Document:

ex10-36.htm

 

EXHIBIT 10.36

MASTER DEVELOPMENT AND LICENSE AGREEMENT

THIS MASTER DEVELOPMENT AND LICENSE AGREEMENT (this “Agreement”) is entered into and effective as of May 5, 2010 (the “Effective Date”), by and between NeoMagic Corporation, a Delaware corporation, (“NeoMagic”) and Synapse Design Automation, Inc., a Delaware corporation (“Synapse”).

BACKGROUND

A.           Synapse is in the business of developing semiconductor products and providing related services.

B.           NeoMagic wishes to engage Synapse to develop a USB 3.0 transceiver which will be jointly owned by the Parties under the terms and conditions of this Agreement.

AGREEMENT

The Parties agree as follows:

1.           DEFINITIONS

 

1.1           “Acceptance” means, with respect to a Deliverable and the Test Chip, acceptance or deemed acceptance of such item in accordance with Section 2.5.

 

1.2           “Acceptance Criteria” means, for each Deliverable or the Test Chip, the applicable acceptance criteria as set forth in the related Statement of Work.  If a Statement of Work contains no additional acceptance criteria, the Acceptance Criteria will be that the Deliverable or the Test Chip, as applicable, conforms to the applicable Specifications.

 

1.3           “Acceptance Period” means the period of time agreed by the Parties in connection with developing the related Acceptance Criteria.

 

1.4           “Confidential Information” means, for a particular Party, its confidential business or other information which, from the circumstances surrounding disclosure, should be understood to be confidential or proprietary information of such Party.  Confidential Information will not include information that (a) is or becomes public knowledge without the fault or action of the recipient, (b) is received by the recipient from a source other than the disclosing Party, which source received the information without violation of any confidentiality restriction and is not under an obligation of non-disclosure with respect to such information, or (c) is independently developed by the recipient without violation of any confidentiality or use restriction as evidenced by written records.  For clarity, the USB 3.0 Transceiver IP is not Confidential Information of either Party, however, disclosure of such technology is subject to the limits in Section 7.3.

 

1.5           “Customer Transaction” means a license agreement (which may also include additional development) pursuant to which Synapse licenses a version of the USB 3.0 Transceiver IP to a third party.

 

1.6           “Data Sheet” means, for a particular version of the USB 3.0 Transceiver IP, the document which includes the related Specifications.

 

1.7           “Deliverables” means, for a particular Statement of Work, the deliverables set forth therein.

 

1.8           “Derivative” means a work, know-how, technique, process, information, invention and the like which is based upon one or more preexisting works, such as a revision, improvement, alteration, enhancement, new version, modification, translation, abridgement, correction, condensation, expansion or any other form of modification or other form.

 

  

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1.9           “Documentation” means the materials for use with the USB 3.0 Transceiver IP, which may include a user manual, reference manuals, release notes, application and methodology notes, and Data Sheets.

 

1.10         “Fees” means, for a particular Statement of Work, those fees to be paid by NeoMagic to Synapse for the Services and Deliverables specified therein to be provided by Synapse.

 

1.11         “Fiscal Quarter” means a fiscal quarter of NeoMagic.

 

1.12          “Initial Statement of Work” is defined in Section 2.1.

 

1.13          “Intellectual Property Rights” means, with respect to any technology, all related intellectual property rights, including patents, copyrights, trademarks, trade-names, know-how, trade secrets and all other forms of intellectual property, irrespective of whether the rights protecting such property arise under U.S. or international intellectual property laws or unfair competition or trade secret laws.

 

1.14          “Joint IP” is defined in Section 3.1.

 

1.15          “NeoMagic Royalty” is defined in Section 4.2(b).

 

1.16          “Party” means each of Synapse and NeoMagic.

 

1.17          “Schedule” means, for a particular Statement of Work, the timeline set forth therein which specifies, among others, the target schedule for the Parties’ performance under such Statement of Work, including design review and payment schedule.

 

1.18          “Services” means, for a particular Statement of Work, the services to be provided by Synapse under such Statement of Work.

 

1.19          “Specifications” means the logic, functional, performance and operational aspects of a version of the USB 3.0 Transceiver IP, as set forth in, attached to, or referenced in, the related Statement of Work.

 

1.20          “Statement of Work” means a written description of the services to be performed by Synapse under this Agreement in connection with the USB 3.0 Transceiver IP, which indicates it is a “Statement of Work” under this Agreement and, other than the Initial Statement of Work, is executed by both Parties.  Each Statement of Work will contain or reference a full and complete description of the Services, Specifications, Deliverables, Schedule, Fees, payment terms and other matters as are agreed by the Parties.

 

1.21          “SyMagic Transceiver” means an integrated circuit manufactured by or for NeoMagic using a version of the USB 3.0 Transceiver IP, or any part thereof.

 

1.22          “Synapse Royalty” is defined in Section 4.2(a).

 

1.23          “Test Chip” means a silicon engineering prototype of the initial SyMagic Transceiver that is manufactured by or for NeoMagic.

 

1.24          “Third Party IP” is defined in Section 3.4.

 

1.25          “USB 3.0 Transceiver IP” means the “USB 3.0 Transceiver IP,” as further described in the Initial Statement of Work, including (a) all Derivatives or other modifications or enhancements thereto made pursuant to additional Statements of Work or in connection with any Customer Transaction and (b) all related materials and Documentation and all updates thereto.

 

  

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1.26          “Warranty Period” is defined in Section 5.1.

 

2.           STATEMENTS OF WORK; DELIVERY; ACCEPTANCE

 

2.1   Statements of Work.  The initial Statement of Work under this Agreement is attached as Exhibit A (the “Initial Statement of Work”).  The Parties may, from time to time agree on additional Statements of Work related to the USB 3.0 Transceiver IP.  Each Statement of Work will be consecutively numbered.  The Initial Statement of Work and, upon execution thereof, each other Statement of Work, are deemed part of this Agreement and incorporated herein.  If the terms of a Statement of Work conflict with the other terms of this Agreement, the terms of such Statement of Work will control with respect to the matters covered thereby.

 

2.2Performance under Statements of Work.  Subject to the terms of this Agreement, Synapse will (a) perform the Services under each Statement of Work, and (b) develop, design or make the Deliverables according to the Specifications set forth in each Statement of Work.  Synapse will meet the time Schedule set forth in each Statement of Work.  NeoMagic will cooperate fully with Synapse to allow Synapseto meet each such Schedule.  NeoMagic agrees to perform such duties and tasks as are specified to be performed by NeoMagic in each Statement of Work.  

 

2.3   Changes to Statements of Work.  Any request for changes to a Statement of Work by must be delivered to the other Party in writing.  If the request is proposed by NeoMagic, then, following receipt of such a request, Synapse will submit to NeoMagic an analysis of how the requested changes would affect such Statement of Work, including the related Schedule and Fees.  If Synapse proposes a change, its proposal to NeoMagic will include such analysis.  If the Parties approve such changes, they will execute a written amendment to such Statement of Work which reflects such agreed changes prior to work being initiated based on such changes.  Thereafter, such Statement of Work will be deemed amended and, as such, incorporated into this Agreement.

 

2.4      Delivery.  In addition to any Deliverables specified in a Statement of Work, Synapse agrees to deliver to NeoMagic on request and in mutually agreed formats, all design documents, HDL code, scripts, verification reports, spice netlists, schematics, characterization data, layer mapping files, simulation models, final design simulation results and other related materials, for each version of the USB 3.0 Transceiver IP.  Synapse also will electronically deliver to NeoMagic at least one copy of each of the Deliverables under a Statement of Work.  Documentation may be delivered as on-line electronic documentation.

 

2.5      Acceptance.  Within the applicable Acceptance Period for a Deliverable provided under a Statement of Work (and, with regard to the Initial Statement of Work, for the Test Chip), NeoMagic will, with assistance from Synapse test the Deliverable or the Test Chip, as applicable, to determine conformance with the applicable Acceptance Criteria.  If NeoMagic determines that such item fails to conform to the related Acceptance Criteria, then within the Acceptance Period, NeoMagic may contact Synapse in writing including providing a detailed description of the failure.  Following receipt of such a notice of failure, Synapse will revise the affected Deliverable and resubmit such item to NeoMagic, whereupon the foregoing process will be repeated.  If the Test Chip fails to conform to the related Acceptance Criteria, the Parties will meet to discuss how to address such failure.  If Synapse does not receive such written notice (including a detailed description of the failures) within the applicable Acceptance Period, such item will be deemed to have achieved Acceptance and NeoMagic will be deemed to have accepted the applicable item.

 

3.           IP OWNERSHIP AND LIMITATION ON RIGHTS

 

3.1      Transfer of Joint IP.  Subject to the terms and conditions in this Agreement and other than Third Party IP, Synapse hereby sells, assigns and transfers to NeoMagic, and NeoMagic hereby acquires from Synapse, an undivided joint ownership interest, as tenants in common, in all of Synapse’s right, title and interest in and to the USB 3.0 Transceiver IP and all related Intellectual Property Rights, whether in existence on the Effective Date or hereafter created, including Derivatives thereof created under a Statement of Work or in connection with a Customer Transaction (collectively, the “Joint IP”).

 

3.2      Joint Ownership.  NeoMagic and Synapse further agree as follows:

 

  

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(a)           Undivided Interest.  Synapse and NeoMagic shall jointly own equal undivided interests, as equal tenants in common, in all worldwide right, title and interest in and to the Joint IP.  Subject to the limitations in this Section 3 and Section 9.1, each party shall have the right to freely and separately use, exploit, maintain, license, sell, assign, transfer and enforce its rights in and to the Joint IP, with no royalty payment or accounting to the other Party in connection with the Joint IP, other than as provided in Section 4.

 

(b)           Filings, Cooperation, Etc.  The Parties’ joint ownership of the Joint IP will be appropriately indicated in (i) all applications or other governmental filings made concerning the Joint IP, and (ii) all proprietary rights notices placed on any product consisting of, or incorporating, all or any portion of the Joint IP.  Synapse and NeoMagic will reasonably cooperate with the other Party with respect to providing information and preparing and filing any documents necessary, including patent applications, to secure their rights with respect to Joint IP.  Each Party shall notify the other in advance of any proposed filing of documents, including patent applications and copyright registrations, with respect to the Joint IP.  If one Party elects not to seek or secure such rights in Joint IP in any particular country or not to share equally in the expense thereof, the other Party will have the right to seek and maintain such protection at its own expense and shall have primary control over the prosecution and maintenance thereof, even though title to any Intellectual Property Rights arising from the Joint IP will be joint (as equal tenants in common as above described).  Any Party filing or receiving documents related to the prosecution or issuance of any Intellectual Property Rights arising from the Joint IP will provide copies of such documents to the other Party promptly after filing or receipt.  Each Party has the right, but not the obligation, to participate in the prosecution or issuance of any Intellectual Property Right related to the Joint IP.

 

(c)           Enforcement of Rights.  The Parties agree that they will cooperate with each other to the extent reasonably possible to enforce the Intellectual Property Rights in the Joint IP against third party infringers.  In the absence of a written agreement to the contrary, the rewards of any infringement claim against a third party to the extent relating to Joint IP, shall be allocated and paid as follows: first to reimburse the Party or Parties for the costs paid to pursue such infringement claim involving the Joint IP, and after all such costs are reimbursed or paid, any balance shall be paid to the Parties in proportion to the amount of costs of such claim involving the Joint IP paid by such Party.

 

3.3      Exclusion of NeoMagic Developed Technology.  Nothing in this Agreement is intended to constitute an assignment by NeoMagic to Synapse of any technology or other Intellectual Property Right, regardless of whether it complements, or is a Derivative of, the Joint IP or whether it was created prior to or after the Effective Date.  NeoMagic is free to modify, update, exploit and create Derivatives of the Joint IP, including the SyMagic Transceiver, without any obligation to provide, disclose or license any such modifications, updates or Derivatives to Synapse.  In addition, as between the Parties, NeoMagic has exclusive rights in the “SyMagic” trademark.

 

3.4      Third Party IP License.  Prior to including in the USB 3.0 Transceiver IP, technology or other intellectual property not owned by Synapse (“Third Party IP”), Synapse will so notify NeoMagic in writing.  With respect to any Third Party IP (and all related Intellectual Property Rights) included in the USB 3.0 Transceiver IP, Synapse hereby grants to NeoMagic a perpetual, irrevocable, royalty-free, non-exclusive, world-wide license (with a right to sublicense) to use, reproduce, modify, create Derivatives of, distribute, disclose, perform and display in source and binary form, such Third Party IP and related Intellectual Property Rights, including the right to use, make, have made, offer to sell, sell, have sold and import products, including the SyMagic Transceiver.  Synapse hereby confirms that any license fees associated with such Third Party IP or related Intellectual Property Rights will be at Synapse’s expense.

 

3.5      Limitation on Rights.  Notwithstanding the joint ownership of the Joint IP as well as the license granted to NeoMagic in the Third Party IP, the Parties agree as follows:

 

(a)           Synapse may only market and license the USB 3.0 Transceiver IP as an embedded IP core, such as part of a “system on a chip” (SoC), a chipset or a chip containing other material functionality.  For clarity, Synapse may not license all or any part of the USB 3.0 Transceiver IP, or related Intellectual Property Rights, for inclusion in a standalone USB 3.0 transceiver chip nor may Synapse itself manufacture or distribute such a chip using all or any part of the USB 3.0 Transceiver IP.

 

  

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(b)           NeoMagic may use the USB 3.0 Transceiver IP and related Intellectual Property Rights to manufacture SyMagic Transceivers.  Other than in connection with the design, modification, manufacture, distribution and use of SyMagic Transceivers, NeoMagic may not sublicense the USB 3.0 Transceiver IP.

 

3.6      Additional Documents.  Each Party covenants on behalf of itself, and its successors and assigns, to promptly execute, with acknowledgment and affidavit, if required, and deliver any and all documents and writings which the other Party may reasonably request in order to evidence, perform or effectuate the transfer of ownership, protection of Intellectual Property Rights, licenses and other provisions and transactions contemplated hereby, including the assignment to NeoMagic of the Joint IP hereafter created.

 

4.           FEES; ROYALTIES; PAYMENT TERMS; TAXES

 

4.1      Fees.  NeoMagic agrees to pay to Synapse the Fees set forth in, and in accordance with the payment terms in, each Statement of Work, provided that Synapse has submitted an invoice to NeoMagic for such amount.  Unless otherwise specified in the related Statement of Work, NeoMagic agrees to pay all such Fees within 30 days of its receipt of the related invoice.  Other than the NeoMagic Royalties, the applicable Fees constitute the entire amount payable by NeoMagic for the Services under the related Statement of Work.  The Fees payable under the Initial Statement of Work total $1,000,000.  Synapse acknowledges and agrees that other than the applicable Fees and the NeoMagic Royalties, Synapse is responsible for providing at its own expense all services, personnel, equipment, licenses and other supplies required to perform such Services.

 

4.2      Royalty Obligations.

 

(a)           Synapse Royalties.  Within 30 days after the end of each calendar quarter, Synapse agrees to pay NeoMagic a royalty (the “Synapse Royalty”) equal to the percentage specified in Exhibit B of the gross licensing fees, royalties and other amounts received by Synapse (or its affiliates) from selling, licensing or otherwise exploiting the USB 3.0 Transceiver IP during the immediately preceding Fiscal Quarter.  On transactions between Synapse and its affiliates for resale or sublicensing, the Synapse Royalty shall be paid on the resale or sublicense.  Synapse shall bear all cost of sales for the USB 3.0 Transceiver IP.

 

(b)           NeoMagic Royalties.  Within 30 days after the end of each Fiscal Quarter, NeoMagic agrees to pay Synapse a royalty (the “NeoMagic Royalty”) equal to the percentage specified in Exhibit B of the Profit (defined in Exhibit B) from sales of the SyMagic Transceivers.  On transactions between NeoMagic and its affiliates for resale, the NeoMagic Royalty shall be paid on the resale.

 

(c)           Royalty Adjustments.  If, in connection with a Customer Transaction, the USB 3.0 Transceiver IP licensee pays the development costs for changes to such intellectual property, then the Synapse Royalty and NeoMagic Royalty percentages will not be affected.  However, if the development costs for such changes are not paid by such licensee, then the Synapse Royalty and NeoMagic Royalty percentages may be adjusted, if and as agreed by the Parties (based, at least in part, on the portion of the development costs paid by each Party).  If the Parties are unable to agree on such adjustments within 30 days of commencing such discussions, then either Party may submit to an arbitrator, in accordance with Section 9.5, a request that such arbitrator specify the terms of such adjustments; provided that such arbitrator may not impose on NeoMagic an obligation to pay any such development costs.  The Parties may agree that each will submit to the arbitrator proposed adjustments from which the arbitrator shall select one (aka “baseball arbitration”) or the Parties may select an alternate means of resolving such dispute through such arbitration process.  In addition to the above, the Parties shall meet to discuss adjustments to the NeoMagic Royalty percentage no later than 3 years after the Effective Date.

 

4.3      Combination Sales.  Even if the USB 3.0 Transceiver IP or SyMagic Transceivers, as applicable, are sold or licensed by Synapse or NeoMagic, respectively, in combination with one or more other products or services, the Synapse Royalty and NeoMagic Royalty will be payable only on the portion of such combined price attributable to the USB 3.0 Transceiver IP or SyMagic Transceivers, as applicable.  Such portion will be determined in good faith by the Parties.

  

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4.4      Non-Cash Consideration.  Any item of value in lieu of a cash payment in consideration of the USB 3.0 Transceiver IP licenses or SyMagic Transceivers, as applicable, will be valued, for purposes of calculating the royalties payable to hereunder, at the fair market value of such compensation (as reasonably determined by the Parties) and will be considered received by the receiving Party as of the date such consideration is granted.  If the Parties fail to agree on the fair market value of such consideration, then Synapse or NeoMagic, as appropriate, may not enter into the transaction giving rise to such non-cash payment.

 

4.5      Statements.  Synapse and NeoMagic shall furnish the other Party, within 30 days of the end of each Fiscal Quarter during the term of this Agreement in which amounts are payable hereunder a full, complete and accurate statement detailing the calculation of the Synapse Royalties and NeoMagic Royalties, as applicable, for the preceding Fiscal Quarter.

 

4.6      Inspection and Audit Rights.  Each Party shall have the right once during each calendar year and upon at least 30 days’ prior notice, to have independent auditors reasonably acceptable to the other Party inspect or audit such other Party’s books and records relating to the calculation of the Synapse Royalty or NeoMagic Royalty, as applicable, in order to verify the amounts paid hereunder.  The Party requesting an inspection or audit shall provide at least 30 days’ prior notice to the other of such inspection or audit.  The auditors must execute in favor of the audited Party a nondisclosure agreement relating to the information disclosed in the inspection or audit.  The audited Party shall fully cooperate with the auditors in conducting such inspections or audits and shall permit the auditors to review the books and records that are reasonably appropriate and necessary to perform the inspection or audit.  The cost of an inspection or audit shall be at the expense of the requesting Party; provided, however, if any inspection or audit reveals an underpayment of more than 10% of the amounts paid for the period audited, then the underpaying Party will reimburse the auditing Party for the auditor’s fees for such inspection or audit.  The auditor shall disclose to the audited Party the basis for any conclusions reached by the auditor.  Generally, the auditor may only disclose to the requesting Party whether or not there was, and the amount of, any discrepancy in the amounts paid to such Party.  However, if the audited Party disputes that there was a discrepancy in the payments to the other Party, then the auditor may disclose to the requesting Party such information as is necessary for the requesting Party to justify the conclusions of the auditor.  Unless disputed by a Party, the applicable Party will pay any shortfall or overpayment within 30 days after receiving notice of such discrepancy.

 

4.7      Currency; Overdue Interest.  All payments hereunder shall be made in immediately available funds in United States dollars.  All amounts due hereunder which are not paid when due shall accrue interest from the date due until paid at the per annum rate of 10% or the maximum rate permitted by applicable law, whichever is less.

 

4.8      Taxes; Employees.

 

(a)           Taxes Generally.  Each party is responsible for the payment of all sales, use, value added, property, transfer, excise and other taxes and all export, import duties and other governmental charges imposed on it in connection with this Agreement by any national, federal, state, provincial, regional, local or special purpose governmental authority.

 

(b)           Employee Liability.  Without limiting the foregoing, Synapse understands and agrees that NeoMagic is not responsible for any employer taxes or expenses of any sort relating to Synapse’s employees or any other person performing the Services hereunder, including all state and federal payroll taxes and worker’s compensation coverage.  Synapse agrees that as between the Parties, Synapse’s employees and subcontractors are under its control and are not entitled to any benefits of employment provided by NeoMagic to its employees.  Synapse agrees to indemnify and hold NeoMagic harmless from all losses, damages, costs and expenses, including penalties, interest and reasonable attorneys’ fees, in connection with any obligation imposed on NeoMagic resulting from any employee or subcontractor of Synapse being determined to be otherwise entitled to the benefits of employment provided by NeoMagic to its respective employees.

 

5.           PERFORMANCE WARRANTY

 

5.1      Services and Performance Warranty.  Synapse warrants that the Services will be performed in a workmanlike manner, in conformity with the professional standards for comparable services in the industry.  If the foregoing warranty is breached, Synapse shall immediately reperform the deficient Services and correct the breach at no additional cost to NeoMagic or, at NeoMagic’s option, refund the amounts paid for such Services.  Synapse also warrants to NeoMagic with respect to each version of the USB 3.0 Transceiver IP for a period of 1 year from the delivery by Synapse to NeoMagic of the GDSII stream files of such version (the “Warranty Period”), that such version of the USB 3.0 Transceiver IP will conform to the applicable Specifications.  If within the applicable Warranty Period NeoMagic informs Synapse of the breach of the foregoing warranty, Synapse agrees to modify or replace the affected version of the USB 3.0 Transceiver IP so that it conforms to such warranty.

 

  

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5.2      Warranty Limitations and Exclusions.  Without limiting the generality of the foregoing, Synapse’s warranty does not cover and no warranty is made with respect to failures caused by alterations or repairs made by NeoMagic.  Except for the express warranties stated in this Agreement, Synapse makes no other representations or warranties express, implied, statutory or otherwise regarding the USB 3.0 Transceiver IP.  Synapse expressly disclaims all implied warranties of merchantability and fitness for a particular purpose and noninfringement of intellectual property rights with regard to the USB 3.0 Transceiver IP.

 

6.           INDEMNITY

 

6.1      Warranty and Indemnity by Synapse.  Synapse hereby represents and warrants that each version of the USB 3.0 Transceiver IP and the use and distribution thereof, does not infringe any third party Intellectual Property Right.  Synapse agrees, at its own expense, to defend, indemnify and hold NeoMagic and its officers, directors, employees, licensees, customers and distributors (each an “Indemnified Party”) harmless from any claim or action (a “Claim”) brought against such Indemnified Party to the extent (a) it is based on a claim that a version of the USB 3.0 Transceiver IP, including as incorporated into a SyMagic Transceiver, infringes, violates or misappropriates any patent, copyright, trade secret or other Intellectual Property Right of a third party, (b) arising from or related to an assertion that Synapse has violated the terms of any agreement under a Customer Transaction, or (c) arising from or related to: any act or omission of Synapse, its employees, agents, or subcontractors; the performance of this Agreement; the presence of Synapse or its personnel on NeoMagic premises or the driving of NeoMagic’s motor vehicles.  The defense fees and costs relating thereto will be paid by Synapse as incurred.  NeoMagic agrees to provide Synapse with: (i) prompt written notification of such Claim; (ii) sole control and authority over the defense or settlement thereof (but subject to NeoMagic’s approval); and (iii) reasonably available information and assistance in connection with such Claim, at Synapse’s expense.

 

6.2      Limited Remedies.  If a version of the USB 3.0 Transceiver IP becomes, or in the opinion of Synapse is likely to become, the subject of an infringement Claim, Synapse shall either (a) procure, at no cost to NeoMagic, the right to continue using such version of the USB 3.0 Transceiver IP or (b) replace or modify such version with a functionally equivalent product that is non-infringing.

 

6.3      Exceptions.  Synapse will have no liability under this Section 6 for any Claim to the extent (a) a Claim of infringement relates to modifications of the USB 3.0 Transceiver IP, or portions thereof, made NeoMagic or its representatives or (b) attributable to the sole negligence of NeoMagic.

 

7.           CONFIDENTIALITY

 

7.1      Generally.  Synapse and NeoMagic will not reveal to any other party (except as permitted below) or use (except as contemplated by this Agreement), any Confidential Information of the other Party.  Without limiting the foregoing, each Party agrees to use at least the same standard of care to protect the other Party’s Confidential Information from disclosure as such Party uses to protect its own information of like importance, but in any event not less than a reasonable degree of care.  Without limiting the foregoing, each Party agrees to only disclose the Confidential Information of the other Party to its employees and subcontractors with a need to know such information in connection with such Party performing its obligations or exercising its rights under this Agreement and which employees and subcontractors are subject to confidentiality obligations regarding such Confidential Information at least as protective as this Section 7.1.  This Section will not prohibit disclosure of Confidential Information pursuant to the order or requirement of a court, administrative agency, or other governmental body or in connection with the enforcement of this Agreement; provided, however, that the receiving Party will provide prompt notice thereof to enable the disclosing Party to seek a protective order or otherwise prevent such disclosure.

 

  

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7.2      Independent Development.  Each Party understands that the other Party may currently or in the future be developing information internally without the use of the other Party’s Confidential Information, or receiving information from third parties that may be similar to the Confidential Information of the other Party.  Accordingly, nothing in this Agreement will be construed as a representation or inference that either Party will not develop products, or have products developed for it, or enter into joint ventures, alliances, or licensing arrangements that, without violation of this Agreement, compete with the products or systems embodying the Confidential Information of the other Party.

 

7.3      USB 3.0 Transceiver IP.  Each Party agrees to keep confidential and not to disclose confidential or proprietary information regarding USB 3.0 Transceiver IP to any third party, other than (a) in connection with any transaction permitted pursuant to this Agreement, provided that such disclosure shall be limited to the minimum amount of information needed to be provided and shall be subject to confidentiality obligations regarding such information at least as protective as Section 7.1, (b) in confidence to its affiliates, actual or potential investors, banks, lawyers, accountants and other professional advisors, (c) in connection with the enforcement of its rights under this Agreement, (d) as may be required by law, and (e) in confidence in connection with a merger or acquisition or a proposed merger or acquisition.

 

7.4      Terms of this Agreement.  Each party agrees to keep confidential and not to disclose the terms and conditions of this Agreement to any third party other than (a) in confidence to its affiliates, actual or potential investors, banks, lawyers, accountants and other professional advisors, (b) in connection with the enforcement of its rights under this Agreement, (c) as may be required by law, including in connection with the requirements of a public offering or securities filing, and (d) in confidence in connection with a merger or acquisition or a proposed merger or acquisition.

 

8.           TERM AND TERMINATION

 

8.1      Term.  The term of this Agreement commences on the Effective Date and is terminated as provided below.  Each Statement of Work commences on its date of execution and ends upon completion of the Services thereunder, unless sooner terminated as provided in this Agreement or such Statement of Work.

 

8.2      Termination Due to Breach; Insolvency.

 

(a)           Breach.  Either Party may terminate any or all Statements of Work and this Agreement if the other Party materially breaches this Agreement and such breach has not been cured within 30 business days after receipt of written notice of such default.

 

(b)           Insolvency.  A Party may terminate any or all Statements of Work and this Agreement if the other Party (i) becomes insolvent; (ii) makes an assignment for the benefit of its creditors; (iii) files or has filed against it a petition in bankruptcy or seeking a re-organization; (iv) has a receiver appointed; or (iv) institutes any proceedings for liquidation or winding-up.

 

8.3      NeoMagic’s Termination for Convenience.  NeoMagic may terminate any Statement of Work without cause at any time.

 

8.4      Effect of Termination.

 

(a)           Initial Statement of Work.  If NeoMagic terminates the Initial Statement of Work under Section 8.3 prior to delivery of the GDSII Deliverable thereunder, NeoMagic will be obligated to pay 50% of the Services costs, if any, not covered by previous installments, provided that such portion will not exceed the next scheduled installment payment amount.

 

  

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(b)           Survival of Obligations.  Unless terminated as set forth above, the Statements of Work in effect on the effective date of termination of this Agreement shall survive and continue until completion of such Statements of Work or their earlier termination, and the applicable provisions of this Agreement shall continue to apply thereto.  The termination or expiration of this Agreement or any Statement of Work for any reason will terminate the obligations of the Parties under such document.  However, the provisions of Sections 1, 2.4, 3, 4, 5, 6, 7, 8 and 9 and Exhibit B, will remain in full effect following termination or expiration of this Agreement.  Also, termination or expiration will not affect any accrued payment obligation under this Agreement or any Statement of Work, nor will it affect either Party’s right to pursue remedies under this Agreement or such Statement of Work arising prior to termination or expiration.  In addition, upon the termination of a Statement of Work (with or without termination of this Agreement) each Party shall return to the other any Confidential Information of the other Party in whatever form relating to such Statement of Work, to the extent not needed in connection with any license or other rights which survive such termination.  Termination of this Agreement or a Statement of Work is not an exclusive remedy.

 

9.           GENERAL TERMS

 

9.1      Insurance.

 

(a)           Required Insurance.  Synapse shall procure and maintain in effect the following policies of insurance covering liability arising from this Agreement: (i) all insurance coverage’s required by Federal and State law, including worker’s compensation and employer’s liability all with statutory minimum limits; (ii) general comprehensive liability insurance, with at least $1,000,000.00 combined single limit and aggregate, including personal injury or death of any persons and injury to or destruction of property, including loss of use resulting therefrom; and (iii) business automobile liability, covering all owned, non-owned and hired automobiles of Synapse, with a combined single limit of liability of at least $1,000,000.00 for bodily injury and property damage for each accident.

(b)           Evidence of Insurance and Endorsements.  Synapse shall cause its insurers to issue endorsements naming NeoMagic as additional insured or loss payee, as appropriate, on all such insurance policies (except for workers’ compensation insurance).  Upon execution of this Agreement, Synapse shall provide NeoMagic with certificates of insurance evidencing such coverage and endorsements and providing that such coverage is primary and that no such coverage shall be subject to cancellation or material change without 30 days prior written notice to NeoMagic.  The insurance requirements hereunder shall not limit or relieve Synapse of its duties, responsibilities or liabilities under this Agreement.  Synapse shall maintain such insurance and endorsements from the Effective Date until at least 2 years following the termination of this Agreement.

9.2      Assignment.  The rights and obligations of each Party under this Agreement, including each Statement of Work, will not be capable of being assigned or delegated without the prior written consent of the other Party for the first 5 years following the Effective Date.  Notwithstanding the foregoing, either Party may assign and delegate its rights and obligations under this Agreement to any successor to any of the USB 3.0 Transceiver IP or SyMagic Transceiver, as applicable, business units, without the prior written consent of the other Party; provided, that Synapse may not so assign this Agreement without NeoMagic’s consent prior to achieving the final payment milestone under the Initial Statement of Work.  The Parties also agree that any assignment of the Joint IP (by either Party) also must include assumption of the related obligations under this Agreement.

 

9.3      Notices.  All notices given by either Party under this Agreement will be in writing and may be given via facsimile (with proof of confirmation of receipt), email (with confirmed receipt) or overnight mail by a nationally recognized courier, addressed as specified below, as updated by either Party.  A notice so addressed is effective on the date it is received.

 

	 	
For Synapse:

	
For NeoMagic:

	 	
Synapse Design Automation, Inc.

	
NeoMagic Corporation

	 	
150 South Almaden Blvd., Suite #1380

	
2372-A Qume Drive

	 	
San Jose, California 95113

	
San Jose, California 95131

	 	
Attn:  James J. Hemeon

	
Attn:  Syed Zaidi

	 	
Tel:

	
Tel:

	 	
Fax:

	
Fax:

	 	
Email:  james@synapse-da.com

	
Email:  szaidi@NeoMagic.com

	 	
With a copy to:

	
With a copy to:

	 	
Rosheni Fernando (at the same address)

	
Charlotte Wilson (at the same address)

	 	
Email: clients@synapse-da.com

	
Email: cwilson@NeoMagic.com

  

9

  

9.4      Governing Law; Jurisdiction and Venue.  This Agreement will in all respects be governed by the laws of the State of California, without reference to its principles of conflicts of laws.  This Agreement will not be governed by the United Nations Convention of Contracts for the International Sale of Goods, the application of which is expressly excluded.  Subject to Section 9.5, the California state courts of Santa Clara County and federal courts of the Northern District of California will have exclusive jurisdiction and venue over any dispute arising out of or relating to this Agreement (other than to enforce a judgment), and each Party hereby consents to the jurisdiction and venue of such courts.

 

9.5      Arbitration.  Any dispute or claim arising out of or in connection with this Agreement or the performance, breach or termination hereof, shall be finally settled by binding arbitration in accordance with the then-current rules of JAMS by 1 arbitrator.  Such arbitration proceeding shall be held in San Jose, California.  The decision and/or award rendered by the arbitrator shall be written, final and non-appealable and may be entered in any court of competent jurisdiction.  The costs of any arbitration, including administrative fees and fees of the arbitrator, shall be shared equally by the Parties, unless otherwise determined by the arbitrator.  The Parties agree that, any provision of applicable law notwithstanding, they will not request, and the arbitrator shall have no authority to award, punitive or exemplary damages against any Party.  The arbitrator may grant permanent injunctions or other relief in such dispute or claim.  Notwithstanding the foregoing, without breach of this arbitration provision, either Party may apply to any court of competent jurisdiction for temporary injunctive relief or to collect any amounts owed by the other Party under this Agreement.

 

9.6      Disclaimer of Consequential Damages.  In no event will either Party be liable for indirect, special, incidental, consequential or special damages of any nature whatsoever, (including loss of production, profits or use of facilities, promotional or manufacturing expenses, or overhead, or injury to reputation), arising out of or in connection with any claim arising hereunder, even if such Party has been advised of the possibility of such damages.  The limitations in this Section will not apply to breach of, or liability under, Section 6 or 7.

 

9.7      Entire Agreement.  Both Parties agree that this Agreement, including each Statement of Work, is the complete and exclusive statement of agreement between the Parties and supersedes all proposals, oral or written, and all other communications relating to the subject matter of this Agreement, including that certain Memorandum of Understanding dated April 9, 2010.  Any and all preprinted terms and conditions appearing on the face and reverse sides, if any, of a purchase order or quotation will not apply to or become a part of this Agreement, and will be superseded in their entirety by this Agreement.

 

9.8      Modifications; Waiver.  This Agreement may be modified or amended only by a written instrument duly signed by authorized representatives of the Party to be bound thereby.  Failure or delay in enforcing any term, provision or condition of this Agreement by either Party will not operate as a waiver thereof, and no waiver of any term, provision or condition of this Agreement will be valid unless in writing and signed by authorized representatives of the Party to be bound thereby.  Any waiver by either Party of any condition, part, term or provision of this Agreement will not operate or be considered as a waiver of any other condition, part, term or provision of a waiver of any future event or circumstance.

 

9.9      Severability.  If any provision of this Agreement is adjudged by any court of competent jurisdiction to be unenforceable or invalid, that provision will be limited or eliminated to the minimum extent necessary so that this Agreement will be enforceable and otherwise remain in full force and effect.

 

9.10    Relationship of Parties.  The relationship between the Parties is that of independent contractors.  This Agreement does not constitute a partnership or joint venture between Synapse and NeoMagic.  Neither Party is the representative or agent of the other Party and neither will so hold itself out publicly or to any third party or incur any liability for the other.  The Parties agree to act in good faith in connection with their performance of this Agreement and in connection with any consent required hereunder.

 

  

10

  

9.11    Export\Re-Export.  NeoMagic acknowledges that the laws and regulations of the United States restrict the export and reexport of commodities and technical data of United States origin, which may include some or all of the USB 3.0 Transceiver IP.  NeoMagic agrees, and will cause each of its transferees of the SyMagic Transceivers to agree, not to export or re-export such items or any part thereof, in any form, without obtaining the appropriate United States and foreign government licenses.

 

9.12    Other Interpretive Provisions.  References in this Agreement to “Sections” and “Exhibits” are to sections and exhibits herein and hereto unless otherwise indicated.  The words “include” and “including” and words of similar import when used in this Agreement will not be construed to be limiting or exclusive.  Except as provided in a particular context, the word “or” when used in this Agreement may mean each as well as all alternatives.  Headings in this Agreement are for convenience of reference only and are not part of the substance hereof.  All terms defined in this Agreement in the singular form will have comparable meanings when used in the plural form and vice versa.

 

9.13    Counterparts.  This Agreement may be executed in counterparts, each of which will be deemed an original, but both of which together will constitute one and the same instrument.

 

WITNESSETH, the Parties hereto have caused this Agreement to be executed by their duly authorized representatives on the dates indicated below and to be effective as of the Effective Date.

	
NeoMagic Corporation

	
Synapse Design Automation, Inc.

	  	  
	 	  
	
By: /s/ Syed Zaidi

	
By: /s/ James J. Hemeon

	
Name: Syed Zaidi

	
Name: James J. Hemeon

	
Title: President and Chief Executive Officer

	
Title:   Sr. Director WW Sales

	
Date: May 5, 2010

	
Date: May 5, 2010

 

11ex_10-1.htm

    TBS
INTERNATIONAL PLC & SUBSIDIARIES                 EXHIBIT
10.1

     

    

    

    AS AMENDED

    

    Date
   6 May 2010

    

    

    

    

    

    ARGYLE
MARITIME CORP.

    CATON
MARITIME CORP.

    DORCHESTER
MARITIME CORP.

    LONGWOODS
MARITIME CORP.

    McHENRY
MARITIME CORP.

    SUNSWYCK
MARITIME CORP.

    as Joint
and Several Borrowers

     

    – and
–

     

    THE
BANKS AND FINANCIAL INSTITUTIONS

    listed
in Schedule 1

    as
Lenders

     

    – and
–

     

    THE
ROYAL BANK OF SCOTLAND PLC

    as
Mandated Lead Arranger

     

    – and
–

     

    THE
ROYAL BANK OF SCOTLAND PLC

    as
Bookrunner, Agent, Security Trustee and Swap Bank

    

    

    

    

    

                                                                                                                 

     

    AMENDING
AND RESTATING AGREEMENT

                                                                                                                 

    

    relating
to

    a term
loan facility of US$150,000,000

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    INDEX

    

    

    Clause Page

    

     

    

      
        	
                
1

              	
                
INTERPRETATION

              	
                
2

              
	
                
2

              	
                
AGREEMENT OF ALL PARTIES TO THE AMENDMENT OF THE
      LOAN AGREEMENT, MASTER AGREEMENT AND EXISTING FINANCE
      DOCUMENTS

              	
                
3

              
	
                
3

              	
                
CONDITIONS PRECEDENT

              	
                
4

              
	
                
4

              	
                
REPRESENTATIONS AND
      WARRANTIES

              	
                
5

              
	
                
5

              	
                
AMENDMENT OF LOAN AGREEMENT, MASTER AGREEMENT AND
      EXISTING FINANCE DOCUMENTS

              	
                
5

              
	
                
6

              	
                
FURTHER ASSURANCES

              	
                
6

              
	
                
7

              	
                
NOTICES

              	
                
6

              
	
                
8

              	
                
SUPPLEMENTAL

              	
                
6

              
	
                
9

              	
                
LAW AND JURISDICTION

              	
                
7

              
	
                
SCHEDULE
      1  LENDERS

              	
                
8

              
	
                
SCHEDULE 2A

              	
                
9

              
	
                
LOAN A REPAYMENT
    SCHEDULE

              	
                
9

              
	
                
SCHEDULE 2B

              	
                
10

              
	
                
LOAN B REPAYMENT
    SCHEDULE

              	
                
10

              
	
                
SCHEDULE 2C

              	
                
11

              
	
                
AMOUNTS DRAWN DOWN IN RESPECT OF LOAN C, LOAN D,
      LOAN E AND LOAN F

              	
                
11

              
	
                
EXECUTION PAGES

              	
                
12

              
	
                
APPENDIX 1  FORM OF AMENDED AND RESTATED
      LOAN AGREEMENT MARKED TO INDICATE AMENDMENTS TO THE LOAN
      AGREEMENT

              	
                
16

              
	
                
APPENDIX 2  FORM OF CORPORATE GUARANTEE
      SUPPLEMENTS

              	
                
17

              
	
                
APPENDIX 3  FORM OF MORTGAGE
      ADDENDUM

              	
                
18

              
	
                
APPENDIX 4  FORM OF SHARES SECURITY
      DEED

              	
                
19

              
	
                
APPENDIX 5  FORM OF RESTRICTED EQUITY
      DEPOSIT ACCOUNT SECURITY DEED

              	
                
20

              
	 
      	 
      	 
      

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    THIS AGREEMENT is made on
                                       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 borrowers (the “Borrowers”);

            

    

     

    
      	
              (2)  

            	
              THE BANKS AND FINANCIAL
      INSTITUTIONS listed in Schedule 1 as lenders (the “Lenders”);

            

    

     

    
      	
              (3)  

            	
              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 mandated lead arranger (the “Mandated Lead
      Arranger”);

            

    

     

    
      	
              (4)  

            	
              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 agent (the “Agent”);

            

    

     

    
      	
              (5)  

            	
              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 security trustee (the “Security
      Trustee”);

            

    

     

    
      	
              (6)  

            	
              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 swap bank (the “Swap Bank”);
      and

            

    

     

    
      	
              (7)  

            	
              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 bookrunner (the “Bookrunner”).

            

    

     

     

    BACKGROUND

     

    
      	
              (A)  

            	
              By
      a loan agreement dated 29 March 2007 as amended by a side letter dated 24
      July 2007, a supplemental letter agreement dated 26 March 2008, a
      supplemental agreement dated 27 March 2009, a side letter dated 27 May
      2009, a side letter dated 3 September 2009, a side letter dated 31
      December 2009, a supplemental agreement dated 7 January 2010, a side
      letter dated 28 February 2010 and a side letter dated 31 March 2010 (the
      “Loan Agreement”)
      each made between (inter alia) (i) the Borrowers as joint and several
      borrowers, (ii) the Lenders, (iii) the Mandated Lead Arranger, (iv) the
      Bookrunner, (v) the Agent, (vi) the Security Trustee and (viii) the Swap
      Bank, the Lenders agreed to make available to the Borrowers a term loan
      facility in an amount of One hundred and fifty million United States
      Dollars (US$150,000,000).

            

    

     

    
      	
              (B)  

            	
              By
      an ISDA master agreement dated 29 March 2007 (the “Master Agreement”) made
      between the Borrowers and the Swap Bank, the Borrowers have entered into
      or will enter into certain Transactions (as such term is defined in the
      said Master Agreement) pursuant to separate Confirmations (as such term is
      defined in the said Master
Agreement).

            

    

     

    
      	
              (C)  

            	
              Subject
      to the terms and conditions of this Agreement the Lenders have agreed with
      the Borrowers:

            

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (ii)  

            	
              to
      increase the Margin;

            

    

     

    
      	
              (iii)  

            	
              that
      the Borrowers will pay additional
fees;

            

    

     

    
      	
              (iv)  

            	
              to
      extend the Availability Period in respect of certain
  Loans;

            

    

     

    
      	
              (v)  

            	
              to
      reduce the maturity of the Loans;
and

            

    

     

    
      	
              (vi)  

            	
              to
      take additional security in the form of Shares Security Deeds in respect
      of the share capital of the Borrowers and an assignment of any shareholder
      or intra-group loans to the Borrowers and the Restricted Equity Deposit
      Account Security Deed in respect of the Restricted Equity Deposit
      Account.

            

    

     

     

    IT IS AGREED as
follows:

     

    
      	
              1  

            	
              INTERPRETATION

            

    

     

    
      	
              1.1  

            	
              Defined
      expressions.  Words and expressions defined in the Loan
      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 Borrowers and any of the Creditor Parties in
respect of any additional fees;

     

    “Amended and Restated Loan
Agreement”  means the Loan 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 Agent notifies the Borrowers
and the Creditor Parties 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;

     

    “Existing
Mortgages”  means:

     

    
      	
              (a)  

            	
              a
      first preferred Panamanian ship mortgage dated 23 September 2009
      preliminarily registered at the Public Registry Office, Microfilm
      (Mercantile) Section, at Microjacket N-33447, Document No. 1652171 by
      which Argyle Maritime Corp. mortgaged the vessel “ROCKAWAY BELLE” to and
      in favour of the Security Trustee on the terms and conditions therein
      contained; and

            

    

     

    
      	
              (b)  

            	
              a
      first preferred Panamanian ship mortgage dated 26 March 2010 preliminarily
      registered at the Public Registry Office, Microfilm (Mercantile) Section,
      at Microjacket N-34102, Document No. 1748208 by which Caton Maritime Corp.
      mortgaged the vessel “DAKOTA PRINCESS” to and in favour of the Security
      Trustee on terms and conditions therein
  contained;

            

    

     

    “Loan
Agreement”  means the loan agreement dated 29 March 2007 as
referred to in Recital (A);

     

    “Master
Agreement”  means the master agreement dated 29 March 2007 as
amended and supplemented from time to time and  as referred to in
Recital (B);

     

    “Mortgage Addendum” or “Mortgage
Addenda”  means in relation to each Existing Mortgage, an
addendum to the Existing Mortgage, executed or to be executed by the relevant
Borrower in favour of the Security Trustee substantially in the form set out in
Appendix 3 (or in such other form as the Agent may approve or
require);

     

    “Restricted Equity Deposit
Account”  means an account in the name of the Borrowers with
the Agent at Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX
designated with such designation as the Agent may allocate upon its opening or
any other account (with that or another office of the Agent or with a bank or
financial institution other than the Agent) which is designated by the Agent as
the Restricted Equity Deposit Account for the purposes of this
Agreement;

     

    “Restricted Equity Deposit Account
Security Deed”  means a deed creating security in respect of
the Restricted Equity Deposit Account made or to be made by and between the
Borrowers and the Security Trustee in the form set out in Appendix 5 or in such
other form as the Borrowers and the Agent may agree;

     

     “Shareholder”  means
Westbrook Holdings Ltd., a corporation incorporated under the laws of the
Marshall Islands and having its registered office at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;
and

     

    “Shares Security
Deed”  means, in relation to each Borrower, a deed creating
security over the share capital of that Borrower and including an assignment of
any shareholder loans made to the Borrowers to be executed by the Shareholder in
favour of the Security Trustee in the form set out in Appendix 4 or in such
other form as the Borrowers and the Agent may agree.

     

    
      	
              1.3  

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

            

    

     

    
      	
              2  

            	
              AGREEMENT
      OF ALL PARTIES TO THE AMENDMENT OF THE LOAN AGREEMENT, MASTER 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:

            

    

     

    
      	
              (a)  

            	
              to
      the amendment of the Loan Agreement, the Master Agreement and the Existing
      Finance Documents to be made pursuant to Clauses 5.1, 5.2 and 5.3; and

            

    

     

    
      	
              (b)  

            	
              that
      the Borrowers shall pay to the Agent on the Effective Date a restructuring
      fee which in aggregate is equal to zero point five per cent (0.50%) of the
      Total Commitment outstanding as at the Effective Date, such fee to be
      distributed pro rata amongst the Lenders which have entered into this
      Agreement.

            

    

     

    
      	
              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.

            

    

     

    
      	
              2.3  

            	
              Amounts drawn down under Loan A
      and Loan B and repayments in respect of Loan A and Loan
      B.  On the Drawdown Date in respect of the Loan A
      Delivery Advance the Borrowers had drawn down $25,000,000 in respect of
      Loan A.  With effect from the Effective Date, the repayment
      schedule in respect of Loan A shall be as set out in Schedule
      2A.  On the Drawdown Date in respect of the Loan B Delivery
      Advance the Borrowers had drawn down $24,587,500 in respect of Loan
      B.  With effect from the Effective Date, the repayment schedule
      in respect of Loan B shall be as set out in Schedule
  2B.

            

    

     

    
      	
              2.4  

            	
              Amounts drawn down under Loan
      C, Loan D, Loan E and Loan F.  The Borrowers have as at
      the date of this Agreement drawn down the amounts set out in Schedule 2C
      in respect of Loan C, Loan D, Loan E and Loan
F.

            

    

     

    
      	
              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 Agent shall have received the
      following documents and evidence in all respects in form and substance
      satisfactory to the Agent and its lawyers on or before 14 May 2010 or such
      later date as the Agent may agree with the Creditor Parties and the
      Borrowers:

            

    

     

    
      	
              (a)  

            	
              in
      relation to the Borrowers, the New Corporate Guarantor, the Corporate
      Guarantor and the Shareholder, documents of the kind specified in
      paragraphs 2, 3, 4 and 5 of Part A of Schedule 3 of the Loan Agreement
      with appropriate modifications to refer to this Agreement, the Additional
      Fee Letter, the Mortgage Addenda, the Corporate Guarantee Supplements, the
      Shares Security Deeds and the Restricted Equity Deposit Account Security
      Deed 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 Mortgage
Addenda;

            

    

     

    
      	
              (e)  

            	
              a
      duly executed original of the Corporate Guarantee
    Supplements;

            

    

     

    
      	
              (f)  

            	
              duly
      executed originals of the Shares Security Deeds (and of each document to
      be delivered pursuant to each of
them);

            

    

     

    
      	
              (g)  

            	
              a
      duly executed original of the Restricted Equity Deposit Account Security
      Deed (and of each document to be delivered pursuant to
  it);

            

    

     

    
      	
              (h)  

            	
              documentary
      evidence that each Mortgage Addendum has been duly recorded against the
      relevant Ship as a valid addendum to the relevant Existing Mortgage over
      that Ship according to the laws of
Panama;

            

    

     

    
      	
              (i)  

            	
              evidence
      that each Lender which has entered into this Agreement has received the
      fee payable to it pursuant to Clause 2.1(b);

            

    

     

    
      	
              (j)  

            	
              documentary
      evidence that the agent for service of process named in Clause 31 of the
      Loan Agreement has accepted its appointment in respect of the Shares
      Security Deeds and the Restricted Equity Deposit Account Security Deed;
      and

            

    

     

    
      	
              (k)  

            	
              any
      further opinions, consents, agreements and documents in connection with
      this Agreement, the Additional Fee Letter, the Mortgage Addenda, the
      Corporate Guarantee Supplements, the Shares Security Deeds, the Restricted
      Equity Deposit Account Security Deed and the Finance Documents which the
      Agent may reasonably request by notice to the Borrowers prior to the
      Effective Date.

            

    

     

    
      	
              4  

            	
              REPRESENTATIONS
      AND WARRANTIES

            

    

     

    
      	
              4.1  

            	
              Repetition of Loan Agreement
      representations and warranties.  The Borrowers represent
      and warrant to the Agent that the representations and warranties in clause
      10 of the Loan Agreement, as amended and restated by this Agreement and
      updated with appropriate modifications to refer to this Agreement and,
      where appropriate, the Mortgage Addendum, 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
      Borrowers represent and warrant to the Agent 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 and, where appropriate, the
      Mortgage Addendum, remain true and not misleading if repeated on the date
      of this Agreement with reference to the circumstances now
      existing.

            

    

     

    
      	
              5  

            	
              AMENDMENT
      OF LOAN AGREEMENT, MASTER AGREEMENT AND EXISTING FINANCE
      DOCUMENTS

            

    

     

    
      	
              5.1  

            	
              Amendments
      to Loan Agreement

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              5.2  

            	
              Amendments to Master
      Agreement.  With effect on and from the Effective Date
      the Master Agreement shall be, and shall be deemed by this Agreement to
      be, amended so that the definition of, and references throughout to, the
      Loan Facility and the Credit Support Documents shall be construed as if
      the same referred to the Loan Agreement and those Credit Support Documents
      as amended and restated or supplemented by this Agreement and the Mortgage
      Addendum.

            

    

     

    
      	
              5.3  

            	
              Amendments to Existing Finance
      Documents.  With effect on and from the Effective Date
      each of the Existing Finance Documents (other than the Existing Mortgages
      which are amended and supplemented by the Mortgage Addenda) 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 Loan Agreement, the Master Agreement and any of the
      Existing Finance Documents shall be construed as if the same referred to
      the Loan Agreement, the Master 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;

            

    

     

    
      	
              (c)  

            	
              the
      definition of, and references throughout each of the Existing Finance
      Documents to, the Existing Mortgages, shall be construed as if the same
      referred to the Existing Mortgages as amended and supplemented by the
      Mortgage Addenda; and

            

    

     

    
      	
              (d)  

            	
              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.

            

    

     

    
      	
              5.4  

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

            

    

     

    
      	
              (a)  

            	
              the
      amendments contained or referred to in Clause 5.2 and 5.3 and the
      Mortgage Addenda; 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  

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

            

    

     

    
      	
              (a)  

            	
              execute
      and deliver to the Agent (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 Agent may, in any particular case,
      specify;

            

    

     

    
      	
              (b)  

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

            

    

     

    which the
Agent may, by notice to the Borrowers, 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 Agent intended should be created by or pursuant to the Loan Agreement
      or any other Finance Document, each as amended and restated or
      supplemented by this Agreement, or by the Mortgage Addenda;
      and

            

    

     

    
      	
              (b)  

            	
              implementing
      the terms and provisions of this
Agreement.

            

    

     

    
      	
              6.3  

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

            

    

     

    
      	
              7  

            	
              NOTICES

            

    

     

    
      	
              7.1  

            	
              General.  The
      provisions of clause 28 (Notices) of the Loan
      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.  Other than a Creditor Party, 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 Loan
      Agreement provisions.  The provisions of clause 31 (Law and jurisdiction) of
      the Loan 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.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    

    SCHEDULE
1

     

    

     

    LENDERS

     

    
      	
              Lender

            	
              Lending
      Office

            
	
              The
      Royal Bank of Scotland plc

            	
              Shipping
      Business Centre

              5-10
      Great Tower Street

              London
      EC3P 3HX

              Fax
      No:               +
      44 207 085 7142

              Attn:
      Transaction and Portfolio Management

            
	
              Citibank,
      N.A.

            	
              750
      Washington Boulevard

              Stamford
      CT06901

              USA

              Fax
      No: + 1 866 772 2935

              Attn:
      Gilbert Torres

            
	
              Landesbank
      Hessen-Thüringen Girozentrale

            	
              420
      Fifth Avenue, 24th Floor

              New
      York, NY 100108-2729

              USA

              Fax
      No: +1 212 703 5256

              Attn:
      Corporate Finance/ Portfolio Management

            
	
              Norddeutsche
      Landesbank Girozentrale

            	
              Ship
      and Aircraft Finance Department

              Friednichswall
      10

              30159
      Hannover, Germany

              Fax
      No: +49 511 361 4785

              Attn:
      International Shipping Group II - Sebastian Schubert

            
	
              Alliance
      & Leicester Commercial Finance plc

            	
              298 Deansgate

              Manchester

              M3
      4HH

              Fax
      No: + 44 161 953 3517

              Attn
      Corporate Administration Manager

            
	
              Bank
      of America, N.A.

            	
              Bank
      of America

              100
      Federal Street

              Boston
      MA 02110

              Fax
      No: +617434 1955

              Attn:
      Transportation Division - Credit
Products

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    SCHEDULE
2A

     

    LOAN
A REPAYMENT SCHEDULE

     

    
      	
              (D)Date

            	
              (E)Amortization

            	
              (F)Principal Amount Outstanding
      after Amortization Payment

            
	
               

              (G) Final
      draw
      date:                    9
      September 2009

               

            	
              (H)-

            	
              (I)$25,000,000

            
	
               

              (J) September
      2009

               

            	
              (K)$417,500

            	
              (L)$24,582,500

            
	
               

              (M) March
      2010

               

            	
              (N)$417,500

            	
              (O)$24,165,000

            
	
               

              (P) June
      2010

               

            	
              (Q)$417,500

            	
              (R)$23,747,500

            
	
               

              (S) September
      2010

               

            	
              (T)$417,500

            	
              (U)$23,330,000

            
	
               

              (V) December
      2010

               

            	
              (W)$417,500

            	
              (X)$22,912,500

            
	
               

              (Y) March
      2011

               

            	
              (Z)$417,500

            	
              (AA)$22,495,000

            
	
               

              (BB) June
      2011

               

            	
              (CC)$417,500

            	
              (DD)$22,077,500

            
	
               

              (EE) September
      2011

               

            	
              (FF)$417,500

            	
              (GG)$21,660,000

            
	
               

              (HH) December
      2011

               

            	
              (II)$417,500

            	
              (JJ)$21,242,500

            
	
               

              (KK) March
      2012

               

            	
              (LL)$417,500

            	
              (MM)$20,825,000

            
	
               

              (NN) June
      2012

               

            	
              (OO)$417,500

            	
              (PP)$20,407,500

            
	
               

              (QQ) September
      2012

               

            	
              (RR)$417,500

            	
              (SS)$19,990,000

            
	
               

              (TT) December
      2012

               

            	
              (UU)$417,500

            	
              (VV)$19,572,500

            
	
               

              (WW) March
      2013

               

            	
              (XX)$417,500

            	
              (YY)$19,155,000

            
	
               

              (ZZ) June
      2013

               

            	
              (AAA)$417,500

            	
              (BBB)$18,737,500

            
	
               

              (CCC) September
      2013

               

            	
              (DDD)$417,500

            	
              (EEE)$18,320,000

            
	
               

              (FFF) December
      2013

               

            	
              (GGG)$417,500

            	
              (HHH)$17,902,500

            
	
               

              (III) March
      2014

               

            	
              (JJJ)$417,500

            	
              (KKK)$17,485,000

            
	
               

              (LLL) June
      2014

               

            	
              (MMM)$417,500

            	
              (NNN)$17,067,500

            
	
               

              (OOO) September
      2014

               

            	
              (PPP)$17,067,500

            	
              (QQQ)$0

            

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    SCHEDULE
2B

     

    LOAN
B REPAYMENT SCHEDULE

     

    
      	
              (RRR)Date

            	
              (SSS)Amortization

            	
              (TTT)Principal Amount Outstanding
      after Amortization Payment

            
	
               

              (UUU) Final
      draw
      date:                  23
      March 2010

               

            	
              (VVV)-

            	
              (WWW)$24,587,500

            
	
               

              (XXX) March
      2010

               

            	
              (YYY)$417,500

            	
              (ZZZ)$24,170,000

            
	
               

              (AAAA) June
      2010

               

            	
              (BBBB)$417,500

            	
              (CCCC)$23,752,500

            
	
               

              (DDDD) September
      2010

               

            	
              (EEEE)$417,500

            	
              (FFFF)$23,335,000

            
	
               

              (GGGG) December
      2010

               

            	
              (HHHH)$417,500

            	
              (IIII)$22,917,500

            
	
               

              (JJJJ) March
      2011

               

            	
              (KKKK)$417,500

            	
              (LLLL)$22,500,000

            
	
               

              (MMMM) June
      2011

               

            	
              (NNNN)$417,500

            	
              (OOOO)$22,082,500

            
	
               

              (PPPP) September
      2011

               

            	
              (QQQQ)$417,500

            	
              (RRRR)$21,665,000

            
	
               

              (SSSS) December
      2011

               

            	
              (TTTT)$417,500

            	
              (UUUU)$21,247,500

            
	
               

              (VVVV) March
      2012

               

            	
              (WWWW)$417,500

            	
              (XXXX)$20,830,000

            
	
               

              (YYYY) June
      2012

               

            	
              (ZZZZ)$417,500

            	
              (AAAAA)$20,412,500

            
	
               

              (BBBBB) September
      2012

               

            	
              (CCCCC)$417,500

            	
              (DDDDD)$19,995,000

            
	
               

              (EEEEE) December
      2012

               

            	
              (FFFFF)$417,500

            	
              (GGGGG)$19,577,500

            
	
               

              (HHHHH) March
      2013

               

            	
              (IIIII)$417,500

            	
              (JJJJJ)$19,160,000

            
	
               

              (KKKKK) June
      2013

               

            	
              (LLLLL)$417,500

            	
              (MMMMM)$18,742,500

            
	
               

              (NNNNN) September
      2013

               

            	
              (OOOOO)$417,500

            	
              (PPPPP)$18,325,000

            
	
               

              (QQQQQ) December
      2013

               

            	
              (RRRRR)$417,500

            	
              (SSSSS)$17,907,500

            
	
               

              (TTTTT) March
      2014

               

            	
              (UUUUU)$417,500

            	
              (VVVVV)$17,490,000

            
	
               

              (WWWWW) June
      2014

               

            	
              (XXXXX)$417,500

            	
              (YYYYY)$17,072,500

            
	
               

              (ZZZZZ) September
      2014

               

            	
              (AAAAAA)$17,072,500

            	
              (BBBBBB)$0

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    SCHEDULE
2C

     

    AMOUNTS
DRAWN DOWN IN RESPECT OF LOAN C, LOAN D, LOAN E AND LOAN F

     

    
      	
              (CCCCCC)Loan

            	
              (DDDDDD)Amount drawn down to finance
      first stage payment

            	
              (EEEEEE)Amount drawn down to finance
      second stage payment

            	
              (FFFFFF)Amount drawn down to finance
      third stage payment

            	
              (GGGGGG)Amount drawn down to finance
      fourth stage payment

            	
              (HHHHHH)Amount drawn down to finance
      final delivery payment

            
	
              (IIIIII)Loan
      C

            	
              (JJJJJJ)$5,000,000

            	
              (KKKKKK)$5,000,000

            	
              (LLLLLL)$5,000,000

            	
              (MMMMMM)$5,000,000

            	
              (NNNNNN)$0

              (OOOOOO)

            
	
              (PPPPPP)Loan D

            	
              (QQQQQQ)$5,000,000

            	
              (RRRRRR)$5,000,000

            	
              (SSSSSS)$5,000,000

            	
              (TTTTTT)$0

            	
              (UUUUUU)$0

              (VVVVVV)

            
	
              (WWWWWW)Loan E

            	
              (XXXXXX)$5,000,000

            	
              (YYYYYY)$5,000,000

            	
              (ZZZZZZ)$4,587,500

            	
              (AAAAAAA)$5,000,000

            	
              (BBBBBBB)$0

              (CCCCCCC)

            
	
              (DDDDDDD)Loan F

            	
              (EEEEEEE)$5,000,000

            	
              (FFFFFFF)$5,000,000

            	
              (GGGGGGG)$5,000,000

            	
              (HHHHHHH)$0

            	
              (IIIIIII)$0

              (JJJJJJJ)

            

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXECUTION
PAGES

    

      
        	
                BORROWERS

              	 
      	 
	
                EXECUTED and DELIVERED as a DEED

              	
                )

              	 
	
                by

              	
                )

              	 
	
                ARGYLE
      MARITIME CORP.

              	
                )

              	 
	
                acting
      by Keith Krut 

              	
                )

              	 /s/
      Keith Krut 
	
                its
      duly authorised attorney-in-fact

              	
                )

              	 
	
                in
      the presence of: /s/ Tiana Morales

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED

              	
                )

              	 
	
                by

              	
                )

              	 
	
                CATON
      MARITIME CORP.

              	
                )

              	 
	
                acting
      by Keith Krut 

              	
                )

              	 /s/
      Keith Krut
	
                its
      duly authorised attorney-in-fact

              	
                )

              	 
	
                in
      the presence of: /s/ Tiana Morales 

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED

              	
                )

              	 
	
                by

              	
                )

              	 
	
                DORCHESTER
      MARITIME CORP.

              	
                )

              	 
	
                acting
      by Keith Krut

              	
                )

              	 /s/
      Keith Krut 
	
                its
      duly authorised attorney-in-fact

              	
                )

              	 
	
                in
      the presence of: /s/ Tiana Morales

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED

              	
                )

              	 
	
                by

              	
                )

              	 
	
                LONGWOODS MARITIME
      CORP.

              	
                )

              	 
	
                acting
      by Keith Krut

              	
                )

              	 /s/
      Keith Krut 
	
                its
      duly authorised attorney-in-fact

              	
                )

              	 
	
                in
      the presence of: /s/ Tiana Morales

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED

              	
                )

              	 
	
                by

              	
                )

              	 
	
                McHENRY
      MARITIME CORP.

              	
                )

              	 
	
                acting
      by Keith Krut

              	
                )

              	 /s/
      Keith Krut
	
                its
      duly authorised attorney-in-fact

              	
                )

              	 
	
                in
      the presence of: /s/ Tiana Morales

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED

              	
                )

              	 
	
                by

              	
                )

              	 
	
                SUNSWYCK
      MARITIME CORP.

              	
                )

              	 
	
                acting
      by Keith Krut

              	
                )

              	 /s/
      Keith Krut
	
                its
      duly authorised attorney-in-fact

              	
                )

              	 
	
                in
      the presence of: /s/ Tiana Morales

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                LENDERS

              	 
      	 
	
                EXECUTED and DELIVERED as a DEED

              	
                )

              	 
	
                by

              	
                )

              	 
	
                THE
      ROYAL BANK OF SCOTLAND PLC

              	
                )

              	 
	
                PLC

              	
                )

              	 
	
                acting
      by Graham Richard Locker

              	
                )

              	 /s/
      Graham Richard Locker
	 
      	
                )

              	 
	
                its
      duly authorised attorney-in-fact

              	
                )

              	 
	
                in
      the presence of: /s/ C.L. Patrick

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED

              	
                )

              	 
	
                by

              	
                )

              	 
	
                CITIBANK,
      N.A.

              	
                )

              	 
	
                acting
      by Mark McElwain

              	
                )

              	 /s/
      Mark McElwain 
	 
      	
                )

              	 
	
                its
      duly authorised attorney-in-fact

              	
                )

              	 
	
                in
      the presence of: /s/ Lisa Wah 

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED

              	
                )

              	 
	
                by

              	
                )

              	 
	
                LANDESBANK
      HESSEN-THÜRINGEN

              	
                )

              	 
	
                GIROZENTRALE

              	
                )

              	 
	
                acting
      by

              	
                )

              	 /s/
      David A.
    Leech         
	 
      	
                )

              	 
	
                its
      duly authorised attorney-in-fact

              	
                )

              	 
	
                in
      the presence of:

              	
                )

              	 /s/
      Jan Welsmulter
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED

              	
                )

              	 
	
                by

              	
                )

              	 
	
                NORDDEUTSCHE
      LANDESBANK

              	
                )

              	 
	
                GIROZENTRALE

              	
                )

              	 
	
                acting
      by  Claudia Merrmann / Christian Schmech

              	
                )

              	 /s/
      Claudia Merrmann   /s/ Christian Schmech
	 
      	
                )

              	 
	
                its
      duly authorised attorney-in-fact

              	
                )

              	 
	
                in
      the presence of: /s/ Torsten Reiyedle 

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED

              	
                )

              	 
	
                by

              	
                )

              	 
	
                ALLIANCE
      & LEICESTER

              	
                )

              	 
	
                COMMERCIAL
      FINANCE PLC

              	
                )

              	 
	
                acting
      by Mark McCarthy

              	
                )

              	 /s/
      Mark McCarthy
	 
      	
                )

              	 
	
                its
      duly authorised attorney-in-fact

              	
                )

              	 
	
                in
      the presence of: /s/ Sufdar Hassan 

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED

              	
                )

              	 
	
                by

              	
                )

              	 
	
                BANK OF AMERICA,
      N.A.

              	
                )

              	 
	
                acting
      by Judith A Huckins

              	
                )

              	 /s/
      Judith A. Huckins
	 
      	
                )

              	 
	
                its
      duly authorised attorney-in-fact

              	
                )

              	 
	
                in
      the presence of: /s/ Matthew Consigli

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                MANDATED
      LEAD ARRANGER

              	 
      	 
	 
      	 
      	 
	
                EXECUTED and DELIVERED as a DEED

              	
                )

              	 
	
                by
      

              	
                )

              	 
	
                THE ROYAL BANK OF SCOTLAND
      PLC

              	
                )

              	 
	
                acting
      by  Philip A. Pentney

              	
                )

              	 /s/
      Philip A. Pentney
	
                its
      duly authorised attorney-in-fact

              	
                )

              	 
	
                in
      the presence of: /s/ Tiana Morales

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                BOOKRUNNER

              	 
      	 
	
                EXECUTED and DELIVERED as a DEED

              	
                )

              	 
	
                by

              	
                )

              	 
	
                THE
      ROYAL BANK OF SCOTLAND PLC

              	
                )

              	 
	
                acting
      by Philip A. Pentney

              	
                )

              	 /s/
      Philip A. Pentney
	
                its
      duly authorised attorney-in-fact

              	
                )

              	 
	
                in
      the presence of: /s/ Tiana Morales

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                AGENT

              	 
      	 
	
                EXECUTED and DELIVERED as a DEED

              	
                )

              	 
	
                by

              	
                )

              	 
	
                THE
      ROYAL BANK OF SCOTLAND PLC

              	
                )

              	 
	
                acting
      by

              	
                )

              	 
	
                its
      duly authorised attorney-in-fact

              	
                )

              	 
	
                in
      the presence of:

              	
                )

              	 
	
                SECURITY
      TRUSTEE

              	 
      	 
	
                EXECUTED and DELIVERED as a DEED

              	
                )

              	 
	
                by

              	
                )

              	 
	
                THE
      ROYAL BANK OF SCOTLAND PLC

              	
                )

              	 
	
                acting
      by Philip A. Pentney

              	
                )

              	 /s/
      Philip A. Pentney
	 
      	
                )

              	 
	
                its
      duly authorised attorney-in-fact

              	
                )

              	 
	
                in
      the presence of: /s/ Tiana Morales

              	
                )

              	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
                SWAP
      BANK

              	 
      	 
	
                EXECUTED and DELIVERED as a DEED

              	
                )

              	 
	
                by

              	
                )

              	 
	
                THE
      ROYAL BANK OF SCOTLAND PLC

              	
                )

              	 
	
                acting
      by Philip A. Pentney 

              	
                )

              	 /s/
      Philip A. Pentney
	 
      	
                )

              	 
	
                its
      duly authorised attorney-in-fact

              	
                )

              	 
	
                in
      the presence of: /s/ Tiana Morales

              	
                )

              	 
	 
      	 
      	 

      

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    APPENDIX
1

    

    FORM
OF AMENDED AND RESTATED LOAN 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 Borrowers

    

    – and
–

    

    THE
BANKS AND FINANCIAL INSTITUTIONS

    listed
in Schedule 1

    as
Lenders

    

    – and
–

    

    THE
ROYAL BANK OF SCOTLAND plc

    as
Mandated Lead Arranger

    

    – and
–

    

    THE
ROYAL BANK OF SCOTLAND plc

    as
Bookrunner, Agent, Security Trustee and Swap Bank

    

    

    

    

    

                                                                                

     

    LOAN
AGREEMENT

                                                                                

    

    relating
to a term loan facility of US$150,000,000

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    INDEX

    

    
      
        	
                Clause

              	 
      	
                Page

              
	 
      	 
      	 
      
	
                1

              	
                INTERPRETATION

              	
                1

              
	
                2

              	
                LOAN
      FACILITy

              	
                17

              
	
                3

              	
                POSITION
      OF THE LENDERS AND THE SWAP BANK

              	
                20

              
	
                4

              	
                DRAWDOWN

              	
                21

              
	
                5

              	
                INTEREST

              	
                22

              
	
                6

              	
                INTEREST
      PERIODS

              	
                24

              
	
                7

              	
                DEFAULT
      INTEREST

              	
                25

              
	
                8

              	
                REPAYMENT
      AND PREPAYMENT

              	
                26

              
	
                9

              	
                CONDITIONS
      PRECEDENT

              	
                28

              
	
                10

              	
                REPRESENTATIONS
      AND WARRANTIES

              	
                30

              
	
                11

              	
                GENERAL
      UNDERTAKINGS AND FINANCIAL COVENANTS

              	
                32

              
	
                12

              	
                CORPORATE
      UNDERTAKINGS

              	
                37

              
	
                13

              	
                INSURANCE

              	
                38

              
	
                14

              	
                SHIP
      COVENANTS

              	
                43

              
	
                15

              	
                SECURITY
      COVER

              	
                46

              
	
                16

              	
                PAYMENTS
      AND CALCULATIONS

              	
                47

              
	
                17

              	
                APPLICATION
      OF RECEIPTS

              	
                49

              
	
                18

              	
                EARNINGS
      ACCOUNT AND STANDBY EARNINGS ACCOUNT

              	
                50

              
	
                19

              	
                EVENTS
      OF DEFAULT

              	
                51

              
	
                20

              	
                FEES
      AND EXPENSES

              	
                56

              
	
                21

              	
                INDEMNITIES

              	
                58

              
	
                22

              	
                NO
      SET-OFF OR TAX DEDUCTION

              	
                60

              
	
                23

              	
                ILLEGALITY,
      ETC

              	
                61

              
	
                24

              	
                INCREASED
      COSTS

              	
                61

              
	
                25

              	
                SET‐OFF

              	
                63

              
	
                26

              	
                TRANSFERS
      AND CHANGES IN LENDING OFFICES

              	
                64

              
	
                27

              	
                VARIATIONS
      AND WAIVERS

              	
                67

              
	
                28

              	
                NOTICES

              	
                67

              
	
                29

              	
                JOINT
      AND SEVERAL LIABILITY

              	
                70

              
	
                30

              	
                SUPPLEMENTAL

              	
                71

              
	
                31

              	
                LAW
      AND JURISDICTION

              	
                71

              
	
                SCHEDULE
      1  LENDERS

              	
                73

              
	
                SCHEDULE
      2  DRAWDOWN NOTICE

              	
                74

              
	
                SCHEDULE
      3  CONDITION PRECEDENT DOCUMENTS

              	
                75

              
	
                SCHEDULE
      4  TRANSFER CERTIFICATE

              	
                80

              
	
                SCHEDULE
      5  REPAYMENT INSTALMENTS

              	
                84

              
	
                SCHEDULE
      6  MANDATORY COST FORMULA

              	
                86

              
	
                schedule
      7  Classification of SHIPS

              	
                88

              
	
                SCHEDULE
      8  FINANCIAL COVENANTS

              	
                89

              
	
                SCHEDULE
      9  FORM OF COMPLIANCE CERTIFICATE

              	
                98

              
	
                EXECUTION
      PAGES

              	
                100

              
	 
      	 
      	 
      

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    THIS LOAN 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
      Borrowers;

            

    

     

    
      	
              (2)  

            	
              THE BANKS AND FINANCIAL
      INSTITUTIONS listed in Schedule 1, as Lenders;

            

    

     

    
      	
              (3)  

            	
              THE ROYAL BANK OF
      SCOTLAND plc as Mandated Lead
      Arranger;

            

    

     

    
      	
              (4)  

            	
              THE ROYAL BANK OF SCOTLAND
      plc as Bookrunner;

            

    

     

    
      	
              (5)  

            	
              THE ROYAL BANK OF SCOTLAND
      plc as Agent;
    and

            

    

     

    
      	
              (6)  

            	
              THE ROYAL BANK OF SCOTLAND
      plc as Swap
      Bank.

            

    

     

    BACKGROUND

     

    
      	
              (A)  

            	
              The
      Lenders have agreed to make available to the Borrowers a term loan
      facility of up to $150,000,000 for the purpose of part financing the
      acquisition cost of each of six newbuilding multipurpose carriers being
      built at Yahua Shipyard, China having hull nos. NYHS200720, NYHS200721,
      NYHS200722, NYHS200723, NYHS200724 and
  NYHS200725.

            

    

     

    
      	
              (B)  

            	
              The
      Swap Bank has agreed to enter into interest rate swap transactions with
      the Borrowers from time to time to hedge the Borrowers’ exposure under
      this Agreement to interest rate
fluctuations.

            

    

     

    
      	
              (C)  

            	
              The
      Lenders and the Swap Bank have agreed to share in the security to be
      granted to the Security Trustee pursuant to this Agreement on the terms
      described herein.

            

    

     

    IT IS AGREED as
follows:

     

    
      	
              1  

            	
              INTERPRETATION

            

    

     

    
      	
              1.1  

            	
              Definitions.  Subject
      to Clause 1.5, in this
    Agreement:

            

    

     

    “Account Security
Deed”  means a deed creating security in respect of the Standby
Earnings Account made or to be made by and between the Borrowers, TBS Pacific
Liner and the Security Trustee, in such form as the Borrowers, TBS Pacific Liner
and the Agent may agree;

     

    “Advance”  means the
principal amount of each borrowing of a portion of the Commitments by the
Borrowers under this Agreement;

     

    “Affected
Lender”  has the meaning given in Clause 5.7;

     

    “Agency and Trust
Agreement”  means the agency and trust agreement executed or to
be executed between the Borrowers, the Lenders, the Agent and the Security
Trustee in such form as the Borrowers and the Agent may agree;

     

    “Agent”  means The
Royal Bank of Scotland plc, acting in such capacity through its office at Level
5, 135 Bishopsgate, London EC2M 3UR, or any successor of it appointed under
clause 5 of the Agency and Trust 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
which the Agent may, with the authorisation of the Majority Lenders, approve
from time to time as the manager of the Ships;

     

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

     

    
      	
              (a)  

            	
              (i)           in
      respect of Loan A, 30 September 2009 (or such later date as the Agent may,
      with the authorisation of the Majority Lenders, agree with the
      Borrowers);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              in
      respect of Loan B, 31 March 2010 (or such later date as the Agent may,
      with the authorisation of the Majority Lenders, agree with the
      Borrowers);

            

    

    

    
      	
               
      

            	
              (iii)

            	
              in
      respect of Loan C, 31 August 2010 (or such later date as the Agent may,
      with the authorisation of the Majority Lenders, agree with the
      Borrowers);

            

    

    

    
      	
               
      

            	
              (iv)

            	
              in
      respect of Loan D, 30 April 2011 (or such later date as the Agent may,
      with the authorisation of the Majority Lenders, agree with the
      Borrowers);

            

    

    

    
      	
               
      

            	
              (v)

            	
              in
      respect of Loan E, 31 January 2011 (or such later date as the Agent may,
      with the authorisation of the Majority Lenders, agree with the
      Borrowers);

            

    

    

    
      	
               
      

            	
              (vi)

            	
              in
      respect of Loan F, 31 August 2011 (or such later date as the Agent may,
      with the authorisation of the Majority Lenders, agree with the
      Borrowers);

            

    

    

    
      	
              (b)  

            	
              if
      earlier, the date on which the Total Commitments are fully borrowed,
      cancelled or terminated;

            

    

     

    “Available
Commitment”  means, in relation to a Lender and at any time,
its Commitment less its Contribution at that time (and “Total Available
Commitments”  means the aggregate of the Available Commitments
of all the Lenders);

     

    “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;

     

    “Bareboat
Charter”  means, in relation to each Ship, the bareboat charter
made or to be made between the relevant Borrower and the Bareboat Charterer in
respect of such Ship;

     

    “Bareboat
Charterer”  means a company to be nominated by the Borrowers
which is incorporated in the Philippines and owned or controlled by Aboitiz
Jebsen, or such other company as the Borrowers may nominate with the Agent’s
approval which is not to be unreasonably withheld;

     

    “Bookrunner” means The Royal
Bank of Scotland plc, acting in such capacity through Loan Markets, 3rd Floor,
135 Bishopsgate, London EC2M 3UR;

     

    “Borrower 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;

     

    “Borrower 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;

     

    “Borrower 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;

     

    “Borrower 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;

     

    “Borrower 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;

     

    “Borrower 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;

     

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

     

    “Builder”  means
Nantong Yahua Shipbuilding Co., Ltd a corporation organised and existing under
the laws of the People’s Republic of China, having its registered office at 1#
Hongzha Road, Jinweigang, Nantong Jiangsu P.C. 226361, the People’s Republic of
China;

     

    “Business Day”  means
a day on which banks are open for general business in Dublin, Frankfurt, London
and Paris 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. B88, An Ding Men Wai
Street, Beijing 100011, The People’s Republic of China;

     

    “Classification” means, in
relation to a Ship, the classification set opposite its name in Schedule
7;

     

    “Commitment”  means
in relation to a Lender, the amount set opposite its name in Schedule 1, or, as
the case may be require, the amount specified in the relevant Transfer
Certificate, as that amount may be reduced, cancelled or terminated in
accordance with this Agreement (and “Total Commitments” means the
aggregate of the Commitments of all the Lenders);

     

    “Confirmation” in relation to
any continuing Designated Transaction, has the meaning given in the Master
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 21.4;

     

    “Contribution”  means,
in relation to a Lender the part of the Loans which is owing to that Lender (and
“Total Contributions”
means the aggregate of the Contributions of all the Lenders);

     

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

     

    “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;

     

    “Creditor
Party”  means the Agent, the Security Trustee, any Lender or
the Swap Bank, whether as at the date of this Agreement or at any later
time;

     

    “Delivery
Advances”  means together Loan A Delivery Advance, Loan B
Delivery Advance, Loan C Delivery Advance, Loan D Delivery Advance, Loan E
Delivery Advance and Loan F Delivery Advance (as each such expression is defined
in Clause 2.1) and, in the singular, means any of
them;

     

    “Delivery
Date”  means, in relation to each Ship, the date of delivery of
such Ship by the Seller to the relevant Borrower under the relevant Shipbuilding
Contract;

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

            	
              its
      purpose is the hedging of the Borrowers’ exposure under this Agreement to
      fluctuations in LIBOR arising from the funding of the Loans (or any part
      thereof) for a period expiring no later than the final Repayment
      Date;

            

    

     

    “Dispute” has the meaning given
to that term in Clause 31.6;

     

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

     

    “Drawdown
Date”  means, in relation to an Advance, the date requested by
the Borrowers for the Advance to be made, or (as the context requires) the date
on which the Advance is actually made;

     

    “Drawdown
Notice”  means a notice in the form set out in Schedule 2 (or
in any other form which the Agent approves or reasonably requires);

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    “Earnings
Account”  means an account in the name of TBS Pacific Liner
with the Agent at Shipping Business Centre, 5-10 Great Tower Street, London EC3P
3HX designated with such designation as the Agent may allocate upon its opening
or any other account (with that or another office of the Agent or with a bank or
financial institution other than the Agent) which is designated by the Agent as
the Earnings Account for the purposes of this Agreement;

     

    “Environmental Claim”
means:

     

    
      	
              (a)  

            	
              any
      claim by any governmental, judicial or regulatory authority which arises
      out of an Environmental Incident or which relates to an alleged breach of,
      or non-compliance with, any Environmental Law;
  or

            

    

     

    
      	
              (b)  

            	
              any
      claim by any other person which relates to an Environmental Incident or to
      an alleged Environmental Incident,

            

    

     

    and
“claim” means a claim
for damages, compensation, fines, penalties or any other payment of any kind
whether or not similar to the foregoing; an order or direction to take, or not
to take, certain action or to desist from or suspend certain action; and any
form of enforcement or regulatory action, including the arrest or attachment of
any asset;

     

    “Environmental
Incident”  means:

     

    
      	
              (a)  

            	
              any
      release of Environmentally Sensitive Material from a Ship;
    or

            

    

     

    
      	
              (b)  

            	
              any
      incident in which Environmentally Sensitive Material is released from a
      vessel other than a Ship and which involves a collision between a Ship and
      such other vessel or some other incident of navigation or operation, in
      either case, in connection with which a Ship is actually or potentially
      liable to be arrested, attached, detained or injuncted and/or a Ship
      and/or a Borrower and/or any Approved Manager of a Ship is at fault or
      allegedly at fault or otherwise liable to any legal or administrative
      action; or

            

    

     

    
      	
              (c)  

            	
              any
      other incident in which Environmentally Sensitive Material is released
      otherwise than from a Ship and in connection with which a Ship is actually
      or potentially liable to be arrested and/or where a Borrower and/or any
      Approved Manager of a Ship is at fault or allegedly at fault or otherwise
      liable to any legal or administrative
action;

            

    

     

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

     

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

     

    “Event of
Default”  means any of the events or circumstances described in
Clause 19.1;

     

    “Fee Letter” means any letter
or letters dated on or about the date of this Agreement between the Mandated
Lead Arranger and the Borrowers (or the Agent and the Borrowers) setting out any
of the fees referred to in Clause 20.1(a), (b) , (c), (d), (e), (f), (g) and (h), a letter dated 27 March 2009 between the
Borrowers and the Agent and any further letters in relation to fees between the
Borrowers and the Agent;

     

    “Final Repayment Date” means 9
September 2014;

     

    “Finance Documents”
means:

     

    
      	
              (a)  

            	
              this
      Agreement;

            

    

     

    
      	
              (b)  

            	
              the
      Agency and Trust Agreement;

            

    

     

    
      	
              (c)  

            	
              the
      Multiparty Deeds;

            

    

     

    
      	
              (d)  

            	
              the
      Mortgages;

            

    

     

    
      	
              (e)  

            	
              the
      Master Agreement;

            

    

     

    
      	
              (f)  

            	
              the
      Master Agreement Assignment;

            

    

     

    
      	
              (g)  

            	
              the
      Predelivery Security Assignments;

            

    

     

    
      	
              (h)  

            	
              the
      Corporate Guarantee;

            

    

     

    
      	
              (i)             

            	
              the
      New Corporate Guarantee;

            

    

     

    
      	
              (j)             

            	
              the
      Shares Security Deeds;

            

    

     

    
      	
              (k)             

            	
              the
      Account Security Deed;

            

    

     

    
      	
              (l)             

            	
              the
      Restricted Equity Deposit Account Security
Deed;

            

    

     

    
      	
              (m)             

            	
              the
      Fee Letter;

            

    

     

    
      	
              (n)             

            	
              the
      Intercreditor Agreement; and

            

    

     

    
      	
              (o)             

            	
              any
      other document (whether creating a Security Interest or not) which is
      executed at any time by the Borrowers 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 Creditor Parties 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;

            

    

     

    “First Sub-Time Charter” means
in relation to each Ship, the time charter made or to be made between the Time
Charterer and the relevant Borrower in respect of such Ship;

     

    “Guarantee Facility
Agreement”  means the guarantee facility agreement of even date
herewith made between the Borrowers as obligors and the Issuing Bank relating to
a guarantee facility of $84,000,000;

     

    “Insurances”  means,
in relation to a Ship:

     

    
      	
              (a)  

            	
              all
      policies and contracts of insurance, including entries of the Ship in any
      protection and indemnity or war risks association, which are effected in
      respect of the Ship, its Earnings or otherwise in relation to it;
      and

            

    

     

    
      	
              (b)  

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

            

    

     

    “Intercreditor
Agreement”  means the intercreditor agreement executed or to be
executed between the Borrowers, the Security Trustee and the Issuing Bank in
such form as such parties may agree;

     

    “Interest
Period”  means a period determined in accordance with Clause 6;

     

    “ISM Code”  means the
International Safety Management Code (including the guidelines on its
implementation), adopted by the International Maritime Organisation Assembly as
Resolutions A.741 (18) and A.788 (19), as the same may be amended or
supplemented from time to time (and the terms “safety management system”,
“Safety Management
Certificate” and “Document of Compliance” have
the same meanings as are given to them in the ISM Code);

     

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

     

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

     

    “Issuing Bank”  means
The Royal Bank of Scotland plc acting as issuing bank under the Guarantee
Facility Agreement acting through the Shipping Business Centre, 5-10 Great Tower
Street, London EC3P 3HX;

     

    “Joint Ventures” means the
following investment projects (details of which have separately been advised to
the Agent):

    

    
      	
              (a)             

            	
              investments
      and loans in relation to a joint venture in South Africa with ICM
      Forwarding to form African Projects Logistics, a logistics provider for
      the South African Medupi Power Station
Project;

            

    

     

    
      	
              (b)             

            	
              investments
      in relation to limestone mines in the Dominican Republic and
      Jamaica;

            

    

     

    
      	
              (c)             

            	
              investments
      in relation to the LOG-STAR joint venture in Brazil which will/does
      provide break bulk, bulk, liner and parcel services in the Brazilian
      coastal cabotage trade

            

    

     

    “Lender”  means a
bank or financial institution listed in Schedule 1 and acting through its branch
indicated in Schedule 1 (or through another branch notified to the Agent under
Clause 26.14) or its transferee, successor or
assign;

     

    “LIBOR”  means, for
an Interest Period:

     

    
      	
              (a)  

            	
              the
      rate per annum equal to the offered quotation for deposits in Dollars for
      a period equal to, or as near as possible equal to, the relevant Interest
      Period which appears on REUTERS BBA Page LIBOR 01 at or about 11.00 a.m.
      (London time) on the Quotation Date for that Interest 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 Agent to be the arithmetic mean (rounded upwards, if
      necessary, to the nearest one-sixteenth of one per cent.) of the rates per
      annum notified to the Agent by each Reference Bank as the rate at which
      deposits in Dollars are offered to that Reference Bank by leading banks in
      the London Interbank Market at that Reference Bank’s request at or about
      11.00 a.m. (London time) on the Quotation Date for that Interest Period
      for a period equal to that Interest Period and for delivery on the first
      Business Day of it;

            

    

     

    “Loan A”  means the
five Advances referred to in Clause 2.1(i) or (as
the context requires) the principal amount thereof for the time being advanced
and outstanding under this Agreement;

     

    “Loan B”  means the
five Advances referred to in Clause 2.1(ii) or (as
the context requires) the principal amount thereof for the time being advanced
and outstanding under this Agreement;

     

    “Loan C”  means the
five Advances referred to in Clause 2.1(iii) or (as
the context requires) the principal amount thereof for the time being advanced
and outstanding under this Agreement;

     

    “Loan D”  means the
five Advances referred to in Clause 2.1(iv) or (as
the context requires) the principal amount thereof for the time being advanced
and outstanding under this Agreement;

     

    “Loan E”  means the
five Advances referred to in Clause 2.1(v) or (as
the context requires) the principal amount thereof for the time being advanced
and outstanding under this Agreement;

     

    “Loan F”  means the
five Advances referred to in Clause 2.1(vi)or (as
the context requires) the principal amount thereof for the time being advanced
and outstanding under this Agreement;

     

    “Loan
Facility”  means, the loan facility of $150,000,000 made
available under this Agreement;

     

    “Loans”  means Loan
A, Loan B, Loan C, Loan D, Loan E and Loan F and, in the singular, means any of
them;

     

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

     

    “Majority
Lenders”  means:

     

    
      	
              (a)  

            	
              before
      an Advance has been made, Lenders whose Commitments total 66.66 per cent.
      of the Total Commitments; and

            

    

     

    
      	
              (b)  

            	
              after
      an Advance has been made, Lenders whose Contributions total 66.66 per
      cent. of the
Total  Contributions;

            

    

     

    “Mandated Lead
Arranger”  means The Royal Bank of Scotland plc, acting in such
capacity through the Shipping Business Centre, 5-10 Great Tower Street, London
EC3P 3HX;

     

    “Mandatory
Cost”  means the percentage rate per annum calculated by the
Agent in accordance with Schedule 6;

     

    “Margin”  means in
relation to each Loan five point zero per cent. (5.00%) per annum;

     

    “Master
Agreement”  means the master agreement (on the 1992 ISDA
(Multicurrency Crossborder) form) dated 29 March 2007 between the Borrowers and
the Swap Bank and includes all Designated Transactions from time to time entered
into and Confirmations from time to time exchanged under such master agreement
as the same may be amended, supplemented or the subject of one of more
assumption agreements;

     

    “Master Agreement
Assignment”  means the assignment of the Master Agreement to be
made between the Borrowers and the Security Trustee, in such form as the
Borrowers and the Agent may agree;

     

    “Mortgage”  means, in
relation to a Ship, the first preferred
Panamanian ship mortgage on that Ship to be executed by the relevant Borrower in
favour of the Security Trustee, in such form as the relevant Borrower and the
Agent may agree and fully cross-collateralised with the Mortgages over the other
Ships;

     

    “Multiparty
Deed”  means, in relation to a Ship, a deed containing amongst
other things (i) an assignment of the relevant Borrower’s interest in the
Earnings, the Insurances and any Requisition Compensation of that Ship, (ii) an
assignment of the relevant Borrower’s rights under the relevant Bareboat Charter
and the Second Sub-Time Charter (iii) an assignment of the Bareboat Charterer’s
interest in the Insurances of that Ship and the relevant Time Charter, (iv) an
assignment of the Time Charterer’s rights under the First Sub-Time Charter and
(v) an assignment of TBS Worldwide’s rights under the TBS Worldwide Time
Charters to be made by and between the relevant Borrower, the Bareboat Charterer
the, Time Charterer, TBS Worldwide and the Security Trustee, in such form as the
relevant Borrower and the Agent may agree;

     

    
      	
               
      

            	
              “Negotiation
      Period”  has the meaning given in Clause 5.10;

            

    

     

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

     

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

     

    “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 21.4;

     

    “Permitted Security
Interests”  means:

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

            	
              liens
      for salvage;

            

    

     

    
      	
              (d)  

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

            

    

     

    
      	
              (e)  

            	
              liens
      for master’s disbursements incurred in the ordinary course of trading and
      any other lien arising by operation of law or otherwise in the ordinary
      course of the operation, repair or maintenance of a Ship, provided such
      liens do not secure amounts more than 30 days overdue (unless the overdue
      amount is being contested by the relevant Borrower in good faith by
      appropriate steps) and subject, in the case of liens for repair or
      maintenance, to Clause 14.12(g);

            

    

     

    
      	
              (f)  

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

            

    

     

    
      	
              (g)  

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

            

    

     

    “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);

            

    

     

    “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
Majority Lenders and/or the satisfaction of any other condition, would
constitute an Event of Default;

     

    “Predelivery Security
Assignment”  means, in relation to each Shipbuilding Contract
and corresponding Refund Guarantees, an assignment of the relevant Borrower’s
rights under such Shipbuilding Contract and Refund Guarantees to be executed by
the relevant Borrower in favour of the Security Trustee in such form as the
relevant Borrower and the Agent may agree;

     

    “Quotation
Date”  means, in relation to any Interest Period (or any other
period for which an interest rate is to be determined under any provision of a
Finance Document), 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 Interest Period or other period;

     

    “Reference
Banks”  means, subject to Clause 26.16, The Royal Bank of Scotland plc, Citibank and
Bank of America;

     

    “Refund
Guarantee”  means, in relation to each Ship, each refund
guarantee issued by the Refund Guarantor in favour of the relevant Borrower
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;

     

    “Related Party Charters” means,
in relation to a Ship, the Bareboat Charter, the Time Charter, the First
Sub-Time Charter, the Second Sub-Time Charter and the TBS Worldwide Time
Charters in relation to such Ship and which are the subject of the assignments
under the relevant Multiparty Deed;

     

    “Relevant
Person”  has the meaning given in Clause 19.9;

     

    “Repayment
Date”  means a date on which a repayment is required to be made
under Clause 8;

     

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

     

    “Restricted Equity Deposit
Account”  means an account in the name of the Borrowers with
the Agent at Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX
designated with such designation as the Agent may allocate upon its opening or
any other account (with that or another office of the Agent or with a bank or
financial institution other than the Agent) which is designated by the Agent as
the Restricted Equity Deposit Account for the purposes of this
Agreement;

     

    “Restricted Equity Deposit Account
Security Deed”  means a deed creating security in respect of
the Restricted Equity Deposit Account made or to be made by and between the
Borrowers and the Security Trustee in such form set as the Borrowers and the
Agent may agree;

     

    “Second Sub-Time Charter” means
in relation to each Ship, the time charter made or to be made between the
relevant Borrower and TBS Worldwide in respect of such Ship;

     

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

     

    “Security
Interest”  means:

     

    
      	
              (a)  

            	
              a
      mortgage, charge (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 Borrowers, the Corporate Guarantor, the New
Corporate Guarantor, the Shareholder and any 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 any Creditor Party, the Mandated Lead Arranger, the
Bookrunner, the Issuing Bank, the Bareboat Charterer, the Time Charterer, TBS
Pacific Liner, TBS Worldwide and the Approved Managers;

     

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

     

    
      	
              (a)  

            	
              all
      amounts which have become due for payment by the Borrowers 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 Borrowers nor any Security Party has any future or contingent
      liability under Clause 20, 21 or 22 or any
      other provision of this Agreement or another Finance Document;
      and

            

    

     

    
      	
              (d)  

            	
              the
      Agent, the Security Trustee and the Majority Lenders do 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 a Borrower 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;

            

    

     

    “Security
Trustee”  means The Royal Bank of Scotland plc, acting in such
capacity through its office at Level 5, 135 Bishopsgate, London EC2M 3UR, or any
successor of it appointed under clause 5 of the Agency and Trust
Agreement;

     

    “Seller”  means
together China Communications and the Builder;

     

    “Servicing
Bank”  means the Agent or the Security Trustee;

     

    “Shareholder”  means
Westbrook Holdings Ltd., a company incorporated under the laws of the Marshall
Islands having its registered office at Trust Company Complex, Ajeltake Road,
Ajeltake Island, Majuro, Marshall Islands, MH96960;

     

    “Shares Security
Deed”  means, in relation to each Borrower, a deed creating
security over the share capital of that Borrower and including an assignment of
any shareholder loans made to the Borrowers to be executed by the Shareholder in
favour of the Security Trustee in such form as the Shareholder and the Agent may
agree;

     

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

     

    “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
Borrower A pursuant to the relevant Shipbuilding Contract and upon delivery to
be registered in the name of Borrower A with the Panamanian registry and
bareboat registered in the name of the Bareboat Charterer under the Philippines
flag;

     

    “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
Borrower B pursuant to the relevant Shipbuilding Contract and upon delivery to
be registered in the name of Borrower B with the Panamanian registry and
bareboat registered in the name of the Bareboat Charterer under the Philippines
flag;

     

    “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
Borrower C pursuant to the relevant Shipbuilding Contract and upon delivery to
be registered in the name of Borrower C with the Panamanian registry and
bareboat registered in the name of the Bareboat Charterer under the Philippines
flag;

     

    “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
Borrower D pursuant to the relevant Shipbuilding Contract and upon delivery to
be registered in the name of Borrower D with the Panamanian registry and
bareboat registered in the name of the Bareboat Charterer under the Philippines
flag;

     

    “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
Borrower E pursuant to the relevant Shipbuilding Contract and upon delivery to
be registered in the name of Borrower E with the Panamanian registry and
bareboat registered in the name of the Bareboat Charterer under the Philippines
flag;

     

    “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
Borrower F pursuant to the relevant Shipbuilding Contract and upon delivery to
be registered in the name of Borrower F with the Panamanian registry and
bareboat registered in the name of the Bareboat Charterer under the Philippines
flag;

     

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

     

    “Standby Earnings
Account”  means an account in the name of TBS Pacific Liner
with the Agent at Shipping Business Centre, 5-10 Great Tower Street, London EC3P
3HX designated with such designation as the Agent may allocate upon its opening
or any other account (with that or another office of the Agent or with a bank or
financial institution other than the Agent) which is designated by the Agent as
the Standby Earnings Account for the purposes of this Agreement;

     

    “Swap Bank”  means
The Royal Bank of Scotland plc acting in such capacity through its office at 135
Bishopsgate, London EC2M 3UR and its successors in title and assigns under the
Master Agreement;

     

    “Swap Facility” means the interest rate
swap facility made or to be made available by the Swap Bank to the Borrowers
under the Master Agreement;

     

    “TBS Pacific
Liner”  means TBS Pacific Liner, Ltd. 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;

     

    “TBS Worldwide” means TBS
Worldwide Services Inc being a corporation organised and existing under the laws
of the Marshall Islands having its registered office at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960;

     

    “TBS Worldwide Time Charters”
means, in relation to each Ship, the time charters entered or to be entered into
between TBS Worldwide and other subsidiaries of the New Corporate Guarantor
pursuant to which TBS Worldwide has agreed or shall agree to let, and such
charterers have agreed or shall agree to hire, such Ship on time
charter;

     

    “Time Charter” means, in relation to
each Ship, the time charter made or to be made between the Bareboat Charterer
and the Time Charterer in respect of such Ship;

     

    “Time Charterer” means Pacific
Rim Shipping Corp., a company incorporated in the Marshall Islands whose
principal office is at Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, Marshall Islands, MH 96960;

     

    “Total Loss”  means,
in relation to a Ship:

     

    
      	
              (a)             

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

            

    

     

    
      	
              (b)             

            	
              any
      expropriation, confiscation, requisition or acquisition of the Ship,
      whether for full consideration, a consideration less than its proper
      value, a nominal consideration or without any consideration, which is
      effected by any government or official authority or by any person or
      persons claiming to be or to represent a government or official authority
      (excluding a requisition for hire for a fixed period not exceeding 1 year
      without any right to an extension) unless it is within 1 month redelivered
      to the full control of the Borrower owning the Ship;
  and

            

    

     

    
      	
              (c)             

            	
              any
      condemnation of the Ship by any tribunal or by any person or person
      claiming to be a tribunal; and

            

    

     

    
      	
              (d)             

            	
              any
      arrest, capture, seizure or detention of the Ship (including any hijacking
      or theft) unless it is within 1 month redelivered to the full control of
      the Borrower owning the Ship;

            

    

     

    “Total Loss
Date”  means, in relation to a Ship:

     

    
      	
              (a)             

            	
              in
      the case of an actual loss of the Ship, the date on which it occurred or,
      if that is unknown, the date when the Ship was last heard
    of;

            

    

     

    
      	
              (b)             

            	
              in
      the case of a constructive, compromised, agreed or arranged total loss of
      the Ship, the earliest of:

            

    

     

    
      	
              (i)  

            	
              the
      date on which a notice of abandonment is given to the insurers;
      and

            

    

     

    
      	
              (ii)  

            	
              the
      date of any compromise, arrangement or agreement made by or on behalf of
      the Borrower owning the Ship with the Ship’s insurers in which the
      insurers agree to treat the Ship as a total loss;
  and

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    “Transaction”  means
a Transaction as defined in the introductory paragraph of the Master
Agreement;

     

    “Transfer
Certificate”  has the meaning given in Clause 26.2; and

     

    “Transfer Date” means, in
relation to a transfer, the later of:

     

    
      	
              (a)             

            	
              the
      proposed transfer date specified in the Transfer Certificate;
      and

            

    

     

    
      	
              (b)             

            	
              the
      date on which the Agent executes the Transfer Certificate under Clause 26.3.

            

    

     

    
      	
              1.2  

            	
              Construction of certain
      terms.  In this
Agreement:

            

    

     

    “administration
notice”  means a notice appointing an administrator, a notice
of intended appointment and any other notice which is required by law (generally
or in the case concerned) to be filed with the court or given to a person prior
to, or in connection with, the appointment of an administrator;

     

    “approved”  means,
for the purposes of Clause 13, approved in writing
by the Agent;

     

    “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 or fax;

     

    “excess
risks”  means, in relation to a Ship, the proportion of claims
for general average, salvage and salvage charges not recoverable under the hull
and machinery policies in respect of the Ship in consequence of its insured
value being less than the value at which the Ship is assessed for the purpose of
such claims;

     

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

     

    “law”  includes any
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;

     

    “obligatory
insurances”  means, in relation to a Ship, all insurances
effected, or which the Borrower owning the Ship is obliged to effect, under
Clause 13 or any other provision of this Agreement
or another Finance Document;

     

    “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;

     

    “protection and indemnity
risks” means the usual risks covered by a protection and indemnity
association managed in London, including pollution risks and the proportion (if
any) of any sums payable to any other person or persons in case of collision
which are not recoverable under the hull and machinery policies by reason of the
incorporation in them of clause 1 of the Institute Time Clauses (Hulls)(1/10/83)
or clause 8 of the Institute Time Clauses (Hulls)(1/11/1995) or the Institute
Amended Running Down Clause (1/10/71) or any equivalent provision;

     

    “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;

     

    “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; and

     

    “war risks”  includes
the risk of mines and all risks excluded by clause 23 of the Institute Time
Clauses (Hulls)(1/10/83) or clause 24 of the Institute Time Clauses (Hulls)
(1/11/1995).

     

    
      	
              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
      Agent (with the authorisation of the Majority Lenders in the case of
      substantial modifications) 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  

            	
              LOAN
      FACILITY

            

    

     

    
      	
              2.1  

            	
              Amount of
      facilities.  Subject to the other provisions of this
      Agreement, the Lenders shall make available to the Borrowers the Loan
      Facility in an amount of up to $150,000,000 which shall be made available
      in the following Advances:

            

    

     

    
      	
              (i)  

            	
              five
      Advances in an aggregate amount of up to $25,000,000 to enable Borrower A
      to finance its acquisition of Ship A as
follows:

            

    

     

    
      	
              (A)  

            	
              $5,000,000
      to enable Borrower A to meet the first stage payment (contract signing) of
      the Contract Price payable under the Shipbuilding Contract in respect of
      Ship A;

            

    

     

    
      	
              (B)  

            	
              $5,000,000
      to enable Borrower A to meet the second stage payment (steel cutting) of
      the Contract Price payable under the Shipbuilding Contract in respect of
      Ship A;

            

    

     

    
      	
              (C)  

            	
              $5,000,000
      to enable Borrower A to meet the third stage payment (keel laying) of the
      Contract Price payable under the Shipbuilding Contract in respect of Ship
      A;

            

    

     

    
      	
              (D)  

            	
              $5,000,000
      to enable Borrower A to meet the fourth stage payment (launching) of the
      Contract Price payable under the Shipbuilding Contract in respect of Ship
      A;

            

    

     

    
      	
              (E)  

            	
              $5,000,000
      to enable Borrower A to meet the final delivery payment of the Contract
      Price payable under the Shipbuilding Contract in respect of Ship A (the
      “Loan A Delivery
      Advance”);

            

    

     

    
      	
              (ii)  

            	
              five
      Advances in an aggregate amount of $25,000,000 to enable Borrower B to
      finance its acquisition of Ship B as
follows:

            

    

     

    
      	
              (A)  

            	
              $5,000,000
      to enable Borrower B to meet the first stage payment (contract signing) of
      the Contract Price payable under the Shipbuilding Contract in respect of
      Ship B;

            

    

     

    
      	
              (B)  

            	
              $5,000,000
      to enable Borrower B to meet the second stage payment (steel cutting) of
      the Contract Price payable under the Shipbuilding Agreement in respect of
      Ship B;

            

    

     

    
      	
              (C)  

            	
              $5,000,000
      to enable Borrower B to meet the third stage payment (keel laying) of the
      Contract Price payable under the Shipbuilding Contract in respect of Ship
      B;

            

    

     

    
      	
              (D)  

            	
              $5,000,000
      to enable Borrower B to meet the fourth stage payment (launching) of the
      Contract Price payable under the Shipbuilding Contract in respect of Ship
      B;

            

    

     

    
      	
              (E)  

            	
              $5,000,000
      to enable Borrower B to meet the final delivery payment of the Contract
      Price payable under the Shipbuilding Contract in respect of Ship B (the
      “Loan B Delivery
      Advance”);

            

    

     

    
      	
              (iii)  

            	
              five
      Advances in an aggregate amount of up to $25,000,000 to enable Borrower C
      to finance its acquisition of Ship C as
follows:

            

    

     

    
      	
              (A)  

            	
              $5,000,000
      to enable Borrower C to meet the first stage payment (contract signing) of
      the Contract Price payable under the Shipbuilding Contract in respect of
      Ship C;

            

    

     

    
      	
              (B)  

            	
              $5,000,000
      to enable Borrower C to meet the second stage payment (steel cutting) of
      the Contract Price payable under the Shipbuilding Agreement in respect of
      Ship C;

            

    

     

    
      	
              (C)  

            	
              $5,000,000
      to enable Borrower C to meet the third stage payment (keel laying) of the
      Contract Price payable under the Shipbuilding Contract in respect of Ship
      C;

            

    

     

    
      	
              (D)  

            	
              $5,000,000
      to enable Borrower C to meet the fourth stage payment (launching) of the
      Contract Price payable under the Shipbuilding Contract in respect of Ship
      C;

            

    

     

    
      	
              (E)  

            	
              $5,000,000
      to enable Borrower C to meet the final delivery payment of the Contract
      Price payable under the Shipbuilding Contract in respect of Ship C (the
      “Loan C Delivery
      Advance”);

            

    

     

    
      	
              (iv)  

            	
              five
      Advances in an aggregate amount of up to $25,000,000 to enable Borrower D
      to finance its acquisition of Ship D as
follows:

            

    

     

    
      	
              (A)  

            	
              $5,000,000
      to enable Borrower D to meet the first stage payment (contract signing) of
      the Contract Price payable under the Shipbuilding Contract in respect of
      Ship D;

            

    

     

    
      	
              (B)  

            	
              $5,000,000
      to reimburse Borrower D the second stage payment (steel cutting) of the
      Contract Price payable under the Shipbuilding Contract in respect of Ship
      D;

            

    

     

    
      	
              (C)  

            	
              $5,000,000
      to enable Borrower D to meet the third stage payment (keel laying) of the
      Contract Price payable under the Shipbuilding Contract in respect of Ship
      D;

            

    

     

    
      	
              (D)  

            	
              $5,000,000
      to enable Borrower D to meet the fourth stage payment (launching) of the
      Contract Price payable under the Shipbuilding Contract in respect of Ship
      D;

            

    

     

    
      	
              (E)  

            	
              $5,000,000
      to enable Borrower D to meet the final delivery payment of the Contract
      Price payable under the Shipbuilding Contract in respect of Ship D; (the
      “Loan D Delivery
      Advance”);

            

    

     

    
      	
              (v)  

            	
              five
      Advances in an aggregate amount of up to $25,000,000 to enable Borrower E
      to finance its acquisition of Ship E as
follows:

            

    

     

    
      	
              (A)  

            	
              $5,000,000
      to enable Borrower E to meet the first stage payment (contract signing) of
      the Contract Price payable under the Shipbuilding Contract in respect of
      Ship E;

            

    

     

    
      	
              (B)  

            	
              $5,000,000
      to reimburse Borrower E the second stage payment (steel cutting) of the
      Contract Price payable under the Shipbuilding Contract in respect of Ship
      E;

            

    

     

    
      	
              (C)  

            	
              $5,000,000
      to enable Borrower E to meet the third stage payment (keel laying) of the
      Contract Price payable under the Shipbuilding Contract in respect of Ship
      E;

            

    

     

    
      	
              (D)  

            	
              $5,000,000
      to enable Borrower E to meet the fourth stage payment (launching) of the
      Contract Price payable under the Shipbuilding Contract in respect of Ship
      E;

            

    

     

    
      	
              (E)  

            	
              $5,000,000
      to enable Borrower E to meet the final delivery payment of the Contract
      Price payable under the Shipbuilding Contract in respect of Ship E; (the
      “Loan E Delivery
      Advance”);

            

    

     

    
      	
              (vi)  

            	
              five
      Advances in an aggregate amount of up to $25,000,000 to enable Borrower F
      to finance its acquisition of Ship F as
follows:

            

    

     

    
      	
              (A)  

            	
              $5,000,000
      to enable Borrower F to meet the first stage payment (contract signing) of
      the Contract Price payable under the Shipbuilding Contract in respect of
      Ship F;

            

    

     

    
      	
              (B)  

            	
              $5,000,000
      to reimburse Borrower F the second stage payment (steel cutting) of the
      Contract Price payable under the Shipbuilding Contract in respect of Ship
      F;

            

    

     

    
      	
              (C)  

            	
              $5,000,000
      to enable Borrower F to meet the third stage payment (keel laying) of the
      Contract Price payable under the Shipbuilding Contract in respect of Ship
      F;

            

    

     

    
      	
              (D)  

            	
              $5,000,000
      to enable Borrower F to meet the fourth stage payment (launching) of the
      Contract Price payable under the Shipbuilding Contract in respect of Ship
      F;

            

    

     

    
      	
              (E)  

            	
              $5,000,000
      to enable Borrower F to meet the final delivery payment of the Contract
      Price payable under the Shipbuilding Contract in respect of Ship F; (the
      “Loan F Delivery
      Advance”);

            

    

     

    
      	
              2.2  

            	
              Lenders’
      participations.  Subject to the other provisions of this
      Agreement, each Lender shall participate in each Advance in the proportion
      which, as at the relevant Drawdown Date, its Commitment bears to the Total
      Commitments;

            

    

     

    
      	
              2.3  

            	
              Purpose of
      Advances.  The Borrowers undertake with each Creditor
      Party to use each Advance only for the respective purposes stated in the
      preamble of this Agreement.

            

    

     

    
      	
              3  

            	
              POSITION
      OF THE LENDERS AND THE SWAP BANK

            

    

     

    
      	
              3.1  

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

            

    

     

    
      	
              3.2  

            	
              Individual Creditor Parties’
      right of action.  Each Lender and the Swap Bank shall be
      entitled to sue for any amount which has become due and payable by the
      Borrowers to it under this Agreement without joining the Agent, the
      Security Trustee or any other Creditor Party as additional parties in the
      proceedings.

            

    

     

    
      	
              3.3  

            	
              Proceedings by individual
      Creditor Party requiring Majority Lenders’
      consent.  Except as provided in Clause 3.2, neither the Swap Bank nor any Lender may
      commence proceedings against the Borrowers or any Security Party in
      connection with a Finance Document without the prior consent of the
      Majority Lenders.

            

    

     

    
      	
              3.4  

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

            

    

     

    
      	
              (a)  

            	
              the
      obligations of the other Lenders or the Swap Bank being increased;
      nor

            

    

     

    
      	
              (b)  

            	
              any
      Borrower, any Security Party, any other Lender or the Swap Bank being
      discharged (in whole or in part) from its obligations under any Finance
      Document;

            

    

     

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

     

    
      	
              3.5  

            	
              Ranking of Swap
      Facility.  It is agreed by the Borrowers and the Creditor
      Parties that the Swap Facility and all amounts payable thereunder shall
      rank in priority after the Loan
Facility.

            

    

     

    
      	
              4  

            	
              DRAWDOWN

            

    

     

    
      	
              4.1  

            	
              Request for an
      Advance.  Subject to the following conditions, a Borrower
      may request that an Advance be made by ensuring that the Agent receives a
      completed Drawdown Notice not later than 11.00 a.m. (London time) 3
      Business Days prior to the intended Drawdown
  Date.

            

    

     

    
      	
              4.2  

            	
              Availability.  The
      conditions referred to in Clause 4.1 are
      that:

            

    

     

    
      	
              (a)  

            	
                

            

    

     

    
      	
              (i)  

            	
              the
      Drawdown Date for such Advance has to be a Business Day during the
      Availability Period for the relevant
Loan;

            

    

     

    
      	
              (ii)  

            	
              the
      aggregate amount of the Advances shall not exceed the Total
      Commitments;

            

    

     

    
      	
              (iii)  

            	
              in
      the case of a Delivery Advance of a Loan, the amount of such Delivery
      Advance when aggregated with each of the other Advances made in relation
      to that Loan shall not exceed 75% of the valuation of the relevant Ship to
      be obtained pursuant to Schedule 3, Part C, Item 4 and if such test is not
      met the amount of such Delivery Advance shall be correspondingly
      reduced.

            

    

     

    
      	
              (b)  

            	 

    

     

    
      	
              (i)  

            	
              no
      Event of Default or Potential Event of Default has occurred and is
      continuing or might result from the making of the relevant
      Advance;

            

    

     

    
      	
              (ii)  

            	
              the
      representations and warranties of the Borrowers in Clause 10 and those of the Borrowers or any Security
      Party which are set out in the other Finance Documents would be true and
      not misleading if repeated on the date of the relevant Drawdown Notice or
      the relevant Drawdown Date with reference to the circumstances then
      existing;

            

    

     

    
      	
              (iii)  

            	
              that
      if the ratio set out in Clause 15.1 were
      applied immediately following the making of the Advance the Borrowers
      would not be obliged to provide additional security or prepay part of the
      Loans under that Clause and if the Borrowers would be so obliged the
      amount of the Advance to be made shall be correspondingly
      reduced.

            

    

     

    
      	
              4.3  

            	
              Notification to Lenders of
      receipt of a Drawdown Notice.  The Agent shall promptly
      notify the Lenders that it has received a Drawdown Notice and shall inform
      each Lender of:

            

    

     

    
      	
              (a)  

            	
              the
      amount of the Advance and the Drawdown
Date;

            

    

     

    
      	
              (b)  

            	
              the
      amount of that Lender’s participation in the relevant Advance;
      and

            

    

     

    
      	
              (c)  

            	
              the
      duration of the first Interest Period for the relevant
      Advance.

            

    

     

    
      	
              4.4  

            	
              Drawdown Notice
      irrevocable.  A Drawdown Notice must be signed by a
      director, officer or, if agreed by the Agent, a duly authorised
      attorney-in-fact of the Borrowers; and once served, a Drawdown Notice
      cannot be revoked without the prior consent of the Agent, acting on the
      authority of the Majority Lenders.

            

    

     

    
      	
              4.5  

            	
              Lenders to make available
      Contributions.  Subject to the provisions of this
      Agreement, each Lender shall, on and with value on each Drawdown Date,
      make available to the Agent for the account of the Borrowers the amount
      due from that Lender on that Drawdown Date under Clause 2.2.

            

    

     

    
      	
              4.6  

            	
              Disbursement of
      Advance.  Subject to the provisions of this Agreement,
      the Agent shall on each Drawdown Date pay to the Borrowers the amounts
      which the Agent receives from the Lenders under Clause 4.5; and that payment to the Borrowers shall be
      made:

            

    

     

    
      	
              (a)  

            	
              to
      the account which the Borrowers specifies in the Drawdown Notice;
      and

            

    

     

    
      	
              (b)  

            	
              in
      the like funds as the Agent received the payments from the
      Lenders.

            

    

     

    
      	
              4.7  

            	
              Disbursement of an Advance to
      third party.  The payment by the Agent under Clause 4.6 shall constitute the making of the Advance
      and each Borrower shall at that time become indebted, as a principal and
      direct obligor, to each Lender in an amount equal to that Lender’s
      Contribution.

            

    

     

    
      	
              5  

            	
              INTEREST

            

    

     

    
      	
              5.1  

            	
              Payment of normal
      interest.  Subject to the provisions of this Agreement,
      interest on an Advance in respect of each Interest Period applicable to it
      shall be paid by the Borrowers on the last day of that Interest
      Period.

            

    

     

    
      	
              5.2  

            	
              Normal rate of
      interest.  Subject to the provisions of this Agreement,
      the rate of interest on each Advance in respect of an Interest Period
      shall be the aggregate of the Margin, the Mandatory Cost (if any) and
      LIBOR for that Interest Period.

            

    

     

    
      	
              5.3  

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

            

    

     

    
      	
              5.4  

            	
              Notification of Interest
      Periods and rates of normal interest.  The Agent shall
      (subject to Clause 6.2(a) notify the
      Borrowers and each Lender of:

            

    

     

    
      	
              (a)  

            	
              each
      rate of interest; and

            

    

     

    
      	
              (b)  

            	
              the
      duration of each Interest Period;

            

    

     

    as soon
as reasonably practicable after each is determined.

     

    
      	
              5.5  

            	
              Obligation of Reference Banks
      to quote.  A Reference Bank which is a Lender shall use
      all reasonable efforts to supply the quotation required of it for the
      purposes of fixing a rate of interest under this
  Agreement.

            

    

     

    
      	
              5.6  

            	
              Absence of quotations by
      Reference Banks.  If any Reference Bank fails to supply a
      quotation, the Agent shall determine the relevant LIBOR on the basis of
      the quotations supplied by the other Reference Bank or Banks; but if 2 or
      more of the Reference Banks fail to provide a quotation, the relevant rate
      of interest shall be set in accordance with the following provisions of
      this Clause 5.

            

    

     

    
      	
              5.7  

            	
              Market
      disruption.  The following provisions of this Clause 5 apply
if:

            

    

     

    
      	
              (a)  

            	
              no
      rate is quoted on REUTERS BBA Page LIBOR 01 and the Reference Banks do
      not, before 1.00 p.m. (London time) on the Quotation Date for an Interest
      Period, provide quotations to the Agent in order to fix LIBOR;
      or

            

    

     

    
      	
              (b)  

            	
              at
      least 1 Business Day before the start of an Interest Period, Lenders
      having Contributions together amounting to more than 66.66 per cent. of
      the Loans (or, if an Advance has not been made, Commitments amounting to
      more than 66.66 per cent. of the Total Commitments) notify the Agent that
      LIBOR fixed by the Agent would not accurately reflect the cost to those
      Lenders of funding their respective Contributions (or any part of them)
      during the Interest Period in the London Interbank Market at or about
      11.00 a.m. (London time) on the Quotation Date for the Interest Period;
      or

            

    

     

    
      	
              (c)  

            	
              at
      least 1 Business Day before the start of an Interest Period, the Agent is
      notified by a Lender (the “Affected Lender”) that
      for any reason it is unable to obtain Dollars in the London Interbank
      Market in order to fund its Contribution (or any part of it) during the
      Interest Period.

            

    

     

    
      	
              5.8  

            	
              Notification of market
      disruption.  The Agent shall promptly notify the
      Borrowers and each of the Lenders stating the circumstances falling within
      Clause 5.7 which have caused its notice to be
      given.

            

    

     

    
      	
              5.9  

            	
              Suspension of
      drawdown.  If the Agent’s notice under Clause 5.8 is served before an Advance is
      made:

            

    

     

    
      	
              (a)  

            	
              in
      a case falling within Clauses 5.7(a) or 5.7(b), the Lenders’ obligations to make the
      Advance;

            

    

     

    
      	
              (b)  

            	
              in
      a case falling within Clause 5.7(c), the
      Affected Lender’s obligation to participate in the
  Advance;

            

    

     

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

     

    
      	
              5.10  

            	
              Negotiation of alternative rate
      of interest.  If the Agent’s notice under Clause 5.8 is served after an Advance is made, the
      Borrowers, the Agent and the Lenders or (as the case may be) the Affected
      Lender shall use reasonable endeavours to agree, within the 30 days after
      the date on which the Agent serves its notice under Clause 5.8 (the “Negotiation Period”), an
      alternative interest rate or (as the case may be) an alternative basis for
      the Lenders or (as the case may be) the Affected Lender to fund or
      continue to fund their or its Contribution during the Interest Period
      concerned.

            

    

     

    
      	
              5.11  

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

            

    

     

    
      	
              5.12  

            	
              Alternative rate of interest in
      absence of agreement.  If an alternative interest rate or
      alternative basis is not agreed within the Negotiation Period, and the
      relevant  circumstances are continuing at the end of the
      Negotiation Period, then the Agent shall, with the agreement of each
      Lender or (as the case may be) the Affected Lender, set an interest period
      and interest rate representing the cost of funding of the Lenders or (as
      the case may be) the Affected Lender in Dollars or in any available
      currency of their or its Contribution plus the Margin; and the procedure
      provided for by this Clause 5.12 shall be
      repeated if the relevant circumstances are continuing at the end of the
      interest period so set by the Agent.  Once the circumstances
      giving rise to the invoking of Clauses 5.7
      through 5.12 have ceased the Agent and the
      Lenders shall return to the normal method of calculating the interest rate
      hereunder.

            

    

     

    
      	
              5.13  

            	
              Notice of
      prepayment.  If the Borrowers do not agree with an
      interest rate set by the Agent under Clause 5.12, the Borrowers may give the Agent not less
      than 14 Business Days’ notice of their intention to prepay the Loans or
      the Affected Lender’s Contribution (as the case may require) at the end of
      the interest period set by the
Agent.

            

    

     

    
      	
              5.14  

            	
              Prepayment; termination of
      Commitments.  A notice under Clause 5.13 shall be irrevocable; the Agent shall
      promptly notify the Lenders or (as the case may require) the Affected
      Lender of the Borrowers’ notice of intended prepayment;
    and:

            

    

     

    
      	
              (a)  

            	
              on
      the date on which the Agent serves that notice, the Total Commitments or
      (as the case may require) the Commitment of the Affected Lender shall be
      cancelled; and

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              5.15  

            	
              Amounts payable upon prepayment
      etc.  The provisions of Clauses 8.9 to 8.12
      inclusive shall apply in relation to the
  prepayment.

            

    

     

    
      	
              5.16  

            	
              Designated Transactions under
      the Master Agreement.

            

    

     

    
      	
              (a)  

            	
              The
      Borrowers have entered into the Master Agreement with the Swap Bank and,
      pursuant thereto, may at any time conclude Designated Transactions, for
      the purpose of swapping their interest payment obligations under this
      Agreement in relation to the Loan
Facility.

            

    

     

    
      	
              (b)  

            	
              In
      relation to the Master Agreement, the Borrowers hereby agree and undertake
      throughout the Security Period:

            

    

     

    
      	
              (i)  

            	
              only
      to use Designated Transactions concluded under the Master Agreement for
      the purpose of swapping their interest payment obligations under this
      Clause 5 in relation to the Loan Facility from LIBOR-based funding to
      longer-term fixed rate funding; and

            

    

     

    
      	
              (ii)  

            	
              not
      to conclude Designated Transactions which would result, at any time during
      the Security Period, in the notional principal amount of all Designated
      Transactions then remaining exceeding the aggregate amount of the Loans,
      as reduced from time to time pursuant to Clause
  8.

            

    

     

    
      	
              (c)  

            	
              The
      Lenders agree that, to enable the Borrowers to secure their obligations to
      the Swap Bank under the Master Agreement, the security of the New
      Corporate Guarantee, the Corporate Guarantee, the Mortgages, the
      Multiparty Deeds, the Predelivery Security Assignments, the Shares
      Security Deeds, the Restricted Equity Deposit Account Security Deed and
      the Account Security Deed in respect of each of the Ships shall be held by
      the Security Trustee not only to secure the Borrowers’ obligations under
      this Agreement but also the Borrower’s obligations under the Master
      Agreement on the terms set out in Clause 18.

            

    

     

    
      	
              6  

            	
              INTEREST
      PERIODS

            

    

     

    
      	
              6.1  

            	
              Commencement of Interest
      Periods.  The first Interest Period applicable to an
      Advance shall commence on the Drawdown Date for that Advance and each
      subsequent Interest Period shall commence on the expiry of the preceding
      Interest Period.

            

    

     

    
      	
              6.2  

            	
              Duration of normal Interest
      Periods.  Subject to Clauses 6.3 and 6.4, each
      Interest Period shall be:

            

    

     

    
      	
              (a)  

            	
              1,
      3 or 6 months as notified by the Borrowers to the Agent not later than
      11.00 a.m. (London time) 3 Business Days before the commencement of the
      Interest Period; or

            

    

     

    
      	
              (b)  

            	
              in
      the case of the first Interest Period applicable to any Advance of a Loan
      other than the first such Advance of such Loan, a period ending on the
      last day of the Interest Period applicable to the first Advance of that
      Loan then current, whereupon all such Advances of that Loan shall be
      consolidated and treated as a single
Advance;

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

            	
              such
      other period as the Agent may, with the authorisation of the Majority
      Lenders, agree with the Borrowers.

            

    

     

    
      	
              6.3  

            	
              Duration of Interest Periods
      for repayment instalments.  In respect of an amount due
      to be repaid under Clause 8 on a particular
      Repayment Date, an Interest Period shall end on that Repayment
      Date.

            

    

     

    
      	
              6.4  

            	
              Non-availability of matching
      deposits for Interest Period selected.  If, after the
      Borrowers have selected and the Lenders have agreed an Interest Period
      longer than 6 months, any Lender notifies the Agent by 11.00 a.m. (London
      time) on the third Business Day before the commencement of the Interest
      Period that it is not satisfied that deposits in Dollars for a period
      equal to the Interest Period will be available to it in the London
      Interbank Market when the Interest Period commences, the Interest Period
      shall be of 6 months.

            

    

     

    
      	
              7  

            	
              DEFAULT
      INTEREST

            

    

     

    
      	
              7.1  

            	
              Payment of default interest on
      overdue amounts.  The Borrowers shall pay interest in
      accordance with the following provisions of this Clause 7 on any amount
      payable by the Borrowers under any Finance Document which the relevant
      Creditor Party 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 Borrowers;
  or

            

    

     

    
      	
              (c)  

            	
              if
      such amount has become immediately due and payable under Clause 19.4, the date on which it became immediately
      due and payable.

            

    

     

    
      	
              7.2  

            	
              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
      Agent to be 1.5 per cent. above:

            

    

     

    
      	
              (a)  

            	
              in
      the case of an overdue amount of principal, the higher of the rates set
      out at Clauses 7.3(a) and (b); or

            

    

     

    
      	
              (b)  

            	
              in
      the case of any other overdue amount, the rate set out at Clause 7.3(b).

            

    

     

    
      	
              7.3  

            	
              Calculation of default rate of
      interest.  The rates referred to in Clause 7.2 are:

            

    

     

    
      	
              (a)  

            	
              the
      rate applicable to the overdue principal amount immediately prior to the
      relevant date (but only for any unexpired part of any then current
      Interest Period applicable to it);

            

    

     

    
      	
              (b)  

            	
              the
      aggregate of the Margin and the Mandatory Cost (if any) plus, in respect
      of successive periods of any duration (including at call) up to 3 months
      which the Agent may select from time to
time:

            

    

     

    
      	
              (i)  

            	
              LIBOR;
      or

            

    

     

    
      	
              (ii)  

            	
              if
      the Agent (after consultation with the Reference Banks) determines that
      Dollar deposits for any such period are not being made available to any
      Reference Bank by leading banks in the London Interbank Market in the
      ordinary course of business, a rate from time to time determined by the
      Agent by reference to the cost of funds to the Reference Banks from such
      other sources as the Agent (after consultation with the Reference Banks)
      may from time to time determine.

            

    

     

    
      	
              7.4  

            	
              Notification of interest
      periods and default rates.  The Agent shall promptly
      notify the Lenders and the Borrowers of each interest rate determined by
      the Agent under Clause 7.3 and of each period
      selected by the Agent for the purposes of paragraph (b) of that Clause;
      but this shall not be taken to imply that the Borrowers are liable to pay
      such interest only with effect from the date of the Agent’s
      notification.

            

    

     

    
      	
              7.5  

            	
              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; and the payment
      shall be made to the Agent for the account of the Creditor Party to which
      the overdue amount is due.

            

    

     

    
      	
              7.6  

            	
              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.

            

    

     

    
      	
              7.7  

            	
              Application to Master
      Agreement.  For the avoidance of doubt, this Clause 7 does not apply to any amount payable under the
      Master Agreement in respect of any continuing Designated Transaction as to
      which section 2(e) (Default Interest;  Other Amounts) of the
      Master Agreement shall apply.

            

    

     

    
      	
              8  

            	
              REPAYMENT
      AND PREPAYMENT

            

    

     

    
      	
              8.1  

            	
              Repayment of
      Loans.  The Borrowers shall repay the Loans in the
      instalments and on the repayment dates set out in Schedule
    5.

            

    

     

    
      	
              8.2  

            	
              Final Repayment
      Date.  On the Final Repayment Date, the Borrowers shall
      additionally pay to the Agent for the account of the Creditor Parties all
      other sums then accrued or owing under any Finance
    Document.

            

    

     

    
      	
              8.3  

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

            

    

     

    
      	
              8.4  

            	
              Conditions for voluntary
      prepayment.  The conditions referred to in Clause 8.3 are
that:

            

    

     

    
      	
              (a)  

            	
              a
      partial prepayment shall be in a minimum amount of $2,500,000 (and in
      integral multiples of $500,000);

            

    

     

    
      	
              (b)  

            	
              the
      Agent has received from the Borrowers at least 7 Business Days’ prior
      written notice specifying the amount to be prepaid and the date on which
      the prepayment is to be made; and

            

    

     

    
      	
              (c)  

            	
              the
      Borrowers have provided evidence satisfactory to the Agent that any
      consent required by the Borrowers in connection with the prepayment has
      been obtained and remains in force, and that any
      official  regulation relevant to this Agreement which affects
      the Borrowers has been complied
with.

            

    

     

    
      	
              8.5  

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

            

    

     

    
      	
              8.6  

            	
              Notification of notice of
      prepayment.  The Agent shall notify the Lenders promptly
      upon receiving a prepayment notice, and shall provide any Lender which so
      requests with a copy of any document delivered by the Borrowers under
      Clause 8.4(c).

            

    

     

    
      	
              8.7  

            	
              Mandatory prepayment upon a
      Sale or Total Loss of a Ship.  Without prejudice to the
      provisions of Clause 15, the Borrowers shall
      be obliged to make a prepayment in respect of the Loans if a Ship is sold
      or becomes a Total Loss or on the occurrence of one of the events set out
      in Clause 8.13 in relation to a Shipbuilding
      Contract:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

            	
              in
      the case of the occurrence of one of the events set out in Clause 8.13 in relation to a Shipbuilding Contract, on
      demand by the Agent,

            

    

     

    and in
any such case the amount to be prepaid in respect of the Loans shall be the
greater of:

     

    
      	
              (i)  

            	
              the
      Loan relative to that Ship or that Shipbuilding Contract;
    and

            

    

     

    
      	
              (ii)  

            	
              such
      sum as is necessary to ensure that, in relation to the remaining amount of
      the Loans and the remaining Ship or Ships immediately after such
      prepayment, the same asset cover ratio (calculated as per Clause 15.3) applies as applied immediately prior to
      such prepayment or, if higher, such sum as shall ensure that the
      requirements of Clause 15.1 are then complied
      with.

            

    

     

    
      	
              8.8  

            	
              Mandatory prepayment upon a
      change of control.  If there is a change of ownership of
      the shares in the New Corporate Guarantor or any Borrower such that an
      individual or company (or group of individuals and/or companies acting in
      concert) which does not at the date of this Agreement control the New
      Corporate Guarantor or that Borrower acquires control of the New Corporate
      Guarantor or that Borrower:

            

    

     

    
      	
              (i)  

            	
              the
      Borrowers shall promptly notify the Agent upon becoming aware of that
      event; and

            

    

     

    
      	
              (ii)  

            	
              a
      Lender shall not be obliged to fund an Advance requested in a Drawdown
      Notice and (unless the Agent has previously given its written consent to
      such change of control acting on the instruction of all the Lenders) a
      Lender, by not less than 10 days’ notice to the Borrowers and the other
      Lenders, may cancel its Available Commitment and require repayment of all
      of its Contribution immediately.

            

    

     

    For the
purpose of this Clause 8.8 “acting in concert” means actively co-operating
pursuant to an agreement or understanding (whether formal or
informal).

     

    
      	
              8.9  

            	
              Amounts payable on
      prepayment.  A prepayment shall be made together with
      accrued interest (and any other amount payable under Clauses
      8.14,  21 or otherwise) in respect
      of the amount prepaid and, if the prepayment is not made on the last day
      of an Interest Period together with any sums payable under Clause 21.1(b) but without premium or
      penalty.

            

    

     

    
      	
              8.10  

            	
              Application of partial
      prepayment.  Each partial prepayment of a Loan shall be
      applied against the repayment instalments of such Loan in inverse order of
      maturity.

            

    

     

    
      	
              8.11  

            	
              No
      Reborrowing.  No amount of the Loans prepaid may be
      reborrowed.

            

    

     

    
      	
              8.12  

            	
              Unwinding of Designated
      Transactions.  On or prior to any repayment or prepayment
      of the Loans under this Clause 8 or any other
      provision of this Agreement, the Borrowers shall wholly or partially
      reverse, offset, unwind or otherwise terminate one or more of the
      continuing Designated Transactions so that the notional principal amount
      of the continuing Designated Transactions thereafter remaining does not
      and will not in the future (taking into account the scheduled
      amortisation) exceed the amount of the Loans as reducing from time to time
      thereafter pursuant to Clause 8.1.

            

    

     

    
      	
              8.13  

            	
              Prepayment pursuant to events
      arising in respect of the Shipbuilding Contracts.  The
      events referred to in Clause 8.7(c)
      are:

            

    

     

    
      	
              (a)  

            	
              the
      occurrence of any of the events referred to in Article(s) X or XI of any
      of the Shipbuilding Contracts and in the case where the relevant Borrower
      has rescinded such Shipbuilding Contract either the Security Trustee has
      received from the Seller or the Refund Guarantor all amounts to be
      refunded under such Shipbuilding Contract or a period of 30 days (or such
      longer period as the Agent may agree) has elapsed from the date of such
      rescission whichever is the earlier;
or

            

    

     

    
      	
              (b)  

            	
              any
      of the Shipbuilding Contracts being cancelled, terminated, rescinded or
      suspended or otherwise ceasing to remain in force for any reason and in
      the case where the relevant Borrower has rescinded such Shipbuilding
      Contract either the Security Trustee has received from the Seller or the
      Refund Guarantor all amounts to be refunded under such Shipbuilding
      Contract or a period of 30 days (or such longer period as the Agent may
      agree) has elapsed from the date of such rescission whichever is the
      earlier; or

            

    

     

    
      	
              (c)  

            	
              any
      of the Shipbuilding Contracts being amended or varied without the prior
      written consent of the Majority Lenders except for any such amendments or
      variation as is permitted by this Agreement or any other relevant Finance
      Document; or

            

    

     

    
      	
              (d)  

            	
              any
      Ship not for any reason being delivered to, and accepted by, the relevant
      Borrower under the relevant Shipbuilding Contract by the end of the
      Availability Period applicable to the Loan to which that Ship relates;
      or

            

    

     

    
      	
              (e)  

            	
              the
      rights of the Borrowers under any of the Shipbuilding Contracts are sold,
      novated or assigned other than by way of security pursuant to the Finance
      Documents.

            

    

     

    
      	
              9  

            	
              CONDITIONS
      PRECEDENT

            

    

     

    
      	
              9.1  

            	
              Documents, fees and no
      default.  Each Lender’s obligation to contribute to an
      Advance is subject to the following conditions
  precedent:

            

    

     

    
      	
              (a)  

            	
              that,
      on or before the service of the first Drawdown Notice, the Agent receives
      the documents described in Part A of Schedule 3 in form and substance
      satisfactory to it;

            

    

     

    
      	
              (b)  

            	
              that,
      on or before a Drawdown Date but prior to the making of an Advance (other
      than a Delivery Advance), the Agent receives the documents described in
      Part B of Schedule 3 in form and substance satisfactory to
    it;

            

    

     

    
      	
              (c)  

            	
              that,
      on or before the Drawdown Date but prior to the drawdown of a Delivery
      Advance, the Agent receives the documents described in Part C of Schedule
      3 in form and substance satisfactory to
it;

            

    

     

    
      	
              (d)  

            	
              that,
      on or before each Drawdown Date, the Agent has received all arrangement,
      commitment and agency fees accrued due and payable pursuant to Clause 20.1;

            

    

     

    
      	
              (e)  

            	
              that
      at the date of each Drawdown Notice and on each Drawdown
    Date:

            

    

     

    
      	
              (i)  

            	
              no
      Event of Default or Potential Event of Default has occurred and is
      continuing or would result from the borrowing of the relevant
      Advance;

            

    

     

    
      	
              (ii)  

            	
              the
      representations and warranties in Clause 10.1 and those of the Borrowers
      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;
  and

            

    

     

    
      	
              (iii)  

            	
              none
      of the circumstances contemplated by Clause 5.7 has occurred and is
    continuing;

            

    

     

    
      	
              (f)  

            	
              that,
      if the ratio set out in Clause 15.1 were
      applied immediately following the making of the relevant Advance, the
      Borrowers would not be obliged to provide additional security or prepay
      part of the Loans; and

            

    

     

    
      	
              (g)  

            	
              that
      the Agent has received, and found to be acceptable to it, any further
      opinions, consents, agreements and documents in connection with the
      Finance Documents which the Agent may, with the authorisation of the
      Majority Lenders, reasonably request by notice to the Borrowers prior to
      the Drawdown Date.

            

    

     

    Provided that the Lenders
shall not be required to make an Advance if the Loans relating to Ships which
have not yet been delivered (but including the Advance being requested by the
Borrowers) exceed 75% of (i) the aggregate Contract Value of the Ships and (ii)
the net realisable value of any additional security provided under this
Agreement and for the purpose of this Clause, “Contract Value” shall
mean:

     

    the
market value of a Ship at any date based on the acquisition price of the rights
and obligations under the Shipbuilding Contract relating to that Ship or a ship
of a similar size and type and due to be delivered at the same time as that Ship
as shown by a valuation prepared as at a date not more than 10 Business Days
previously by an independent international sale and purchase shipbroker which
the Agent has approved for the purpose and after deducting the estimated amount
of usual and reasonable expenses which would be incurred in connection with such
a sale.

     

    
      	
              9.2  

            	
              Waiver of conditions
      precedent.  If all the Lenders or, in relation to a
      condition which the Agent determines is non-material, the Majority
      Lenders, at their discretion, permit an Advance to be borrowed before
      certain of the conditions referred to in Clause 9.1 are satisfied, the Borrowers shall ensure
      that those conditions are satisfied within 14 Business days after the
      Drawdown Date (or such longer period as the Agent may, with the
      authorisation of all the Lenders or (as the case may be) the Majority
      Lenders, specify).

            

    

     

    
      	
              9.3  

            	
              Pre-positioning of delivery
      instalments under Shipbuilding Contracts. Notwithstanding the
      foregoing provisions of Clause 9, in the event a Delivery Advance is
      required to be drawndown prior to the satisfaction of the relevant
      conditions precedent set out in Schedule 3 and remitted to the Seller’s
      bank in accordance with Article II, 2.4 of the relevant Shipbuilding
      Contract, the Agent may with the authorisation of the Majority Lenders
      agree to remit such amount to the Seller’s bank prior to the satisfaction
      of such conditions precedent provided
that:

            

    

     

    
      	
              (a)  

            	
              the
      amount remitted shall be held by the Seller’s bank in an account to the
      order of the Agent;

            

    

     

    
      	
              (b)  

            	
              such
      amount will only be released to the Seller upon the Seller’s presentation
      to the Seller’s bank of a copy of the protocol of delivery and acceptance
      for the relevant Ship in the form agreed between the Seller and the
      relevant Borrower and duly signed on behalf of the Agent by a person named
      in the Agent’s remittance
instructions;

            

    

     

    
      	
              (c)  

            	
              such
      amount so released may only be used for payment to the account of the
      Seller with the Seller’s bank in satisfaction of the delivery instalment
      referred to in Article II, 2.3(e) of the relevant Shipbuilding
      Contract;

            

    

     

    
      	
              (d)  

            	
              in
      the event that none of the said amount so remitted is released in
      accordance with the Agent’s instructions or any part thereof is not so
      released ten (or such longer period as the Agent may agree, up to a
      maximum of thirty days) days after its receipt by the Seller’s bank the
      money held by the Seller’s bank is returned to the account specified in
      the Agent’s remittance
instructions;

            

    

     

    
      	
              (e)  

            	
              the
      relevant conditions precedent set out in Schedule 3 shall be satisfied
      simultaneously with any release to the Seller pursuant to (b) above;
      and

            

    

     

    
      	
              (f)  

            	
              any
      amounts so remitted and returned pursuant to (d) above will be applied in
      or towards prepayment of the relevant Delivery Advance pursuant to Clause
      8 but will continue to be available to the
      Borrowers for borrowing subject to the terms and conditions of this
      Agreement.

            

    

     

    
      	
              10  

            	
              REPRESENTATIONS
      AND WARRANTIES

            

    

     

    
      	
              10.1  

            	
              General.  Each
      Borrower represents and warrants to each Creditor Party as
      follows.

            

    

     

    
      	
              10.2  

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

            

    

     

    
      	
              10.3  

            	
              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 Ltd.

            

    

     

    
      	
              10.4  

            	
              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, to purchase and
      pay for its Ship under that Shipbuilding Contract and to register such
      Ship in its name in the Panamanian Ship
  Registry;

            

    

     

    
      	
              (b)  

            	
              to
      execute the Bareboat Charter to which it is a party and to bareboat
      charter its Ship to the Bareboat
Charterer;

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

            	
              to
      borrow under this Agreement and to make all the payments contemplated by,
      and to comply with, those Finance
Documents.

            

    

     

    
      	
              10.5  

            	
              Consents in
      force.  All the consents referred to in Clause 10.4 remain in force and nothing to the best of
      the Borrower’s knowledge and belief has occurred which makes any of them
      liable to revocation.

            

    

     

    
      	
              10.6  

            	
              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 Agent pursuant to Schedule
3.

     

    
      	
              10.7  

            	
              No third party Security
      Interests.  Without limiting the generality of Clause 10.6, at the time of the execution and delivery
      of each Finance Document:

            

    

     

    
      	
              (a)  

            	
              the
      relevant Borrower or Borrowers 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 Borrower’s 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.

            

    

     

    
      	
              10.8  

            	
              No
      conflicts.  The execution by that Borrower of each
      Finance Document to which it is a party, and the borrowing by that
      Borrower of the Loans, 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 Borrower;
or

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              10.9  

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

            

    

     

    
      	
              10.10  

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

            

    

     

    
      	
              10.11  

            	
              Information.  All
      information which has been provided in writing by or on behalf of the
      Borrowers or any Security Party to any Creditor Party in connection with
      any Finance Document was to the best of the Borrower’s knowledge and
      belief true and not misleading as at the time it was given and all audited
      and unaudited accounts which have been so provided satisfied the
      requirements of Clause 11.7; and there has
      been no material adverse change in the financial position or state of
      affairs of the Borrowers from that disclosed in the latest of those
      accounts.

            

    

     

    
      	
              10.12  

            	
              No
      litigation.  No legal or administrative action involving
      the Borrowers (including action relating to any alleged or actual breach
      of the ISM Code or the ISPS Code) has been commenced or taken or, to that
      Borrower’s knowledge, is likely to be commenced or taken which, in either
      case, would be likely to have a material adverse effect on the Borrowers’
      financial position or
profitability.

            

    

     

    
      	
              10.13  

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

            

    

     

    
      	
              (a)  

            	
              each
      copy of the Shipbuilding Contracts delivered to the Agent 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 Borrower or the Seller waived any of their respective rights under
      the Shipbuilding Contracts.

            

    

     

    
      	
              10.14  

            	
              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 Borrowers, the Seller or a third party in
      connection with the purchase by the Borrowers of the Ships, other than as
      disclosed to the Agent in writing on or prior to the date of this
      Agreement.

            

    

     

    
      	
              10.15  

            	
              Compliance with certain
      undertakings.  At the date of this Agreement, each
      Borrower is in compliance with Clause 11.13
      and (save as described in writing to the Agent) Clauses 11.4 and 11.9.

            

    

     

    
      	
              10.16  

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

            

    

     

    
      	
              10.17  

            	
              Money
      laundering.  Without prejudice to the generality of
      Clause 2.3, in relation to the borrowing by
      the Borrowers of the Loan Facility, the performance and discharge of their
      obligations and liabilities under the Finance Documents, and the
      transactions and other arrangements affected or contemplated by the
      Finance Documents to which the Borrowers or any of them are a party, each
      Borrower confirms (i) that it is acting for its own
      account;  (ii) that it will use the proceeds of the Loans for
      its own benefit, under its full responsibility and exclusively for the
      purposes specified in this Agreement; and (iii) that the foregoing will
      not involve or lead to a contravention of any law, official requirement or
      other regulatory measure or procedure implemented and in force to combat
      “money laundering” (as defined in Article 1 of Directive (91/308/EEC)
      of the Council of the European
Communities).

            

    

     

    
      	
              10.18  

            	
              Conformity
      of Financial Covenants and Dividend
  Restrictions.

            

    

     

    
      	
              (a)  

            	
              The
      financial covenants set out in Schedule 8 conform to the financial
      covenants given by the New Corporate Guarantor and its subsidiaries under
      the Bank of America Facilities.

            

    

     

    
      	
              (b)  

            	
              The
      dividend restrictions in Clause 11.21 conform in substance to the dividend
      restrictions imposed on the New Corporate Guarantor under the Bank of
      America Facilities.

            

    

     

    
      	
              10.19  

            	
              Charters with TBS Worldwide to
      which Borrowers are a party.  Any charter which a
      Borrower shall enter into with TBS Worldwide shall be on terms comparable
      to, as far as charterhire is concerned, the time charter dated 10 May
      2005, a copy of which was previously delivered to the
    Agent.

            

    

     

    
      	
              10.20             

            	
              Shareholder
      loans.  All shareholder loans and inter-company
      Indebtedness made available to the Borrowers (or any of them) shall be
      made by the Shareholder.

            

    

     

    
      	
              11  

            	
              GENERAL
      UNDERTAKINGS AND FINANCIAL
COVENANTS

            

    

     

    
      	
              11.1  

            	
              General.  Each
      Borrower undertakes with each Creditor Party to comply with the following
      provisions of this Clause 11 at all times
      during the Security Period except as the Agent may, with the authorisation
      of the Majority Lenders otherwise
permit.

            

    

     

    
      	
              11.2  

            	
              Title; negative
      pledge.  Each Borrower will keep its rights under the
      Shipbuilding Contract and Refund Guarantees to which it is a party, and
      with effect from the Delivery Date of the Ship, will hold the legal title
      to, and own the entire beneficial interest in its Ship, its Insurances and
      Earnings, in each case free from all Security Interests and other
      interests and rights of every kind, except for Permitted Security
      Interests.

            

    

     

    
      	
              11.3  

            	
              No disposal of
      assets.  Save pursuant to the relevant Bareboat Charter
      or in the case of the disposal of a Ship or a Shipbuilding Contract where
      the provisions of Clause 8.7 are complied
      with, no Borrower will transfer, lease or otherwise dispose
      of:

            

    

     

    
      	
              (a)  

            	
              its
      Ship or its rights under the Shipbuilding Contract to which it is a party
      or all or a substantial part of its other assets, whether by one
      transaction or a number of transactions, whether related or not;
      or

            

    

     

    
      	
              (b)  

            	
              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.

            

    

     

    
      	
              11.4  

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

            

    

     

    
      	
              (a)  

            	
              liabilities
      and obligations under the Shipbuilding Contract, the Bareboat Charter, the
      First Sub-Time Charter, the Second Sub-Time Charter, the Finance
      Documents, the Guarantee Facility Agreement and the Finance Documents (as
      defined in the Guarantee Facility 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
      Borrowers to the Approved Managers may be a permitted expense);
      and

            

    

     

    
      	
              (c)  

            	
              provided
      the terms of Clause 12.3(c)  are complied with, inter-company
      Indebtedness from other companies which are in the same ultimate
      beneficial ownership as the
Borrowers.

            

    

     

    
      	
              11.5  

            	
              Information provided to be
      accurate.  All financial and other information which is
      provided in writing by or on behalf of each Borrower under or in
      connection with any Finance Document will to the best of that Borrower’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.

            

    

     

    
      	
              11.6  

            	
              Provision of financial
      statements.  Each Borrower will procure that there is
      sent to the Agent:

            

    

     

    
      	
              (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:

            

    

     

    
      	
              (i)  

            	
              the
      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;
  and

            

    

     

    
      	
              (ii)  

            	
              with
      effect from the relevant Delivery Date of its Ship management accounts in
      a format approved by the Agent which show the results of the operation of
      its Ship during the preceding financial quarter and which are certified as
      to their correctness by its chief financial
  officer;

            

    

     

    
      	
              (c)  

            	
              as
      soon as possible, but in no event later than 3 months after the end of
      each of its financial years (but only with effect from the relevant
      Delivery Date of its Ship), a budget in a format approved by the Agent
      which shows all anticipated income and expenditure of its Ship during its
      next financial year;

            

    

     

    
      	
              (d)             

            	
              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

            

    

     

    
      	
              (e)             

            	
              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.

            

    

     

    
      	
              11.7  

            	
              Form of financial
      statements.  All accounts (audited and unaudited)
      delivered under Clause 11.6
    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 Borrower
      at the date of those accounts and of its profit for the period to which
      those accounts relate;

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              11.8  

            	
              Shareholder and creditor
      notices.  Each Borrower will send the Agent, 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.

            

    

     

    
      	
              11.9  

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

            

    

     

    
      	
              (a)  

            	
              for
      that Borrower 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;

            

    

     

    
      	
              (c)  

            	
              for
      that Borrower to continue to own, charter and operate its
      Ship;

            

    

     

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

     

    
      	
              11.10  

            	
              Maintenance of Security
      Interests.  Each Borrower
will:

            

    

     

    
      	
              (a)  

            	
              at
      its own cost, do all that is necessary 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 Majority Lenders, 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.

            

    

     

    
      	
              11.11  

            	
              Notification of
      litigation.  Each Borrower will provide the Agent with
      details of any legal or administrative action involving any Borrower, any
      Security Party, the Approved Managers or the Ships, their Earnings or the
      Insurances 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 Borrower to perform its obligations
      under any Finance Document to which it is a
  party.

            

    

     

    
      	
              11.12  

            	
              No amendment to Shipbuilding
      Contracts.  No Borrower will agree to any material
      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 11.12 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%).

            

    

     

    
      	
              11.13  

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

            

    

     

    
      	
              11.14  

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

            

    

     

    
      	
              11.15  

            	
              Notification of
      default.  Each Borrower will notify the Agent 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 Agent fully up-to-date with all developments.

     

    
      	
              11.16  

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

            

    

     

    
      	
              (a)  

            	
              to
      it, its Ship, her Earnings or Insurances;
or

            

    

     

    
      	
              (b)  

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

            

    

     

    which may
be reasonably requested by the Agent, the Security Trustee or any Lender at any
time.

     

    
      	
              11.17  

            	
              Provision of copies and
      translation of documents.  Each Borrower will supply the
      Agent with a sufficient number of copies of the documents referred to
      above to provide 1 copy for each Creditor Party; and if the Agent so
      requires in respect of any of those documents, such Borrower will provide
      a certified English translation prepared by a translator approved by the
      Agent.

            

    

     

    
      	
              11.18  

            	
              Financial
      Covenants.

            

    

     

    
      	
              (i)  

            	
              The
      Borrowers undertake to comply at all times with the financial covenants
      set out in Schedule 8.

            

    

     

    
      	
              (ii)  

            	
              The
      Borrowers shall provide to the Agent 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 9 executed by the
      chief financial officer of the New Corporate Guarantor and confirming that
      the Financial Covenants set out in Schedule 8 have been complied with
      during each financial quarter.

            

    

     

    
      	
              (iii)  

            	
              A
      formal review of the financial covenants set out in Schedule 8 will be
      undertaken by the Agent, having consulted and received the written
      agreement of the Lenders, upon expiry and prepayment of the Bank of
      America Facilities whichever is the
earlier.

            

    

     

    
      	
              (iv)             

            	
              The
      parties to this Agreement shall review the financial covenants set out in
      Schedule 8 on or around 1 May 2012.

            

    

     

    
      	
              11.19  

            	
              Operational business of TBS
      Pacific Liner.  The Borrowers undertake to procure that
      TBS Pacific Liner opens the Earnings Account with the Agent no later than
      30 June 2007 and that thereafter and throughout the Security Period (i)
      all of the operational business of TBS Pacific Liner shall be conducted
      through the Earnings Account and (ii) TBS Pacific Liner does not operate
      accounts with any banks other than the Agent (save that the Creditor
      Parties agree there may be a transitional period of up to 6 months from
      the date of opening the Earnings Account until all operational business of
      TBS Pacific Liner is completely transferred and all other accounts of TBS
      Pacific Liner which are currently with other banks are
      closed).

            

    

     

    
      	
              11.20  

            	
              Designated
      Transactions.  The Borrowers hereby undertake that on the
      Drawdown Date in respect of an Advance they shall hedge the
      interest rate payable in respect of such Advance for the period for which
      such Advance is scheduled to be outstanding by entering into a Designated
      Transaction with the Swap Bank pursuant to the Master
      Agreement.

            

    

     

    
      	
              11.21             

            	
              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 Borrowers
      may pay any dividends or make other forms of distributions to the New
      Corporate Guarantor.  The Borrowers 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.

            

    

     

    
      	
              11.22             

            	
              Financial Covenants in other
      facilities.  The Borrowers 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.

            

    

     

    
      	
              11.23             

            	
              Equity
      Contributions.  The Borrowers shall ensure that all
      amounts due under the Shipbuilding Contracts other than those amounts
      being financed by a Loan under this Agreement shall be paid from operating
      cashflow and the Borrowers shall not use any monies credited to the
      Restricted Equity Deposit Account until the Agent has notified the
      Borrowers that it is satisfied that the amount standing to the credit of
      the Restricted Equity Deposit Account is sufficient to meet all remaining
      amounts due under the Shipbuilding Contracts other than those amounts
      being financed by a Loan under this Agreement.  The Borrowers
      shall further ensure that any further equity raised by the New Corporate
      Guarantor shall be utilised in meeting the Borrowers’ equity contributions
      as required under this Clause in the first instance and any balance
      thereafter shall promptly be credited to the Restricted Equity Deposit
      Account. Any amount of equity raised over such amounts required to fund
      equity contributions in respect of amounts due under the Shipbuilding
      Contracts other than those amounts being financed by a Loan under this
      Agreement shall not be credited to the Restricted Equity Deposit Account
      but shall be used to prepay all loans and indebtedness owed by the New
      Corporate Guarantor and its subsidiaries to Bank of America, The Royal
      Bank of Scotland plc, DVB Group Merchant Bank (Asia) Ltd., Credit Suisse,
      AIG Commercial Equipment Finance, Inc., Commerzbank AG and Berenberg Bank
      under loan or facility agreements entered into with them on a pro rata
      basis.  Any prepayment of the Loans under this Clause shall be
      applied to all Loans on a pro rata basis in accordance with Clause
      8.

            

    

     

    
      	
              11.24             

            	
              Operating
      Leases.  The Borrowers shall ensure that neither the New
      Corporate Guarantor nor any of its subsidiaries shall permit any new or
      increase their existing off balance sheet operating leases, operating
      lease payments and payments associated with vessels chartered in for more
      than 12 months without the prior written consent of the Agent acting on
      the instructions of the Majority Lenders.  In no circumstances
      shall any such off-balance sheet operating obligations exceed $45,000,000
      when aggregated.

            

    

     

    
      	
              11.25             

            	
              Additional
      Vessels.  The Borrowers shall not and shall procure that
      the New Corporate Guarantor or any of its subsidiaries do not purchase any
      additional vessels without the prior written consent of the Agent acting
      on the instructions of the Majority
Lenders.

            

    

     

    
      	
              11.26             

            	
              Investments in Joint
      Ventures.  The Borrowers, the Corporate Guarantor and the
      New Corporate Guarantor acting individually or together shall not invest
      more than $10,000,000 in aggregate in any Joint Ventures of which any
      amounts in excess of $5,000,000 shall require the prior written consent of
      the Agent acting on the instructions of the Majority Lenders. For the
      avoidance of doubt, the $10,000,000 amount referred to above shall include
      all Joint Venture investments made on or after 27 March
    2009.

            

    

     

    
      	
              12  

            	
              CORPORATE
      UNDERTAKINGS

            

    

     

    
      	
              12.1  

            	
              General.  Each
      Borrower also undertakes with each Creditor Party to comply with the
      following provisions of this Clause 12 at all
      times during the Security Period except as the Agent may, with the
      authorisation of the Majority Lenders, otherwise
  permit.

            

    

     

    
      	
              12.2  

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

            

    

     

    
      	
              12.3  

            	
              Negative
      undertakings.  No Borrower
  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 Borrower’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 Borrower 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 Borrower 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 Security Trustee fully
subordinating the rights of such lending company in respect of such Indebtedness
to those of the Creditor Parties 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 Borrowers;

     

    
      	
              (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.

            

    

     

    
      	
              13  

            	
              INSURANCE

            

    

     

    
      	
              13.1  

            	
              General.  Each
      Borrower also undertakes with each Creditor Party to comply with the
      following provisions of this Clause 13 in
      respect of each Ship at all times during the Security Period after that
      Ship has been delivered to it under the relevant Shipbuilding Contract
      except as the Agent may, with the authorisation of the Majority Lenders,
      otherwise permit.

            

    

     

    
      	
              13.2  

            	
              Maintenance of obligatory
      insurances.  Each Borrower shall keep its Ship insured at
      its expense against:

            

    

     

    
      	
              (a)  

            	
              fire
      and usual marine risks (including hull and machinery and excess
      risks);

            

    

     

    
      	
              (b)  

            	
              war
      risks;

            

    

     

    
      	
              (c)  

            	
              protection
      and indemnity risks; and

            

    

     

    
      	
              (d)  

            	
              any
      other risks against which the Agent considers, having regard to practices
      and other circumstances prevailing at the relevant time, it would in the
      reasonable opinion of the Agent be reasonable for a prudent owner to
      insure and which are specified by the Agent by notice to the
      Borrower.

            

    

     

    
      	
              13.3  

            	
              Terms of obligatory
      insurances.  Such insurances in relation to a Ship shall
      be effected by the Borrowers:

            

    

     

    
      	
              (a)  

            	
              in
      Dollars;

            

    

     

    
      	
              (b)  

            	
              in
      the case of fire and usual marine risks and war risks, in an amount on an
      agreed value basis at least the greater of (i) One hundred and twenty per
      cent. (120%) of the Loan in respect of such Ship and (ii) the market value
      of such Ship;

            

    

     

    
      	
              (c)  

            	
              in
      the case of oil pollution liability risks, for an aggregate amount equal
      to the highest level of cover from time to time available under basic
      protection and indemnity club entry and in the international marine
      insurance market;

            

    

     

    
      	
              (d)  

            	
              in
      relation to protection and indemnity risks in respect of the full tonnage
      of such Ship;

            

    

     

    
      	
              (e)  

            	
              on
      approved terms; and

            

    

     

    
      	
              (f)  

            	
              through
      approved brokers and with approved insurance companies and/or underwriters
      or, in the case of war risks and protection and indemnity risks, in
      approved war risks and protection and indemnity risks associations and
      without prejudice to the Borrowers’ obligation to obtain the prior
      approval of the Agent such approval not to be unreasonably withheld, at
      all times with reputable international brokers, companies, underwriters
      and mutual insurance associations.

            

    

     

    
      	
              13.4  

            	
              Further protections for the
      Creditor Parties.  In addition to the terms set out in
      Clause 13.3, each Borrower shall use its best
      endeavours to procure that the obligatory insurances
  shall:

            

    

     

    
      	
              (a)  

            	
              whenever
      the Security Trustee requires, name (or be amended to name) the Security
      Trustee as additional named assured for its rights and interests,
      warranted no operational interest and with full waiver of rights of
      subrogation against the Security Trustee, but without the Security Trustee
      thereby being liable to pay (but having the right to pay) premiums, calls
      or other assessments in respect of such
  insurance;

            

    

     

    
      	
              (b)  

            	
              name
      the Security Trustee as loss payee with such directions for payment as the
      Security Trustee may reasonably
specify;

            

    

     

    
      	
              (c)  

            	
              provide
      that all payments by or on behalf of the insurers under the obligatory
      insurances to the Security Trustee shall be made without set-off,
      counterclaim or deductions or condition
  whatsoever;

            

    

     

    
      	
              (d)  

            	
              provide
      that the insurers shall waive, to the fullest extent permitted by English
      law, their entitlement (if any) (whether by statute, common law, equity,
      or otherwise) to be subrogated to the rights and remedies of the Agent in
      respect of any rights or interests (secured or not) held by or available
      to the Agent under the Finance Documents, until the Secured Liabilities
      shall have been fully repaid and discharged, except that the insurers
      shall not be restricted by the terms of this paragraph (d) from making
      personal claims against persons (other than the Borrowers or any other
      Creditor Party) in circumstances where the insurers have fully discharged
      their liabilities and obligations under the relevant obligatory
      insurances;

            

    

     

    
      	
              (e)  

            	
              provide
      that such obligatory insurances shall be primary without right of
      contribution from other insurances which may be carried by the Security
      Trustee or any other Creditor
Party;

            

    

     

    
      	
              (f)  

            	
              provide
      that the Security Trustee may make proof of loss if the Borrowers fail to
      do so; and

            

    

     

    
      	
              (g)  

            	
              provide
      so far as possible that if any obligatory insurance is cancelled, or if
      any substantial change is made in the coverage which adversely affects the
      interest of the Agent, or if any obligatory insurance is allowed to lapse
      for non-payment of premium, such cancellation, charge or lapse shall not
      be effective with respect to the Agent for 30 days (or 7 days in the case
      of war risks) after receipt by the Agent of prior written notice from the
      insurers of such cancellation, change or
lapse.

            

    

     

    
      	
              13.5  

            	
              Renewal of obligatory
      insurances.  The Borrowers
  shall:

            

    

     

    
      	
              (a)  

            	
              at
      least 14 days before the expiry of any obligatory insurance effected by
      it:

            

    

     

    
      	
              (i)  

            	
              notify
      the Security Trustee of the brokers (or other insurers) and any protection
      and indemnity or war risks association through or with whom the Borrowers
      propose to renew that obligatory insurance and of the proposed terms of
      renewal; and

            

    

     

    
      	
              (ii)  

            	
              obtain
      the Security Trustee’s approval to the matters referred to in paragraph
      (i) such approval not to be unreasonably
  withheld;

            

    

     

    
      	
              (b)  

            	
              at
      least 7 days before the expiry of any obligatory insurance effected by it,
      renew that obligatory insurance in accordance with the Security Trustee’s
      approval pursuant to paragraph (a);
and

            

    

     

    
      	
              (c)  

            	
              use
      its best endeavours to procure that the approved brokers and/or the war
      risks and protection and indemnity associations with which such a renewal
      is effected shall promptly after the renewal notify the Security Trustee
      in writing of the terms and conditions of the
  renewal.

            

    

     

    
      	
              13.6  

            	
              Copies of policies; letters of
      undertaking.  The Borrowers shall ensure that all
      approved brokers provide the Security Trustee with pro forma copies of all
      policies relating to the obligatory insurances which they are to effect or
      renew and of a letter or letters or undertaking in a form required by the
      Security Trustee and including undertakings by the approved brokers
      that:

            

    

     

    
      	
              (a)  

            	
              they
      will have endorsed on each policy, immediately upon issue, a loss payable
      clause and a notice of assignment complying with the provisions of Clause
      13.4;

            

    

     

    
      	
              (b)  

            	
              they
      will hold such policies, and the benefit of such insurances, to the order
      of the Security Trustee in accordance with the said loss payable
      clause;

            

    

     

    
      	
              (c)  

            	
              they
      will advise the Security Trustee immediately of any material change to the
      terms of the obligatory insurances;

            

    

     

    
      	
              (d)  

            	
              they
      will notify the Security Trustee, not less than 10 days before the expiry
      of the obligatory insurances, in the event of their not having received
      notice of renewal instructions from the Borrowers or their agents and, in
      the event of their receiving instructions to renew, they will promptly
      notify the Security Trustee of the terms of the instructions;
      and

            

    

     

    
      	
              (e)  

            	
              they
      will not set off against any sum recoverable in respect of a claim
      relating to a Ship under such obligatory insurances any premiums or other
      amounts due to them or any other person whether in respect of that Ship or
      otherwise, they waive any lien on the policies, or any sums received under
      them, which they might have in respect of such premiums or other amounts,
      and they will not cancel such obligatory insurances by reason of
      non-payment of such premiums or other amounts, and will arrange for a
      separate policy to be issued in respect of that Ship forthwith upon being
      so requested by the Security
Trustee.

            

    

     

    
      	
              13.7  

            	
              Copies of certificates of
      entry.  The Borrowers shall ensure that any protection
      and indemnity and/or war risks associations in which a Ship is entered
      provides the Security Trustee with:

            

    

     

    
      	
              (a)  

            	
              a
      certified copy of the certificate of entry for that
  Ship;

            

    

     

    
      	
              (b)  

            	
              a
      letter or letters of undertaking in such form as may be reasonably
      required by the Security Trustee;
and

            

    

     

    
      	
              (c)  

            	
              a
      certified copy of each certificate of financial responsibility for
      pollution by oil or other Environmentally Sensitive Material issued by the
      relevant certifying authority in relation to that
  Ship.

            

    

     

    
      	
              13.8  

            	
              Deposit of original
      policies.  The Borrowers shall ensure that all policies
      relating to obligatory insurances effected by it are deposited with the
      approved brokers through which the insurances are effected or
      renewed.

            

    

     

    
      	
              13.9  

            	
              Payment of
      premiums.  The Borrowers shall punctually pay all
      premiums or other sums payable in respect of the obligatory insurances
      effected by it and produce all relevant receipts when so required by the
      Security Trustee.

            

    

     

    
      	
              13.10  

            	
              Guarantees.  The
      Borrowers shall ensure that any guarantees required by a protection and
      indemnity or war risks association are promptly issued and remain in full
      force and effect.

            

    

     

    
      	
              13.11  

            	
              Restrictions on
      employment.  The Borrowers shall not employ the Ships,
      nor permit them to be employed, outside the cover provided by any
      obligatory insurances.

            

    

     

    
      	
              13.12  

            	
              Compliance with terms of
      insurances.  The Borrowers shall not do nor omit to do
      (nor permit to be done or not to be done) any act or thing which would or
      might render any obligatory insurance invalid, void, voidable or
      unenforceable or render any sum payable under an obligatory insurance
      repayable in whole or in part; and, in
  particular:

            

    

     

    
      	
              (a)  

            	
              the
      Borrowers shall take all necessary action and comply with all requirements
      which may from time to time be applicable to the obligatory insurances,
      and (without limiting the obligation contained in Clause 13.7(c)) ensure that the obligatory insurances
      are not made subject to any exclusions or qualifications to which the
      Security Trustee has not given its prior
  approval;

            

    

     

    
      	
              (b)  

            	
              the
      Borrowers shall not make any changes relating to the classification or
      classification society or manager or operator of the Ships approved by the
      underwriters of the obligatory
insurances;

            

    

     

    
      	
              (c)  

            	
              the
      Borrowers shall make (and promptly supply copies to the Agent of) all
      quarterly or other voyage declarations which may be required by the
      protection and indemnity risks association in which the Ships are entered
      to maintain cover for trading to the United States of America and
      Exclusive Economic Zone (as defined in the United States Oil Pollution Act
      1990 or any other applicable legislation);
and

            

    

     

    
      	
              (d)  

            	
              the
      Borrowers shall not employ the Ships, nor allow them to be employed,
      otherwise than in conformity with the terms and conditions of the
      obligatory insurances, without first obtaining the consent of the insurers
      and complying with any requirements (as to extra premium or otherwise)
      which the insurers specify.

            

    

     

    
      	
              13.13  

            	
              Alteration to terms of
      insurances.  The Borrowers shall not either make or agree
      to any alteration to the terms of any obligatory insurance nor waive any
      right relating to any obligatory
insurance.

            

    

     

    
      	
              13.14  

            	
              Settlement of
      claims.  The Borrowers shall not either settle,
      compromise or abandon any claim under any obligatory insurance for Total
      Loss or for a Major Casualty unless the Agent is satisfied that such
      release, compromise or abandonment will not prejudice any of the Lenders’
      interests, and the Borrowers shall do all things necessary and provide all
      documents, evidence and information to enable the Security Trustee to
      collect or recover any moneys which at any time become payable in respect
      of the obligatory insurances.

            

    

     

    
      	
              13.15  

            	
              Provision of copies of
      communications.  The Borrowers shall provide the Security
      Trustee, at the time of each such communication, copies of all written
      communications between the Borrowers
and:

            

    

     

    
      	
              (a)  

            	
              the
      approved brokers; and

            

    

     

    
      	
              (b)  

            	
              the
      approved protection and indemnity and/or war risks associations;
      and

            

    

     

    
      	
              (c)  

            	
              the
      approved insurance companies and/or
  underwriters,

            

    

     

    which
relate directly or indirectly to:

     

    
      	
              (i)  

            	
              the
      obligations of the Borrowers relating to the obligatory insurances
      including, without limitation, all requisite declarations and payments of
      additional premiums or calls; and

            

    

     

    
      	
              (ii)  

            	
              any
      credit arrangements made between the Borrowers and any of the persons
      referred to in paragraphs (a) or (b) relating wholly or partly to the
      effecting or maintenance of the obligatory
  insurances.

            

    

     

    
      	
              13.16  

            	
              Provision of
      information.  In addition, the Borrowers shall promptly
      provide the Security Trustee (or any persons which it may designate) with
      any information which the Security Trustee (or any such designated person)
      reasonably requests for the purpose
of:

            

    

     

    
      	
              (a)  

            	
              obtaining
      or preparing any report from an independent marine insurance broker as to
      the adequacy of the obligatory insurances effected or proposed to be
      effected; and/or

            

    

     

    
      	
              (b)  

            	
              effecting,
      maintaining or renewing any such insurances as are referred to in Clause
      13.16 or dealing with or considering any
      matters relating to any such
insurances;

            

    

     

    and the
Borrowers shall, forthwith upon demand, indemnify the Security Trustee in
respect of all fees and other expenses properly incurred by or for the account
of the Security Trustee in connection with any such report as is referred to in
paragraph (a).

     

    
      	
              13.17  

            	
              Mortgagee’s interest,
      additional perils.  The Security Trustee shall be
      entitled from time to time to effect, maintain and renew a mortgagee’s
      interest additional perils insurance and a mortgagee’s interest marine
      insurance in relation to each Ship the subject of a Mortgage, in each case
      in an amount, which when aggregated with any such insurance policy taken
      out in relation to the other Ships then the subject of a Mortgage is equal
      to one hundred and ten per cent. (110%) of the Loans or part thereof at
      the discretion of the Security Trustee, on such terms, through such
      insurers and generally in such manner as the Security Trustee may from
      time to time consider appropriate and the Borrowers shall upon demand
      fully indemnify the Security Trustee in respect of all premiums and other
      expenses which are incurred in connection with or with a view to
      effecting, maintaining or renewing any such insurance or dealing with, or
      considering, any matter arising out of any such
  insurance.

            

    

     

    
      	
              13.18  

            	
              Review of insurance
      requirements.  The Agent may and, on instruction of the
      Majority Lenders, shall review the requirements of this Clause 13 from time to time in order to take account of
      any changes in circumstances after the date of this Agreement which are,
      in the reasonable opinion of the Agent or any Lender significant and
      capable of affecting the Borrowers or the Ships and their insurance
      (including, without limitation, changes in the availability or the cost of
      insurance coverage or the risks to which the Borrowers may be
      subject).

            

    

     

    
      	
              13.19  

            	
              Modification of insurance
      requirements.  The Agent shall notify the Borrowers of
      any proposed modification under Clause 13.18 to the requirements of this
      Clause 13 which the Agent, may or, on
      instruction of the Majority Lenders, shall reasonably consider
      appropriate, in the circumstances and, after consultation and taking full
      account of the Borrower’s opinions, such modification shall take effect on
      and from the date it is notified in writing to the Borrowers as an
      amendment to this Clause 13 and shall bind
      the Borrowers accordingly.

            

    

     

    
      	
              14  

            	
              SHIP
      COVENANTS

            

    

     

    
      	
              14.1  

            	
              General.  Each
      Borrower also undertakes with each Creditor Party to comply with the
      following provisions of this Clause 14 in
      respect of each Ship at all times during the Security Period after that
      Ship has been delivered to it under the relevant Shipbuilding Contract
      except as the Agent, with the authorisation of the Majority Lenders, may
      otherwise permit.

            

    

     

    
      	
              14.2  

            	
              Ship’s name and
      registration.  Each Borrower shall keep its Ship
      registered in its name in the Panamanian ship registry; shall not do or
      allow to be done anything as a result of which such registration might be
      cancelled or imperilled; and shall not change the name or port of registry
      of its Ship.

            

    

     

    
      	
              14.3  

            	
              Repair and
      classification.  Each Borrower shall keep its Ship in a
      good and safe condition and state of
repair:

            

    

     

    
      	
              (a)  

            	
              consistent
      with first-class ship ownership and management
  practice;

            

    

     

    
      	
              (b)  

            	
              so
      as to maintain such Ship’s present Classification in each case free
      of  recommendations and conditions affecting that Ship’s
      Classification; and

            

    

     

    
      	
              (c)  

            	
              so
      as to comply with all laws and regulations applicable to vessels
      registered at ports in the Republic of Panama or to vessels trading to any
      jurisdiction to which that Ship may trade from time to time, including but
      not limited to the ISM Code and the ISPS
Code.

            

    

     

    
      	
              14.4  

            	
              Modification.  The
      Borrowers shall not make any modification or repairs to, or replacement
      of, any Ship or equipment installed on it which would or might materially
      alter the structure, type or performance characteristics of that Ship or
      materially reduce its value.

            

    

     

    
      	
              14.5  

            	
              Removal of
      parts.  The Borrowers shall not remove any material part
      of any Ship, or any item of equipment installed on, any Ship unless the
      part or item so removed is forthwith replaced by a suitable part or item
      which is in the same condition as or better condition than the part or
      item removed, is free from any Security Interest or any right in favour of
      any person other than the Security Trustee and becomes on installation on
      the relevant Ship the property of the relevant Borrower and subject to the
      security constituted by the relevant Mortgage Provided that the
      Borrowers may install equipment owned by a third party if the equipment
      can be removed without any risk of damage to the relevant
      Ship.

            

    

     

    
      	
              14.6  

            	
              Surveys.  The
      Borrowers shall submit the Ships regularly to all periodical or other
      surveys which may be required for classification purposes and, if so
      required by the Security Trustee provide the Security Trustee, with copies
      of all survey reports.

            

    

     

    
      	
              14.7  

            	
              Inspection.  The
      Borrowers shall permit the Security Trustee (by surveyors or other persons
      appointed by it for that purpose) to board the Ships at all reasonable
      times and without interference to their itineraries to inspect their
      condition or to satisfy themselves about proposed or executed repairs and
      shall afford all proper facilities for such
  inspections.

            

    

     

    
      	
              14.8  

            	
              Prevention of and release from
      arrest.  The Borrowers shall promptly
      discharge:

            

    

     

    
      	
              (a)  

            	
              all
      liabilities which give or may give rise to maritime or possessory liens on
      or claims enforceable against the Ships, their Earnings or the
      Insurances;

            

    

     

    
      	
              (b)  

            	
              all
      taxes, dues and other amounts charged in respect of the Ships, their
      Earnings or the Insurances; and

            

    

     

    
      	
              (c)  

            	
              all
      other outgoings whatsoever in respect of the Ships, their Earnings or the
      Insurances;

            

    

     

    
      	
               
      

            	
              and,
      upon receiving notice of the arrest of a Ship, or of its detention in
      exercise or purported exercise of any lien or claim, the Borrowers shall
      procure its release by providing bail or otherwise as the circumstances
      may require as soon as practicable and in any event within 14
      days.

            

    

    

    
      	
              14.9  

            	
              Compliance with laws
      etc.  The Borrowers
shall:

            

    

     

    
      	
              (a)  

            	
              comply,
      or procure compliance with the ISM Code, the ISPS Code, all Environmental
      Laws and all other laws or regulations relating to the Ships, their
      ownership, operation and management or to the business of the
      Borrowers;

            

    

     

    
      	
              (b)  

            	
              not
      employ the Ships nor allow their employment in any manner contrary to any
      law or regulation in any relevant jurisdiction including but not limited
      to the ISM Code and the ISPS Code;
and

            

    

     

    
      	
              (c)  

            	
              in
      the event of hostilities in any part of the world (whether war is declared
      or not), not cause or permit any Ship to enter or trade to any zone which
      is declared a war zone by any government or by the Ship’s war risks
      insurers unless the prior written consent of the Security Trustee has been
      given and the Borrowers have (at their expense) effected any special,
      additional or modified insurance cover which the Security Trustee may
      require.

            

    

     

    
      	
              14.10  

            	
              Provision of
      information.  The Borrowers shall promptly provide the
      Security Trustee with any information which it reasonably requests
      regarding:

            

    

     

    
      	
              (a)  

            	
              the
      Ships, their employment, position and
  engagements;

            

    

     

    
      	
              (b)  

            	
              the
      Earnings and payments and amounts due to the master and crew of the
      Ships;

            

    

     

    
      	
              (c)  

            	
              any
      expenses incurred, or likely to be incurred, in connection with the
      operation, maintenance or repair of the Ships and any payments made in
      respect of the Ships;

            

    

     

    
      	
              (d)  

            	
              any
      towages and salvages;

            

    

     

    
      	
              (e)  

            	
              its
      compliance, the Approved Managers’ compliance and the compliance of the
      Ships with the ISM Code and the ISPS
Code;

            

    

     

    
      	
               
      

            	
              and,
      upon the Security Trustee’s request, provide copies of any current charter
      relating to any Ship, of any current charter guarantee and copies of a
      Ship’s Document of Compliance.

            

    

    

    
      	
               
      

            	
              The
      Agent shall communicate any of the above information to any one of the
      Lenders upon receiving written demand subject to receipt of the same from
      the Borrower.

            

    

    

    
      	
              14.11  

            	
              Notification of certain
      events.  The Borrowers shall immediately notify the
      Security Trustee by fax, confirmed forthwith by letter,
  of:

            

    

     

    
      	
              (a)  

            	
              any
      casualty which is or is likely to be or to become a Major
      Casualty;

            

    

     

    
      	
              (b)  

            	
              any
      occurrence as a result of which any Ship has become or is, by the passing
      of time or otherwise, likely to become a Total
  Loss;

            

    

     

    
      	
              (c)  

            	
              any
      requirement or recommendation made by any insurer or classification
      society or by any competent authority which is not immediately complied
      with;

            

    

     

    
      	
              (d)  

            	
              any
      arrest or detention of a Ship, any exercise or purported exercise of any
      lien on a Ship or its Earnings or any requisition of a Ship for
      hire;

            

    

     

    
      	
              (e)  

            	
              any
      intended dry docking of a Ship;

            

    

     

    
      	
              (f)  

            	
              any
      Environmental Claim made against any Borrower or in connection with a
      Ship, or any Environmental
Incident;

            

    

     

    
      	
              (g)  

            	
              any
      claim for breach of the ISM Code or the ISPS Code being made against any
      Borrower, the Approved Managers or otherwise in connection with a Ship;
      or

            

    

     

    
      	
              (h)  

            	
              any
      other matter, event or incident, actual or threatened, the effect of which
      will or could lead to the ISM Code or the ISPS Code not being complied
      with;

            

    

     

    
      	
               
      

            	
              and
      the Borrowers shall keep the Security Trustee advised in writing on a
      regular basis and in such detail as the Security Trustee shall require of
      the Borrowers’, the Approved Managers’ or any other person’s response to
      any of those events or matters.

            

    

    

    
      	
              14.12  

            	
              Restrictions on chartering,
      appointment of managers etc.  No Borrower shall, in
      relation to a Ship:

            

    

     

    
      	
              (a)  

            	
              (other
      than pursuant to a Related Party Charter) let or allow any charterer to
      let that Ship on demise charter for any
period;

            

    

     

    
      	
              (b)  

            	
              (other
      than pursuant to a Related Party Charter) enter or allow any charterer to
      enter into any time or consecutive voyage charter in respect of that Ship
      for a term which exceeds, or which by virtue of any optional extensions
      may exceed, 13 months;

            

    

     

    
      	
              (c)  

            	
              enter
      or allow any charterer to enter into any charter  in relation to
      that Ship under which more than 2 months’ hire (or the equivalent) is
      payable in advance;

            

    

     

    
      	
              (d)  

            	
              (other
      than pursuant to a Related Party Charter) charter or allow any charterer
      to charter that Ship otherwise than on bona fide arm’s length terms at the
      time when that Ship is fixed;

            

    

     

    
      	
              (e)  

            	
              appoint
      or allow any charterer to appoint a manager of that Ship other than the
      Approved Managers or agree to any alteration to the terms of the Approved
      Managers’ appointment;

            

    

     

    
      	
              (f)  

            	
              de-activate
      or lay up or allow any charterer to de-activate or lay up that Ship;
      or

            

    

     

    
      	
              (g)  

            	
              put
      or allow any charterer to put that Ship into the possession of any person
      for the purpose of work being done upon it in an amount exceeding or
      likely to exceed $500,000 (or the equivalent in any other currency) unless
      (i) that person has first given to the Security Trustee and in terms
      satisfactory to it a written undertaking not to exercise any lien on that
      Ship or its Earnings for the cost of such work or for any other reason or
      (ii) the cost of the work to be done on that Ship is covered by insurances
      and the underwriters have agreed to make payment direct to the person who
      is to carry out the work or (iii) the Agent is otherwise satisfied that
      the amounts payable in respect of the cost of the work will be paid on
      their relevant due date for
payment.

            

    

     

    
      	
              14.13  

            	
              Notice of
      Mortgage.  Each Borrower shall keep the relevant Mortgage
      registered against its Ship as a valid first priority mortgage, carry on
      board its Ship a certified copy of the relevant Mortgage and place and
      maintain in a conspicuous place in the navigation room and the Master’s
      cabin of its Ship a framed printed notice stating that its Ship is
      mortgaged by that Borrower to the Security
  Trustee.

            

    

     

    
      	
              14.14  

            	
              Sharing of
      Earnings.   Save as disclosed to the Agent, no
      Borrower shall enter into any agreement or arrangement for the sharing of
      any Earnings.

            

    

     

    
      	
              14.15  

            	
              ISPS
      Code.  The Borrowers shall comply with the ISPS Code and
      in particular, without limitation,
shall:

            

    

     

    
      	
              (a)  

            	
              procure
      that each Ship and the company responsible for each Ship’s compliance with
      the ISPS Code comply with the ISPS Code;
and

            

    

     

    
      	
              (b)  

            	
              maintain
      for each Ship an
ISSC;  and

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              15  

            	
              SECURITY
      COVER

            

    

     

    
      	
              15.1  

            	
              Minimum required security
      cover.  Clause 15.2 applies
      if the Agent notifies the Borrowers
that:

            

    

     

    
      	
              (a)  

            	
              the
      aggregate of the market values (determined as provided in Clause 15.3) of the Ships then subject to a Mortgage;
      plus

            

    

     

    
      	
              (b)  

            	
              the
      net realisable value of any additional security previously provided under
      this Clause 15;

            

    

     

    
      	
               
      

            	
              is
      below One hundred and twenty five per cent.(125%) of the Loans (provided
      however that Loans for these purposes shall exclude prior to the Delivery
      Date in respect of a Ship and the advance of its Delivery Advance, all
      Advances of the Loan for such
Ship).

            

    

    

    
      	
              15.2  

            	
              Provision of additional
      security; prepayment.  If the Agent serves a notice on
      the Borrowers under Clause 15.1, the Borrowers shall, within 1 month after
      the date on which the Agent’s notice is served,
  either:

            

    

     

    
      	
              (a)  

            	
              provide,
      or ensure that a third party provides, additional security which, in the
      reasonable opinion of the Majority Lenders, has a net realisable market
      value at least equal to the shortfall and is documented in such terms as
      the Agent may, with the authorisation of the Majority Lenders, approve or
      require; or

            

    

     

    
      	
              (b)  

            	
              prepay
      such part (at least) of the Loan as will eliminate the
      shortfall.

            

    

     

    
      	
              15.3  

            	
              Valuation of
      Ships.  The market value of a Ship at any date is that
      shown by a valuation prepared:

            

    

     

    
      	
              (a)  

            	
              as
      at a date not more than 10 Business days
  previously;

            

    

     

    
      	
              (b)  

            	
              by
      an independent international sale and purchase shipbroker which the Agent
      has approved or appointed for the
purpose;

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

            	
              on
      the basis of a sale for prompt delivery for cash on normal arm’s length
      commercial terms as between a willing seller and a willing buyer, free of
      any existing charter or other contract of
  employment;

            

    

     

    
      	
              (e)  

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

            

    

     

    
      	
              15.4  

            	
              Value of additional vessel
      security.  The net realisable value of any additional
      security which is provided under Clause 15.2
      and which consists of a Security Interest over a vessel shall be that
      shown by a valuation complying with the requirements of Clause 15.3.

            

    

     

    
      	
              15.5  

            	
              Valuations
      binding.  Any valuation under Clause 15.2, 15.3 or 15.4 shall be binding and conclusive as regards
      the Borrowers, as shall be any valuation which the Majority Lenders make
      of any additional security which does not consist of or include a Security
      Interest.

            

    

     

    
      	
              15.6  

            	
              Provision of
      information.  The Borrowers shall promptly provide the
      Agent and any shipbroker or expert acting under Clause 15.3 or 15.4 with
      any information which the Agent or the shipbroker or expert may reasonably
      request for the purposes of the valuation; and, if the Borrowers fail to
      provide the information by the date specified in the request, the
      valuation may be made on any basis and assumptions which the shipbroker or
      the Majority Lenders (or the expert appointed by them) consider
      prudent.

            

    

     

    
      	
              15.7  

            	
              Payment of valuation
      expenses.  Without prejudice to the generality of the
      Borrowers’ obligations under Clauses 20.2, 20.3 and 21.3, the Borrowers
      shall, on demand, pay the Agent the amount of the fees and expenses of any
      shipbroker or expert instructed by the Agent under this Clause and all
      legal and other expenses incurred by any Creditor Party in connection with
      any matter arising out of this Clause provided however that prior to the
      occurrence of an Event of Default the Borrowers shall only be obliged to
      reimburse the Agent such fees and expenses in relation to one valuation of
      each Ship obtained pursuant to Clause 15 per
      each twelve month period. The Borrowers shall also pay to the Agent the
      amount of all legal and other expenses incurred by any Creditor Party in
      connection with any matter arising out of this Clause 20.

            

    

     

    
      	
              15.8  

            	
              Application of
      prepayment.  Clause 8 shall
      apply in relation to any prepayment pursuant to Clause 15.2(b).

            

    

     

    
      	
              15.9  

            	
              Meaning of additional security.
      In Clause 15.1 “security” means a
      Security Interest over an asset or assets (whether securing the Borrowers’
      liabilities under the Finance Documents or a guarantee in respect of those
      liabilities), or a guarantee, letter of credit or other security in
      respect of the Borrowers’ liabilities under the Finance
      Documents.

            

    

     

    
      	
              15.10  

            	
              Requirement for additional
      documents. The Borrowers shall not be deemed to have complied with
      Clause 15.2(a) above until the Agent has
      received in connection with the additional security certified copies of
      documents of the kinds referred to in paragraphs 3, 4 and 5 of Part A of
      Schedule 3 below and such legal opinions in terms acceptable to the Agent
      from such lawyers as it may select.

            

    

     

    
      	
              16  

            	
              PAYMENTS
      AND CALCULATIONS

            

    

     

    
      	
              16.1  

            	
              Currency and method of
      payments.  All payments to be made by the Lenders or by
      the Borrowers under a Finance Document shall be made to the Agent or to
      the Security Trustee, in the case of an amount payable to
    it:

            

    

     

    
      	
              (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 Agent shall specify as being customary at the
      time for the settlement of international transactions of the type
      contemplated by this Agreement);

            

    

     

    
      	
              (c)  

            	
              in
      the case of an amount payable by a Lender to the Agent or by the Borrowers
      to the Agent or any Lender, to the account of the Agent at JP Morgan Chase
      Bank, New York (Swift Code: CHASUS33) Account No. 400759136 for credit to
      the Agent (Swift Code: RBOSGB2LGLO Swift Name: Royal Bank of Scotland GLO,
      London) reference “GLO re TBS”, or to such other account with such other
      bank as the Agent may from time to time notify to the Borrowers and the
      other Creditor Parties; and

            

    

     

    
      	
              (d)  

            	
              in
      the case of an amount payable to the Security Trustee, to such account as
      it may from time to time notify to the Borrowers and the other Creditor
      Parties.

            

    

     

    
      	
              16.2  

            	
              Payment on non-Business
      Day.  If any payment by the Borrowers 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.

    

    
      	
              16.3  

            	
              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.

            

    

     

    
      	
              16.4  

            	
              Distribution of payments to
      Creditor Parties.  Subject to Clauses 16.5, 16.6 and 16.7:

            

    

     

    
      	
              (a)  

            	
              any
      amount received by the Agent under a Finance Document for distribution or
      remittance to a Lender, the Swap Bank or the Security Trustee shall be
      made available by the Agent to that Lender, the Swap Bank or, as the case
      may be, the Security Trustee by payment, with funds having the same value
      as the funds received, to such account as the Lender, the Swap Bank or the
      Security Trustee may have notified to the Agent not less than 5 Business
      Days previously; and

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              16.5  

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

            

    

     

    
      	
              16.6  

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

            

    

     

    
      	
              16.7  

            	
              Refund to Agent of monies not
      received.  If and to the extent that the Agent makes
      available a sum to the Borrowers or a Lender, without first having
      received that sum, the Borrowers or the Lender concerned (as the case may
      be) shall, on demand:

            

    

     

    
      	
              (a)  

            	
              refund
      the sum in full to the Agent; and

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              16.8  

            	
              Agent may assume
      receipt.  Clause 16.7 shall
      not affect any claim which the Agent has under the law of restitution, and
      applies irrespective of whether the Agent had any form of notice that it
      had not received the sum which it made
  available.

            

    

     

    
      	
              16.9  

            	
              Creditor Party
      accounts.  Each Creditor Party shall maintain accounts
      showing the amounts owing to it by the Borrowers and each Security Party
      under the Finance Documents and all payments in respect of those amounts
      made by the Borrowers and any Security
Party.

            

    

     

    
      	
              16.10  

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

            

    

     

    
      	
              16.11  

            	
              Accounts prima facie
      evidence.  If any accounts maintained under Clauses 16.9 and 16.10 show
      an amount to be owing by the Borrowers or a Security Party to a Creditor
      Party, those accounts shall be prima facie evidence that that amount is
      owing to that Creditor Party.

            

    

     

    
      	
              17  

            	
              APPLICATION
      OF RECEIPTS

            

    

     

    
      	
              17.1  

            	
              Normal order of
      application.  Except as any Finance Document may
      otherwise provide, any sums which are received or recovered by any
      Creditor Party 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), other than the Master Agreement, in
      such order of application and/or such proportions as the Agent, acting
      with the authorisation of the Majority Lenders, may specify by notice to
      the Borrowers, the Security Parties and the other Creditor
      Parties;

            

    

     

    
      	
              (b)  

            	
              SECONDLY:
      in or towards satisfaction of amounts then due and payable under the
      Master Agreement, in such order of application as the Agent, acting with
      the authorisation of the Majority Lenders, may specify by notice to the
      Borrowers, the Security Parties and the other Creditor
      Parties;

            

    

     

    
      	
              (c)  

            	
              THIRDLY:
      in retention of an amount equal to any amount not then due and payable
      under any Finance Document but which the Agent, by notice to the
      Borrowers, the Security Parties and the other Creditor 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 foregoing provisions of this Clause;
      and

            

    

     

    
      	
              (d)  

            	
              FOURTHLY:
      any surplus shall be paid to the Borrowers or to any other person
      appearing to be entitled to it.

            

    

     

    
      	
              17.2  

            	
              Variation of order of
      application.  The Agent may, with the authorisation of
      the Majority Lenders, by notice to the Borrowers, the Security Parties and
      the other Creditor Parties provide for a different manner of application
      from that set out in Clause 17.1 either as
      regards a specified sum or sums or as regards sums in a specified category
      or categories.

            

    

     

    
      	
              17.3  

            	
              Notice of variation of order of
      application.  The Agent may give notices under Clause 17.2 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.

            

    

     

    
      	
              17.4  

            	
              Appropriation rights
      overridden.  This Clause 17
      and any notice which the Agent gives under Clause 17.2 shall override any right of appropriation
      possessed, and any appropriation made, by the Borrowers or any Security
      Party.

            

    

     

    
      	
              18  

            	
              EARNINGS
      ACCOUNT AND STANDBY EARNINGS
ACCOUNT

            

    

     

    
      	
              18.1  

            	
              Payment of
      Earnings.  The Borrowers agree that at any time following
      the date of this Agreement (and whether before or after the occurrence of
      an Event of Default and whether or not the same is continuing), the Agent
      shall be entitled (but not bound) to give the Borrowers a notice in
      writing directing the Borrowers (or any of them) to procure and ensure
      that the Earnings of the Ships (or the relevant Ship referred to in such
      direction) are thereafter paid to the Standby Earnings
      Account.  Where such a notice is given to the Borrowers (or
      relevant Borrower) before the occurrence of an Event of Default, the
      Borrowers (or relevant Borrower, as the case may be) shall be given a
      period of 5 Business Days in which to re-direct the payments but where an
      Event of Default has occurred the re-direction shall take effect
      immediately upon receipt of the Agent’s notice to that effect. For the
      avoidance of doubt where the Agent gives such a direction all Earnings of
      the relevant Ship or Ships which are subsequently paid to TBS Pacific
      Liner shall (save as provided above) be paid directly to the Standby
      Earnings Account.  In respect of any such Earnings which have
      been paid to and are standing to the credit of the Earnings Account the
      Borrowers shall procure that following the occurrence of an Event of
      Default and receipt of a direction from the Agent in accordance with this
      clause 18.1, such amounts shall be transferred to the Standby Earnings
      Account as soon as practicable after such
  direction.

            

    

     

    
      	
              18.2  

            	
              Interest accrued on the
      Earnings Account and the Standby Earnings Account.  Any
      credit balance on the Earnings Account and the Standby Earnings Account
      shall bear interest at the rate from time to time offered by the Agent to
      its customers for Dollar deposits of similar amounts and for periods
      similar to those for which such balances appear to the Agent likely to
      remain on the Earnings Account and the Standby Earnings
      Account.

            

    

     

    
      	
              18.3  

            	
              Monies on the Earnings Account
      and the Standby Earnings Account.  Following the
      occurrence of an Event of Default which is continuing and a direction from
      the Agent under Clause 18.1 above:-

            

    

     

    
      	
              (i)  

            	
              any
      Earnings of the Ships standing to the credit of the Earnings Account shall
      be transferred to the Standby Earnings Account;
  and

            

    

     

    
      	
              (ii)  

            	
              any
      amounts standing to the credit of the Standby Earnings Account shall only
      be released with the approval of the Majority
  Lenders.

            

    

     

    
      	
              18.4  

            	
              Location of
      accounts.  The Borrowers shall, and shall procure that
      TBS Pacific Liner shall, promptly :

            

    

     

    
      	
              (a)  

            	
              comply
      with any requirement of the Agent as to the location or re-location of the
      Earnings Account and the Standby Earnings
  Account;

            

    

     

    
      	
              (b)  

            	
              execute
      any documents which the Agent specifies to create or maintain in favour of
      the Security Trustee a Security Interest over (and/or rights of set-off,
      consolidation or other rights in relation to) the Standby Earnings
      Account.

            

    

     

    
      	
              18.5  

            	
              Debits for expenses
      etc.  Following the occurrence of an Event of Default
      which is continuing and a direction from the Agent under Clause 18.1
      above, the Agent shall be entitled (but not obliged) from time to time to
      debit the Standby Earnings Account without prior notice in order to
      discharge any amount due and payable under Clause 20 or 21 to a
      Creditor Party or payment of which any Creditor Party has become entitled
      to demand under Clause 20 or 21.

            

    

     

    
      	
              19  

            	
              EVENTS
      OF DEFAULT

            

    

     

    
      	
              19.1  

            	
              Events of
      Default.  An Event of Default occurs
  if:

            

    

     

    
      	
              (a)  

            	
              any
      Borrower 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 if paid 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 16.1(b) which disruption is
      beyond the control of the Borrowers, 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 9.2, 11.2, 11.3, 12.2, 12.3 or 15.1; or

            

    

     

    
      	
              (c)  

            	
              any
      breach occurs of Clause 11.18(i);
      or

            

    

     

    
      	
              (d)  

            	
              any
      breach by any Borrower or any Security Party occurs of any provision of a
      Finance Document (other than a breach covered by paragraphs (a) or (b))
      and if, in the opinion of the Majority Lenders, such default is capable of
      remedy (and for these purposes any breach by any Borrower of its
      obligations under Clause 13 in relation to
      insurances will be a default not capable of remedy), such default
      continues unremedied 10 Business Days after written notice from the Agent
      requesting action to remedy the same;
or

            

    

     

    
      	
              (e)  

            	
              any
      representation, warranty or statement made by, or by an officer of, any
      Borrower or a Security Party in a Finance Document or in a Drawdown Notice
      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 cases, 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 19.1(f) in relation to the New Corporate Guarantor if
the amount of Financial Indebtedness falling within paragraph (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 Majority Lenders, 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 one month of
      the same being levied or sued out;
or

            

    

     

    
      	
              (iii)  

            	
              any
      administrative or other receiver is appointed over any substantial part of
      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 a Borrower which is, or is to be, effected for
      the purposes of an amalgamation or reconstruction previously approved by
      the Majority Lenders 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 Majority Lenders is similar to
      any of the foregoing; or

            

    

     

    
      	
              (h)  

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

            

    

     

    
      	
              (i)  

            	
              it
      becomes unlawful in any Pertinent Jurisdiction or
    impossible:

            

    

     

    
      	
              (i)  

            	
              for
      any Borrower or any Security Party to discharge any liability under a
      Finance Document or to comply with any other obligation which the Majority
      Lenders consider material under a Finance Document unless provided that
      none of the interests of any of the Creditor Parties 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 Agent, the Security Trustee, or the Lenders 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 Borrower to own, operate or
      charter its Ship or to enable any Borrower or any Security Party to comply
      with any provision which the Majority Lenders consider 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)  

            	 

    

     

    
      	
              (i)  

            	
              any
      Bareboat Charter is terminated or cancelled for whatever reason and, if
      the Ship the subject of such Bareboat Charter is to remain parallel
      registered under the Philippines flag, such Bareboat Charter is not
      replaced with a similar bareboat charter on terms acceptable to the Agent
      within a period of 15 days; or

            

    

     

    
      	
              (ii)  

            	
              any
      of the circumstances described in Clause 19.1(g) or (h) occurs (mutatis mutandis) in
      relation to the Bareboat Charterer or the Bareboat Charterer breaches any
      provision of the Multiparty Deeds which the Agent considers material and
      the Borrowers fail within a period of 15 days of them becoming aware of
      the occurrence of such circumstances or breach or of the receipt of a
      written notification from the Agent requesting the Borrowers to remedy
      such circumstances or breach either to remedy such circumstances or breach
      or to substitute the Bareboat Charterer with another bareboat charterer
      acceptable to the Agent and which accedes to the terms of the Multiparty
      Deeds;

            

    

     

    
      	
              (l)  

            	
              any
      Time Charter or First Sub-Time Charter or Second Sub-Time Charter or TBS
      Worldwide Time Charter is terminated or cancelled for whatever reason or
      any of the circumstances described in Clause 19.1(g) or (h) occurs
      (mutatis mutandis) in relation to the Time Charterer or TBS Worldwide or
      the Time Charterer or TBS Worldwide breaches any provision of the
      Multiparty Deeds which the Agent considers material and either such breach
      is not remedied or the Ship the subject of such Time Charter or First
      Sub-Time Charter or Second Sub-Time Charter or TBS Worldwide Time Charter
      is not employed on alternative terms acceptable to the Agent within a
      period of 15 days of the Borrowers becoming aware of the occurrence of
      such breach or the receipt of a written notification from the Agent
      requesting the Borrowers to remedy such breach;
  or

            

    

     

    
      	
              (m)  

            	
              any
      of the Ships ceases to be employed by the Approved Manager on terms
      acceptable to the Agent or any of the circumstances described in Clause 19.1(g) or (h) occurs (mutatis mutandis) in
      relation to the Approved Managers or the Approved Managers breach any
      provisions of the letters of undertaking given to the Security Trustee
      pursuant to Schedule 3 Part C, 3(a) which the Agent considers material and
      the Borrowers fails within a period of 15 days of them becoming aware of
      the occurrence of such circumstances or breach or of the receipt of a
      written notification from the Agent requesting the Borrowers to remedy
      such circumstances or breach either to remedy such circumstances or breach
      or to substitute the Approved Managers with other Approved Managers which
      execute and deliver to the Security Trustee letters of undertaking similar
      to those referred to in Schedule 3 Part C, 3(a);
  or

            

    

     

    
      	
              (n)  

            	
              any
      of the circumstances described in Clause 19.1(g) or (h) occurs (mutatis
      mutandis) in relation to TBS Pacific Liner or TBS Pacific Liner breaches
      any provision of the Account Security Deed which the Agent considers
      material and the Borrowers fail within a period of 15 days’ of them
      becoming aware of the occurrence of such circumstances or breach or of the
      receipt of a written notification from the Agent requesting the Borrowers
      to remedy such circumstances or breach either to remedy the circumstances
      or breach or to substitute the Earnings Account and the Standby Earnings
      Account with a new Earnings Account and a new Standby Earnings Account in
      the name of an alternative party acceptable to the Agent and which
      executes and delivers in favour of the Security Trustee a new Account
      Security Deed.

            

    

     

    
      	
              (o)  

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

            

    

     

    
      	
              (p)  

            	
              any
      provision which the Majority Lenders consider in their 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

            

    

     

    
      	
              (q)  

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

            

    

     

    
      	
              (r)  

            	
              an
      Event of Default (as defined in the Guarantee Facility Agreement)
      occurs;

            

    

     

    
      	
              (s)  

            	
              any
      other event occurs or any other circumstances arise or develop including,
      without limitation:

            

    

     

    
      	
              (i)  

            	
              a
      change in the financial position, state of affairs or prospects of any
      Borrower; or

            

    

     

    
      	
              (ii)  

            	
              any
      accident or other event involving any Ship or another vessel owned,
      chartered or operated by a Relevant
Person;

            

    

     

    in the
light of which the Majority Lenders consider that there is a significant risk
that any Borrower is, or will later become, unable to discharge its liabilities
under the Finance Documents as they fall due.

    

    
      	
              19.2  

            	
              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:

            

    

     

    
      	
              (a)  

            	
              the
      Agent may, and if so instructed by the Majority Lenders, the Agent
      shall:

            

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (iii)  

            	
              take
      any other action which, as a result of the Event of Default or any notice
      served under paragraph (i) or (ii), the Agent and/or the Lenders are
      entitled to take under any Finance Document or any applicable law;
      and/or

            

    

     

    
      	
              (b)  

            	
              the
      Security Trustee may, and if so instructed by the Agent, acting with the
      authorisation of the Majority Lenders, the Security Trustee shall take any
      action which, as a result of the Event of Default or any notice served
      under paragraph (a) (i) or (ii), the Security Trustee, the Agent and/or
      the Lenders are entitled to take under any Finance Document or any
      applicable law.

            

    

     

    
      	
              19.3  

            	
              Termination of
      Commitments.  On the service of a notice under Clause 19.2(a)(i), the Commitments and all other
      obligations of each Lender to the Borrower under this Agreement shall
      terminate.

            

    

     

    
      	
              19.4  

            	
              Acceleration of
      Liabilities.  On the service of a notice under Clause 19.2(a)(ii), all amounts accrued or owing from
      the Borrowers 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.

            

    

     

    
      	
              19.5  

            	
              Multiple notices; action
      without notice.  The Agent may serve notices under
      Clauses 19.2(a)(i), or (ii) simultaneously or on different dates and it
      and/or the Security Trustee may take any action referred to in Clause 19.2 if no such notice is served or
      simultaneously with or at any time after the service of both or either of
      such notices.

            

    

     

    
      	
              19.6  

            	
              Notification of Creditor
      Parties and Security Parties.  The Agent shall send to
      each Lender, the Security Trustee and each Security Party a copy or the
      text of any notice which the Agent serves on the Borrowers under Clause 19.2; but the notice shall become effective when
      it is served on the Borrowers, and no failure or delay by the Agent to
      send a copy or the text of the notice to any other person shall invalidate
      the notice or provide the Borrowers or any Security Party with any form of
      claim or defence.

            

    

     

    
      	
              19.7  

            	
              Lender’s and Swap Bank’s rights
      unimpaired.  Nothing in this Clause shall be taken to
      impair or restrict the exercise of any right given to individual Lenders
      or the Swap Bank under a Finance Document or the general law; and, in
      particular, this Clause is without prejudice to Clause 3.1.

            

    

     

    
      	
              19.8  

            	
              Exclusion of Creditor Party
      liability.  No Creditor Party, and no receiver or manager
      appointed by the Security Trustee, shall have any liability to the
      Borrowers 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 a Creditor Party or a receiver or manager from
liability for losses shown to have been directly and mainly caused by the
dishonesty or the wilful misconduct of such Creditor Party’s own officers and
employees or (as the case may be) such receiver’s or manager’s own partners or
employees.

    

    
      	
              19.9  

            	
              Relevant
      Persons.  In this Clause 19
      a “Relevant
      Person” means any Borrower and any Security
  Party.

            

    

     

    
      	
              19.10  

            	
              Interpretation.  In
      Clause 19.1(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
      19.1(g)  “petition” includes an
      application.

            

    

     

    
      	
              20  

            	
              FEES
      AND EXPENSES

            

    

     

    
      	
              20.1  

            	
              Arrangement, commitment and
      agency fees.  The Borrowers shall pay to the
      Agent:

            

    

     

    
      	
              (a)  

            	
              on
      the date of this Agreement, an arrangement fee in the amount specified in
      the Fee Letter or Fee Letters (as the case may
  be);

            

    

     

    
      	
              (b)             

            	
              quarterly
      in arrears during the period from (and including) 27 March 2009 to the
      earlier of (i) the Drawdown Date in relation to the Loan A Delivery
      Advance and (ii) 30 September 2009 (or such later date as the Agent, in
      its sole and absolute discretion shall agree) and on the last day of that
      period a commitment fee at the rate of One point five per cent. (1.5%) per
      annum on the undrawn balance of Loan
A;

            

    

     

    
      	
              (c)             

            	
              quarterly
      in arrears during the period from (and including) 27 March 2009 to the
      earlier of (i) the Drawdown Date in relation to the Loan B Delivery
      Advance and (ii) 31 March 2010 (or such later date as the Agent, in its
      sole and absolute discretion shall agree) and on the last day of that
      period a commitment fee at the rate of One point five per cent. (1.5%) per
      annum on the undrawn balance of Loan
B;

            

    

     

    
      	
              (d)             

            	
              quarterly
      in arrears during the period from (and including) 27 March 2009 to the
      earlier of (i) the Drawdown Date in relation to the Loan C Delivery
      Advance and (ii) 31 August 2010 (or such later date as the Agent, in its
      sole and absolute discretion shall agree) and on the last day of that
      period a commitment fee at the rate of One point five per cent. (1.5%) per
      annum on the undrawn balance of Loan
C;

            

    

     

    
      	
              (e)  

            	
              quarterly
      in arrears during the period from (and including) 27 March 2009 to the
      earlier of (i) the Drawdown Date in relation to the Loan D Delivery
      Advance and (ii) 30 April 2011 (or such later date as the Agent, in its
      sole and absolute discretion shall agree) and on the last day of that
      period a commitment fee at the rate of One point five per cent. (1.5%) per
      annum on the undrawn balance of Loan
D;

            

    

     

    
      	
              (f)  

            	
              quarterly
      in arrears during the period from (and including) 27 March 2009 to the
      earlier of (i) the Drawdown Date in relation to the Loan E Delivery
      Advance and (ii) 31 January 2011 (or such later date as the Agent, in its
      sole and absolute discretion shall agree) and on the last day of that
      period a commitment fee at the rate of One point five per cent. (1.5%) per
      annum on the undrawn balance of Loan
E;

            

    

     

    
      	
              (g)  

            	
              quarterly
      in arrears during the period from (and including) 27 March 2009 to the
      earlier of (i) the Drawdown Date in relation to the Loan F Delivery
      Advance and (ii) 31 August 2011 (or such later date as the Agent, in its
      sole and absolute discretion shall agree) and on the last day of that
      period a commitment fee at the rate of One point five per cent. (1.5%) per
      annum on the undrawn balance of Loan
F;

            

    

     

    
      	
              (h)  

            	
              on
      the date of this Agreement and on each anniversary thereof during the
      Security Period, an annual agency fee of an amount specified in the
      relevant Fee Letter, such agency fee to be payable to the Agent in advance
      for its own account.

            

    

     

    
      	
              20.2  

            	
              Costs of negotiation,
      preparation etc.  The Borrowers shall pay to the Agent on
      its demand the amount of all expenses reasonably incurred by the Agent or
      the Security Trustee 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.

            

    

     

    
      	
              20.3  

            	
              Costs of variations,
      amendments, enforcement etc.  The Borrowers shall pay to
      the Agent, on the Agent’s demand, for the account of the Creditor Party
      concerned the amount of all expenses incurred by a Creditor Party (in the
      case of paragraphs (a), (b) and (c), 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 Lenders, the Majority Lenders or the Creditor
      Party concerned under or in connection with a Finance Document, or any
      request for such a consent or
waiver;

            

    

     

    
      	
              (c)  

            	
              the
      valuation of any security provided or offered under Clause 15 or any other matter relating to such
      security; or

            

    

     

    
      	
              (d)  

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

            

    

     

    There
shall be recoverable under paragraph (d) the full amount of all legal expenses,
whether or not such as would be allowed under rules of court or any taxation or
other procedure carried out under such rules.

    

    
      	
              20.4  

            	
              Extraordinary management
      time.  The Borrowers shall pay to the Agent on its demand
      compensation in respect of the reasonable and documented amount of time
      which the management of either Servicing Bank has spent in connection with
      a matter covered by Clause 20.3 and which
      exceeds the amount of time which would ordinarily be spent in the
      performance of the relevant Servicing Bank’s routine
      functions.  Any such compensation shall be based on such
      reasonable daily or hourly rates as the Agent may notify to the Borrowers
      and is in addition to any fee paid or payable to the relevant Servicing
      Bank.  Where one bank is both Agent and Security Trustee there
      shall be no double charging of such
  compensation.

            

    

     

    
      	
              20.5  

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

            

    

     

    
      	
              20.6  

            	
              Certification of
      amounts.  A notice which is signed by 2 officers of a
      Creditor Party, which states that a specified amount, or aggregate amount,
      is due to that Creditor Party under this Clause 20 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.

            

    

     

    
      	
              21  

            	
              INDEMNITIES

            

    

     

    
      	
              21.1  

            	
              Indemnities regarding borrowing
      and repayment of Loan.  The Borrowers shall fully
      indemnify the Agent and each Lender on the Agent’s demand and the Security
      Trustee on its demand in respect of all claims, expenses, liabilities and
      losses which are made or brought against or incurred by that Creditor
      Party, or which that Creditor Party reasonably and with due diligence
      estimates that it will incur, as a result of or in connection
      with:

            

    

     

    
      	
              (a)  

            	
              an
      Advance not being borrowed on the date specified in the Drawdown Notice
      for any reason other than a default by the Lender claiming the
      indemnity;

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

            	
              the
      occurrence and/or continuance of an Event of Default or a Potential Event
      of Default and/or the acceleration of repayment of the Loans under Clause
      19;

            

    

     

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

    

    
      	
              21.2  

            	
              Breakage
      costs.  Without limiting its generality, Clause 21.1 covers any claim, expense, liability or
      loss, including a loss of a prospective profit, incurred by a
      Lender:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    In the
circumstances referred to in Clause 21.1(b) such
costs shall include an amount equal to the relevant Margin which would, but for
receipt or recovery of the relevant part of the Loans, have accrued on the
relevant part of the Loans, from the date of such receipt or recovery to the end
of the then current Interest Period relating thereto.

     

    
      	
              21.3  

            	
              Miscellaneous
      indemnities.  The Borrowers shall fully indemnify each
      Creditor Party severally on their respective demands in respect of all
      claims, expenses, liabilities and losses which may be made or brought
      against or incurred by a Creditor Party, 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 Agent, the
      Security Trustee or any other Creditor Party 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 the reckless action with knowledge of
      the probable consequences of the officers or employees of the Creditor
      Party concerned.

            

    

     

    Without
prejudice to its generality, this Clause 21.3
covers any claims, expenses, liabilities and losses which arise, or are
asserted, under or in connection with any law relating to safety at sea, the ISM
Code, the ISPS Code or any Environmental Law.

    

    
      	
              21.4  

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

            

    

     

    
      	
              (a)  

            	
              making
      or lodging any claim or proof against the Borrowers 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
Borrowers shall indemnify the Creditor Party concerned against the loss arising
when the amount of the payment actually received by that Creditor Party is
converted at the available rate of exchange into the Contractual
Currency.

    

    In this
Clause 21.4 the “available rate of exchange”
means the rate at which the Creditor Party concerned is able at the opening of
business (London time) on the Business Day after it receives the sum concerned
to purchase the Contractual Currency with the Payment Currency.

    

    This
Clause 21.4 creates a separate liability of the
Borrowers 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.

    

    
      	
              21.5  

            	
              Certification of
      amounts.  A notice which is signed by 2 officers of a
      Creditor Party, which states that a specified amount, or aggregate amount,
      is due to that Creditor Party under this Clause 21 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.

            

    

     

    
      	
              21.6  

            	
              Sums deemed due to a
      Lender.  For the purposes of this Clause 21, a sum payable by the Borrowers to the Agent
      or the Security Trustee for distribution to a Lender shall be treated as a
      sum due to that Lender.

            

    

     

    
      	
              21.7  

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

            

    

     

    
      	
              22  

            	
              NO
      SET-OFF OR TAX DEDUCTION

            

    

     

    
      	
              22.1  

            	
              No
      deductions.  All amounts due from a Borrower 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 Borrower
      is required by law to make.

            

    

     

    
      	
              22.2  

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

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

            	
              that
      Borrower 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 relevant Creditor Parties receive and retain
      (free from any liability relating to the tax deduction) a net amount
      which, after the tax deduction, is equal to the full amount which they
      would otherwise have received.

            

    

     

    No
Borrower 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
relevant Creditor Party had completed a declaration claim, exemption or other
form which it has been requested by the Borrowers or an applicable taxation
authority to complete and which it is able to complete.

     

    
      	
              22.3  

            	
              Evidence of payment of
      taxes.  Within 1 month after making any tax deduction,
      the Borrower concerned shall deliver to the Agent documentary evidence
      satisfactory to the Agent that the tax had been paid to the appropriate
      taxation authority.

            

    

     

    
      	
              22.4  

            	
              Tax
      credits.  A Creditor Party which 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 a Borrower under Clause 22.2 shall pay to the
      relevant Borrower a sum equal to the proportion of the repayment, relief
      or credit which that Creditor Party allocates to the amount due from that
      Borrower in respect of which that Borrower made the increased
      payment:

            

    

     

    
      	
              (a)  

            	
              the
      Creditor Party 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 22.4 shall oblige a Creditor
      Party 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 22.4 shall oblige a Creditor
      Party to make a payment which would leave it in a worse position than it
      would have been in if the relevant Borrower had not been required to make
      a tax deduction from a payment; and

            

    

     

    
      	
              (d)  

            	
              any
      allocation or determination made by a Creditor Party under or in
      connection with this Clause 22.4 shall (save
      in the case of manifest error) be conclusive and binding on the Borrowers
      and the other Creditor Parties.

            

    

     

    
      	
              22.5  

            	
              Exclusion of tax on overall net
      income.  In this Clause 22
      “tax deduction”
      means any deduction or withholding for or on account of any present or
      future tax except tax on a Creditor Party’s overall net
      income.

            

    

     

    
      	
              22.6  

            	
              Application of Master
      Agreement.  For the avoidance of doubt, Clause 22 does not apply in respect of sums due from
      the Borrowers to the Swap Bank under or in connection with the Master
      Agreement as to which sums the provisions of section 2(d) (Deduction or
      Withholding for Tax) of the Master Agreement shall
  apply.

            

    

     

    
      	
              23  

            	
              ILLEGALITY,
      ETC

            

    

     

    
      	
              23.1  

            	
              Illegality.  This
      Clause 23 applies if a Lender (the “Notifying Lender”)
      notifies the Agent 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
Notifying Lender to maintain or give effect to any of its obligations under this
Agreement in the manner contemplated by this Agreement.

    

    
      	
              23.2  

            	
              Notification of
      illegality.  The Agent shall promptly notify the
      Borrowers, the Security Parties, the Security Trustee, and the other
      Lenders of the notice under Clause 23.1 which
      the Agent receives from the Notifying
Lender.

            

    

     

    
      	
              23.3  

            	
              Prepayment; termination of
      Commitment.  On the Agent notifying the Borrowers under
      Clause 23.2, the Notifying Lender’s Available
      Commitment shall terminate by no later than the date specified in the
      Notifying Lender’s notice under Clause 23.1
      as the date on which the notified event would become effective the
      Borrowers shall prepay the Notifying Lender’s Contribution in accordance
      with Clause 8.

            

    

     

    
      	
              23.4  

            	
              Mitigation.  If
      circumstances arise which would result in a notification under
      Clause 23.1 then, without in any way limiting the rights of the
      Notifying Lender under Clause 23.3, the Notifying Lender shall use
      reasonable endeavours to transfer its obligations, liabilities and rights
      under this Agreement and the Finance Documents to another office or
      financial institution not affected by the circumstances but the Notifying
      Lender shall not be under any obligation to take any such action if, in
      its opinion, to do 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 regulation;
  or

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              24  

            	
              INCREASED
      COSTS

            

    

     

    
      	
              24.1  

            	
              Increased
      costs.  This Clause 24
      applies if a Lender (the “Notifying Lender”)
      notifies the Agent that the Notifying Lender 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 Notifying
      Lender’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 Notifying
      Lender 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
Notifying Lender (or a parent company of it) has incurred or will incur an
“increased
cost”.

    

    
      	
              24.2  

            	
              Meaning of “increased
      cost”.  In this Clause 24,
      “increased cost”
      means, in relation to a Notifying
Lender:

            

    

     

    
      	
              (a)  

            	
              an
      additional or increased cost incurred as a result of, or in connection
      with, the Notifying Lender having entered into, or being a party to, this
      Agreement or a Transfer Certificate, of funding or maintaining its
      Commitment or Contribution or performing its obligations under this
      Agreement, or of having outstanding all or any part of its Contribution or
      other unpaid sums;

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

            	
              an
      additional or increased cost of funding all or maintaining all or any of
      the advances comprised in a class of advances formed by or including the
      Notifying Lender’s Contribution or (as the case may require) the
      proportion of that cost attributable to the Contribution;
    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 Notifying Lender
      under this Agreement;

            

    

     

    but not
an item attributable to a change in the rate of tax on the overall net income of
the Notifying Lender (or a parent company of it) or an item covered by the
indemnity for tax in Clause 21.1 or by Clause 22 or an item arising directly out of the
implementation by the applicable authorities having jurisdiction over the
Notifying Lender 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 24.2 the Notifying Lender
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.

     

    
      	
              24.3  

            	
              Notification to Borrowers of
      claim for increased costs.  The Agent shall promptly
      notify the Borrowers and the Security Parties of the notice which the
      Agent received from the Notifying Lender under Clause 24.1.

            

    

     

    
      	
              24.4  

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

            

    

     

    
      	
              24.5  

            	
              Notice of prepayment or
      cancellation.  If the Borrowers are not willing to
      continue to compensate the Notifying Lender for the increased cost under
      Clause 24.4, the Borrowers may give the Agent
      not less than 90 days’ notice of their intention to prepay the Notifying
      Lender’s Contribution at the end of an Interest Period and/or to cancel
      the Notifying Lender’s Available
Commitment.

            

    

     

    
      	
              24.6  

            	
              Prepayment; termination of
      Commitment.  A notice under Clause 24.5 shall be irrevocable; the Agent shall
      promptly notify the Notifying Lender of the Borrowers’ notice of intended
      prepayment and/or intended cancellation;
and:

            

    

     

    
      	
              (a)  

            	
              on
      the date on which the Agent serves that notice, the Commitment of the
      Notifying Lender shall be cancelled;
and

            

    

     

    
      	
              (b)  

            	
              on
      the date specified in its notice of intended prepayment, the Borrowers
      shall prepay (without premium or penalty) the Notifying
      Lender’s  Contribution, together with accrued interest thereon
      at the applicable rate plus the
Margin.

            

    

     

    
      	
              24.7  

            	
              Application of
      prepayment.  Save to the extent stated above Clause 8 shall apply in relation to the
      prepayment.

            

    

     

    
      	
              24.8  

            	
              Mitigation.  If
      circumstances arise which would result in a notification under
      Clause 24.1 then, without in any way limiting the rights of the
      Notifying Lender under Clause 24.3, the Notifying Lender shall use
      reasonable endeavours to transfer its obligations, liabilities and rights
      under this Agreement and the Finance Documents to another office or
      financial institution not affected by the circumstances but the Notifying
      Lender 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 regulation;
  or

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              25  

            	
              SET-OFF

            

    

     

    
      	
              25.1  

            	
              Application of credit
      balances.  Each Creditor Party 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 Borrower at any office in any
      country of that Creditor Party in or towards satisfaction of any sum then
      due from the Borrowers to that Creditor Party 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
      Borrower;

            

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (iii)  

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

            

    

     

    
      	
              25.2  

            	
              Existing rights
      unaffected.  No Creditor Party shall be obliged to
      exercise any of its rights under Clause 25.1;
      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 a Creditor Party is entitled (whether under the general law or
      any document).

            

    

     

    
      	
              25.3  

            	
              Sums deemed due to a
      Lender.  For the purposes of this Clause 25, a sum payable by the Borrowers to the Agent
      or the Security Trustee for distribution to, or for the account of, a
      Lender shall be treated as a sum due to that Lender; and each Lender’s
      proportion of a sum so payable for distribution to, or for the account of,
      the Lenders shall be treated as a sum due to such
  Lender.

            

    

     

    
      	
              25.4  

            	
              No Security
      Interest.  This Clause 25
      gives the Creditor Parties a contractual right of set-off only, and does
      not create any equitable charge or other Security Interest over any credit
      balance of the Borrowers.

            

    

     

    
      	
              26  

            	
              TRANSFERS
      AND CHANGES IN LENDING OFFICES

            

    

     

    
      	
              26.1  

            	
              Transfer by
      Borrowers.  No Borrower may, without the consent of the
      Agent, given on the instructions of all the Lenders transfer any of its
      rights, liabilities or obligations under any Finance
    Document.

            

    

     

    
      	
              26.2  

            	
              Transfer by a
      Lender.  Subject to Clause 26.4, a Lender (the “Transferor Lender”) may
      at any time, with the prior written consent of the Borrowers (not to be
      unreasonably withheld or delayed) or without the consent of the Borrowers
      if an Event of Default or a Potential Event of Default has occurred and is
      continuing, cause:

            

    

     

    
      	
              (a)  

            	
              its
      rights in respect of all or part of its Contribution;
  or

            

    

     

    
      	
              (b)  

            	
              its
      obligations in respect of all or part of its Commitment;
  or

            

    

     

    
      	
              (c)  

            	
              a
      combination of (a) and (b);

            

    

     

    to be (in
the case of its rights) transferred to, or (in the case of its obligations)
assumed by, another bank or financial institution (a “Transferee Lender”) by
delivering to the Agent a completed certificate in the form set out in Schedule
4 with any modifications approved or required by the Agent (a “Transfer Certificate”)
executed by the Transferor Lender and the Transferee Lender Provided that a
Lender may make such transfer to any wholly owned subsidiary of it, to its
parent company or to another subsidiary of its parent company without the
consent of the Borrowers and provided further that the Borrowers may withhold
their consent aforesaid if the proposed transfer would result in the Borrowers
being obliged to make a payment to the Transferee under Clause 22 or Clause 24.

     

    However
any rights and obligations of the Transferor Lender in its capacity as Agent or
Security Trustee will have to be dealt with separately in accordance with the
Agency and Trust Agreement.

     

    
      	
              26.3  

            	
              Transfer Certificate, delivery
      and notification.  As soon as reasonably practicable
      after a Transfer Certificate is delivered to the Agent, it shall (unless
      it has reason to believe that the Transfer Certificate may be
      defective):

            

    

     

    
      	
              (a)  

            	
              sign
      the Transfer Certificate on behalf of itself, the Borrowers, the Security
      Parties, the Security Trustee and each of the other Creditor
      Parties;

            

    

     

    
      	
              (b)  

            	
              on
      behalf of the Transferee Lender, send to the Borrowers and each Security
      Party letters or faxes notifying them of the Transfer Certificate and
      attaching a copy of it;

            

    

     

    
      	
              (c)  

            	
              send
      to the Transferee Lender copies of the letters or faxes sent under
      paragraph (b) above.

            

    

     

    
      	
              26.4  

            	
              Effective Date of Transfer
      Certificate.  A Transfer Certificate becomes effective on
      the Transfer Date.

            

    

     

    
      	
              26.5  

            	
              No transfer without Transfer
      Certificate.  No assignment or transfer of any right or
      obligation of a Lender under any Finance Document is binding on, or
      effective in relation to, the Borrowers, any Security Party, the Agent or
      the Security Trustee unless it is effected, evidenced or perfected by a
      Transfer Certificate.

            

    

     

    
      	
              26.6  

            	
              Lender re-organisation; waiver
      of Transfer Certificate.  However, if a Lender enters
      into any merger, de-merger or other reorganisation as a result of which
      all its rights or obligations vest in another person (the “successor”), the Agent
      may, if it sees fit, by notice to the successor and the Borrowers and the
      Security Trustee waive the need for the execution and delivery of a
      Transfer Certificate; and, upon service of the Agent’s notice, the
      successor shall become a Lender with the same Commitment and Contribution
      as were held by the predecessor
Lender.

            

    

     

    
      	
              26.7  

            	
              Effect of Transfer
      Certificate.  A Transfer Certificate takes effect in
      accordance with English law as
follows:

            

    

     

    
      	
              (a)  

            	
              to
      the extent specified in the Transfer Certificate, all rights and interests
      (present, future or contingent) which the Transferor Lender has under or
      by virtue of the Finance Documents are assigned to the Transferee Lender
      absolutely, free of any defects in the Transferor Lender’s title and of
      any rights or equities which the Borrowers or any Security Party had
      against the Transferor Lender;

            

    

     

    
      	
              (b)  

            	
              the
      Transferor Lender’s Commitment is discharged to the extent specified in
      the Transfer Certificate;

            

    

     

    
      	
              (c)  

            	
              the
      Transferee Lender becomes a Lender with the Contribution or Commitment of
      an amount specified in the Transfer
Certificate;

            

    

     

    
      	
              (d)  

            	
              the
      Transferee Lender becomes bound by all the provisions of the Finance
      Documents which are applicable to the Lenders generally, including those
      about pro-rata sharing and the exclusion of liability on the part of, and
      the indemnification of, the Agent and the Security Trustee and, to the
      extent that the Transferee Lender becomes bound by those provisions (other
      than those relating to exclusion of liability), the Transferor Lender
      ceases to be bound by them;

            

    

     

    
      	
              (e)  

            	
              any
      part of the Loans which the Transferee Lender advances after the Transfer
      Certificate’s effective date ranks in point of priority and security in
      the same way as it would have ranked had it been advanced by the
      transferor, assuming that any defects in the transferor’s title and any
      rights or equities of the Borrowers or any Security Party against the
      Transferor Lender had not existed;

            

    

     

    
      	
              (f)  

            	
              the
      Transferee Lender becomes entitled to all the rights under the Finance
      Documents which are applicable to the Lenders generally, including but not
      limited to those relating to the Majority Lenders and those under Clause
      5.7 and Clause 20, and to the extent that the Transferee Lender
      becomes entitled to such rights, the Transferor Lender ceases to be
      entitled to them; and

            

    

     

    
      	
              (g)  

            	
              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, the Transferee Lender shall be
      entitled to recover damages by reference to the loss incurred by it as a
      result of the breach or misrepresentation, irrespective of whether the
      original Lender would have incurred a loss of that kind or
      amount.

            

    

     

    The
rights and equities of the Borrowers or any Security Party referred to above
include, but are not limited to, any right of set off and any other kind of
cross-claim.

     

    
      	
              26.8  

            	
              Maintenance of register of
      Lenders.  During the Security Period the Agent shall
      maintain a register in which it shall record the name, the Commitment, the
      Contribution and administrative details (including the lending office)
      from time to time of each Lender holding a Transfer Certificate and the
      effective date (in accordance with Clause 26.4) of the Transfer Certificate; and the Agent
      shall make the register available for inspection by the Security Trustee
      and the Borrowers during normal banking hours, subject to receiving at
      least 3 Business Days prior notice.

            

    

     

    
      	
              26.9  

            	
              Reliance on register of
      Lenders.  The entries on that register shall, in the
      absence of manifest error, be conclusive in determining the identities of
      the Lenders and the amounts of their Commitments, Contributions and the
      effective dates of Transfer Certificates and may be relied upon by the
      Agent and the other parties to the Finance Documents for all purposes
      relating to the Finance Documents.

            

    

     

    
      	
              26.10  

            	
              Authorisation of Agent to sign
      Transfer Certificates.  Subject to the foregoing
      provisions of this Clause 26 the Borrowers, the Security Trustee and each
      Lender irrevocably authorise the Agent to sign Transfer Certificates on
      its behalf.

            

    

     

    
      	
              26.11  

            	
              Registration
      fee.  In respect of any Transfer Certificate, the Agent
      shall be entitled to recover a registration fee of $2,000 from the
      Transferor Lender or (at the Agent’s option) the Transferee Creditor
      Party.

            

    

     

    
      	
              26.12  

            	
              Sub-participation; subrogation
      assignment.  A Lender 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 Borrowers, any
      Security Party, the Agent, the Security Trustee or any other Creditor
      Party; and the Lenders may assign, in any manner and terms agreed by the
      Majority Lenders, the Agent and the Security Trustee all or any part of
      those rights to an insurer or surety who has become subrogated to
      them.

            

    

     

    
      	
              26.13  

            	
              Disclosure of
      information.  A Lender may disclose to a potential
      Transferee Lender or sub-participant any information which the Lender has
      received in relation to the Borrowers, any Security Party or their affairs
      under or in connection with any Finance
  Document.

            

    

     

    
      	
              26.14  

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

            

    

     

    
      	
              (a)  

            	
              the
      date on which the Agent receives the notice;
and

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              26.15  

            	
              Notification.  On
      receiving such a notice, the Agent shall notify the Borrowers and the
      Security Trustee; and, until the Agent receives such a notice, it shall be
      entitled to assume that a Lender is acting through the lending office of
      which the Agent last had notice.

            

    

     

    
      	
              26.16  

            	
              Replacement of Reference
      Bank.  If any Reference Bank ceases to be a Lender or is
      unable on a continuing basis to supply quotations for the purposes of
      Clause 5 then, unless the Borrowers, the
      Agent and the Majority Lenders otherwise agree, the Agent, acting on the
      instructions of the Majority Lenders, and after consulting the Borrowers,
      shall appoint another bank (whether or not a Lender) to be a replacement
      Reference Bank; and, when that appointment comes into effect, the
      first-mentioned Reference Bank’s appointment shall cease to be
      effective.

            

    

     

    
      	
              26.17  

            	
              No additional
      costs.  If a Lender transfers any part of its
      Contribution and/or Commitment or sub-participates any part of its rights
      and/or obligations under the Finance Documents or changes it lending
      office pursuant to this Clause 26 and as a
      result of circumstances existing at the date the transfer, sub
      participation or change occurs, the Borrowers would be obliged to make an
      increased payment to that Lender under any applicable Clauses of this
      Agreement, then that Lender is only entitled to receive payment under
      those Clauses to the same extent as the Lender would have been if the
      transfer, sub-participation or change of lending office had not
      occurred.

            

    

     

    
      	
              27  

            	
              VARIATIONS
      AND WAIVERS

            

    

     

    
      	
              27.1  

            	
              Variations, waivers etc. by
      Majority Lenders.  Subject to Clause 27.2, a document shall be effective to vary,
      waive, suspend or limit any provision of a Finance Document, or any
      Creditor Party’s rights or remedies under such a provision or the general
      law, only if the document is signed, or specifically agreed to by fax, by
      the Borrowers, by the Agent on behalf of the Majority Lenders, by the
      Agent and the Security Trustee in their own rights, and, if the document
      relates to a Finance Document to which a Security Party is party, by that
      Security Party.

            

    

     

    
      	
              27.2  

            	
              Variations, waivers etc.
      requiring agreement of all Lenders.  However, as regards
      the following, Clause 27.1 applies as if the
      words “by the Agent on behalf of the Majority Lenders” were replaced by
      the words “by or on behalf of every
Lender”:

            

    

     

    
      	
              (a)  

            	
              a
      reduction in the Margin or in the definition of
  LIBOR;

            

    

     

    
      	
              (b)  

            	
              an
      extension of the due date for, or a decrease in the amount of, any payment
      of principal, interest, fees, or other sum payable under this
      Agreement;

            

    

     

    
      	
              (c)  

            	
              an
      increase in any Lender’s
Commitment;

            

    

     

    
      	
              (d)  

            	
              an
      extension of Availability Period;

            

    

     

    
      	
              (e)  

            	
              a
      change to the definition of “Majority Lenders” or
      “Finance
      Documents”;

            

    

     

    
      	
              (f)  

            	
              a
      change to the preamble or to Clause 2, 3, 4, 5.1, 17, 18 or 30;

            

    

     

    
      	
              (g)  

            	
              a
      change to this Clause 27;

            

    

     

    
      	
              (h)  

            	
              any
      release of, or material variation to, a Security Interest, guarantee,
      indemnity or subordination arrangement set out in a Finance Document;
      and

            

    

     

    
      	
              (i)  

            	
              any
      other change or matter as regards which this Agreement or another Finance
      Document expressly provides that each Lender’s consent is
      required.

            

    

     

    
      	
              27.3  

            	
              Exclusion of other or implied
      variations.  Except for a document which satisfies the
      requirements of Clauses 27.1 and 27.2, no document, and no act, course of
      conduct, failure or neglect to act, delay or acquiescence on the part of
      the Creditor Parties or any of them (or any person acting on behalf of any
      of them) shall result in the Creditor Parties or any of them (or any
      person acting on behalf of any of them) 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 Borrower 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.

            

    

    

    
      	
              28  

            	
              NOTICES

            

    

     

    
      	
              28.1  

            	
              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.

            

    

     

    
      	
              28.2  

            	
              Addresses for
      communications.  A notice shall be
  sent:

            

    

     

    
      	
              (a)  

            	
              to
      the Borrowers: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
      a
      Lender:                      At
      the address below its name in Schedule 1 or (as the case may require) in
      the relevant Transfer Certificate.

            

    

     

    
      	
              (c)  

            	
              to
      the
      Agent:                      In
      respect of operational matters (such as drawdowns, interest rate fixing,
      interest/fee calculations and
payments:

            

    

     

    The Royal
Bank of Scotland plc

     

    Level
3

     

    21⁄2
Devonshire Square

     

    London
EC2M 4XJ

     

    Fax No:
+44 207 615 7673

     

    Attention:
Loans Administration/LAU

     

    in
respect of non operational matters (such as documentation, covenant compliance,
amendments and waivers etc)

     

    The Royal
Bank of Scotland plc

     

    Shipping
Business Centre

     

    5-10
Great Tower Street

     

    London
EC3P 3HX

     

    Fax No:
+44 207 085 7142

     

    Attention:
Transaction and Portfolio Management

     

    
      	
              (d)  

            	
              to
      the Security
      Trustee:                                                      The
      Royal Bank of Scotland plc

            

    

    Level
5

    135
Bishopsgate

    London
EC2M 3UR

    

    Fax No:
+44 207 085 4564

     

    Attention:
Syndicated Loans Agency

     

    or to
such other address as the relevant party may notify the Agent or, if the
relevant party is the Agent or the Security Trustee, the Borrowers, the Lenders,
and the Security Parties.

    

    
      	
              28.3  

            	
              Effective date of
      notices.  Subject to Clauses 28.4 and 28.5:

            

    

     

    
      	
              (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.

            

    

     

    
      	
              28.4  

            	
              Service outside business
      hours.  However, if under Clause 28.3 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 28.5) be deemed to
be served, and shall take effect, at 9 a.m. on the next day which is such a
business day.

    

    
      	
              28.5  

            	
              Illegible
      notices.  Clauses 28.3 and
      28.4 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.

            

    

     

    
      	
              28.6  

            	
              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.

            

    

     

    
      	
              28.7  

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

            

    

     

    
      	
              28.8  

            	
              Meaning of
      “notice”.  In this Clause 28, “notice” includes any
      demand, consent, authorisation, approval, instruction, waiver or other
      communication.

            

    

     

    
      	
              28.9  

            	
              Electronic
      communication

            

    

     

    
      	
              (a)  

            	
              Any
      communication to be made between the Agent and a Creditor Party under or
      in connection with the Finance Documents may be made by electronic mail or
      other electronic means, if the Agent and the relevant Creditor
      Party:

            

    

     

    
      	
              (i)  

            	
              agree
      that, unless and until notified to the contrary, this is to be an accepted
      form of communication;

            

    

     

    
      	
              (ii)  

            	
              notify
      each other in writing of their electronic mail address and/or any other
      information required to enable the sending and receipt of information by
      that means; and

            

    

     

    
      	
              (iii)  

            	
              notify
      each other of any change to their address or any other such information
      supplied by them.

            

    

     

    
      	
              (b)  

            	
              Any
      electronic communication made between the Agent and a Creditor Party will
      be effective only when actually received in readable form and in the case
      of any electronic communication made by a Creditor Party to the Agent only
      if it is addressed in such a manner as the Agent shall specify for this
      purpose.

            

    

     

    
      	
              29  

            	
              JOINT
      AND SEVERAL LIABILITY

            

    

     

    
      	
              29.1  

            	
              General.  All
      liabilities and obligations of the Borrowers under this Agreement shall,
      whether expressed to be so or not, be several and, if and to the extent
      consistent with Clause 29.2,
      joint.

            

    

     

    
      	
              29.2  

            	
              No impairment of Borrower's
      obligations.  The liabilities and obligations of a
      Borrower shall not be impaired by:

            

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

            	
              any
      combination of the foregoing.

            

    

     

    
      	
              29.3  

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

            

    

     

    
      	
              29.4  

            	
              Subordination.  Subject
      to Clause 29.5, during the Security Period,
      no Borrower shall:

            

    

     

    
      	
              (a)  

            	
              claim
      any amount which may be due to it from any other Borrower whether in
      respect of a payment made, or matter arising out of, this Agreement or 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 Borrower for such an
      amount, or in any other way seek to have recourse in respect of such an
      amount against any asset of any other Borrower;
  or

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

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

            

    

     

    
      	
              (e)  

            	
              exercise
      or assert any combination of the
foregoing.

            

    

     

    
      	
              29.5  

            	
              Borrower's required
      action.  If during the Security Period, the Agent, by
      notice to a Borrower, requires it to take any action referred to in
      paragraphs (a) to (d) of Clause 29.4, in
      relation to any other Borrower, that Borrower shall take that action as
      soon as practicable after receiving the Agent's
  notice.

            

    

     

    
      	
              30  

            	
              SUPPLEMENTAL

            

    

     

    
      	
              30.1  

            	
              Rights cumulative,
      non-exclusive.  The rights and remedies which the Finance
      Documents give to each Creditor Party
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.

            

    

     

    
      	
              30.2  

            	
              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.

            

    

     

    
      	
              30.3  

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

            

    

     

    
      	
              30.4  

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

            

    

     

    
      	
              31  

            	
              LAW
      AND JURISDICTION

            

    

     

    
      	
              31.1  

            	
              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.

            

    

     

    
      	
              31.2  

            	
              Exclusive English
      jurisdiction.  Subject to Clause 31.3, the courts of England shall have exclusive
      jurisdiction to settle any Dispute.

            

    

     

    
      	
              31.3  

            	
              Choice of forum for the
      exclusive benefit of the Creditor Parties.  Clause 36.2
      is for the exclusive benefit of the Creditor Parties, each of which
      reserves the right:

            

    

     

    
      	
              (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
Borrower shall commence any proceedings in any country other than England in
relation to a Dispute.

    

    
      	
              31.4  

            	
              Process
      agent.  Each Borrower 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.

            

    

     

    
      	
              31.5  

            	
              Creditor Party rights
      unaffected.  Nothing in this Clause 31 shall exclude or limit any right which any
      Creditor Party may have (whether under the law of any country, an
      international convention or otherwise) with regard to the bringing of
      proceedings, the service of process, the recognition or enforcement of a
      judgment or any similar or related matter in any
    jurisdiction.

            

    

     

    
      	
              31.6  

            	
              Meaning of
      “proceedings”.  In this Clause 31, “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

     

    

     

    LENDERS

     

    

    
      	
              Lender

            	
              Lending
      Office

            	
              Commitment

            
	
              The
      Royal Bank of Scotland plc

            	
              Shipping
      Business Centre

              5-10
      Great Tower Street

              London
      EC3P 3HX

              Fax
      No:                    +
      44 207 085 7142

              Attn:
      Transaction and Portfolio Management

            	
              $35,000,000

            
	
              Citibank,
      N.A.

            	
              750
      Washington Boulevard

              Stamford
      CT06901

              USA

              Fax
      No: + 1 866 772 2935

              Attn:
      Gilbert Torres

            	
              $15,000,000

            
	
              Landesbank
      Hessen-Thüringen Girozentrale

            	
              420
      Fifth Avenue, 24th Floor

              New
      York, NY 100108-2729

              USA

              Fax
      No: +1 212 703 5256

              Attn:
      Corporate Finance/ Portfolio Management

            	
              $30,000,000

            
	
              Norddeutsche
      Landesbank Girozentrale

            	
              Ship
      and Aircraft Finance Department

              Friednichswall
      10

              30159
      Hannover, Germany

              Fax
      No: +49 511 361 4785

              Attn:
      International Shipping Group II - Sebastian Schubert

            	
              $30,000,000

            
	
              Alliance
      & Leicester Commercial Finance plc

            	
              298 Deansgate

              Manchester

              M3
      4HH

              Fax
      No: + 44 161 953 3517

              Attn
      Corporate Administration Manager

            	
              $30,000,000

            
	
              Bank
      of America, N.A.

            	
              Bank
      of America

              100
      Federal Street

              Boston
      MA 02110

              Fax
      No: +617434 1955

              Attn:
      Transportation Division - Credit Products

            	
              $10,000,000

            

    

    

    
      
        
          
            26357268
vDOC

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    SCHEDULE
2

     

    

     

    DRAWDOWN
NOTICE

     

    To:           The
Royal Bank of Scotland plc

    Level 3

    21⁄2 Devonshire Square

    London EC2M 4XJ

    

    Attention:
Loans Administration/LAU

    

    [l]

    DRAWDOWN
NOTICE

    

    
      	
              1  

            	
              We
      refer to the loan agreement (the “Loan 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 Borrowers, the Lenders
      referred to therein, and The Royal Bank of Scotland plc as Mandated Lead
      Arranger, Bookrunner, Agent, Security Trustee, and Swap Bank in connection
      with a term loan facility of US$150,000,000.  Terms defined in
      the Loan Agreement have their defined meanings when used in this Drawdown
      Notice.

            

    

     

    
      	
              2  

            	
              We
      request to borrow an Advance under the Loan Facility as
      follows:

            

    

     

    
      	
              (a)  

            	
              Amount:
      US$[l];

            

    

     

    
      	
              (b)  

            	
              Drawdown
      Date: [l];

            

    

     

    
      	
              (c)  

            	
              [Duration
      of the first Interest Period shall be [l]
      months;]

            

    

     

    
      	
              (d)  

            	
              Payment
      instructions : account in our name and numbered [l] with [l] of [l].

            

    

     

    
      	
              3  

            	
              We
      represent and warrant that:

            

    

     

    
      	
              (a)  

            	
              the
      representations and warranties in Clause 10 of the Loan 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 borrowing of the
  Loans.

            

    

     

    
      	
              4  

            	
              This
      notice cannot be revoked without the prior consent of the Majority
      Lenders.

            

    

     

    
      	
              5  

            	
              We
      authorise you to deduct the fees referred to in Clause 20 and due to you
      for the account of the Lenders from the amount of the said
      Advance.

            

    

     

    [Name of
Signatory]

    

    

    

    

                                                           

    for and
on behalf of

    [relevant
Borrower]

    [l]

    [l]

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    SCHEDULE
3

     

    

     

    CONDITION
PRECEDENT DOCUMENTS

     

    

    

    PART
A

    

    

    The
following are the documents referred to in Clause 9.1(a) required before service
of the first Drawdown Notice.

    

    
      	
              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 or Part C or Part
D.

            

    

     

    
      	
              2  

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

            

    

     

    
      	
              3  

            	
              Copies
      of resolutions of the directors of each Borrower and each Security Party
      and copies of resolutions of the shareholders of each Borrower, in each
      case authorising the execution of each of the Finance Documents to which
      that Borrower or that Security Party is a party and, in the case of each
      Borrower, authorising named officers to give the Drawdown Notices and
      other notices under this Agreement and ratifying the execution of the
      Shipbuilding Contracts.

            

    

     

    
      	
              4  

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

            

    

     

    
      	
              5  

            	
              Copies
      of all consents which any Borrower 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 and the Overall
  Agreement.

            

    

     

    
      	
              7  

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

            

    

     

    
      	
              8  

            	
              Documentary
      evidence that the agent for service of process named in Clause 31 has accepted its
  appointment.

            

    

     

    
      	
              9  

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

            

    

     

    
      	
              10  

            	
              A
      written confirmation from the Borrowers as to which individuals are
      authorised to give verbal and/or written instructions to the Agent on
      behalf of the Borrowers in respect of the selection of any Interest Period
      pursuant to Clause 6.2 of this
Agreement.

            

    

     

    
      	
              11  

            	
              A
      written statement from a person acceptable to the Agent confirming the
      identity of the ultimate beneficial owner or owners of the shares in the
      Borrowers, 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.

            

    

     

    
      	
              12  

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

            

    

     

    
      	
              13  

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

            

    

     

    
      	
              14  

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

            

    

     

    Each of
the documents specified in paragraphs 2, 3, 5, and 6 of Part A 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 Borrower.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    PART
B

    

    

    The
following are the documents referred to in Clause 9.1(b) required before the
drawdown of a Advance (other than a Delivery Advance) in respect of a Ship to be
acquired using the proceeds of such Advance:

    

    
      	
              1  

            	
              evidence
      that the relevant stage payment of the Contract Price payable under the
      Shipbuilding Contract in respect of such Ship payable under the relevant
      Shipbuilding Contract has fallen due for payment or, in the case of each
      of Ship D, Ship E and Ship F and the relevant Advance to be utilised to
      reimburse the relevant Borrower the second instalment of the Contract
      Price payable under the relevant Shipbuilding Contract that such
      instalment has been paid to the Seller and that the stage of steel cutting
      for such Ship has been completed;

            

    

     

    
      	
              2  

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

            

    

     

    
      	
              3  

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

            

    

     

    
      	
              4  

            	
              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.

            

    

     

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    PART
C

    

    

    The
following are the documents referred to in Clause 9.1(d) required before the
drawdown of a Delivery Advance in respect of a Ship to be acquired using the
proceeds of such Delivery Advance:

    

    
      	
              1  

            	 

    

     

    
      	
              (a)  

            	
              A
      duly executed original of the Mortgage and Multiparty Deed relating to the
      Ship (and of each document to be delivered by each of them);
      and

            

    

     

    
      	
              (b)  

            	
              in
      relation to the First Delivery Advance a duly executed original of the
      Account Security Deed and the originals of any mandates or other documents
      required in connection with the opening and operation of the Earnings
      Account and the Standby Earnings
Account.

            

    

     

    
      	
              2  

            	
              Documentary
      evidence that:

            

    

     

    
      	
              (a)  

            	
              the
      Ship has been or on the relevant Delivery Date will be unconditionally
      delivered by the Sellers to, and accepted by, the relevant Borrower under
      the relevant Shipbuilding Contract and the full purchase price payable
      under the relevant Shipbuilding Contract has been duly
    paid;

            

    

     

    
      	
              (b)  

            	
              the
      Ship is or on the relevant Delivery Date will be registered in the name of
      the relevant Borrower with the Panamanian ship
  registry;

            

    

     

    
      	
              (c)  

            	
              the
      Ship is or on the relevant Delivery Date will be in the absolute and
      unencumbered ownership of the relevant Borrower save as contemplated by
      the Finance Documents;

            

    

     

    
      	
              (d)  

            	
              the
      Ship has or on the relevant Delivery Date will have its Classification
      with its classification society, free of all recommendations and
      qualifications of such classification
society;

            

    

     

    
      	
              (e)  

            	
              the
      relevant Mortgage has been or on the Delivery Date will be duly registered
      against the Ship as a valid first preferred Panamanian ship mortgage in
      accordance with the laws of Panama;

            

    

     

    
      	
              (f)  

            	
              the
      Ship is insured in accordance with the provisions of this Agreement and
      all requirements therein in respect of insurances have been complied with
      and a certified copy of the certificate of financial responsibility for
      pollution by oil or other Environmentally Sensitive Material issued by the
      relevant certifying authority in relation to that
  Ship;

            

    

     

    
      	
              (g)  

            	
              the
      Ship has been or on the relevant Delivery Date will be unconditionally
      delivered by the relevant Borrower to, and accepted by, the Bareboat
      Charterer under the relevant Bareboat Charter and the Ship has been
      bareboat registered under the Philippine’s flag (with details of the
      Mortgage duly noted on the Ship’s bareboat
  register);

            

    

     

    
      	
              (h)  

            	
              the
      Ship has been or on the relevant Delivery Date will be unconditionally
      delivered by the Bareboat Charter to, and accepted by, the Time Charterer
      under the relevant Time Charter;

            

    

     

    
      	
              3  

            	
              Documents
      establishing that the Ship will, as from the relevant Drawdown Date, be
      managed by the Approved Managers on terms acceptable to the Lenders,
      together with:

            

    

     

    
      	
              (a)  

            	
              a
      letter or letters of undertaking executed by the Approved Managers in
      favour of the Agent in the terms required by the Agent agreeing certain
      matters in relation to the management of that Ship and subordinating the
      rights of the Approved Managers against the Borrowers and that Ship to the
      rights of the Creditor Parties under the Finance Documents;
      and

            

    

     

    
      	
              (b)  

            	
              copies
      of the Approved Managers’ Document of Compliance and of the Ship Safety
      Management Certificate (together with any other details of the applicable
      safety management system which the Agent
  requires).

            

    

     

    
      	
              4  

            	
              A
      valuation of each Ship then the subject of a Mortgage and the Ship the
      subject of the said Final Sub-Advance addressed to the Agent and the
      Lenders stated to be for the purpose of this Agreement and dated not
      earlier then 30 days before the relevant Drawdown Date from an independent
      London sale and purchase shipbroker which the Agent has approved or
      appointed which shows a value for such Ships acceptable to the
      Agent.

            

    

     

    
      	
              5  

            	
              A
      letter from the relevant Borrower to the protection and indemnity
      association in which the Ship is or is to be entered instructing it to
      provide the Agent with a copy of the certificate of entry of the Ship and
      any information relating to the entry of the Ship in such protection and
      indemnity association.

            

    

     

    
      	
              6  

            	
              Favourable
      legal opinions from lawyers appointed by the Agent on such matters
      concerning the law of Marshall Islands, Panama, China and such other
      relevant jurisdictions as the Agent may
require.

            

    

     

    
      	
              7  

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

            

    

     

    
      	
              8  

            	
              Documents
      of the kind referred to in Schedule 3 Part A 2, 3 and 4 in relation to the
      Bareboat Charterer, the Time Charterer, the Approved Managers, TBS Pacific
      Liner and TBS Worldwide and their execution of the Finance Documents to
      which they are a party.

            

    

     

    
      	
              9  

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

            

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
4

     

    

     

    TRANSFER
CERTIFICATE

     

    

    

    The
Transferor and the Transferee accept exclusive responsibility for ensuring that
this Certificate and the transaction to which it relates comply with all legal
and regulatory requirements applicable to them respectively.

    

    

    
      	
              To:

            	
              The
      Royal Bank of Scotland plc for itself and for and on behalf of the
      Borrowers, each Security Party, the Security Trustee and each Lender, as
      defined in the Loan Agreement referred to
below.

            

    

    

    

    [l]

    

    

    
      	
              1  

            	
              This
      Certificate relates to a Loan Agreement (the “Loan Agreement”) dated
      as of 29 March 2007 and made between (1) Argyle Maritime Corp., Caton
      Maritime Corp., Dorchester Maritime Corp., Longwoods Maritime Corp.,
      McHenry Maritime Corp. and Sunswyck Maritime Corp. (the “Borrowers”), (2) the
      banks and financial institutions named therein as Lenders and (3) The
      Royal Bank of Scotland plc as Mandated Lead Arranger, Bookrunner, Agent,
      Swap Bank, Security Trustee relating to a term loan facility of
      $150,000,000.

            

    

     

    
      	
              2  

            	
              In
      this Certificate, terms defined in the Loan Agreement shall, unless the
      contrary intention appears, have the same meanings
  and:

            

    

     

    
      	
               
      

            	
              “Relevant Parties” means
      the Agent, the Borrowers, each Security Party, the Security Trustee and
      each Lender;

            

    

    

    “Transferor” means [full name]
of [lending office]; and

    

    “Transferee” means [full name]
of [lending office].

    

    
      	
              3  

            	
              The
      effective date of this Certificate is [l]  Provided that this
      Certificate shall not come into effect unless it is signed by the Agent on
      or before that date.

            

    

     

    
      	
              4  

            	
              The
      Transferor assigns to the Transferee absolutely all rights and interests
      (present, future or contingent) which the Transferor has as Lender under
      or by virtue of the Loan Agreement and every other Finance Document in
      relation to [l] per cent. of its
      Contribution, which percentage represents $[l].

            

    

     

    
      	
              5  

            	
              By
      virtue of this Certificate and Clause 26 of
      the Loan Agreement, the Transferor is discharged entirely from its
      Commitment which amounts to $[l] [from [l] per cent. of its
      Commitment, which percentage represents $[l] and the
      Transferee acquires a Commitment of $[l].

            

    

     

    
      	
              6  

            	
              The
      Transferee undertakes with the Transferor and each of the Relevant Parties
      that the Transferee will observe and perform all the obligations under the
      Finance Documents which Clause 26 of the Loan
      Agreement provides will become binding on it upon this Certificate taking
      effect.

            

    

     

    
      	
              7  

            	
              The
      Agent, at the request of the Transferee (which request is hereby made)
      accepts, for the Agent itself and for and on behalf of every other
      Relevant Party, this Certificate as a Transfer Certificate taking effect
      in accordance with Clause 26 of the Loan
      Agreement.

            

    

     

    
      	
              8  

            	
              The
      Transferor:

            

    

     

    
      	
              (a)  

            	
              warrants
      to the Transferee and each Relevant Party
that:

            

    

     

    
      	
              (i)  

            	
              the
      Transferor has full capacity to enter into this transaction and has taken
      all corporate action and obtained all consents which are in connection
      with this transaction; and

            

    

     

    
      	
              (ii)  

            	
              this
      Certificate is valid and binding as regards the
  Transferor;

            

    

     

    
      	
              (b)  

            	
              warrants
      to the Transferee that the Transferor is absolutely entitled, free of
      encumbrances, to all the rights and interests covered by the assignment in
      paragraph 4 above; and

            

    

     

    
      	
              (c)  

            	
              undertakes
      with the Transferee that the Transferor will, at its own expense, execute
      any documents which the Transferee reasonably requests for perfecting in
      any relevant jurisdiction the Transferee’s title under this Certificate or
      for a similar purpose.

            

    

     

    
      	
              9  

            	
              The
      Transferee:

            

    

     

    
      	
              (a)  

            	
              confirms
      that it has received a copy of the Loan Agreement and each of the other
      Finance Documents;

            

    

     

    
      	
              (b)  

            	
              agrees
      that it will have no rights of recourse on any ground against either the
      Transferor, the Agent, the Security Trustee or any Lender in the event
      that:

            

    

     

    
      	
              (i)  

            	
              any
      of the Finance Documents prove to be invalid or
    ineffective;

            

    

     

    
      	
              (ii)  

            	
              any
      Borrower or any Security Party fails to observe or perform its
      obligations, or to discharge its liabilities, under any of the Finance
      Documents;

            

    

     

    
      	
              (iii)  

            	
              it
      proves impossible to realise any asset covered by a Security Interest
      created by a Finance Document, or the proceeds of such assets are
      insufficient to discharge the liabilities of the Borrowers or any Security
      Party under the Finance Documents;

            

    

     

    
      	
              (c)  

            	
              agrees
      that it will have no rights of recourse on any ground against the Agent,
      the Security Trustee or any Lender in the event that this Certificate
      proves to be invalid or
ineffective;

            

    

     

    
      	
              (d)  

            	
              warrants
      to the Transferor and each Relevant Party
that:

            

    

     

    
      	
              (i)  

            	
              it
      has full capacity to enter into this transaction and has taken all
      corporate action and obtained all consents which it needs to take or
      obtain in connection with this transaction;
and

            

    

     

    
      	
              (ii)  

            	
              this
      Certificate is valid and binding as regards the Transferee;
      and

            

    

     

    
      	
              (e)  

            	
              confirms
      the accuracy of the administrative details set out below regarding the
      Transferee.

            

    

     

    
      	
              10  

            	
              The
      Transferor and the Transferee each undertake with the Agent and the
      Security Trustee severally, on demand, fully to indemnify the Agent and/or
      the Security Trustee in respect of any claim, proceeding, liability or
      expense (including all legal expenses) which they or either of them may
      incur in connection with this Certificate or any matter arising out of it,
      except such as are shown to have been mainly and directly caused by the
      gross and culpable negligence or dishonesty of the Agent’s or the Security
      Trustee’s own officers or
employees.

            

    

     

    
      	
              11  

            	
              The
      Transferee shall repay to the Transferor on demand so much of any sum paid
      by the Transferor under paragraph 10 as exceeds one-half of the amount
      demanded by the Agent or the Security Trustee in respect of a claim,
      proceeding, liability or expense which was not reasonably foreseeable at
      the date of this Certificate; but nothing in this paragraph shall affect
      the liability of each of the Transferor and the Transferee to the Agent or
      the Security Trustee for the full amount demanded by
  it.

            

    

     

    

    

    [Name of
Transferor]                                                                                                [Name
of Transferee]

    

    By:                                                                                     By:

    

    Date:                                                                                     Date:

    

    

    Agent

    

    Signed
for itself and for and on behalf of itself

    as Agent
and for every other Relevant Party

    

    [Name of
Agent]

    

    By:

    

    Date:

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    Administrative
Details of Transferee

    

    

    Name of
Transferee:

    

    Lending
Office:

    

    Contact
Person

    (Loan
Administration Department):

    

    Telephone:

    

    Telex:

    

    Fax:

    

    Contact
Person

    (Credit
Administration Department):

    

    Telephone:

    

    Telex:

    

    Fax:

    

    Account
for payments:

    

    

    

    

    Note:           This
Transfer Certificate alone may not be sufficient to transfer a proportionate
share of the Transferor’s interest in the security constituted by the Finance
Documents in the Transferor’s or Transferee’s jurisdiction.  It is the
responsibility of each Lender to ascertain whether any other documents are
required for this purpose.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    SCHEDULE
5

     

    

     

    REPAYMENT
INSTALMENTS

     

    

    Loan
A

     

    Loan A
will be repaid by quarterly instalments each in an amount equal to $417,500
together with a balloon instalment in amount equal to such amount outstanding in
respect of Loan A as at the Final Repayment Date, the first such instalment
falling due on the Drawdown Date in respect of the Loan A Delivery Advance, the
second instalment falling due on the date falling 6 months after the Drawdown
Date in respect of the Loan A Delivery Advance and subsequent instalments
falling due at 3 month intervals thereafter and the balloon instalment falling
due on the Final Repayment Date.  The Agent shall on the Delivery Date
in respect of Ship A deliver to the Borrowers and the Creditor Parties a revised
repayment schedule setting out the dates on which each instalment is due and the
amount of each such instalment.

     

    Loan
B

     

    Loan B
will be repaid by quarterly instalments each in an amount equal to $417,500
together with a balloon instalment in amount equal to such amount outstanding in
respect of Loan B as at the Final Repayment Date, the first such instalment
falling due three months from the Drawdown Date in respect of the Loan B
Delivery Advance and subsequent instalments falling due at 3 month intervals
thereafter and the balloon instalment falling due on the Final Repayment
Date.  The Agent shall on the Delivery Date in respect of Ship B
deliver to the Borrowers and the Creditor Parties a revised repayment schedule
setting out the dates on which each instalment is due and the amount of each
such instalment.

     

    Loan
C

     

    Loan C
will be repaid by quarterly instalments each in an amount equal to $417,500
together with a balloon instalment in amount equal to such amount outstanding in
respect of Loan C as at the Final Repayment Date, the first such instalment
falling due three months from the Drawdown Date in respect of the Loan C
Delivery Advance and subsequent instalments falling due at 3 month intervals
thereafter and the balloon instalment falling due on the Final Repayment
Date.  The Agent shall on the Delivery Date in respect of Ship C
deliver to the Borrowers and the Creditor Parties a revised repayment schedule
setting out the dates on which each instalment is due and the amount of each
such instalment.

     

    Loan
D

     

    Loan D
will be repaid by quarterly instalments each in an amount equal to $417,500
together with a balloon instalment in amount equal to such amount outstanding in
respect of Loan D as at the Final Repayment Date, the first such instalment
falling due three months from the Drawdown Date in respect of the Loan D
Delivery Advance and subsequent instalments falling due at 3 month intervals
thereafter and the balloon instalment falling due on the Final Repayment
Date.  The Agent shall on the Delivery Date in respect of Ship D
deliver to the Borrowers and the Creditor Parties a revised repayment schedule
setting out the dates on which each instalment is due and the amount of each
such instalment.

     

    Loan
E

     

    Loan E
will be repaid by quarterly instalments each in an amount equal to $417,500
together with a balloon instalment in amount equal to such amount outstanding in
respect of Loan E as at the Final Repayment Date, the first such instalment
falling due three months from the Drawdown Date in respect of the Loan E
Delivery Advance and subsequent instalments falling due at 3 month intervals
thereafter and the balloon instalment falling due on the Final Repayment
Date.  The Agent shall on the Delivery Date in respect of Ship E
deliver to the Borrowers and the Creditor Parties a revised repayment schedule
setting out the dates on which each instalment is due and the amount of each
such instalment.

     

    Loan
F

     

    Loan F
will be repaid by quarterly instalments each in an amount equal to $417,500
together with a balloon instalment in amount equal to such amount outstanding in
respect of Loan F as at the Final Repayment Date, the first such instalment
falling due three months from the Drawdown Date in respect of the Loan F
Delivery Advance and subsequent instalments falling due at 3 month intervals
thereafter and the balloon instalment falling due on the Final Repayment
Date.  The Agent shall on the Delivery Date in respect of Ship F
deliver to the Borrowers and the Creditor Parties a revised repayment schedule
setting out the dates on which each instalment is due and the amount of each
such instalment.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
6

     

    

     

    MANDATORY
COST FORMULA

     

    

    

    
      	
              1  

            	
              The
      Mandatory Cost is an addition to the interest rate to compensate Lenders
      for the cost of compliance with (a) the requirements of the Financial
      Services Authority (or any other authority which replaces all or any of
      its functions) or (b) the requirements of the European Central
      Bank.

            

    

     

    
      	
              2  

            	
              On
      the first day of each Interest Period (or as soon as possible thereafter)
      the Agent shall calculate, as a percentage rate, a rate (the “Additional Cost Rate”)
      for each Lender, in accordance with the paragraphs set out
      below.  The Mandatory Cost will be calculated by the Agent as a
      weighted average of the Lenders’ Additional Cost Rates (weighted in
      proportion to the percentage participation of each Lender in the relevant
      Advance) and will be expressed as a percentage rate per
    annum.

            

    

     

    
      	
              3  

            	
              The
      Additional Cost Rate for any Lender lending from a lending office in
      Participating Member State will be the percentage notified by that Lender
      to the Agent.  This percentage will be certified by that Lender
      in its notice to the Agent to be its reasonable determination of the cost
      (expressed as a percentage of that Lender’s participation in all Advances
      made from that lending office) of complying with the minimum reserve
      requirements of the European Central Bank in respect of loans made from
      that lending office.

            

    

     

    
      	
              4  

            	
              The
      Additional Cost Rate for any Lender lending from a lending office in the
      United Kingdom will be calculated by the Agent as
  follows:

            

    

     

    [Missing
Graphic Reference]per cent. per annum

    Where:

    

    
      	
               
      

            	
              E

            	
              is
      designed to compensate Lenders for amounts payable under the Fees Rules
      and is calculated by the Agent as being the average of the most recent
      rates of charge supplied by the Reference Banks to the Agent pursuant to
      paragraph 6 below and expressed in pounds per
  £1,000,000.

            

    

    

    
      	
              5  

            	
              For
      the purposes of this Schedule:

            

    

     

    
      	
              (a)  

            	
              “Eligible Liabilities”
      and “Special
      Deposits” have the meanings given to them from time to time under
      or pursuant to the Bank of England Act 1998 or (as may be appropriate) by
      the Bank of England;

            

    

     

    
      	
              (b)  

            	
              “Fees
      Rules”  means the rules on periodic fees contained in the
      FSA Supervision Manual or such other law or regulation as may be in force
      from time to time in respect of the payment of fees for the acceptance of
      deposits;

            

    

     

    
      	
              (c)  

            	
              “Fee
      Tariffs”  means the fee tariffs specified in the Fees
      Rules under the activity group A.1 Deposit acceptors (ignoring any minimum
      fee or zero rated fee required pursuant to the Fees Rules but taking into
      account any applicable discount
rate);

            

    

     

    
      	
              (d)  

            	
              “Participating Member
      State”  means any member state of the European Union that
      adopts or has adopted the euro as its lawful currency in accordance with
      legislation of the European Union relating to European Monetary Union;
      and

            

    

     

    
      	
              (e)  

            	
              “Tariff
      Base”  has the meaning given to it in, and will be
      calculated in accordance with, the Fees
Rules.

            

    

     

    
      	
              6  

            	
              If
      requested by the Agent, each Reference Bank shall, as soon as practicable
      after publication by the Financial Services Authority, supply to the
      Agent, the rate of charge payable by that Reference Bank to the Financial
      Services Authority pursuant to the Fees Rules in respect of the relevant
      financial year of the Financial Services Authority (calculated for this
      purpose by that Reference Bank as being the average of the Fee Tariffs
      applicable to that Reference Bank for that financial year) and expressed
      in pounds per £1,000,000 of the Tariff Base of that Reference
      Bank.

            

    

     

    
      	
              7  

            	
              Each
      Lender shall supply any information required by the Agent for the purpose
      of calculating its Additional Cost Rate.  In particular, but
      without limitation, each Lender shall supply the following information in
      writing on or prior to the date on which it becomes a
    Lender:

            

    

     

    
      	
              (a)  

            	
              the
      jurisdiction of its lending office;
and

            

    

     

    
      	
              (b)  

            	
              any
      other information that the Agent may reasonably require for such
      purpose.

            

    

     

    Each
Lender shall promptly notify the Agent in writing of any change to the
information provided by it pursuant to this paragraph.

     

    
      	
              8  

            	
              The
      rates of charge of each Reference Bank for the purpose of E above shall be
      determined by the Agent based upon the information supplied to it pursuant
      to paragraph 6 above and on the assumption that, unless a Lender notifies
      the Agent to the contrary, each Lender’s obligations in relation to cash
      ratio deposits and special Deposits are the same as those of a typical
      bank from its jurisdiction of incorporation with a lending office in the
      same jurisdiction as its lending
office.

            

    

     

    
      	
              9  

            	
              The
      Agent shall have no liability to any person if such determination results
      in an Additional Cost Rate which over or under compensates any Lender and
      shall be entitled to assume that the information provided by any Lender or
      Reference Bank pursuant to paragraphs 3, 6 and 7 above is true and correct
      in all respects.

            

    

     

    
      	
              10  

            	
              The
      Agent shall distribute the additional amounts received as a result of the
      Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for
      each Lender based on the information provided by each Lender and each
      Reference Bank pursuant to paragraphs 3, 6 and 7
  above.

            

    

     

    
      	
              11  

            	
              Any
      determination by the Agent pursuant to this Schedule in relation to a
      formula, the Mandatory Cost, an Additional Cost Rate or any amount payable
      to a Lender shall, in the absence of manifest error, be conclusive and
      binding on all parties.

            

    

     

    
      	
              12  

            	
              The
      Agent may from time to time, after consultation with the Borrowers and the
      Lenders, determine and notify to all parties any amendments which are
      required to be made to this Schedule in order to comply
      with  any change in law, regulation or any requirements from
      time to time imposed by the Financial Services Authority or the European
      Central Bank (or, in any case, any other authority which replaces all or
      any of its functions) and any such determination shall, in the absence of
      manifest error, be conclusive and binding on all
  parties.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

    SCHEDULE
7

     

    

     

    CLASSIFICATION
OF SHIPS

     

    

    

    
      	
              Ship

            	
              Classification

            
	
              Ship
      A

            	
              LR
      & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck
      and on Upper Deck and all hatch covers, & LMC, SCM. & IWS,
      UMS

            
	
              Ship
      B

            	
              LR
      & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck
      and on Upper Deck and all hatch covers, & LMC, SCM. & IWS,
      UMS

            
	
              Ship
      C

            	
              LR
      & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck
      and on Upper Deck and all hatch covers, & LMC, SCM. & IWS,
      UMS

            
	
              Ship
      D

            	
              LR
      & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck
      and on Upper Deck and all hatch covers, & LMC, SCM. & IWS,
      UMS

            
	
              Ship
      E

            	
              LR
      & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck
      and on Upper Deck and all hatch covers, & LMC, SCM. & IWS,
      UMS

            
	
              Ship
      F

            	
              LR
      & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck
      and on Upper Deck and all hatch covers, & LMC, SCM. & IWS,
      UMS

            

    

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
SCHEDULE
8

     

    

     

    FINANCIAL
COVENANTS

     

     

    Pursuant
to Clause 11.18 of this Agreement the Borrowers 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
      Borrowers 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 8 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 Borrowers or
      any of their Subsidiaries, in money market investment programs registered
      under the Investment Company Act of 1940, which are administered by
      financial institutions that have the highest rating obtainable from either
      Moody’s or S&P, and the portfolios of which are limited solely to
      Investments of the character, quality and maturity described in Clauses
      (a), (b) and (c) of this
definition;

            

    

     

    “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 noncash
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:

     

    
      	
              (e)             

            	
              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;

            

    

     

    
      	
              (f)             

            	
              all
      purchase money Indebtedness;

            

    

     

    
      	
              (g)             

            	
              all
      direct obligations arising under letters of credit (including standby and
      commercial), bankers’ acceptances, bank guaranties, surety bonds and
      similar instruments;

            

    

     

    
      	
              (h)             

            	
              all
      obligations in respect of the deferred purchase price of property or
      services (other than trade accounts payable in the ordinary course of
      business);

            

    

     

    
      	
              (i)             

            	
              all
      Attributable Indebtedness;

            

    

     

    
      	
              (j)             

            	
              without
      duplication, all Guarantees with respect to outstanding Indebtedness of
      the types specified in Clauses (a) through (e) above of Persons other than
      the Borrowers or any Subsidiary;
and

            

    

     

     

    
      	
              (k)             

            	
              all
      Indebtedness of the types referred to in Clauses (a) through (f) above of
      any partnership or joint venture (other than a joint venture that is
      itself a corporation or limited liability company) in which a Borrower or
      a Subsidiary is a general partner or joint venturer, unless such
      Indebtedness is expressly made non-recourse to such Borrower or such
      Subsidiary;

            

    

     

    “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),
noncash 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
bulkcarrier 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
9

     

    

     

    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 11.18(i)
of the loan agreement dated as of 29 March 2007 (the “Loan Agreement”) and entered
into between (i) Argyle Maritime Corp., Caton Maritime Corp., Dorchester
Maritime Corp., Longwoods Maritime Corp., McHenry Maritime Corp. and Sunswyck
Maritime Corp., as joint and several Borrowers, (ii) the banks and financial
institutions listed in Schedule 1 as Lenders, (iii) The Royal Bank of Scotland
plc as Mandated Lead Arranger, Bookrunner, Agent, Security Trustee and Swap
Bank, relating to a loan facility of US$150,000,000.  Words and
expressions defined in the Loan 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].  The Borrowers are in compliance with
      Clause 15.1 of the Loan
      Agreement.

            

    

     

    [If not,
specify this and what is proposed as regards Clause 15.2.]

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    APPENDIX
2

    

    FORM
OF CORPORATE GUARANTEE SUPPLEMENTS

    

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    APPENDIX
3

    

    FORM
OF MORTGAGE ADDENDUM

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

     APPENDIX
4

    

    FORM
OF SHARES SECURITY DEED

    

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    APPENDIX
5

    

    FORM
OF RESTRICTED EQUITY DEPOSIT ACCOUNT SECURITY DEED

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