
              21  

            	
              VARIATIONS
      AND WAIVERS

            

    

     

    
      	
              21.1  

            	
              Variations, waivers etc. by
      Issuer.  A document shall be effective to vary, waive,
      suspend or limit any provision of a Finance Document, or the Issuer’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 Obligors and
      the Issuer and, if the document relates to a Finance Document to which a
      Security Party is party, by that Security
Party.

            

    

     

    
      	
              21.2  

            	
              Exclusion of other or implied
      variations.  Except for a document which satisfies the
      requirements of Clauses 21.1, no document, and no act, course of conduct,
      failure or neglect to act, delay or acquiescence on the part of the Issuer
      (or any person acting on its behalf) shall result in the Issuer (or any
      person acting on its behalf) being taken to have varied, waived, suspended
      or limited, or being precluded (permanently or temporarily) from
      enforcing, relying on or
exercising:

            

    

     

    
      	
              (a)  

            	
              a
      provision of this Agreement or another Finance Document;
  or

            

    

     

    
      	
              (b)  

            	
              an
      Event of Default; or

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

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

            

    

     

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

     

    
      	
              22  

            	
              NOTICES

            

    

     

    
      	
              22.1  

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

            

    

     

    
      	
              22.2  

            	
              Addresses for
      communications.  A notice shall be
  sent:

            

    

     

    
      	
              (a)  

            	
              to
      the
      Obligors:                                Suite
      306

            

    

    Commerce
Building

    One
Chancery Lane

    Hamilton
HM12

    Bermuda

     

    Mailing
Address:

    P.O. Box
HM 2522

    Hamilton
HMGX

    Bermuda

     

    Attention:                      William
J. Carr

    Fax:           +1-441-295-4957

     

    With a copy
to:

     

    TBS
Shipping Services Inc.

    612 East
Grassy Sprain Road

    Yonkers,
NY  10710 U.S.A.

     

    Attention:  Ferdinand
V. Lepere

     

    Fax
:           +1-914-961-5121

     

    
      	
              (b)  

            	
              to
      the
      Issuer:                                The
      Royal Bank of Scotland plc

            

    

    Shipping Business Centre

    5-10 Great Tower Street

    London EC3R 3HX

     

    Fax
No:                      +44
207 283 7538

     

    Attention: Ship Finance Portfolio
Management

     

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

     

    
      	
              22.3  

            	
              Effective date of
      notices.  Subject to Clauses 22.4 and
    22.5:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              22.4  

            	
              Service outside business
      hours.  However, if under Clause 22.3 a notice would be
      deemed to be served:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    the
notice shall (subject to Clause 22.5) be deemed to be served, and shall take
effect, at 9 a.m. on the next day which is such a business day.

     

    
      	
              22.5  

            	
              Illegible
      notices.  Clauses 22.3 and 22.4 do not apply if the
      recipient of a notice notifies the sender within 1 hour after the time at
      which the notice would otherwise be deemed to be served that the notice
      has been received in a form which is illegible in a material
      respect.

            

    

     

    
      	
              22.6  

            	
              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.

            

    

     

    
      	
              22.7  

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

            

    

     

    
      	
              22.8  

            	
              Meaning of
      “notice”.  In this Clause 22 “notice” includes any
      demand, consent, authorisation, approval, instruction, waiver or other
      communication.

            

    

     

    
      	
              23  

            	
              JOINT
      AND SEVERAL LIABILITY

            

    

     

    
      	
              23.1  

            	
              General.  All
      liabilities and obligations of the Obligors under this Agreement shall,
      whether expressed to be so or not, be several and, if and to the extent
      consistent with Clause 23.2, joint.

            

    

     

    
      	
              23.2  

            	
              No impairment of Obligor’s
      obligations.  The liabilities and obligations of an
      Obligor shall not be impaired by:

            

    

     

    
      	
              (a)  

            	
              this
      Agreement being or later becoming void, unenforceable or illegal as
      regards any other Obligor;

            

    

     

    
      	
              (b)  

            	
              the
      Issuer entering into any rescheduling, refinancing or other arrangement of
      any kind with any other Obligor;

            

    

     

    
      	
              (c)  

            	
              the
      Issuer releasing any other Obligor or any Security Interest created by a
      Finance Document; or

            

    

     

    
      	
              (d)  

            	
              any
      combination of the foregoing.

            

    

     

    
      	
              23.3  

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

            

    

     

    
      	
              23.4  

            	
              Subordination.  Subject
      to Clause 23.5, during the Security Period, no Obligor
    shall:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

            	
              take
      or enforce any form of security from any other Obligor 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 Obligor;
or

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

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

            

    

     

    
      	
              (e)  

            	
              exercise
      or assert any combination of the
foregoing.

            

    

     

    
      	
              23.5  

            	
              Obligor’s required
      action.  If during the Security Period, the Issuer, by
      notice to a Obligor, requires it to take any action referred to in
      paragraphs (a) to (d) of Clause 23.4, in relation to any other Obligor,
      that Obligor shall take that action as soon as practicable after receiving
      the Issuer’s notice.

            

    

     

    
      	
              24  

            	
              SUPPLEMENTAL

            

    

     

    
      	
              24.1  

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

            

    

     

    
      	
              (a)  

            	
              cumulative;

            

    

     

    
      	
              (b)  

            	
              may
      be exercised as often as appears expedient;
and

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              24.2  

            	
              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.

            

    

     

    
      	
              24.3  

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

            

    

     

    
      	
              24.4  

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

            

    

     

    
      	
              25  

            	
              LAW
      AND JURISDICTION

            

    

     

    
      	
              25.1  

            	
              English
      law.  This Agreement and any non-contractual obligations
      arising out of or in connection with it shall be governed by, and
      construed in accordance with, English
law.

            

    

     

    
      	
              25.2  

            	
              Exclusive English
      jurisdiction.  Subject to Clause 25.3, the courts of
      England shall have exclusive jurisdiction to settle any
      Dispute.

            

    

     

    
      	
              25.3  

            	
              Choice of forum for the
      exclusive benefit of the Issuer.  Clause 25.2 is for the
      exclusive benefit of the Issuer, which reserves the
  rights:

            

    

     

    
      	
              (a)  

            	
              to
      commence proceedings in relation to any Dispute in the courts of any
      country other than England and which have or claim jurisdiction to that
      Dispute; and

            

    

     

    
      	
              (b)  

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

            

    

     

    No
Obligor shall commence any proceedings in any country other than England in
relation to a Dispute.

     

    
      	
              25.4  

            	
              Process
      agent.  Each Obligor irrevocably appoints Curtis Davis
      Garrard LLP at its registered office for the time being, presently at 2
      Roundwood Avenue, Stockley Park, Uxbridge UB11 1AF, to act as its agent to
      receive and accept on its behalf any process or other document relating to
      any proceedings in the English courts which are connected with a
      Dispute.

            

    

     

    
      	
              25.5  

            	
              Issuer’s rights
      unaffected.  Nothing in this Clause 25 shall exclude or
      limit any right which the Issuer 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.

            

    

     

    
      	
              25.6  

            	
              Meaning of
      “proceedings”.  In this Clause 25, “proceedings” means
      proceedings of any kind, including an application for a provisional or
      protective measure and a “Dispute” means any
      dispute arising out of or in connection with this Agreement (including a
      dispute relating to the existence, validity or termination of this
      Agreement) or any contractual obligation arising out of or in connection
      with this Agreement.

            

    

     

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    

    SCHEDULE
1

     

    

     

    GUARANTEE
ISSUE REQUEST

     

    

    

    To:           The
Royal Bank of Scotland plc

    5-10
Great Tower Street

    London
EC3R 3HX

     

    Attention:
[l]

     

     

    [l] 2007

     

    
      	
               
      

            	
              GUARANTEE
      ISSUE REQUEST

            

    

     

    
      	
              1  

            	
              We
      refer to the facility agreement (the “Facility Agreement”)
      dated as of 29 March 2007 and made between Argyle Maritime Corp., Caton
      Maritime Corp., Dorchester Maritime Corp., Longwoods Maritime Corp.,
      McHenry Maritime Corp. and Sunswyck Maritime Corp., as Obligors, and
      yourselves, as Issuer, in connection with a guarantee facility of up to
      US$84,000,000.  Terms defined in the Facility Agreement have
      their defined meanings when used in this Guarantee Issue
      Request.

            

    

     

    
      	
              2  

            	
              We
      request the issue of a Guarantee in the form attached as
      follows:

            

    

     

    
      	
              (a)  

            	
              Amount
      of the Guarantee: [l];

            

    

     

    
      	
              (b)  

            	
              Guarantee
      Issue Date:  [l];

            

    

     

    
      	
              (c)  

            	
              Expiry
      date of the Guarantee: [l];

            

    

     

    
      	
              (d)  

            	
              Delivery
      Instructions:  [l].

            

    

     

    
      	
              3  

            	
              We
      represent and warrant that:

            

    

     

    
      	
              (a)  

            	
              the
      representations and warranties in Clause 8 of the Facility Agreement would
      remain true and not misleading if repeated on the date of this notice with
      reference to the circumstances now
existing;

            

    

     

    
      	
              (b)  

            	
              no
      Event of Default or Potential Event of Default has occurred and is
      continuing or will result from the issue of the
  Guarantee.

            

    

     

    
      	
              4  

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

            

    

     

    [Name of
Signatory]

    

    

    For and
on behalf of

    [relevant
Obligor]

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

     

    

    SCHEDULE
2

     

    

     

    CONDITION
PRECEDENT DOCUMENTS

     

     

    PART
A

     

    

    The
following are the documents referred to in Clause 7.1(a) required before service
of the first Guarantee Issue Request

     

    
      	
              1  

            	
              A
      duly executed original of each Finance Document (and of each document
      required to be delivered by each Finance Document) other than those
      referred to in Part B

            

    

     

    
      	
              2             

            	
              Copies
      of the certificate of incorporation and constitutional documents and
      evidence of the goodstanding (or its equivalent) of each Obligor and each
      Security Party.

            

    

     

    
      	
              3             

            	
              Copies
      of resolutions of the directors of each Obligor and each Security Party
      and copies of the resolutions of the shareholders of each Obligor, in each
      case authorising the execution of each of the Finance Documents to which
      that Obligor or that Security Party is a party and, in the case of each
      Obligor, authorising named officers to make Guarantee Issue Requests and
      ratifying execution of the Shipbuilding
  Contracts.

            

    

     

    
      	
              4             

            	
              The
      original of any power of attorney under which any Finance Document is
      executed on behalf of the Obligor or a Security
  Party.

            

    

     

    
      	
              5             

            	
              Copies
      of all consents which any Obligor or any Security Party requires to enter
      into, or make any payment under, any Finance Document or the Shipbuilding
      Contracts.

            

    

     

    
      	
              6             

            	
              Copies
      of the Shipbuilding Contracts of the Overall
  Agreement.

            

    

     

    
      	
              7             

            	
              Such
      documentary evidence as the Issuer and its legal advisers may require in
      relation to the due authorisation and execution by the Seller of the
      Shipbuilding Contracts of the Overall
Agreement.

            

    

     

    
      	
              8             

            	
              Documentary
      evidence that the agent for service of process named in Clause 28 has
      accepted its appointment.

            

    

     

    
      	
              9             

            	
              Favourable
      legal opinions from lawyers appointed by the Issuer on such matters
      concerning the laws of Bermuda and Marshall
  Islands.

            

    

     

    
      	
              10             

            	
              A
      written statement from a person acceptable to the Issuer confirming the
      identity of the ultimate beneficial owner or owners of the shares in the
      Obligors, the Corporate Guarantor and each other Security Party and of the
      identity of the person or persons controlling the voting rights attached
      to those shares.

            

    

     

    
      	
              11             

            	
              Such
      documents and evidence as the Issuer shall require in relation to each
      Security Party based on applicable law and regulations, and the Issuer’s
      owner internal guidelines, relating to the Issuer’s knowledge of its
      customers.

            

    

     

    
      	
              12             

            	
              Such
      documentary evidence as the Issuer and its legal advisers may require in
      relation to the due authorisation and execution by the parties to the
      Intercreditor Agreement (other than the
Issuer).

            

    

     

    
      	
              13             

            	
              If
      the Issuer so requires, in respect of any of the documents referred to
      above, a certified English translation prepared by a translator approved
      by the Issuer.

            

    

     

    Each of
the documents specified in paragraphs 2, 3, 5, 6 and every other copy document
delivered under this Schedule shall be certified as a true and up to date copy
by a director, representative director or the secretary (or equivalent officer)
of the relevant Obligor.

     

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    PART
B

     

    The
following are the documents referred to in Clause 7.1(b) required before the
issue of a Guarantee:

     

    
      	
              1  

            	
              the
      Pre-delivery Security Assignment in respect of the Shipbuilding Contract
      relating to such Ship (and of each document to be delivered thereunder);
      and

            

    

     

    
      	
              2  

            	
              favourable
      legal opinions from lawyers appointed by the Issuer on such matters
      concerning the laws of the Marshall Islands and
  China.

            

    

     

    
      	
              3  

            	
              a
      copy of the relevant Refund Guarantee together with such documentary
      evidence as the Agent, and its legal advisers may require in relation to
      the due authorisation and execution by the Refund Guarantor of that Refund
      Guarantee and that such Refund Guarantee has been registered with the
      State Administration of Foreign Exchange in
  China;

            

    

     

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
3

     

    

     

    FINANCIAL
COVENANTS

     

    

     

    Pursuant
to Clause 11.18 of this Agreement the Obligors undertake that at all times they
shall not:

     

    

     

    
      	
              (a)             

            	
              Minimum Cash
      Liquidity.  For each calendar month ending on or after
      the date hereof, permit Qualified Cash of the Security Parties to be less
      than $15,000,000 at any time during such calendar month provided that the
      Obligors shall ensure that at least $5,000,000 (excluding any restricted
      cash) is deposited with the Agent at all times in any such calendar
      month.

            

    

     

    
      	
              (b)             

            	
              Maximum Consolidated Leverage
      Ratio.  Permit the Consolidated Leverage Ratio as of the
      end of any fiscal quarter set forth below and for the period of four
      fiscal quarters then ending of Holdings and its Subsidiaries to be greater
      than the ratio set forth below opposite such time
  period:

            

    

     

    
      	
              Four
      Fiscal Quarter Ending:

            	
              Maximum
      Consolidated Leverage Ratio

            
	
              30
      June 2010

            	
              5.00:1.00

            
	
              30
      September 2010

            	
              3.75:1.00

            
	
              31
      December 2010

            	
              3.00:1.00

            
	
              31
      March 2011

            	
              3.00:1.00

            
	
              30
      June 2011

            	
              2.75:1.00

            
	
              30
      September 2011 and thereafter

            	
              2.50:1.00

            

    

     

    
      	
              (c)             

            	
              Minimum Consolidated Fixed
      Charge Coverage Ratio.  Permit the Consolidated Fixed
      Charge Coverage Ratio as of the end of any fiscal quarter set forth below
      and for the period of four fiscal quarters then ending of Holdings and its
      Subsidiaries to be less than the ratio set forth below opposite such time
      period:

            

    

     

    
      	
              Four
      Fiscal Quarter Ending:

            	
              Minimum
      Consolidated Fixed Charge Coverage Ratio

            
	
              31
      December 2010

            	
              1.10:1.00

            
	
              31
      March 2011

            	
              1.30:1.00

            
	
              30
      June 2011

            	
              1.50:1.00

            
	
              30
      September 2011 and thereafter

            	
              1.75:1.00

            

    

     

    
      	
              (d)             

            	
              Minimum Consolidated Interest
      Charges Coverage Ratio.  Permit the Consolidated Interest
      Charges Coverage Ratio as of the end of any fiscal quarter set forth below
      and for the period of four fiscal quarters then ending of Holdings and its
      Subsidiaries to be less than the ratio set forth below opposite such time
      period:

            

    

     

    
      	
              Four
      Fiscal Quarter Ending:

            	
              Minimum
      Consolidated Interest Charges Coverage Ratio

            
	
              31
      March 2010

            	
              2.50:1.00

            
	
              30
      June 2010

            	
              3.00:1.00

            
	
              30
      September 2010

            	
              3.75:1.00

            

    

     

    For the
avoidance of doubt the Consolidated Interest Charges Coverage Ratio will not be
measured for any fiscal quarter ending after 30 September 2010.

     

    For the
purposes of this Schedule 3 the following terms shall have the following
meanings.

     

    “Attributable
Indebtedness”  means, on any date, (a) in respect of any
Capitalised Lease of any Person, the capitalised 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 capitalised
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 Capitalised Lease and (c)
all Synthetic Debt of such Person;

     

    “Availability”  means
the amount available for drawing under the Bank of America
Facilities;

     

    “Capitalised
Leases”  means all leases that have been or should be, in
accordance with GAAP, recorded as capitalised leases;

     

    “Cash
Equivalents”  means any of the following types of Investments,
to the extent owned by Holdings or any of their Subsidiaries free and clear of
all Security Interests (other than (i) a Security Interest in favour of the Bank
of America, N.A. in respect of the obligations arising under the Bank of America
Facilities and/or (ii)  Permitted Security Interests):

     

    
      	
              (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 organised 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 organised 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 organised 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 Obligors 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;

            

    

     

    “Consolidated
EBITDA”  means, at any date of determination,
an amount equal to Consolidated Net Income of Holdings 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) net losses from the sales of vessels
as permitted under this Agreement, (v) any non-cash impairment charges incurred
during each fiscal year of Holdings and its Subsidiaries ending December 31,
2008, December 31, 2009, December 31, 2010 and December 31, 2011 in respect of
any of Holdings or its Subsidiaries  goodwill and Vessels (in each
case of or by Holdings and its Subsidiaries for such Measurement Period), (vi)
costs incurred during such Measurement Period in connection with the
redomicilation of Holdings in an aggregate amount not to exceed $3,000,000 for
all Measurement Periods, and (vii) any non-cash compensation in the form of
Equity Interests or other equity awards made to employees of Holdings and its
Subsidiaries in the fiscal years of Holdings and its Subsidiaries ending
December 31, 2010 and December 31, 2011 in an aggregate amount not to exceed
$10,000,000 in each such fiscal year (in each case of or by Holdings 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
Holdings and its Subsidiaries for such Measurement Period ); provided that, to
the extent characterized as interest on the income statements of Holdings and
its Subsidiaries for such Measurement Period pursuant to FASB Interpretation No.
133 – Accounting for Derivative Instruments and Hedging Activities (June 1998),
non-cash adjustments in connection with any interest rate Swap Contract entered
into by Holdings or any of its Subsidiaries, shall be excluded;

     

    “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
      (as defined in the Bank of America
Facilities);

            

    

     

    “Consolidated Funded
Indebtedness”  means, as of any date of determination, for
Holdings 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 under and as defined
      in the Bank of America Facilities) 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 Obligors 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 an Obligor or
      a Subsidiary is a general partner or joint venturer, unless such
      Indebtedness is expressly made non-recourse to such Obligor or such
      Subsidiary;

            

    

     

    “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 Holdings and its Subsidiaries on a consolidated
basis for the most recently completed Measurement Period; provided that, to the
extent characterized as interest on the income statements of Holdings and its
Subsidiaries for such Measurement Period pursuant to FASB Interpretation No. 133
– Accounting for Derivative Instruments and Hedging Activities (June 1998),
non-cash adjustments in connection with any interest rate Swap Contract entered
into by Holdings or any of its Subsidiaries, shall be excluded;

     

    “Consolidated Interest Charges
Coverage Ratio”  means, at any date of determination, the ratio
of (a) the result of (i) Consolidated EBITDA less (ii) the sums of Federal,
State, local and foreign income taxes paid in cash for the most recently
completed Measurement Period to (b) Consolidated Interest Charges 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 Holdings 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 Holdings 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 Organisation Documents or any agreement, instrument or law
      applicable to such Subsidiary during such Measurement Period, except that
      Holdings’ 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 Holdings’ 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 Holdings 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 Holdings as described in Clause (b) of this
      proviso);

            

    

     

    “Debtor Relief
Laws”  means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganisation,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally;

     

    “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 of
acquisition from such Person of shares of capital stock of (or 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;

     

    “GAAP”  means
generally accepted accounting principles in the United States set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession in the United
States, that are applicable to the circumstances as of the date of
determination, consistently applied;

     

    “Guarantee”  means,
as to any Person:

     

    
      	
              (a)             

            	
              any
      obligation, contingent or otherwise, of such Person guaranteeing or having
      the economic effect of guaranteeing any Indebtedness or other obligation
      payable or performable by another Person (the “primary obligor”) in any
      manner, whether directly or indirectly, and including any obligation of
      such Person, direct or indirect,_ (i) to purchase or pay (or advance or
      supply funds the purchase or payment of) such Indebtedness or other
      obligation, (ii) to purchase or lease property, securities or services for
      the purpose of assuring the obligee in respect of such Indebtedness or
      other obligation of the payment or performance of such Indebtedness or
      other obligation, (iii) to maintain working capital, equity capital or any
      other financial statement condition or liquidity or level of income or
      cash flow of the primary obligor so as to enable the primary obligor to
      pay such Indebtedness or other obligation, or (iv) entered into for the
      purpose of assuring in any other manner the obligee in respect of such
      Indebtedness or other obligation of the payment or performance thereof or
      to protect such obligee against loss in respect thereof (in whole or in
      part), or

            

    

     

    
      	
              (b)             

            	
              any
      Security Interest on any assets of such Person securing any Indebtedness
      or other obligation of any other Person, whether or not such Indebtedness
      or other obligation is assumed by such Person (or any right, contingent or
      otherwise, of any holder of such Indebtedness to obtain any such Security
      Interest).  The amount of any Guarantee shall be deemed to be an
      amount equal to the stated or determinable amount of the related primary
      obligation, or portion thereof, in respect of which such Guarantee is made
      or, if not stated or determinable, the maximum reasonably anticipated
      liability in respect thereof as determined by the guaranteeing Person in
      good faith.  The term “Guarantee” as a verb has
      a corresponding meaning;

            

    

     

    “Holdings”  means the
New Corporate Guarantor;

     

    “Indebtedness”  means,
as to any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance
with GAAP:

     

    
      	
              (a)             

            	
              all
      obligations of such Person for borrowed money and all obligations of such
      Person evidenced by bonds, debentures, notes, loan agreements or other
      similar instruments;

            

    

     

    
      	
              (b)             

            	
              the
      maximum amount of all direct or contingent obligations of such Person
      arising under letters of credit (including standby and commercial),
      bankers’ acceptances, bank guaranties, surety bonds and similar
      instruments;

            

    

     

    
      	
              (c)             

            	
              net
      obligations of such Person under any Swap
  Contract;

            

    

     

    
      	
              (d)             

            	
              all
      obligations of such Person to pay the deferred purchase price of property
      or services (other than trade accounts payable in the ordinary course of
      business and not past due for more than 60 days after the date on which
      such trade account was created);

            

    

     

    
      	
              (e)             

            	
              indebtedness
      (excluding prepaid interest thereon) secured by a Security Interest on
      property owned or being purchased by such Person (including indebtedness
      arising under conditional sales or other title retention agreements),
      whether or not such indebtedness shall have been assumed by such Person or
      is limited in recourse;

            

    

     

    
      	
              (f)             

            	
              all
      Attributable Indebtedness in respect of Capitalised Lease and Synthetic
      Lease Obligations of such Person and all Synthetic Debt of such
      Person;

            

    

     

    
      	
              (g)             

            	
              all
      obligations of such Person to purchase, redeem, retire, defease or
      otherwise make any payment in respect of any Equity Interest in such
      Person or any other Person or any warrant, right or option to acquire such
      Equity Interest, valued, in the case of a redeemable preferred interest,
      at the greater of its voluntary or involuntary liquidation preference plus
      accrued and unpaid dividends; and

            

    

     

    
      	
              (h)             

            	
              all
      Guarantees of such Person in respect of any of the
    foregoing.

            

    

     

    For all
purposes hereof, the Indebtedness of any Person shall include the Indebtedness
of any partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which such Person is a general
partner or a joint venturer, unless such Indebtedness is expressly made
non-recourse to such Person.  The amount of any net obligation under
any Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date;

     

    “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, unamortised
deferred charges, unamortised debt discount and capitalised research and
development costs;

     

    “Investment”  means,
as to any Person, any direct or indirect acquisition or investment by such
Person, whether by means of:

     

    
      	
              (a)             

            	
              the
      purchase or other acquisition of Equity Interests of another
      Person;

            

    

     

    
      	
              (b)             

            	
              a
      loan, advance or capital contribution to, Guarantee or assumption of debt
      of, or purchase or other acquisition of any other debt or interest in,
      another Person;

            

    

     

    
      	
              (c)             

            	
              the
      purchase or other acquisition (in one transaction or a series of
      transactions) of assets of another Person that constitute a business unit
      or all or a substantial part of the business of, such Person;
      or

            

    

     

    
      	
              (d)             

            	
              the
      acquisition or construction of a vessel. For purposes of covenant
      compliance, the amount of any Investment shall be the amount actually
      invested, without adjustment for subsequent increases or decreases in the
      value of such Investment;

            

    

     

    “Measurement
Period”  means, at any date of determination, the most recently
completed four fiscal quarters of Holdings;

     

    “Moody’s”  means
Moody’s Investors Service Inc., and any successor thereto;

     

    “Organisation
Documents”  means:

     

    
      	
              (a)             

            	
              with
      respect to any corporation, the certificate or articles of incorporation
      and the bylaws (or equivalent or comparable constitutive documents with
      respect to any non-U.S.
jurisdiction);

            

    

     

    
      	
              (b)             

            	
              with
      respect to any limited liability company, the certificate or articles of
      formation or organisation and operating agreement;
  and

            

    

     

    
      	
              (c)             

            	
              with
      respect to any partnership, joint venture, trust or other form of business
      entity, the partnership, joint venture or other applicable agreement of
      formation or organisation and any agreement, instrument, filing or notice
      with respect thereto filed in connection with its formation or
      organisation with the applicable governmental authority in the
      jurisdiction of its formation or organisation and, if applicable, any
      certificate or articles of formation or organisation of such
      entity;

            

    

     

    “Permitted New Vessel Construction
Indebtedness”  means Indebtedness incurred after the date when
all the conditions precedent in Section 4.01 of the Bank of America Credit
Facilities are satisfied or waived by Subsidiaries of Holdings that are not
borrowers or guarantors under the Bank of America Credit Facilities in
connection with the construction of up to twelve (12) multipurpose tweendecks or
bulk carrier shipping vessels;

     

    “Person”  means any
natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, governmental authority or other
entity;

     

    “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
Security Interest (other than (i) a Security Interest in favour of the Bank of
America, N.A. in respect of the obligations arising under the Bank of America
Facilities and/or (ii) a Permitted Security Interest) pledge, security interest,
encumbrance, escrow or cash collateral arrangement or any other restriction on
its use;

     

    “Restricted
Payment”  means any dividend or other distribution (whether in
cash, securities or other property) with respect to any capital stock or other
Equity Interest of any Person or any of its Subsidiaries, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement, defeasance,
acquisition, cancellation or termination of any such capital stock or other
Equity Interest, or on account of any return of capital to any Person’s
stockholders, partners or members (or the equivalent of any thereof), or any
option, warrant or other right to acquire any such dividend or other
distribution or payment;

     

    “Shareholders’
Equity”  means, as of any date of determination, consolidated
shareholders’ equity of Holdings and its Subsidiaries as of that date determined
in accordance with GAAP;

     

    “S&P”  means
Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies
Inc., and any successor thereto;

     

    “Subsidiary”  of a
Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares of securities
or other interests having ordinary voting power for the election of directors or
other governing body (other than securities or interests having such power only
by reason of the happening of a contingency) are at the time beneficially owned,
or the management of which is otherwise controlled, directly, or indirectly
through one or more intermediaries, or both, by such Person.  Unless
otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of Holdings;

     

    “Swap
Contract”  means:

     

    
      	
              (a)             

            	
              any
      and all rate swap transactions, basis swaps, credit derivative
      transactions, forward rate transactions, commodity swaps, commodity
      options, forward commodity contracts, equity or equity index swaps or
      options, bond or bond price or bond index swaps or options or forward bond
      or forward bond price or forward bond index transactions, interest rate
      options, forward foreign exchange transactions, cap transactions, floor
      transactions, collar transactions, currency swap transactions,
      cross-currency rate swap transactions, currency options, spot contracts,
      or any other similar transactions or any combination of any of the
      foregoing (including any options to enter into any of the foregoing),
      whether or not any such transaction is governed by or subject to any
      master agreement; and

            

    

     

    
      	
              (b)             

            	
              any
      and all transactions of any kind, and the related confirmations, which are
      subject to the terms and conditions of, or governed by, any form of master
      agreement published by the International Swaps and Derivatives
      Association, Inc., any International Foreign Exchange Master Agreement, or
      any other master agreement (any such master agreement, together with any
      related schedules, a “Master Agreement”), including any such obligations
      or liabilities under any Master
Agreement;

            

    

     

    “Swap Termination
Value”  means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts:

     

    
      	
              (a)             

            	
              for
      any date on or after the date such Swap Contracts have been closed out and
      termination value(s) determined in accordance therewith, such termination
      value(s); and

            

    

     

    
      	
              (b)             

            	
              for
      any date prior to the date referenced in clause (a), the amount(s)
      determined as the mark-to-market value(s) for such Swap Contracts, as
      determined based upon one or more mid-market or other readily available
      quotations provided by any recognised dealer in such Swap
      Contracts;

            

    

     

    “Synthetic
Debt”  means, with respect to any Person as of any date of
determination thereof, 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 any Debtor Relief Laws to such Person, would be characterised as the
      indebtedness of such Person (without regard to accounting
      treatment).

            

    

     

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
4

     

    

     

    FORM
OF COMPLIANCE CERTIFICATE

     

    

    

    To:           The
Royal Bank of Scotland plc

    Shipping
Business Centre

    5-10
Great Tower Street

    London
EC3P 3HX

     

    Attention:  Ship
Finance Portfolio Management

     

    From:           TSB
International Public Limited Company

     

    

     

    OFFICER’S
CERTIFICATE

     

    This
Certificate is rendered pursuant to clause 9.16(b) of the facility agreement
dated as of 29 March 2007 (the “Facility Agreement”) and
entered into between (i) Argyle Maritime Corp, Caton Maritime Corp, Dorchester
Maritime Corp, Longwood Maritime Corp, McHenry Maritime Corp and Sunswyck
Maritime Corp and (ii) The Royal Bank of Scotland plc as Issuer relating to a
guarantee facility of US$84,000,000.  Words and expressions defined in
the Facility Agreement shall have the same meanings when used
herein.

     

    I, the
Chief Financial Officer of the New Corporate Guarantor, hereby certify
that:

     

    
      	
              1  

            	
              Attached
      to this Certificate are the latest [audited][unaudited] accounts of the
      Guarantor and its consolidated subsidiaries for the financial year
      [quarter] ending on [l].

            

    

     

    
      	
              2  

            	
              Set
      out below are the respective amounts, in US Dollars, of Cash Equivalents,
      Consolidated EBITDA, Consolidated Interest Charges, Consolidated Net
      Income and Qualified Cash:

            

    

     

    
      	 
      	
              US
      Dollars

            
	
              Cash
      Equivalents

            	
              [l]

            
	
              Consolidated
      EBITDA

            	
              [l]

            
	
              Consolidated
      Interest Charges

            	
              [l]

            
	
              Consolidated
      Net Income

            	
              [l]

            
	
              Qualified
      Cash

            	
              [l]

            

    

     

    
      	
              3  

            	
              Accordingly,
      as at the date of this Certificate the financial covenants set out in
      Appendix 8 of the Loan Agreement [are][are not] complied with, in
      that as at [l]:

            

    

     

    

     

    
      	
              (a)             

            	
              Minimum
      Cash
      Liquidity                                                                             US$[l];

            

    

     

    
      	
              (b)             

            	
              Maximum
      Consolidated Leverage
      Ratio                                                                             [x.xx];

            

    

     

    
      	
              (c)             

            	
              Minimum
      Consolidated Fixed Charge Coverage
      Ratio                                                                                                [x.xx].

            

    

     

    
      	
              4  

            	
              As
      at [l] no
      Event of Default has occurred and is continuing [or, specify / identify
      any Event of Default].

            

    

     

    

    

    

    

    

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

     

    Chief
financial officer

    TBS
International Public Limited Company

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
               
      

            	
              EXECUTION
      PAGE

            

    

     

    

    [INTENTIONALLY
OMITTED]

    

    

    

    

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    APPENDIX
A

     

    

     

    FORM
OF DELIVERY SECURITY ASSIGNMENT

     

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    APPENDIX
B

     

    

     

    FORM
OF CORPORATE GUARANTEE

     

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    APPENDIX
C

     

    

     

    FORM
OF GUARANTEE

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    

    APPENDIX
D

     

    

     

    FORM
OF INTERCREDITOR AGREEMENT

     

     

     

    
 

    

    

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    

    APPENDIX
2

    

    FORM
OF CORPORATE GUARANTEE SUPPLEMENTSConverted by EDGARwiz

EXECUTION VERSION

MORTGAGE LOAN PURCHASE AGREEMENT

among

MOREQUITY, INC.,

as a Seller,

AMERICAN GENERAL FINANCIAL SERVICES OF ARKANSAS, INC.,

as a Seller,

AMERICAN GENERAL HOME EQUITY, INC.,

as a Seller,

AMERICAN GENERAL FINANCE CORPORATION,

as Secondary Repurchaser pursuant to Sections 5, 6.03(a) and 23

and

SIXTH STREET FUNDING LLC,

as Purchaser

Dated January 31, 2010

Fixed Rate Mortgage Loans

TABLE OF CONTENTS

Page

SECTION 1.  Definitions.

1

Section 1.01.  Definitions.

1

SECTION 2.  Purchase and Conveyance.

3

SECTION 3.  Mortgage Loan Schedule.

3

SECTION 4.  Purchase Price.

3

SECTION 5.  Examination of Mortgage Files.

3

SECTION 6.  Representations, Warranties and Covenants; Remedies for Breach.

4

Section 6.01.  Representations and Warranties Regarding Individual Mortgage Loans.

4

Section 6.02.  Seller Representations.

4

Section 6.03.  Remedies for Breach of Representations and Warranties.

14

SECTION 7.  Costs.

17

SECTION 8.  Notices.

17

SECTION 9.  Severability Clause.

18

SECTION 10.  No Partnership.

18

SECTION 11.  Counterparts.

18

SECTION 12.  Governing Law.

18

SECTION 13.  Intention of the Parties.

18

SECTION 14.  Waivers.

19

SECTION 15.  Exhibits.

19

SECTION 16.  General Interpretive Principles.

19

SECTION 17.  Reproduction of Documents.

20

SECTION 18.  Amendment.

20

SECTION 19.  Confidentiality.

20

SECTION 20.  Entire Agreement.

20

-i-

SECTION 21.  Further Agreements.

21

SECTION 22.  Trustee Assignee.

21

EXHIBITS

EXHIBIT 1

MORTGAGE LOAN SCHEDULE

EXHIBIT 2

CONTENTS OF EACH MORTGAGE FILE

EXHIBIT 3

MORTGAGE LOAN DOCUMENTS

EXHIBIT 4

UNDERWRITING GUIDELINES

-ii-

MORTGAGE LOAN PURCHASE AGREEMENT

THIS MORTGAGE LOAN PURCHASE AGREEMENT (the “Agreement”), dated January 31, 2010, is hereby executed by and among Sixth Street Funding LLC, a Delaware limited liability company, as purchaser (the “Purchaser”), MorEquity, Inc., a Nevada corporation (“MorEquity”), American General Financial Services of Arkansas, Inc., a Delaware corporation (“AGFS”), and American General Home Equity, Inc., a Delaware corporation (“AGHE”), each in its respective capacity as a seller (each, a “Seller,” and collectively, the “Sellers”), and American General Finance Corporation, an Indiana corporation (the “Secondary Repurchaser” or “American General”).

W I T N E S S E T H

WHEREAS, each Seller desires to sell to the Purchaser, and the Purchaser desires to purchase from each Seller, certain fully-amortizing and interest only, fixed rate, one- to four-family, first-lien mortgage loans (the “Mortgage Loans”), as described herein, and which shall be delivered as whole loans as provided herein;

WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust or other security instrument creating a first lien on, or first priority security interest in, a residential dwelling located in the jurisdiction indicated on the Mortgage Loan Schedule which is annexed hereto as Exhibit 1; 

WHEREAS, the Purchaser and the Sellers wish to prescribe the manner of the sale and transfer of the Mortgage Loans; and

WHEREAS, pursuant to the terms of a Pooling and Servicing Agreement, dated January 31, 2010 (the “Pooling and Servicing Agreement”), among the Purchaser, as depositor, MorEquity, Inc., as servicer, Green Tree Servicing LLC, as designated successor servicer, Wells Fargo Bank, N.A., as master servicer, custodian and securities administrator, and U.S. Bank National Association, as trustee (the “Trustee”), the Purchaser will convey the Mortgage Loans to American General Mortgage Loan Trust 2010-1 (the “Trust”).

NOW, THEREFORE, in consideration of the premises and mutual agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Purchaser, the Sellers and the Secondary Repurchaser agree as follows:

SECTION 1.

DEFINITIONS.

Section 1.01.

Definitions.

For purposes of this Agreement, the following capitalized terms shall have the respective meanings set forth below.  Terms used without definition herein shall have the respective meanings assigned to them in the Pooling and Servicing Agreement.

Agreement:  This Mortgage Loan Purchase Agreement including all exhibits, schedules, amendments and supplements hereto.

ALTA:  The American Land Title Association or any successor in interest thereto.

Closing Date:  March 30, 2010.

Credit Score:  The credit score for each Mortgage Loan shall be a credit bureau score obtained at origination or such other time by the applicable Seller.

Cut-off Date:  The close of business on January 31, 2010.

High Cost Loan:  A Mortgage Loan classified as (a) a “high cost” loan under the Home Ownership and Equity Protection Act of 1994 or (b) a “high cost home,” “threshold,” “covered,” “high risk home” or “predatory” or similar loan under any other applicable state, federal or local law (or a similarly classified loan using different terminology under a law, regulation or ordinance imposing heightened regulatory scrutiny or additional legal liability for residential mortgage loans having high interest rates, points and/or fees).

Mortgage File:  The items listed in Exhibit 2 hereto and any additional documents required to be added to the Mortgage File pursuant to this Agreement.

Mortgage Loan:  Each mortgage loan identified on the Mortgage Loan Schedule, including, without limitation, the Mortgage File, the Monthly Payments, Principal Prepayments, Liquidation Proceeds, REO Proceeds, Insurance Proceeds and all other rights, benefits, proceeds and obligations arising from or in connection with such mortgage loan.

Mortgage Loan Documents:  With respect to any Mortgage Loan, the documents listed in Exhibit 3 hereto.

Mortgagee:  The mortgagee or beneficiary named in the Mortgage and the successors and assigns of such mortgagee or beneficiary.

Opinion of Counsel:  A written opinion of counsel, who may be an employee of a Seller, reasonably acceptable to the Purchaser.

Primary Mortgage Insurance Policy or PMI Policy:  A policy of primary mortgage guaranty insurance issued by an insurer.

Purchase Price:  The price paid on the Closing Date by the Purchaser to the Sellers pursuant to this Agreement in exchange for the Mortgage Loans as set forth in Section 4 hereto.

Reimbursement Amount: As defined in Section 6.03.

Specified Bankruptcy Opinion Provisions: Means the provisions contained in the legal opinions delivered in connection with the issuance of the Certificates or, if applicable, amendments to the Pooling and Servicing Agreement, Mortgage Loan Purchase Agreement or other related documents, in each case relating to the non-substantive consolidation of the Purchaser with any of American General, MorEquity, AGFS or AGHE.

-2-

Underwriting Guidelines:  The underwriting guidelines applicable to the Mortgage Loans attached as Exhibit 4 hereto.

SECTION 2.

PURCHASE AND CONVEYANCE.

Each Seller, in exchange for the receipt of its portion of the Purchase Price from the Purchaser on the Closing Date, hereby sells, transfers, assigns, sets over and conveys to the Purchaser, without recourse, but subject to the terms of this Agreement, all of its rights, title and interest in and to the Mortgage Loans sold by it on the Closing Date, including the servicing rights, together with the related Mortgage Files and all rights and obligations arising under the documents contained therein.

With respect to each Mortgage Loan purchased, the Purchaser shall own and be entitled to receive:  (a) the Mortgage Loan identified on the Mortgage Loan Schedule to the Pooling and Servicing Agreement, including the related Cut-off Date Principal Balance, and all collections in respect of interest and principal due thereon after the Cut-off Date; and (b) the applicable Seller’s interest in any insurance policies in respect of the Mortgage Loans.

SECTION 3.

MORTGAGE LOAN SCHEDULE.

The Sellers shall deliver the Mortgage Loan Schedule to the Purchaser on the Closing Date.

SECTION 4.

PURCHASE PRICE.

The aggregate Purchase Price for the Mortgage Loans shall be as follows:

			
	Seller

	Immediately Available Funds

	Intercompany Note

	MorEquity, Inc.

	$488,000,000.00

	$336,098,555.41

	American General Home Equity, Inc.

	$8,199,681.33

	 N/A

	American General Financial Services of Arkansas, Inc.

	$9,408,637.38.

	 N/A

	Total:

	$505,608,318.71

	$336,098,555.41 

Subject to the conditions set forth herein, the Purchaser shall pay the Purchase Price to the Sellers by 4:00 p.m. New York time on the Closing Date.  The portion of the Purchase Price payable in immediately available funds shall be made by wire transfer of immediately available funds to the account or accounts designated by each Seller.

SECTION 5.

EXAMINATION OF MORTGAGE FILES; REMEDIES.

In addition to any rights granted to the Purchaser hereunder to underwrite the Mortgage Loans and review the Mortgage Loan Documents prior to the Closing Date, the Sellers shall, prior to the Closing Date, make the Mortgage Files available to the Purchaser for examination and the Purchaser shall have the right to conduct property inspections and obtain appraisal recertifications, drive-by appraisals and/or brokers price opinions.  Such underwriting by the Purchaser or its designee shall not impair or diminish the rights of the Purchaser or any of its successors under this Agreement with respect to a breach of the representations and warranties 

-3-

contained in this Agreement.  The fact that the Purchaser or its designee has conducted or has failed to conduct any partial or complete examination of the Mortgage Files shall not affect the Purchaser’s or any of its successors’ rights to demand repurchase or other relief or remedy provided for in this Agreement.

Upon receipt of notice of any materially defective document in, or that a document is missing from, a Mortgage File which defect or missing document prevents or materially delays the Trust from (A) realizing against the related Mortgaged Property through foreclosure or similar loss mitigation activity or (B) processing any title claim under the related title insurance policy, the applicable Seller shall have 60 days to cure such defect or deliver such missing document to the Purchaser (or its designee or assignee).  If the applicable Seller does not cure such defect or deliver such missing document within such time period, such Seller shall repurchase such Mortgage Loan in accordance with Section 2.03 of the Pooling and Servicing Agreement.  Each Seller hereby agrees to be bound by the provisions set forth in Section 2.03 of the Pooling and Servicing Agreement relating to its obligation to repurchase such Mortgage Loan and such provisions shall be deemed to be incorporated herein by reference.  To the extent a Seller fails to repurchase any such Mortgage Loan on the Repurchase Date relating to such Mortgage Loan, the Secondary Repurchaser shall repurchase such Mortgage Loan within 25 days of the applicable Repurchase Date pursuant to the same terms and conditions set forth in above.  Notwithstanding the foregoing, in no event shall the applicable Seller or the Secondary Repurchaser be required to repurchase any Disputed Mortgage Loan unless the Secondary Repurchaser is the Losing Party with respect to such Disputed Mortgage Loan, in which case such Secondary Repurchaser shall be required to repurchase such Disputed Mortgage Loan in accordance with Section 2.03 of the Pooling and Servicing Agreement. 

Notwithstanding anything to the contrary herein, it is understood and agreed that the obligations of the Sellers and the Secondary Repurchaser expressly set forth in this Section 5 and Section 6.04 to cure such defects or deliver such missing documents, repurchase such Mortgage Loans or comply with any Arbitration Review constitute the sole remedies available to the Purchaser in respect of defects or missing documentation with respect to the Mortgage Files. 

SECTION 6.

REPRESENTATIONS, WARRANTIES AND COVENANTS; REMEDIES FOR BREACH.

Section 6.01.

Representations and Warranties Regarding Individual Mortgage Loans.

Each Seller hereby represents and warrants, severally and not jointly, to the Purchaser as of the date hereof and on the Closing Date with respect to each Mortgage Loan sold by it and listed on the Mortgage Loan Schedule:

1.

The information and descriptions concerning the Mortgage Loan contained in the Mortgage Loan Schedule and the Offering Circular is true and correct in all material respects as of the date or dates respecting which such information is given. No FICO score listed on the Mortgage Loan Schedule was more than 120 days old as of the Closing Date. Except with respect to 367 Mortgage Loans listed on the Mortgage Loan Schedule, no property valuation used to calculate the Cut-off Date loan-to-value ratio set forth in the Mortgage Loan Schedule with respect to any Mortgage Loan was more 

-4-

than 120 days old as of the Closing Date. The information set forth on the Mortgage Loan Schedule and the information that was provided to Moody’s in each case is consistent with the contents of the originator’s records and the underlying Mortgage Files.  The Mortgage Loan Schedule contains all the fields requested by Moody’s.  When determining the occupancy status reflected on the Mortgage Loan Schedule, the Sellers have given due consideration to factors, including but not limited to any difference between the mailing address active in the servicing system and the subject property address, in order to evaluate the occupancy status of the property as originally represented by the Mortgagor.

2.

The Seller is the sole owner and holder of the Mortgage Loan and the Mortgage Loan is not assigned or pledged to any other Person.  The Seller has good, indefeasible, and marketable title to the Mortgage Loan and has full right to transfer, sell, and assign the Mortgage Loan to the Purchaser.  The sale of the Mortgage Loan (x) from the prior owner of such Mortgage Loan to the Seller and (y) from the Seller to the Purchaser in each case was in exchange for fair equivalent value, and such prior owner or Seller, as applicable, was solvent both prior to and after the transfer of such Mortgage Loan and had sufficient capital to pay and was able to pay its debts as they would generally mature.  Following the sale of the Mortgage Loan to the Purchaser, the Purchaser will hold such Mortgage Loan free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim (including, but not limited to, any preference or fraudulent transfer claim), or security interest except any such interest created pursuant to or in accordance with the terms hereof.

3.

The Mortgage Note (and, if applicable, any lost note affidavit) and the related Mortgage are original and genuine and each is the legal, valid and binding obligation of the maker thereof; each is free from all claims, defenses, rights of rescission, any discount, allowance, set-off, counterclaim, bankruptcy or other defenses or contingent liability which could adversely affect the collectability of any Mortgage Loan; and each is enforceable in all respects in accordance with its terms, except as enforceability may be limited by (i) bankruptcy, insolvency, liquidation, receivership, moratorium or other similar laws affecting the enforcement of the rights of creditors and (ii) general principles of equity, whether enforcement is sought in a proceeding in equity or at law. 

4.

The Mortgage Loan is covered by an American Land Title Association mortgagee title insurance policy or other generally acceptable form of policy or insurance issued by a title insurer insuring the originator, its successors and assigns, as to the first priority lien of the Mortgage in the original principal amount of the Mortgage Loan. The assignment of such mortgage title insurance policy does not require any consent of or notification to the insurer which has not been obtained or given, as applicable. No claims have been made under such title insurance policy, and neither the obligor under such title insurance policy nor the Servicer has done, by act or omission, anything that would impair coverage of such title insurance policy.

5.

The Mortgage Loan and each other agreement executed by a Mortgagor or other obligor in connection with the Mortgage Loan is genuine, has been duly and properly 

-5-

executed, and is the legal, valid, and binding obligation of the executor thereof and is enforceable in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of creditors' rights generally and by general equity principles (regardless of whether such enforcement is considered in a proceeding in equity or at law).  All parties to each Mortgage Loan and any such other agreement had legal capacity to enter into the Mortgage Loan and to execute and deliver the applicable Mortgage Loan or such other agreement, as applicable.

6.

Any and all requirements of any applicable federal, state or local law including, without limitation, usury, truth in lending, real estate settlement procedures, consumer credit protection, predatory and abusive lending laws, equal credit opportunity, fair housing and disclosure laws or unfair and deceptive practices laws applicable to the origination and servicing of mortgage loans of a type similar to the Mortgage Loan including, without limitation, any provisions relating to prepayment penalties, have been complied with in all material respects and the consummation of the transactions contemplated hereby will not involve the violation of any such laws or regulations.   

7.

Except as indicated in the related Mortgage Loan Schedule or Mortgage File, there is no material agreement or arrangement as to any Mortgage Loans with any Mortgagor regarding any variation of Monthly Payments, finance charges, schedules of payment, or other charges due under any Mortgage Loan, and no Mortgagor has been released from its liability or obligations under any Mortgage Loan, in whole or in part, and no Mortgaged Property has been released from any Mortgage Loan; none of the terms of any of the Mortgage Loans have been otherwise impaired, amended, altered or modified in any way, except as reflected by a writing signed by the Mortgagor in the Mortgage File 

8.

Other than with respect to any payment deferrals, the terms of the Mortgage Note and the Mortgage have not been impaired, waived, altered, or modified in any material respect, except by a written instrument that, if required by applicable law, has been recorded or is in the process of being recorded. The terms of any waiver, alteration, or modification of the Mortgage Loan are reflected in the Mortgage Loan Schedule. There is no default, breach, violation, event of acceleration or other event existing under the Mortgage Note and the Mortgage that, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation, or event of acceleration.  No foreclosure action is currently being threatened or has begun with respect to the Mortgage Loan.

9.

No Mortgage Loan has been satisfied, cancelled, subordinated or rescinded in whole or in part.

10.

The proceeds of each Mortgage Loan have been fully disbursed to or for the account of the related Mortgagor, and there is no requirement for future advances thereunder.  All conditions precedent to the disbursement of escrow funds relating to the completion of improvements have been satisfied.

-6-

11.

Each Mortgage contains customary and enforceable provisions which render the rights and remedies of the holder thereof adequate to realize the benefits of the security against the Mortgaged Property. Upon the foreclosure on, or trustee's sale of, the Mortgaged Property pursuant to the proper procedures, the holder of the Mortgage Loan will be able to deliver good and marketable title to the Mortgaged Property.  There is no homestead or other exemption available to a Mortgagor that would interfere with the right to sell the Mortgaged Property at a trustee's sale or the right to foreclose on the Mortgage.

12.

Each Mortgage Loan is secured by a first lien in the Mortgaged Property which is free and clear of all prior encumbrances,  evidenced by a Mortgage which has been duly executed by the Mortgagor and, if so required by the Pooling and Servicing Agreement, properly acknowledged and filed or recorded in the appropriate office for public recordation or otherwise perfected in accordance with applicable law, all applicable fees relating to such Mortgage Loan have been paid; provided, that and such first lien may be subject to (1) the following permitted encumbrances (“Permitted Encumbrances”): (A) rights arising under the Pooling and Servicing Agreement, (B) liens for real estate taxes and special assessments not yet due and payable, (C) covenants, conditions and restrictions, rights of way, easements and other matters of public record as of the date of recording of the Mortgage, such exceptions appearing of record being reasonably acceptable to mortgage lending institutions generally or specifically reflected in the appraisal made in connection with the origination of the Mortgage Loan and (D) other matters to which like properties are commonly subject which do not, individually or in the aggregate, materially interfere with (x) the benefits of the security intended to be provided by the Mortgage, (y) the use, enjoyment, value or marketability of the related Mortgaged Property; or (z) the full right and authority to assign and transfer each Mortgage Loan, including the servicing rights relating thereto, and (2) other exceptions that are customarily acceptable to lending institutions generally and do not affect the value or marketability of the Mortgaged Property or otherwise materially impair the Mortgage Loan.

i.

The related Mortgage is a valid, subsisting, enforceable, and perfected first lien on all of the Mortgaged Property, subject only to Permitted Encumbrances, if any, as described above.

ii.

The related original Mortgage has been recorded in the appropriate jurisdictions wherein such recordation is required to perfect the lien thereof for the benefit of the Purchaser.

iii.

The related Mortgaged Property was not, at the time of origination of the Mortgage Loan, subject to a mortgage, deed of trust, deed to secure debt, or other security instrument creating a lien senior to the lien of the Mortgage, and there are no mechanics' or similar liens or claims affecting the Mortgaged Property that have been filed for work, labor, or material (and no rights are outstanding that, under applicable law, could give rise to such liens) that are or may be liens prior 

-7-

to, or equal to or coordinate with, the lien of the Mortgage.

13.

The servicing and collection practices used by the Servicer with respect to the Mortgage Loans have been in all respects legal, proper, prudent and customary in the mortgage servicing business. The servicing and collection procedures of the Servicer used with respect to each Mortgage Loan have complied in all material respects with the servicing standard to be set forth in the Pooling and Servicing Agreement.  All related escrow accounts are being maintained in accordance with applicable federal and state laws and in accordance with any and all servicing agreements applicable thereto and the terms of the Mortgages related thereto, as will be reflected in the Pooling and Servicing Agreement.  While the Mortgage Loan has been serviced by the Servicer, it has been serviced in accordance with the terms of the Mortgage Note (as modified) or any applicable forbearance plan or bankruptcy plan.

i.

The Mortgaged Property is insured by an insurer against loss by fire and such hazards as are covered under a standard extended coverage endorsement and the amount of such coverage is not less than (a) the lesser of (x) 100% of the insurable value of the Mortgaged Property and (y) the outstanding principal balance of the Mortgage Loan or (b) the minimum amount necessary to fully compensate for any damage or loss on a replacement cost basis.

ii.

If the Mortgage Property is a condominium unit, it is included under the coverage afforded by a blanket policy.

iii.

If any portion of the related Mortgaged Property is in an area identified by any governmental authority as having special flood hazards, the Mortgaged Property is insured by a flood insurance policy that meets the current guidelines of the Federal Insurance Administration and the amount of such coverage is not less than the Flood Insurance Coverage.  Each such insurance policy (a) is a valid binding obligation of the issuing insurer, (b) is in full force and effect, (c) contains a standard mortgagee clause naming the Seller, its successors, and its assigns as mortgagee, and (d) may not be reduced, terminated, or canceled without prior written notice to the mortgagee and no such notice to reduce, terminate, or cancel has been received by any obligated party.

iv.

The related Mortgage obligates the Mortgagor to maintain all such insurance policies, and if the Mortgagor fails to do so, authorizes the mortgagee to maintain such insurance at the Mortgagor’s cost and expense and to seek reimbursement from the Mortgagor.

v.

No Mortgagor, other obligated party with respect to the applicable Mortgage Loan, or any other Person, has engaged in any act or omission that would impair the coverage of any such insurance policy, the benefits of the endorsement provided for therein, or the validity and binding effect of either, including, without limitation, the provision or receipt of any unlawful fee, commission, kickback, or other compensation or value of any kind.

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vi.

No action, inaction, or event has occurred and no state of facts exists or has existed that has resulted or will result in the exclusion from, denial of, or defense to coverage under any such insurance polices, regardless of the cause of such failure of coverage.

14.

All taxes; governmental assessments; insurance premiums; water, sewer, and municipal charges; leasehold payments; or ground rents that previously became due and owing have been paid by the Mortgagor, or an escrow of funds from the Mortgagor has been established in an amount sufficient to pay for every such item that remains unpaid and that has been assessed but is not yet due and payable.

15.

The Appraised Value has been produced with respect to the related Mortgaged Property by an appraiser who had no interest, direct or indirect, in the Mortgaged Property or in any loan made on the security thereof, and whose compensation was not affected by the approval or disapproval of the Mortgage Loan. The appraisal contained in each Mortgage File was made and signed, prior to the approval of the Mortgage Loan application, by a duly licensed or certified appraiser. The appraisal was written, in form and substance, to (i) customary Fannie Mae or Freddie Mac standards for mortgage loans of the same type as such Mortgage Loan and (ii) Uniform Standards of Professional Appraisal Practice standards, and satisfies applicable legal and regulatory requirements. To the best of the Sellers’s knowledge, each Mortgage Loan where, as indicated on the Mortgage Schedule, the value of the related Mortgaged Property was derived from an automated valuation model (an “AVM”), such AVM provided an accurate assessment of the property value. For each Mortgage Loan where the value of the related Mortgaged Property was derived from a brokers price opinion (a “BPO”), as indicated on the Mortgage Loan Schedule, the BPO was conducted by a licensed real estate broker or realtor licensed in the jurisdiction of the subject property.

16.

The related Mortgage Note is payable in monthly installments so as to result in complete amortization of the Mortgage Loan over the stated term.

i.

The Mortgage Property consists of a fee simple estate in real property.

ii.

All improvements that were considered in determining the Appraised Value of the Mortgaged Property lie wholly within the boundaries and building restriction lines of the Mortgaged Property. 

iii.

As of the date the Mortgage Loan was originated, no improvements on adjoining properties encroached upon the Mortgaged Property, and no improvement located on or being part of the Mortgaged Property was in violation of any applicable zoning and building law, ordinance, or regulation, and such representations are currently true and correct. 

iv.

All inspections, licenses, and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property and with respect to the 

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use and occupancy thereof have been made or obtained from the appropriate governmental authorities.

v.

No Obligated Party has received notice from the Mortgagor, any governmental authority, or any other Person of any noncompliance with any use or occupancy law, ordinance, regulation, standard, license, or certificate with respect to the Mortgaged Property.

17.

Each Mortgaged Property is located in the United States and consists of parcels of real property with residences thereon which, when the Mortgage Loan was originated, were one-to-four family residences, which may include a detached home, townhouse, condominium unit or a unit in a planned unit development or, in certain cases, by co-op shares, leases or occupancy agreements. 

i.

Each Mortgaged Property is undamaged by waste, fire, hurricane, earthquake or earth movement, windstorm, flood, tornado, or other casualty adversely affecting the value of each Mortgaged Property or the use for which the premises were intended, and each Mortgaged Property is in substantially the same condition it was at the time the most recent Appraised Value was obtained or the related BPO was collected as part of any diligence performed in connection with the transactions contemplated herein.

ii.

There is no proceeding pending or threatened for the total or partial condemnation of any Mortgaged Property

18.

Except for expenditures made in the ordinary course of business to protect Seller’s rights in the Mortgage Loans or the Mortgaged Property, including without limitation force-placed insurance premiums and amounts capitalized in connection with modifications, no amounts have been added to the Mortgagor’s indebtedness with respect to the Mortgage Loan.

19.

Each Mortgage Loan that was originated or acquired by Seller after October 26, 2001 complies with the applicable requirements of the USA Patriot Act.

20.

The related Mortgage File contains each of the documents and instruments specified in the Mortgage Loan Purchase Agreement. The Mortgage Note, the Mortgage, the Assignment of Mortgage, and any other Mortgage Loan Documents required to be delivered under the Custodial Agreement have been delivered to the Custodian. In the event the Mortgage is a deed of trust, a trustee, authorized and duly qualified under applicable law to serve as such, has been properly designated, is named in the Mortgage and currently so serves, and no fees or expenses are or will become payable by the Custodian or the Mortgagor to the trustee under the deed of trust, except in connection with a trustee's sale after default by the Mortgagor. For each Mortgage Loan, all documents necessary to foreclose on the Mortgaged Property are included in the Mortgage Files delivered to the custodian.

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21.

With respect to each Mortgage Loan whose document type on the Mortgage Loan Schedule indicates documented income, employment and/or assets, the originator of such Mortgage Loan verified the Mortgagor’s income, employment and/or assets, as applicable, in accordance with its then current underwriting guidelines and employed procedures reasonably designed to authenticate the documentation supporting such income, employment, and/or assets in accordance with its then current underwriting guidelines.

22.

Each Mortgage Loan was underwritten in conformance to the applicable originator's then current underwriting guidelines at origination or at time of acquisition, in each case subject to reasonable exceptions thereto. 

23.

Each Mortgage Loan is a “qualified mortgage” for REMIC purposes, within the meaning of Sect. 860G(a)(3) of the Code.

24.

No fraud, misrepresentation, material error or omission or gross negligence has taken place with respect to the origination of any Mortgage Loan on the part of the Seller, the Mortgagor, any third party originator of any Mortgage Loan, any appraiser, any builder or developer, any party involved in the application of any insurance to the Mortgage Loan or any other party involved in the origination of the Mortgage Loan.

25.

With respect to each Mortgage Loan, the related Mortgage contains an enforceable provision for the acceleration of the payment of the unpaid principal balance of such Mortgage Loan in the event that the Mortgaged Property is sold or transferred without the prior written consent of the mortgagee thereunder.  The Servicer will not approve the assumption of any such Mortgage Loan. 

26.

None of the Mortgage Loans are subject to the Home Ownership and Equity Protection Act of 1994. 

27.

Each Mortgage Loan had a loan to value ratio of 100% or less as of its origination.

28.

At the time of its origination, the Mortgaged Property was in compliance with all then applicable environmental laws pertaining to environmental hazards including, without limitation, asbestos.

29.

The Seller has fully furnished, in accordance with the Fair Credit Reporting Act and its implementing regulations, accurate and complete information (e.g., favorable and unfavorable) on its Mortgagor credit files to Equifax, Experian or Trans Union Credit Information Company, on a monthly basis.

30.

No Mortgage Loan was 30 or more days delinquent using Office of Thrift Supervision methodology as of the Cut-off Date and no Mortgage Loan was 60 or more days delinquent using Office of Thrift Supervision methodology as of the last day of any of the 12 calendar months preceding the Closing Date, in each case other than as set 

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forth on the Mortgage Loan Schedule.

31.

Each Prepayment Charge with respect to any Mortgage Loan has customary terms and is permissible and enforceable in accordance with its terms under applicable law except as enforceability may be limited by (i) bankruptcy, insolvency, liquidation, receivership, moratorium, expiration of term or other similar laws affecting the enforcement of the rights of creditors and (ii) general principles of equity, whether enforcement is sought in a proceeding in equity or at law.

32.

Each of the applicable originator and the Servicer was duly licensed or approved and validly authorized under applicable law to originate, own, service, hold its interest in, or engage in other related activities, as applicable, with respect to such Mortgage Loan, or was exempt from such licensing or approval requirements.

33.

To the extent that any manufactured home is included as part of the Mortgaged Property, such manufactured home is (1) together with the related land, subject to the Mortgage, (2) deemed to be a part of the real property on which it is located pursuant to the applicable law of the jurisdiction in which it is located, and (3) treated as a single-family residence under Section 25(e)(10) of the Internal Revenue Code. 

34.

There is no material litigation, proceeding or governmental investigation pending, or any order, injunction or decree outstanding, existing or relating to a Mortgage Loan or the related Mortgaged Property. There is no pending action or proceeding directly involving the Mortgaged Property in which compliance with any environmental law, rule, or regulation is at issue. The Mortgage Loan is not subject to any Defense, and the applicable Mortgagor has not asserted any Defense.

35.

To the extent the Mortgage Loan is secured by a leasehold interest:

i.

The lessor under the lease holds a fee simple interest in the land.

ii.

The Mortgagor is the owner of a valid and subsisting interest as tenant under the lease and is not in default thereunder.

iii.

The lease is in full force and effect, and is unmodified.

iv.

All rents and other charges have been paid when due.

v.

The lessor under the lease is not in default.

vi.

The execution, delivery, and performance of the Mortgage do not require the consent (other than the consents that have been obtained and are in full force and effect) under, and will not violate or cause a default under, the terms of the lease.

vii.

The lease is assignable or transferable.

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viii.

The lease will not be terminated before the maturity date of the Mortgage Loan.

ix.

The lease does not provide for termination of the lease in the event of the Mortgagor’s default without written notice to the mortgagee and a reasonable opportunity to cure the default.

x.

The lease permits the mortgaging of the related Mortgaged Property.

xi.

The lease protects the mortgagee's interests in the event of a property condemnation.

36.

There is no Mortgage Loan that was originated on or after October 1, 2002 and on or prior to March 7, 2003, which is secured by property located in the State of Georgia.

37.

The operation of the terms of the Mortgage Loan Documents, or the exercise of any rights thereunder, will not render the Mortgage Loan unenforceable.

38.

With respect to each Mortgage Loan, no portion of the loan proceeds has been escrowed for the purpose of making monthly payments on behalf of the Mortgagor, and no payments due and payable under the terms of the Mortgage Note and Mortgage or deed of trust, except for seller or builder concessions, have been paid by any other person (other than a guarantor) who was involved in, or benefited from, the sale of the Mortgaged Property or the origination, refinancing, sale, or servicing of the Mortgage Loan.

(i)

Each Mortgagor is a natural person

(ii)

As of the origination of the applicable Mortgage Loan, the related Mortgagor was legally permitted to reside in the United States

Section 6.02.

Seller Representations.

Each Seller hereby represents and warrants severally, and not jointly, to the Purchaser as of the date hereof and on the Closing Date as follows:

(a)

Seller is a corporation organized, validly existing and in good standing under the laws of the state of its incorporation and is duly licensed or qualified to conduct its business as currently conducted in all jurisdictions where a Mortgaged Property is located except where the failure to be so licensed or qualified would not have a material adverse effect on its business or operations;

(b)

Seller has full power and authority to execute, deliver and perform this Agreement, and to enter into and consummate all transactions contemplated herein, including authority to sell, transfer and repurchase the Mortgage Loans.  All necessary corporate, regulatory or other similar action has been taken to authorize and empower Seller and the officers or representatives acting on Seller’s behalf to execute, deliver and perform this Agreement;

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(c)

Seller’s execution and delivery of this Agreement, the performance of the transactions contemplated by this Agreement and the fulfillment of the terms of this Agreement applicable to it will not violate any existing law or regulation or any order or decree of any court applicable to the Seller or any provision of the certificate of incorporation of the Seller, or constitute (with or without notice or lapse of time or both) a material default under, any contract, agreement, mortgage, deed of trust, or other instrument to which it is a party or by which it or any of its properties are bound, in each case that would materially and adversely affect the Seller’s ability to perform its obligations hereunder;

(d)

The transfer, assignment and conveyance of the Mortgage Notes and the Mortgages pursuant to this Agreement are not subject to the bulk transfer or any similar statutory provisions in effect in any applicable jurisdiction;

(e)

Seller has duly executed and delivered this Agreement, and this Agreement, assuming due authorization, execution and delivery by the Purchaser, the Secondary Repurchaser and each other Seller, constitutes a legal, valid and binding obligation of Seller enforceable against Seller according to its terms, except as such enforcement may be limited by bankruptcy, reorganization, insolvency, liquidation, receivership, moratorium, reorganization or other similar laws relating to the rights of creditors generally, and by general equity principles (regardless of whether such enforcement is considered in a proceeding in equity or at law);

(f)

In the case of MorEquity, Inc. and American General Financial Services of Arkansas, Inc., Seller is a member of MERS in good standing;

(g)

No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by Seller of this Agreement and the performance of its obligations hereunder other than those authorizations and approvals that have been obtained and those notices and filings that have been made, except that would not have a material adverse effect on the Seller’s abilities to perform its obligations hereunder; and

(h)

There are no actions or proceedings against, or investigations of, Seller before any court, administrative agency or other tribunal (i) asserting the invalidity of this Agreement, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement, (iii) seeking any determination or ruling that, in its judgment, has a reasonable likelihood of resulting in a material adverse effect on the transactions contemplated by this Agreement or (iv) seeking any determination or ruling, in each case that would materially and adversely affect the validity or enforcement of this Agreement.  

Section 6.03.

Remedies for Breach of Representations and Warranties.

(a) It is understood and agreed that the representations and warranties set forth in Section 6.01 shall survive the sale of the Mortgage Loans to the Purchaser and shall inure to the benefit of the Purchaser, notwithstanding any restrictive or qualified endorsement on any 

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Mortgage Note or Assignment or the examination or lack of examination of any Mortgage File.  Upon discovery by a Seller or the Purchaser of a breach of any such representation or warranty in respect of any Mortgage Loan which materially adversely affects the interest of the Purchaser therein, the party discovering such breach shall give prompt written notice to the other parties to this Agreement.  If the applicable Seller does not cure such breach in all material respects within 60 days of such notice, such Seller shall repurchase such Mortgage Loan in accordance with the provisions of Section 2.03 of the Pooling and Servicing Agreement.  Each Seller hereby agrees to be bound by the provisions set forth in Section 2.03 of the Pooling and Servicing Agreement relating to its obligation to repurchase such Mortgage Loan and such provisions shall be deemed to be incorporated herein by reference.  To the extent a Seller fails to repurchase any such Mortgage Loan on the Repurchase Date relating to such Mortgage Loan, the Secondary Repurchaser shall repurchase such Mortgage Loan within 25 days of such Repurchase Date pursuant to the same terms and conditions set forth above.  Notwithstanding the foregoing, in no event shall the applicable Seller or the Secondary Repurchaser be required to repurchase any Disputed Mortgage Loan unless the Secondary Repurchaser is the Losing Party with respect to such Disputed Mortgage Loan, in which case such Secondary Repurchaser shall be required to repurchase such Disputed Mortgage Loan in accordance with the provisions of Section 2.03 of the Pooling and Servicing Agreement.

Upon discovery by or notice to the applicable Seller that any Mortgage Loan does not constitute a “qualified mortgage” within the meaning of Section 860G(a)(3) of the Code, the applicable Seller shall repurchase such Mortgage Loan on or prior to the Non-Qualified Mortgage Repurchase Date relating to such Mortgage Loan.  Any repurchase of such Mortgage Loan pursuant to the foregoing sentence shall occur in accordance with the provisions of Section 2.03 of the Pooling and Servicing Agreement.  Each Seller hereby agrees to be bound by the provisions set forth in Section 2.03 of the Pooling and Servicing Agreement relating to its obligation to repurchase such Mortgage Loan and such provisions shall be deemed to be incorporated herein by reference.  To the extent a Seller fails to repurchase such Mortgage Loan on prior to the Non-Qualified Mortgage Repurchase Date relating to such Mortgage Loan, the Secondary Repurchaser shall be required to repurchase such Mortgage Loan within 25 days of such Non-Qualified Mortgage Repurchase Date pursuant to the same terms and conditions set forth above.  

In addition, if a breach of a representation set forth in Sections 6.01(6) or (13) occurs as a result of a violation of applicable predatory or abusive lending laws, the applicable Seller shall reimburse the Purchaser for all costs and damages incurred by the Purchaser and its assigns as a result of the violation of such predatory or abusive lending law (such amount, the “Reimbursement Amount”).  To the extent the applicable Seller fails to pay any such Reimbursement Amount to the Purchaser, the Secondary Repurchaser shall pay such Reimbursement Amount to the Purchaser.  

Notwithstanding anything to the contrary herein, it is understood and agreed that the obligations of the Sellers and the Secondary Repurchaser expressly set forth in this Section 6.03(a) and Section 6.04 to cure in all material respects the breaches of the representations and warranties set forth in Section 6.01, repurchase Mortgage Loans, pay any Reimbursement Amount or comply with an Arbitration Review, as applicable, constitute the sole 

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remedies available to the Purchaser in respect of a breach of the representations and warranties set forth in Section 6.01. 

(b) Each Seller shall, severally and not jointly, indemnify the Purchaser and its assigns and hold it harmless against any out-of-pocket losses, penalties, fines, forfeitures, reasonable and necessary legal fees (including, without limitation, legal fees incurred in connection with the enforcement of such indemnification obligation) and related costs, judgments, and other costs and expenses resulting from any claim, demand, defense or assertion arising from or relating to, a breach of such Seller’s representations and warranties contained in Section 6.02 of this Agreement. 

Notwithstanding anything to the contrary herein, it is understood and agreed that the obligations of the Sellers expressly set forth in this Section 6.03(b) to indemnify the Purchaser and its assigns constitute the sole remedies available to the Purchaser and its assigns in respect of a breach of the representations and warranties set forth in Section 6.02.  

Section 6.04.

Arbitration.  In the event that any Disputed Mortgage Loan is subject to an Arbitration Review as described in Section 2.03 of the Pooling and Servicing Agreement, the Secondary Repurchaser hereby agrees to be bound by the provisions of Section 2.03 of the Pooling and Servicing Agreement relating to its obligations with respect to such Arbitration Review, and such provisions shall be deemed to be incorporated herein by reference. 

Section 6.05.

Covenants of Purchaser and Sellers.

(a) The Purchaser hereby covenants and agrees that, so long as any Certificate is outstanding, it shall:

(i) not guarantee any obligation of any Person, including any of its Affiliates;

(ii) not merge or consolidate with or into any other Person;

(iii) take, or refrain from taking, as the case may be, all actions that are necessary to be taken or not to be taken in order to (x) ensure that the assumptions and factual recitations set forth in the Specified Bankruptcy Opinion Provisions remain true and correct in all material respects with respect to the Purchaser and (y) comply in all material respects with those procedures described in such provisions which are applicable to the Purchaser;  and

(iv) not transfer any of the Class CE Certificates or Class R Certificates to any of its Affiliates unless, in connection with such transfer, it provides to the Trustee an Opinion of Counsel relating to the non-substantive consolidation of such Affiliate with each of the Secondary Repurchaser, MorEquity, AGFS and AGHE

(b) Each Seller hereby covenants and agrees to forward promptly to the Servicer a copy of each legal notice it receives with respect to any Mortgage Loan.

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SECTION 7.

COSTS.

The Sellers shall pay any commissions due its salesmen and financial advisors and the legal fees and expenses of its attorneys.  All other costs and expenses incurred in connection with the sale of the Mortgage Loans by the Sellers to the Purchaser, including without limitation the Purchaser’s attorneys’ fees, shall be paid by the Purchaser.

SECTION 8.

NOTICES.

All demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given if mailed, by registered or certified mail, return receipt requested, or, if by other means, when received by the other party at the address as follows:

(a)

if to the Purchaser:

Sixth Street Funding LLC

601 N.W. Second Street

Evansville, Indiana 47708

Attn: Treasurer

(b)

if to MorEquity, Inc.:

MorEquity, Inc. 

7116 Eaglecrest Boulevard

Evansville, Indiana  47715

Attention: Treasurer

(c)

if to American General Financial Services of Arkansas, Inc.:

American General Financial Services of Arkansas, Inc.

601 N.W. Second Street

Evansville, Indiana 47708

Attn: Treasurer

(d)

if to American General Home Equity, Inc.:

American General Home Equity, Inc.

601 N.W. Second Street

Evansville, Indiana 47708

Attn: Treasurer

(e)

if to American General Finance Corporation:

American General Finance Corporation

601 N.W. Second Street

Evansville, Indiana 47708

Attn: Treasurer

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or such other address as may hereafter be furnished to the other party by like notice.  Any such demand, notice or communication hereunder shall be deemed to have been received on the date delivered to or received at the premises of the addressee (as evidenced, in the case of registered or certified mail, by the date noted on the return receipt).

SECTION 9.

SEVERABILITY CLAUSE.

Any part, provision, representation or warranty of this Agreement which is prohibited or which is held to be void or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.  Any part, provision, representation or warranty of this Agreement which is prohibited or unenforceable or is held to be void or unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction, to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  To the extent permitted by applicable law, the parties hereto waive any provision of law which prohibits or renders void or unenforceable any provision hereof.  If the invalidity of any part, provision, representation or warranty of this Agreement shall deprive any party of the economic benefit intended to be conferred by this Agreement, the parties shall negotiate, in good-faith, to develop a structure the economic effect of which is nearly as possible the same as the economic effect of this Agreement without regard to such invalidity.

SECTION 10.

NO PARTNERSHIP.

Nothing herein contained shall be deemed or construed to create a co-partnership or joint venture between the parties hereto.

SECTION 11.

COUNTERPARTS.

This Agreement may be executed simultaneously in any number of counterparts.  Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument.

SECTION 12.

GOVERNING LAW.

EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW, THE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS OF NEW YORK OR ANY OTHER JURISDICTION.

SECTION 13.

INTENTION OF THE PARTIES.

It is the intention of the parties that the Purchaser is purchasing, and the Sellers are selling, the Mortgage Loans and not a debt instrument of the Sellers or another security.  Accordingly, the parties hereto each intend to treat the transaction for federal income tax 

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purposes as a sale by the Sellers, and a purchase by the Purchaser, of the Mortgage Loans.  The Purchaser shall have the right to review the Mortgage Loans and the related Mortgage Files to determine the characteristics of the Mortgage Loans which shall affect the federal income tax consequences of owning the Mortgage Loans and each Seller shall cooperate with all reasonable requests made by the Purchaser in the course of such review.

The parties hereto intend that the transfer by each Seller to the Purchaser of the Mortgage Loans pursuant to this Agreement shall be, and be construed as, a sale of the Mortgage Loans by such Seller to the Purchaser. It is not intended that such transfer be deemed to be the grant of a security interest in the Mortgage Loans by any Seller to the Purchaser to secure a debt or other obligation of any Seller. However, in the event that the Mortgage Loans are held to be property of any Seller, or if for any reason this Agreement is held or deemed to create a security interest in the Mortgage Loans, then (a) this Agreement shall constitute a security agreement; and (b) the transfers provided for in this Agreement shall be deemed to be a grant by each Seller to the Purchaser of, and each Seller hereby grants to the Purchaser, to secure all of such Seller’s obligations hereunder, a security interest in all of such Seller’s right, title, and interest, whether now owned or hereafter acquired, in, to, and under the Mortgage Loans and all proceeds thereof.

SECTION 14.

WAIVERS.

No term or provision of this Agreement may be waived unless such waiver is in writing and signed by the party against whom such waiver is sought to be enforced.

SECTION 15.

EXHIBITS.

The exhibits to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement.

SECTION 16.

GENERAL INTERPRETIVE PRINCIPLES.

For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(a)

the terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender;

(b)

accounting terms not otherwise defined herein have the meanings assigned to them in accordance with accounting principles generally accepted in the United States;

(c)

references herein to “Articles,” “Sections,” “Paragraphs” and other subdivisions without reference to a document are to designated Articles, Sections, Paragraphs and other subdivisions of this Agreement;

(d)

reference to a Section without further reference to a Section is a reference to such Section as contained in the same Section in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions;

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(e)

the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision; and

(f)

the term “include” or “including” shall mean without limitation by reason of enumeration.

SECTION 17.

REPRODUCTION OF DOCUMENTS.

This Agreement and all documents relating thereto, including, without limitation (a) consents, waivers and modifications which may hereafter be executed, (b) documents received by any party at the closing and (c) financial statements, certificates and other information previously or hereafter furnished, may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process.  The parties hereto agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party hereto in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

SECTION 18.

AMENDMENT.

This Agreement may be amended or modified from time to time by the Purchaser and the Sellers by written agreement signed by the parties hereto.  The Purchaser shall give Moody’s written notice (at the address set forth in the Pooling and Servicing Agreement) of any such amendment at least five Business Days prior to the effectiveness thereof.  

SECTION 19.

CONFIDENTIALITY.

Each of the Purchaser, the Secondary Repurchaser and the Sellers shall employ proper procedures and standards designed to maintain the confidential nature of the terms of this Agreement, except to the extent (a) the disclosure of which is reasonably believed by such party to be required or advisable in connection with regulatory requirements or other legal requirements relating to its affairs; (b) disclosed to any one or more of such party’s employees, officers, directors, agents, attorneys or accountants who would have access to the contents of this Agreement and such data and information in the normal course of the performance of such Person’s duties for such party, to the extent such party has procedures in effect to inform such Person of the confidential nature thereof; (c)  disclosed in an offering memorandum relating to a securitization of the Mortgage Loans by the Purchaser or to any or other Person in connection with the resale or proposed resale of all or a portion of the Mortgage Loans by such party in accordance with the terms of this Agreement; and (d) that is reasonably believed by such party to be necessary for the enforcement of such party’s rights under this Agreement.

SECTION 20.

ENTIRE AGREEMENT.

This Agreement constitutes the entire agreement and understanding relating to the subject matter hereof between the parties hereto and any prior oral or written agreements between them shall be deemed to have merged herewith.

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SECTION 21.

FURTHER AGREEMENTS.

Each of the Sellers, the Secondary Repurchaser and the Purchaser agree to execute and deliver to the other such reasonable and appropriate additional documents, instruments or agreements as may be necessary or appropriate to effectuate the purposes of this Agreement.

SECTION 22.

TRUSTEE ASSIGNEE.

Each Seller and the Secondary Repurchaser acknowledge the assignment of the Purchaser’s rights hereunder to the Trustee on behalf of the Trust and that the representations, warranties and agreements made by the Sellers and the Secondary Repurchaser in this Agreement may be enforced by the Trustee, on behalf of the Trust, against the Sellers and the Secondary Repurchaser.

SECTION 23.

NO PROCEEDINGS.

Notwithstanding any prior termination of this Agreement, none of the Sellers or the Secondary Repurchaser shall, prior to the date which is one year and one day after the termination of the Pooling and Servicing Agreement, acquiesce, petition or otherwise invoke or cause any Person to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Purchaser under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Purchaser or any substantial part of their respective property, or ordering the winding up or liquidation of the affairs of the Purchaser.

  

-21-

IN WITNESS WHEREOF, the Purchaser, the Secondary Repurchaser and the Sellers have caused their names to be signed hereto by their respective officers thereunto duly authorized on the date first above written.

SIXTH STREET FUNDING LLC,

as Purchaser

By:  

/s/  Kevin J. Small_______

Name:  Kevin J. Small

Title:  President

MOREQUITY, INC.,

as a Seller 

By:  

/s/  Kevin J. Small

Name:  Kevin J. Small

Title:  President

AMERICAN GENERAL FINANCIAL SERVICES OF ARKANSAS, INC.,

as a Seller 

By:  

/s/  Kevin J. Small

Name:  Kevin J. Small

Title:  Senior Vice President

AMERICAN GENERAL HOME EQUITY, INC.,

as a Seller 

By:  

/s/  Kevin J. Small

Name:  Kevin J. Small

Title:  Senior Vice President

Solely for purposes of Sections 5, 6.03(a), 6.04 and 23 of this Agreement:

AMERICAN GENERAL FINANCE CORPORATION,

as Secondary Repurchaser

By:  

/s/  Kevin J. Small

Name:  Kevin J. Small

Title:  Senior Vice President

EXHIBIT 1

MORTGAGE LOAN SCHEDULE

[See the Excel spreadsheet on this CD-ROM]

Ex. 1-1

EXHIBIT 2

CONTENTS OF EACH MORTGAGE FILE

With respect to each Mortgage Loan, the Mortgage File shall include each of the following items, unless otherwise disclosed to the Purchaser on the data tape, which shall be available for inspection by the Purchaser and which shall be delivered to the Purchaser:

(a)

Copies of the Mortgage Loan Documents.

(b)

the truth in lending statement;

(c)

the notice of right to cancel;

(d)

any subordination agreement;

(e)

the appraisal;

(f)

the flood certificate;

(g)

the settlement statement;

(h)

the good faith estimate;

(i)

any partial release;

(j)

any ACH enrollment;

(k)

any death certificate;

(l)

any name or address change requests;

(m)

the SCRA documentation;

(n)

the recorded deeds (warranty, quit claim, grant).

Ex. 2-1

EXHIBIT 3

MORTGAGE LOAN DOCUMENTS

With respect to each Mortgage Loan, the Mortgage Loan Documents shall consist of the following:

(a)

an original mortgage note or, with respect to any lost mortgage note, an original lost note affidavit together with a copy of the related mortgage note, and any riders, addendums or allonges;

(b)

a mortgage or deed of trust with evidence of recording thereon, and the original recorded power of attorney, if the mortgage or deed of trust was executed pursuant to a power of attorney, with evidence of recording thereon or, if such mortgage, deed of trust or power of attorney has been submitted for recording but has not been returned from the applicable public recording office, has been lost or is not otherwise available, a copy of such mortgage, deed of trust or power of attorney, as the case may be, certified to be a true and complete copy of the original submitted for recording;

(c)

the assignment of mortgage and any intervening assignments;

(d)

an original or a certified copy of the lender’s title insurance policy; and

(e)

originals or copies of any assumption, modification, consolidation or extension agreements.

Ex. 3-1

EXHIBIT 4

UNDERWRITING GUIDELINES

Ex. 4-1

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