Document:

ex-10_1.htm

    TBS INTERNATIONAL LIMITED
& SUBSIDIARIES                       EXHIBIT
10.1

     

    

    

    Date
March 29, 2007

    

    

    

    

    

    

    ARGYLE MARITIME
CORP.

    CATON MARITIME
CORP.

    DORCHESTER MARITIME
CORP.

    LONGWOODS MARITIME
CORP.

    McHENRY MARITIME
CORP.

    SUNSWYCK MARITIME
CORP.

    as Joint
and Several Obligors

    

    

    

    -and-

    

    

    

    THE ROYAL BANK OF SCOTLAND
PLC

    as
Issuer

    

    

    

    

    

    

    ___________________________________________

    

     

    GUARANTEE FACILITY
AGREEMENT

    ___________________________________________

    

    relating
to

    a
US$84,000,000 guarantee facility

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    INDEX

    

    

    ClausePage

     

    1 INTERPRETATION

     

    2 GUARANTEE
FACILITY

     

    3 REDUCTION OF
GUARANTEES

     

    4 SETTLEMENT OF
GUARANTEES

     

    5 INDEMNITY OF THE
OBLIGORS

     

    6 DEFAULT
INTEREST

     

    7 CONDITIONS
PRECEDENT

     

    8 REPRESENTATIONS AND
WARRANTIES

     

    9 GENERAL UNDERTAKINGS AND
FINANCIAL COVENANTS

     

    10 CORPORATE
UNDERTAKINGS

     

    11 PAYMENTS AND
CALCULATIONS

     

    12 APPLICATION OF
RECEIPTS

     

    13 EVENTS OF
DEFAULT

     

    14 FEES AND
EXPENSES

     

    15 INDEMNITIES

     

    16 NO SET-OFF OR TAX
DEDUCTION

     

    17 ILLEGALITY,
ETC

     

    18 INCREASED
COSTS

     

    19 SET-OFF

     

    20 TRANSFERS AND CHANGES IN
ISSUING OFFICE

     

    21 VARIATIONS AND
WAIVERS

     

    22 NOTICES

     

    23 JOINT AND SEVERAL
LIABILITY

     

    24 SUPPLEMENTAL

     

    25 LAW AND
JURISDICTION

     

    SCHEDULE 1 GUARANTEE ISSUE
REQUEST 

     

    SCHEDULE 2 CONDITION
PRECEDENT DOCUMENTS 

     

    SCHEDULE 3 FINANCIAL
COVENANTS 

     

    SCHEDULE 4 FORM OF
COMPLIANCE CERTIFICATE 

     

    EXECUTION
PAGE 

     

    APPENDIX A FORM OF DELIVERY
SECURITY ASSIGNMENT 

     

    APPENDIX B FORM OF CORPORATE
GUARANTEE 

     

    APPENDIX C FORM OF
GUARANTEE 

     

    APPENDIX D FORM OF
INTERCREDITOR AGREEMENT 

    
 

    
      
        
          Watson, Farley &
Williams

          London

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    THIS AGREEMENT is made
on March 29, 2007

    

    BETWEEN

    

    
      	(1)  	
              ARGYLE MARITIME
      CORP.,
      CATON MARITIME
      CORP.,
      DORCHESTER MARITIME
      CORP.,
      LONGWOODS MARITIME
      CORP.,
      McHENRY MARITIME CORP.
      and
      SUNSWYCK MARITIME
      CORP.,
      as Joint and Several Obligors; and

            

    

     

    
      	(2)  	
              THE ROYAL BANK OF SCOTLAND
      PLC,
      as Issuer

            

    

     

    BACKGROUND

    

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

    

    IT IS AGREED as
follows:

    

    
      	1  	
              INTERPRETATION

            

    

     

    
      	1.1  	
              Definitions.
      Subject to Clause 1.5, in this
Agreement:

            

    

     

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

    

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

    

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

            

    

     

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

            

    

     

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

    

    “Bank of America
Facilities” means
the credit facilities made available to Albermarle Maritime Corp and others
pursuant to the credit agreement dated 31 July 2006 made between Albermarle
Maritime Corp, the Corporate Guarantor, Bank of America N.A. and
others;

     

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

     

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

    

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

     

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

     

    “Finance Documents”
means:

    

    
      	(a)  	
              this
      Agreement;

            

    

     

    
      	(b)  	
              the
      Corporate Guarantee;

            

    

     

    
      	(c)  	
              the
      Pre-delivery Security Assignments;
and

            

    

     

    
      	(d)  	
              the
      Fee Letter;

            

    

     

    
      	(e)  	
              the
      Intercreditor Agreement; and

            

    

     

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

            

    

     

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

    

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

    

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

    

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

    

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

    

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

    

    “Issuer” means
The Royal Bank of Scotland plc, acting through the Shipping Business Centre,
5-10 Great Tower Street, London EC3R 3HX (or through another branch or office
notified to the Issuer under Clause 20.6) or its direct or indirect successor or
assign;

    

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

    

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

            

    

     

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

            

    

     

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

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    

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

    

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

    

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

    

    “Permitted Security
Interests”
means:

    

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

            

    

     

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

            

    

     

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

            

    

     

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

    

    
      	(a)  	
              England
      and Wales;

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

    

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

     

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

    

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

     

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

     

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

    

    “Security Interest”
means:

    

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

            

    

     

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

            

    

     

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

            

    

     

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

    

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

    

    
      	(a)  	
              all
      amounts which have become due for payment by the Obligors or any Security
      Party under the Finance Documents have been
  paid;

            

    

     

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

            

    

     

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

            

    

     

    
      	(d)  	
              the
      Issuer does not consider that there is a significant risk that any payment
      or transaction under a Finance Document would be set aside, or would have
      to be reversed or adjusted, in any present or possible future bankruptcy
      of an Obligor or a Security Party or in any present or possible future
      proceeding relating to a Finance Document or any asset covered (or
      previously covered) by a Security Interest created by a Finance Document;
      and

            

    

     

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

            

    

     

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

    

    “Seller” means
together China Communications and the Builder;

    

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

    

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

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Termination Date”
means:

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	1.2  	
              Construction of certain
      terms. In
      this Agreement:

            

    

     

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    
      	1.3  	
              Meaning of
      “month”. A
      period of one or more “months”
      ends on the day in the relevant calendar month numerically corresponding
      to the day of the calendar month on which the period started
      (“the numerically corresponding
      day”),
      but:

            

    

     

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

            

    

     

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

            

    

     

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

    

    
      	1.4  	
              Meaning of
      “subsidiary”. A
      company (S) is a subsidiary of another company (P)
  if:

            

    

     

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

            

    

     

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

            

    

     

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

     

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

            

    

     

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

    

    
      	1.5  	
              General
      Interpretation.
      In this Agreement:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	(e)  	
              Clauses
      1.1 to 1.5 apply unless the contrary intention
  appears.

            

    

     

    
      	1.6  	
              Headings. In
      interpreting a Finance Document or any provision of a Finance Document,
      all clause, sub-clause and other headings in that and any other Finance
      Document shall be entirely
disregarded.

            

    

     

    
      	2  	
              GUARANTEE
      FACILITY

            

    

     

    
      	2.1  	
              Availability of guarantee
      facility.
      Subject to the other provisions of this Agreement, the Issuer shall make
      available to the Obligors a guarantee facility in an amount of $84,000,000
      which shall be made available by the following
  Guarantees:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	2.2  	
              Request for issue of
      Guarantees.
      Subject to the following conditions, an Obligor may make a request for a
      Guarantee to be issued by ensuring that the Issuer receives a completed
      Guarantee Issue Request not later than 11 a.m. (London time) 3 Business
      Days prior to the intended Guarantee Issue
Date.

            

    

     

    
      	2.3  	
              Availability.
      The conditions referred to in Clause 2.2 are
  that:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	2.4  	
              Cancellation of guarantee
      facility.
      The Obligor may cancel the Available Commitment in whole or in part
      subject to the condition that the Issuer has received from the Obligor at
      least 7 Business Days’ prior written notice specifying the amount to be
      cancelled and the date on which the cancellation is to take effect. The
      Commitment shall be reduced permanently by the amount of the Available
      Commitment so cancelled.

            

    

     

    
      	2.5  	
              Change of beneficial ownership
      of Obligors or the Corporate Guarantor. If
      without the consent of the Issuer a change occurs after the date of this
      Agreement in the ultimate beneficial ownership of any shares in any
      Obligor or the Corporate Guarantor or in the ultimate voting rights
      attaching to any of those shares from that disclosed to the Issuer
      pursuant to Schedule 2 Part A 10:

            

    

     

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

            

    

     

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

            

    

     

    
      	3  	
              REDUCTION OF
      GUARANTEES

            

    

     

    
      	3.1  	
              Reduction of Outstanding
      Guarantee Amounts.
      The Outstanding Guarantee Amount of a Guarantee shall not be treated as
      reduced for the purposes of this Agreement unless and
    until:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	4  	
              SETTLEMENT OF
      GUARANTEES

            

    

     

    
      	4.1  	
              Notification of Settlement
      Amounts.
      The Issuer shall, immediately after receiving a demand from, or after
      being notified by, the Seller that it is required to make payment under a
      Guarantee, notify the relevant Obligor that such payment is due and of the
      Settlement Amount and the Settlement
Date.

            

    

     

    
      	4.2  	
              Relevant Obligor’s settlement
      obligation.
      The relevant Obligor shall: 

            

    

     

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

            

    

     

    
      	(b)  	
              pay
      to the Issuer the Settlement Amount in Dollars on the Settlement
      Date.

            

    

     

    
      	4.3  	
              Relevant Obligor’s failure to
      reimburse. If
      the relevant Obligor fails to reimburse the Settlement Amount to the
      Issuer on the Settlement Date pursuant to Clause 4.2, it shall pay to the
      Issuer interest on the Settlement Amount from the Settlement Date to the
      date the Issuer is reimbursed by the relevant Obligor at the rate
      described in Clause 6 such interest to be compounded in accordance with
      Clause 6.6 and payable on demand.

            

    

     

    
      	5  	
              INDEMNITY OF THE
      OBLIGORS

            

    

     

    
      	5.1  	
              Obligors’ undertaking to
      indemnify.
      Each Obligor agrees that it shall:

            

    

     

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

            

    

     

    
      	(i)  	
              demanded
      from the Issuer under a Guarantee;
or

            

    

     

    
      	(ii)  	
              paid
      by the Issuer to the Seller under Clause
5.8;

            

    

     

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

    

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

            

    

     

    
      	5.2  	
              Guarantee
      payments.
      Each Obligor:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	5.3  	
              Continuing
      indemnities.
      The liabilities and obligations of the Obligors under the indemnities set
      out in Clause 5.1 shall remain in force as a continuing security
      until:

            

    

     

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

            

    

     

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

            

    

     

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

    

    
      	5.4  	
              Discharges.
      Any such discharge or release referred to in Clause 5.3, and any
      composition or arrangement which the Obligors may effect with the Issuer,
      shall be deemed to be made subject to the condition that it will be void
      if any payment or security which the Issuer, may previously have received
      or may thereafter receive is set aside under any applicable law or proves
      to have been for any reason invalid.  

            

    

     

    
      	5.5  	
              No
      impairment.
      Without limiting the generality of Clauses 5.3 and 5.4, the Obligors shall
      neither be discharged from any of their liabilities or obligations under
      Clause 5.1 by, nor have any claim against the Issuer in respect of:
      

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	(e)  	
              the
      Seller and/or the Issuer and/or the Obligors:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	5.6  	
              Provision of cash collateral
      security.
      Forthwith upon, or at any time following the occurrence of an Event of
      Default which is continuing the Issuer shall be entitled (but not obliged)
      to demand payment by the Obligors of, and the Obligors forthwith upon such
      demand shall pay to the Issuer for credit to an account of the Obligors
      with the Issuer (subject to such Security Interest as the Issuer may
      reasonably specify or require), such amount as shall be the aggregate
      of:

            

    

     

    

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

            

    

     

    
      	(ii)  	
              the
      Outstandings.

            

    

     

    
      	5.7  	
              Application of cash collateral
      security.
      Subject always to the overriding provisions of Clause 15, moneys received
      by the Issuer pursuant to Clause 5.6 shall be applied (as between the
      Obligors on the one hand and the Issuer on the other) in the following
      manner:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	5.8  	
              Negotiation with the
      Seller.
      Each Obligor: 

            

    

     

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

            

    

     

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

            

    

     

    
      	6  	
              DEFAULT
      INTEREST

            

    

     

    
      	6.1  	
              Payment of default interest on
      overdue amounts.
      The Obligors shall pay interest in accordance with the following
      provisions of this Clause 6 on any amount payable by the Obligors under
      any Finance Document which the Issuer does not receive on or before the
      relevant date, that is:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	6.2  	
              Default rate of
      interest.
      Interest shall accrue on an overdue amount from (and including) the
      relevant date until the date of actual payment (as well after as before
      judgment) at the rate per annum determined by the Issuer to be 1.5 per
      cent. above, the rate set out in Clause
6.3.

            

    

     

    
      	6.3  	
              Calculation of default rate of
      interest.
      The rate referred to in Clause 6.2 is, in respect of successive periods of
      any duration (including at call) up to 3 months which the Issuer may
      select from time to time:

            

    

     

    
      	(a)  	
              LIBOR;
      or

            

    

     

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

            

    

     

    
      	6.4  	
              Notification of interest
      periods and default rates.
      The Issuer shall promptly notify the Obligors of each interest rate
      determined by it under Clause 6.3 and of each period selected by it for
      the purposes of that Clause; but this shall not be taken to imply that the
      Obligors are liable to pay such interest only with effect from the date of
      the Issuer’s notification.

            

    

     

    
      	6.5  	
              Payment of accrued default
      interest.
      Subject to the other provisions of this Agreement, any interest due under
      this Clause shall be paid on the last day of the period by reference to
      which it was determined.

            

    

     

    
      	6.6  	
              Compounding of default
      interest.
      Any such interest which is not paid at the end of the period by reference
      to which it was determined shall thereupon be
  compounded.

            

    

     

    
      	7  	
              CONDITIONS
      PRECEDENT

            

    

     

    
      	7.1  	
              Documents, fees and no
      default.
      The Issuer’s obligation to issue any Guarantee is subject to the following
      conditions precedent: 

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	7.2  	
              Waivers of conditions
      precedent. If
      the Issuer, at its discretion, permits any Guarantee to be issued before
      certain of the conditions referred to in Clause 7.1 are satisfied, the
      Obligor shall ensure that those conditions are satisfied within 14
      Business days after the Guarantee Issue Date (or such longer period as the
      Issuer may specify).

            

    

     

    
      	8  	
              REPRESENTATIONS AND
      WARRANTIES

            

    

     

    
      	8.1  	
              General.
      Each Obligor represents and warrants to the Issuer as
    follows.

            

    

     

    
      	8.2  	
              Status. It
      is duly incorporated and validly existing and in good standing under the
      laws of the Marshall Islands.

            

    

     

    
      	8.3  	
              Share capital and
      ownership. It
      has an authorised share capital of 500 registered and/or bearer shares
      without par value, all of which shares have been issued, and the legal
      title and beneficial ownership of all those shares is held, free of any
      Security Interest or other claim, by Westbrook Holdings
      Limited.

            

    

     

    
      	8.4  	
              Corporate
      power. It
      has the corporate capacity, and has taken all corporate action and
      obtained all consents necessary for
it:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	8.5  	
              Consents in
      force.
      All the consents referred to in Clause 8.4 remain in force and nothing to
      the best of the Obligors’ knowledge and belief has occurred which makes
      any of them liable to revocation.

            

    

     

    
      	8.6  	
              Legal validity; effective
      Security Interests.
      The Finance Documents to which it is a party, do now or, as the case may
      be, will, upon execution and delivery (and, where applicable, registration
      as provided for in the Finance Documents):

            

    

     

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

            

    

     

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

            

    

     

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

    

    
      	8.7  	
              No third party Security
      Interests.
      Without limiting the generality of Clause 8.6, at the time of the
      execution and delivery of each Finance
Document:

            

    

     

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

            

    

     

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

            

    

     

    
      	8.8  	
              No
      conflicts.
      The execution by that Obligor of each Finance Document to which it is a
      party and its compliance with each Finance Document to which it is a party
      will not involve or lead to a contravention
of:

            

    

     

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

            

    

     

    
      	(b)  	
              the
      constitutional documents of that Obligor;
or

            

    

     

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

            

    

     

    
      	8.9  	
              No withholding
      taxes. No
      tax is imposed in any jurisdiction in which that Obligor is ordinarily
      resident for tax by way of withholding or deduction or otherwise on any
      payment to be made under this
Agreement.

            

    

     

    
      	8.10  	
              No default. No
      Event of Default or Potential Event of Default has occurred and is
      continuing.

            

    

     

    
      	8.11  	
              Information.
      All information which has been provided in writing by or on behalf of the
      Obligors or any Security Party to the Issuer in connection with any
      Finance Document was to the best of the Obligors’ knowledge and belief
      true and not misleading as at the time it was given; all audited and
      unaudited accounts which have been so provided satisfied the requirements
      of Clause 9.6; and there has been no material adverse change in the
      financial position or state of affairs of the Obligors from that disclosed
      in the latest of those accounts.

            

    

     

    
      	8.12  	
              No
      litigation. No
      legal or administrative action involving the Obligors has been commenced
      or taken or, to that Obligor’s knowledge, is likely to be commenced or
      taken which, in either case, would be likely to have a material adverse
      effect on the Obligors’ financial position or
    profitability.

            

    

     

    
      	8.13  	
              Validity and completeness of
      Shipbuilding Contracts.
      Each Shipbuilding Contract constitutes valid, binding and enforceable
      obligations of the Seller and the relevant Obligor respectively in
      accordance with its terms subject to any relevant insolvency laws
      affecting creditors’ rights generally
and:

            

    

     

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

            

    

     

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

            

    

     

    
      	8.14  	
              No rebates
      etc.
      There is no agreement or understanding to allow or pay any rebate,
      premium, commission, discount or other benefit or payment (howsoever
      described) to the Obligors, the Seller or a third party in connection with
      the purchase by the Obligors of the Ships, other than as disclosed to the
      Issuer in writing on or prior to the date of this
    Agreement.

            

    

     

    
      	8.15  	
              Compliance with certain
      undertakings. At
      the date of this Agreement, each Obligor is in compliance with Clause 9.12
      and (save as disclosed in writing to the Issuer) Clauses 9.3 and
      9.8.

            

    

     

    
      	8.16  	
              Taxes paid.
      Each Obligor has paid all taxes applicable to, or imposed on or in
      relation to it or its business.

            

    

     

    
      	8.17  	
              Conformity of Financial
      Covenants. The
      financial covenants set out in Schedule 3 conform to the financial
      covenants given by the Corporate Guarantor and its subsidiaries under the
      Bank of America Facilities.

            

    

     

    
      	9  	
              GENERAL
      UNDERTAKINGS AND FINANCIAL
      COVENANTS

            

    

     

    
      	9.1  	
              General.
      Each Obligor undertakes with the Issuer to comply with the following
      provisions of this Clause 9 at all times during the Security Period,
      except as the Issuer may otherwise
permit.

            

    

     

    
      	9.2  	
              No disposal of
      assets. 

            

    

     

    
      	(a)  	
              No
      Obligor will transfer or otherwise dispose
of:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	9.3  	
              No other liabilities or
      obligations to be incurred. No
      Obligor will incur any liability or obligation
  except:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	9.4  	
              Information provided to be
      accurate.
      All financial and other information which is provided in writing by or on
      behalf of each Obligor under or in connection with any Finance Document
      will to the best of that Obligor’s knowledge and belief be true and not
      misleading and will not omit any material fact or consideration which, if
      disclosed would reasonably be expected to adversely affect the decision of
      a person considering whether to enter into this
  Agreement.

            

    

     

    
      	9.5  	
              Provision of financial
      statements.
      Each Obligor will procure that there is sent to the
  Issuer:

            

    

     

    
      	(a)  	
              as
      soon as possible, but in no event later than 120 days after the end of
      each of the Corporate Guarantor’s financial years, the annual audited
      accounts of the Corporate Guarantor and its 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 financial years unaudited
      accounts of the Corporate Guarantor and its consolidated subsidiaries
      which are certified as to their correctness by its chief financial
      officer.

            

    

     

    
      	9.6  	
              Form of financial
      statements.
      All accounts (audited and unaudited) delivered under Clause 9.5
      will:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	9.7  	
              Shareholder and creditor
      notices.
      Each Obligor will send the Issuer, at the same time as they are
      despatched, copies of all communications which are despatched to its
      shareholders or creditors or any class of
them.

            

    

     

    
      	9.8  	
              Consents.
      Each Obligor will maintain in force and promptly obtain or renew, and will
      promptly send certified copies to the Issuer of, all consents
      required:

            

    

     

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

            

    

     

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

            

    

     

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

    

    
      	9.9  	
              Maintenance of Security
      Interests.
      Each Obligor will:

            

    

     

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

            

    

     

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

            

    

     

    
      	9.10  	
              Notification of
      litigation.
      Each Obligor will provide the Issuer with details of any legal or
      administrative action involving any Obligor or any Security Party promptly
      upon becoming aware of the same where such legal or administrative action
      might, if adversely determined, have a material adverse effect on the
      ability of that Obligor to perform its obligations under any Finance
      Document to which it is a party 

            

    

     

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

            

    

     

    
      	9.12  	
              Chief Executive
      Office.
      Each Obligor will maintain its chief executive office, and keep its
      corporate documents and records, at Suite 306, Commerce Building, One
      Chancery Lane, Hamilton, MH12,
Bermuda.

            

    

     

    
      	9.13  	
              Confirmation of no
      default.
      Each Obligor will, within 2 Business Days after service by the Issuer of a
      written request, serve on the Issuer a notice which is signed by the
      representative director of such Obligor and
  which:

            

    

     

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

            

    

     

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

            

    

     

    
      	9.14  	
              Notification of
      default.
      Each Obligor will notify the Issuer as soon as it becomes aware
      of:

            

    

     

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

            

    

     

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

            

    

     

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

    

    
      	9.15  	
              Provision of further
      information.
      Each Obligor will, as soon as practicable after receiving the request,
      provide the Issuer with any additional financial or other information
      relating:

            

    

     

    
      	(a)  	
              to
      it and its Shipbuilding Contract;
or

            

    

     

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

            

    

     

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

    

    
      	9.16  	
              Financial
      Covenants.

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	9.17  	
              Dividends.
      The Obligors shall procure that the Corporate Guarantor does not pay any
      dividend or make any other form of distribution except where the following
      conditions are met:

            

    

     

    
      	(a)  	
              no
      Event of Default has occurred and is continuing at the time that the
      proposed dividend or distribution is to be
made;

            

    

     

    
      	(b)  	
              the
      aggregate amount of all dividends or distributions in respect of any
      financial year of the Corporate Guarantor shall not exceed 50% of the
      Consolidated Net Income for such financial
year;

            

    

     

    
      	(c)  	
              prior
      to the making of the proposed dividend or distribution the Obligors have
      provided to the Issuer a certificate executed by the chief financial
      officer of the Corporate Guarantor confirming that the Corporate Guarantor
      is in compliance with the minimum Consolidated Fixed Charge Coverage Ratio
      as set out in Schedule 3 for the Measurement Period immediately preceding
      the date of the proposed dividend or
  distribution.

            

    

     

    For the
purpose of this Clause 9.17, “Consolidated Net Income”, “Consolidated Fixed
Charge Coverage Ratio” and “Measurement Period” each shall have the meaning
given to such term in Schedule 3.

     

    
      	10  	
              CORPORATE
      UNDERTAKINGS

            

    

     

    
      	10.1  	
              General.
      Each Obligor also undertakes with the Issuer to comply with the following
      provisions of this Clause 10 at all times during the Security Period
      except as the Issuer may otherwise
permit.

            

    

     

    
      	10.2  	
              Maintenance of
      status.
      Each Obligor will maintain its separate corporate existence and remain in
      good standing under the laws of the Marshall
  Islands.

            

    

     

    
      	10.3  	
              Negative
      undertakings. No
      Obligor will:

            

    

     

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

            

    

     

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

            

    

     

    
      	(c)  	
              provide
      any form of credit or financial assistance
to:

            

    

     

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

            

    

     

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

            

    

     

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

    

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

            

    

     

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

            

    

     

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

            

    

     

    
      	11  	
              PAYMENTS AND
      CALCULATIONS

            

    

     

    
      	11.1  	
              Currency and method of
      payments.
      All payments to be made by the Obligors to the Issuer under a Finance
      Document shall be made to the
Issuer:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	11.2  	
              Payment on non-Business
      Day. If
      any payment by the Obligors under a Finance Document would otherwise fall
      due on a day which is not a Business
Day:

            

    

     

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

            

    

     

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

            

    

     

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

    

    
      	11.3  	
              Basis for calculation of
      periodic payments.
      All interest and commitment fee and any other payments under any Finance
      Document which are of an annual or periodic nature shall accrue from day
      to day and shall be calculated on the basis of the actual number of days
      elapsed and a 360 day year.

            

    

     

    
      	11.4  	
              Issuer
      accounts.
      The Issuer shall maintain an account showing any and all sums owing to the
      Issuer from the Obligors and each Security Party under the Finance
      Documents and all payments in respect of those amounts made by the
      Obligors and any Security Party.

            

    

     

    
      	11.5  	
              Accounts prima facie
      evidence. If
      the account maintained under Clause 11.4 shows an amount to be owing by
      the Obligors or a Security Party to the Issuer, that account shall be
      prima facie evidence that that amount is owing to the
    Issuer.

            

    

     

    
      	12  	
              APPLICATION OF
      RECEIPTS

            

    

     

    
      	12.1  	
              Normal order of
      application.
      Except as any Finance Document may otherwise provide, any sums which are
      received or recovered by the Issuer under or by virtue of any Finance
      Document shall be applied:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    

    
      	12.2  	
              Variation of order of
      application.
      The Issuer may, by notice to the Obligors and the Security Parties,
      provide for a different manner of application from that set out in Clause
      12.1 either as regards a specified sum or sums or as regards sums in a
      specified category or categories.

            

    

     

    
      	12.3  	
              Notice of variation of order of
      application.
      The Issuer may give notices under Clause 12.2 from time to time; and such
      a notice may be stated to apply not only to sums which may be received or
      recovered in the future, but also to any sum which has been received or
      recovered on or after the third Business Day before the date on which the
      notice is served. 

            

    

     

    
      	12.4  	
              Appropriation rights
      overridden.
      This Clause 12 and any notice which the Issuer gives under Clause 12.2
      shall override any right of appropriation possessed, and any appropriation
      made, by the Obligors or any Security
Party.

            

    

     

    
      	13  	
              EVENTS OF
      DEFAULT

            

    

     

    
      	13.1  	
              Events of
      Default. An
      Event of Default
      occurs if:

            

    

     

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

            

    

     

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

            

    

     

    
      	(c)  	
              any
      breach occurs of Clause 9.16(a); or

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	(i)  	
              it
      becomes unlawful in any Pertinent Jurisdiction or
    impossible:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	13.2  	
              Actions following an Event of
      Default.
      On, or at any time after, the occurrence of an Event of Default and while
      the Event of Default is continuing the Issuer
      may:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	13.3  	
              Termination of
      obligations. On
      the service of a notice under Clause 13.2(a), all the obligations of the
      Issuer to the Obligors under this Agreement shall terminate and the amount
      specified in Clause 5.6 shall become immediately due and payable or, as
      the case may be, payable on demand.

            

    

     

    
      	13.4  	
              Acceleration of
      liabilities. On
      the service of a notice under Clause 13.2(b), all amounts accrued or owing
      from the Obligors or any Security Party under this Agreement and every
      other Finance Document shall become immediately due and payable or, as the
      case may be, payable on demand.

            

    

     

    
      	13.5  	
              Multiple notices; action
      without notice.
      The Issuer may serve notices under Clauses 13.2(a) and (b) simultaneously
      or on different dates and it may take any action referred to in Clauses
      13.2 if no such notice is served or simultaneously with or at any time
      after the service of both or either of such
  notices.

            

    

     

    
      	13.6  	
              Exclusion of Issuer
      liability.
      Neither the Issuer nor any receiver or manager appointed by the Issuer,
      shall have any liability to
      the Obligors or a Security Party:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

    

    
      	13.7  	
              Relevant
      Persons. In
      this Clause 13 a “Relevant
      Person”
      means any Obligor and any Security
Party.

            

    

     

    
      	13.8  	
              Interpretation. In
      Clause 13.1(f) references to an event of default or a termination event
      include any event, howsoever described, which is similar to an event of
      default in a facility agreement or a termination event in a finance lease;
      and in Clause 13.1(g) “petition”
      includes an application.

            

    

     

    
      	14  	
              FEES AND
      EXPENSES

            

    

     

    
      	14.1  	
              Arrangement and commitment
      fees. The
      Obligors shall pay to the Issuer:

            

    

     

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

            

    

     

    
      	(b)  	
              quarterly
      in arrears during the period from (and including) the first Guarantee
      Issue Date to the date of cancellation or termination of the last
      Guarantee and on the last day of that period a commitment fee at the rate
      specified in the Fee Letter.

            

    

     

    
      	14.2  	
              Costs of negotiation,
      preparation etc.
      The Obligors shall pay to the Issuer on its demand the amount of all
      expenses incurred by the Issuer in connection with the negotiation,
      preparation, execution or registration of any Finance Document or any
      related document or with any transaction contemplated by a Finance
      Document or a related document.

            

    

     

    
      	14.3  	
              Costs of variation, amendments,
      enforcement etc.
      The Obligors shall pay to the Issuer, on the Issuer’s demand, the amount
      of all expenses incurred by the Issuer (in the case of paragraphs (a) and
      (b) such expenses to be reasonably incurred) in connection with:
      

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

    

    
      	14.4  	
              Documentary
      taxes.
      The Obligors shall promptly pay any tax payable on or by reference to any
      Finance Document, and shall, on the Issuer’s demand, fully indemnify the
      Issuer against any claims, expenses, liabilities and losses resulting from
      any failure or delay by the Obligors to pay such a
  tax.

            

    

     

    
      	14.5  	
              Certification of
      amounts. A
      notice which is signed by 2 officers of the Issuer, which states that a
      specified amount, or aggregate amount, is due to the Issuer under this
      Clause 14 and which indicates (without necessarily specifying a detailed
      breakdown) the matters in respect of which the amount, or aggregate
      amount, is due shall (save in the case of manifest error) be prima facie
      evidence that the amount, or aggregate amount, is
  due.

            

    

     

    
      	15  	
              INDEMNITIES

            

    

     

    
      	15.1  	
              Indemnities regarding issue of
      Guarantees.
      Without prejudice to the Obligors’ indemnity contained in Clause 5, the
      Obligors shall fully indemnify the Issuer on its demand in respect of all
      claims, expenses, liabilities and losses which are made or brought against
      or incurred by the Issuer, or which the Issuer reasonably and with due
      diligence estimates that it will incur, as a result of or in connection
      with:

            

    

     

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

            

    

     

    
      	(b)  	
              any
      failure (for whatever reason) by the Obligors to make payment of any
      amount due under a Finance Document on the due date or, if so payable, on
      demand (after giving credit for any default interest paid by the Obligors
      on the amount concerned under Clause
6);

            

    

     

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

            

    

     

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

            

    

    

    
      	15.2  	
              Breakage
      costs.
      Without limiting its generality, Clause 15.1 covers any claim, expense,
      liability or loss, including a loss of a prospective profit, incurred by
      the Issuer in liquidating or employing deposits from third parties
      acquired or arranged to fund or maintain any overdue
    amount.

            

    

     

    
      	15.3  	
              Miscellaneous
      indemnities.
      The Obligors shall fully indemnify the Issuer on its demand in respect of
      all claims, expenses, liabilities and losses which may be made or brought
      against or incurred by the Issuer, in any country, as a result of or in
      connection with any action taken, or omitted or neglected to be taken,
      under or in connection with any Finance Document by the Issuer or by any
      receiver appointed under a Finance Document other than claims, expenses,
      liabilities and losses which are shown to have been directly and mainly
      caused by the dishonesty or wilful misconduct or reckless action with
      knowledge of the probable consequences of the officers or employees of the
      Issuer.

            

    

     

    
      	15.4  	
              Currency
      indemnity. If
      any sum due from the Obligors or any Security Party to the Issuer under a
      Finance Document or under any order or judgment relating to a Finance
      Document has to be converted from the currency in which the Finance
      Document provided for the sum to be paid (the “Contractual
      Currency”)
      into another currency (the “Payment
      Currency”)
      for the purpose of:

            

    

     

    
      	(a)  	
              making
      or lodging any claim or proof against the Obligors or any Security Party,
      whether in its liquidation, any arrangement involving it or otherwise;
      or

            

    

     

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

            

    

     

    
      	(c)  	
              enforcing
      any such order or judgment;

            

    

     

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

            

    

    

    
      	 	
              In
      this Clause 15.4, the “available rate of
      exchange”
      means the rate at which the Issuer is able at the opening of business
      (London time) on the Business Day after it receives the sum concerned to
      purchase the Contractual Currency with the Payment
    Currency.

            

    

    

    
      	 	
              This
      Clause 15.4 creates a separate liability of the Obligors which is distinct
      from their other liabilities under the Finance Documents and which shall
      not be merged in any judgment or order relating to those other
      liabilities.

            

    

    

    
      	15.5  	
              Certification of
      amounts. A
      notice which is signed by 2 officers of the Issuer, which states that a
      specified amount, or aggregate amount, is due to the Issuer under this
      Clause 15 and which indicates (without necessarily specifying a detailed
      breakdown) the matters in respect of which the amount, or aggregate
      amount, is due shall (save in the case of manifest error) be prima facie
      evidence that the amount, or aggregate amount, is
  due.

            

    

     

    
      	16  	
              NO SET-OFF OR TAX
      DEDUCTION

            

    

     

    
      	16.1  	
              No
      deductions.
      All amounts
      due from an Obligor under a Finance Document shall be
  paid:

            

    

     

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

            

    

     

    
      	(b)  	
              free
      and clear of any tax deduction except a tax deduction which that Obligor
      is required by law to make.

            

    

     

    
      	16.2  	
              Grossing-up for
      taxes. If
      an Obligor is required by law to make a tax deduction from any
      payment:

            

    

     

    
      	(a)  	
              that
      Obligor shall notify the Issuer as soon as it becomes aware of the
      requirement;

            

    

     

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

            

    

     

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

            

    

     

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

     

    
      	16.3  	
              Evidence of payment of
      taxes.
      Within one month after making any tax deduction, the Obligor concerned
      shall deliver to the Issuer documentary evidence satisfactory to the
      Issuer that the tax had been paid to the appropriate taxation
      authority.

            

    

     

    
      	16.4  	
              Tax credits. If
      the Issuer receives for its own account a repayment or obtains relief or
      credit in respect of tax paid or otherwise payable by it in respect of or
      calculated by reference to the increased payment made by an Obligor under
      Clause 16.2, it shall pay to the relevant Obligor a sum equal to the
      proportion of the repayment, relief or credit which it allocates to the
      amount due from that Obligor in respect of which that Obligor made the
      increased payment:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	16.5  	
              Exclusion of tax on overall net
      income. In
      this Clause 16 “tax
      deduction”
      means any deduction or withholding for or on account of any present or
      future tax except tax on the Issuer’s overall net
  income.

            

    

     

    
      	17  	
              ILLEGALITY,
      ETC

            

    

     

    
      	17.1  	
              Illegality.
      This Clause 17 applies if the Issuer notifies the Obligors that it has
      become, or will with effect from a specified
      date, become:

            

    

     

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

            

    

     

    
      	(b)  	
              contrary
      to, or inconsistent with, any
regulation,

            

    

     

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

            

    

    

    
      	17.2  	
              Notification and effect of
      illegality. On
      the Issuer notifying the Obligors under Clause
  17.1:

            

    

     

    
      	(a)  	
              the
      Commitment shall be cancelled;

            

    

     

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

            

    

     

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

            

    

     

    
      	17.3  	
              Mitigation.
      If circumstances arise which would result in a notification under Clause
      17.1 then, without in any way limiting the rights of the Issuer under
      Clause 17.2, the Issuer shall notify the Obligor and shall use reasonable
      endeavours to transfer its obligations and liabilities under this
      Agreement and the Guarantees and its rights under this Agreement and the
      Finance Documents to another office or financial institution not affected
      by the circumstances but the Issuer shall not be under any obligation to
      take any such action if, in its opinion, to do so would or
      might:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	18  	
              INCREASED
      COSTS

            

    

     

    
      	18.1  	
              Increased
      costs.
      This Clause 18
      applies if the Issuer notifies the Obligors that it considers that as a
      result of:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

    

    
      	18.2  	
              Meaning of “increased
      costs”. In
      this Clause 18, “increased
      costs”
      means:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

    

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

            

    

    

    
      	18.3  	
              Payment of increased
      costs.
      The Obligors shall pay to the Issuer, on its demand, the amounts which the
      Issuer from time to time notifies the Obligors that it has specified to be
      necessary to compensate it for the increased cost (provided that such
      demand is accompanied by a certificate from the Issuer confirming the
      amount of its increased cost and including a calculation
      thereof).

            

    

     

    
      	18.4  	
              Notice of
      cancellation. If
      the Obligors are not willing to continue to compensate the Issuer for the
      increased cost under Clause 18.3, the Obligors may give the Issuer not
      less than 14 days’ notice of its intention to cancel the Commitment and
      procure the cancellation of the
Outstandings.

            

    

     

    
      	18.5  	
              Cancellation. A
      notice under Clause 18.4 shall be irrevocable; and on the date specified
      in its notice of intended cancellation:
      

            

    

     

    
      	(a)  	
              the
      Commitment shall be cancelled; 

            

    

     

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

            

    

     

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

            

    

     

    
      	18.6  	
              Mitigation.
      If circumstances arise which would result in a notification under Clause
      18.1 then, without in any way limiting the rights of the Issuer under
      Clause 18.3, the Issuer shall notify the Obligor and shall use reasonable
      endeavours to transfer its obligations and liabilities under this
      Agreement and the Guarantees and its rights under this Agreement and the
      Finance Documents to another office or financial institution not affected
      by the circumstances but the Issuer shall not be under any obligation to
      take any such action if, in its opinion, to do so would or
      might:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	19  	
              SET-OFF

            

    

     

    
      	19.1  	
              Application of credit
      balances.
      The Issuer
      may without prior notice following the occurrence of an Event of Default
      which is continuing:

            

    

     

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

            

    

     

    
      	(b)  	
              for
      that purpose:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	19.2  	
              Existing rights
      unaffected.
      The Issuer shall not be obliged to exercise any of its rights under Clause
      19.1; and those rights shall be without prejudice and in addition to any
      right of set-off, combination of accounts, charge, lien or other right or
      remedy to which the Issuer is entitled (whether under the general law or
      any document).

            

    

     

    
      	19.3  	
              No Security
      Interest.
      This Clause 19 gives the Issuer a contractual right of set-off only, and
      does not create any equitable charge or other Security Interest over any
      credit balance of the Obligors.

            

    

     

    
      	20  	
              TRANSFERS AND CHANGES IN
      ISSUING OFFICE

            

    

     

    
      	20.1  	
              Transfer by
      Obligor. No
      Obligor
      may, without the consent of the Issuer transfer any of its rights,
      liabilities or obligations under any Finance
  Document.

            

    

     

    
      	20.2  	
              Transfer by
      Issuer.
      The Issuer may transfer all or any of the rights and interests which it
      has under or by virtue of the Finance Documents with the prior written
      consent of the Obligors, (not to be unreasonably withheld or delayed) or
      without the consent of the Obligors if an Event of Default or a Potential
      Event of Default has occurred and is
continuing.

            

    

     

    
      	20.3  	
              Rights of
      transferee. In
      respect of any breach of a warranty, undertaking, condition or other
      provision of a Finance Document, or any misrepresentation made in or in
      connection with a Finance Document, a transferee of any of the Issuer’s
      rights or interests under or by virtue of the Finance Documents shall be
      entitled to recover damages by reference to the loss incurred by that
      transferee as a result of the breach or misrepresentation irrespective of
      whether the Issuer would have incurred a loss of that kind or
      amount.

            

    

     

    
      	20.4  	
              Sub-participation; subrogation
      assignment.
      The Issuer may sub-participate all or any part of its rights and/or
      obligations under or in connection with the Finance Documents without the
      consent of, or any notice to, the Obligors; and the Issuer may assign, in
      any manner and terms agreed by it, all or any part of those rights to an
      insurer or surety who has become subrogated to
  them.

            

    

     

    
      	20.5  	
              Disclosure of
      information.
      The Issuer may disclose to a potential assignee or sub-participant any
      information which the Issuer has received in relation to the Obligors, any
      Security Party or their affairs under or in connection with any Finance
      Document.

            

    

     

    
      	20.6  	
              Change of issuing
      office.
      The Issuer may change its issuing office by giving notice to the Obligors
      and the change shall become
      effective on the later of:

            

    

     

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

            

    

     

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

            

    

     

    
      	20.7  	
              No additional
      costs. If
      the Issuer transfers or sub-participates any part of its rights and/or
      obligations under the Finance Documents or changes its issuing office
      pursuant to this Clause 20 and as a result of circumstances existing at
      the date the transfer, sub-participation or change occurs, the Obligors
      would be obliged to make an increased payment to the Issuer under any
      applicable Clauses of this Agreement then the Issuer is only entitled to
      recover payment under those Clauses to the same extent as the Issuer would
      have been if the transfer, sub-participation or change of issuing office
      had not occurred.

            

    

     

    
      	21  	
              VARIATIONS AND
      WAIVERS

            

    

     

    
      	21.1  	
              Variations, waivers etc. by
      Issuer. A
      document shall be effective to vary, waive, suspend or limit any provision
      of a Finance Document, or the Issuer’s rights or remedies under such a
      provision or the general law, only if the document is signed, or
      specifically agreed to by fax, by the Obligors and the Issuer and, if the
      document relates to a Finance Document to which a Security Party is party,
      by that Security Party.

            

    

     

    
      	21.2  	
              Exclusion of other or implied
      variations.
      Except for a document which satisfies the requirements of Clauses 21.1, no
      document, and no act, course of conduct, failure or neglect to act, delay
      or acquiescence on the part of the Issuer (or any person acting on its
      behalf) shall result in the Issuer (or any person acting on its behalf)
      being taken to have varied, waived, suspended or limited, or being
      precluded (permanently or temporarily) from enforcing, relying on or
      exercising:

            

    

     

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

            

    

     

    
      	(b)  	
              an
      Event of Default; or 

            

    

     

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

            

    

     

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

            

    

     

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

            

    

    

    
      	22  	
              NOTICES

            

    

     

    
      	22.1  	
              General.
      Unless otherwise specifically provided, any notice under or in connection
      with any Finance Document shall be given by letter or fax and references
      in the Finance Documents to written notices, notices in writing and
      notices signed by particular persons shall be construed
      accordingly.

            

    

     

    
      	22.2  	
              Addresses for
      communications. A
      notice
      shall be sent:

            

    

     

    
      	(a)  	
              to
      the Obligors:Suite
      306

            

    

    Commerce
Building 

    One
Chancery Lane

    Hamilton
HM12

    Bermuda

    

    Mailing
Address:

    P.O. Box
HM 2522

    Hamilton
HMGX

    Bermuda

    

    Attention:
   William
J. Carr

    Fax:   +1-441-295-4957

     

    With a copy
to:

    TBS
Shipping Services Inc.

    612 East
Grassy Sprain Road

    Yonkers,
NY 10710 U.S.A.

    Attention:
Ferdinand V. Lepere

    

    Fax :
   +1-914-961-5121

    

    

    
      	(b)  	
              to
      the Issuer:The
      Royal Bank of Scotland plc

            

    

    Shipping
Business Centre

    5-10
Great Tower Street

    London
EC3R 3HX

    

    Fax No:
 +44 207
283 7538

    

    Attention:
Ship Finance Portfolio Management

    

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

    

    
      	22.3  	
              Effective date of
      notices.
      Subject to Clauses
      22.4 and 22.5:

            

    

     

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

            

    

     

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

            

    

     

    
      	22.4  	
              Service outside business
      hours. However,
      if under Clause 22.3 a notice would be deemed to be
  served:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

    

    
      	22.5  	
              Illegible
      notices.
      Clauses 22.3 and 22.4 do not apply if the recipient of a notice notifies
      the sender within 1 hour after the time at which the notice would
      otherwise be deemed to be served that the notice has been received in a
      form which is illegible in a material
respect.

            

    

     

    
      	22.6  	
              Valid
      notices. A
      notice under or in connection with a Finance Document shall not be invalid
      by reason that its contents or the manner of serving it do not comply with
      the requirements of this Agreement or, where appropriate, any other
      Finance Document under which it is served
if:

            

    

     

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

            

    

     

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

            

    

     

    
      	22.7  	
              English
      language.
      Any notice under or in connection with a Finance Document shall be in
      English.

            

    

     

    
      	22.8  	
              Meaning of
      “notice”. In
      this Clause 22 “notice”
      includes any demand, consent, authorisation, approval, instruction, waiver
      or other communication. 

            

    

     

    
      	23  	
              JOINT AND SEVERAL
      LIABILITY

            

    

     

    
      	23.1  	
              General.
      All liabilities and obligations of the Obligors under this Agreement
      shall, whether expressed to be so or not, be several and, if and to the
      extent consistent with Clause 23.2,
joint.

            

    

     

    
      	23.2  	
              No impairment of Obligor's
      obligations.
      The liabilities and obligations of an Obligor shall not be impaired
      by:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	(d)  	
              any
      combination of the foregoing.

            

    

     

    
      	23.3  	
              Principal
      debtors.
      Each Obligor declares that it is and will, throughout the Security Period,
      remain a principal debtor for all amounts owing under this Agreement and
      the Finance Documents and no Obligor shall in any circumstances be
      construed to be a surety for the obligations of any other Obligor under
      this Agreement.

            

    

     

    
      	23.4  	
              Subordination.
      Subject to Clause 23.5, during the Security Period, no Obligor
      shall:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	(e)  	
              exercise
      or assert any combination of the
foregoing.

            

    

     

    
      	23.5  	
              Obligor's required
      action. If
      during the Security Period, the Issuer, by notice to a Obligor, requires
      it to take any action referred to in paragraphs (a) to (d) of Clause 23.4,
      in relation to any other Obligor, that Obligor shall take that action as
      soon as practicable after receiving the Issuer’s
  notice.

            

    

     

    
      	24  	
              SUPPLEMENTAL

            

    

     

    
      	24.1  	
              Rights cumulative,
      non-exclusive.
      The rights and remedies which the Finance Documents give to the Issuer
      are:

            

    

     

    
      	(a)  	
              cumulative;

            

    

     

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

            

    

     

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

            

    

     

    
      	24.2  	
              Severability of
      provisions. If
      any provision of a Finance Document is or subsequently becomes void,
      unenforceable or illegal, that shall not affect the validity,
      enforceability or legality of the other provisions of that Finance
      Document or of the provisions of any other Finance
    Document.

            

    

     

    
      	24.3  	
              Counterparts. A
      Finance Document may be executed in any number of
      counterparts.

            

    

     

    
      	24.4  	
              Third party
      rights. A
      person who is not a party to this Agreement has no right under the
      Contracts (of Third Parties) Act 1999 to enforce or to enjoy the benefit
      of any term of this Agreement.

            

    

     

    
      	25  	
              LAW AND
      JURISDICTION

            

    

     

    
      	25.1  	
              English law.
      This Agreement shall be governed by, and construed in accordance with,
      English law.

            

    

     

    
      	25.2  	
              Exclusive English
      jurisdiction.
      Subject to Clause 25.3, the courts of England shall have exclusive
      jurisdiction to settle any disputes which may arise out of or in
      connection with this Agreement.

            

    

     

    
      	25.3  	
              Choice of forum for the
      exclusive benefit of the Issuer.
      Clause 25.2 is for the exclusive benefit of the Issuer, which reserves
      the rights:

            

    

     

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

            

    

     

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

            

    

     

    No
Obligor shall commence any proceedings in any country other than England in
relation to a matter which arises out of or in connection with this
Agreement.

    

    
      	25.4  	
              Process
      agent.
      Each Obligor irrevocably appoints Curtis Davis Garrard LLP at its
      registered office for the time being, presently at Waterview House,
      Roundwood Avenue, Stockley Park, Uxbridge UB11 1AU, to act as its agent to
      receive and accept on its behalf any process or other document relating to
      any proceedings in the English courts which are connected with this
      Agreement.

            

    

     

    
      	25.5  	
              Issuer’s rights
      unaffected.
      Nothing in this Clause 25 shall exclude or limit any right which the
      Issuer may have (whether under the law of any country, an international
      convention or otherwise) with regard to the bringing of proceedings, the
      service of process, the recognition or enforcement of a judgment or any
      similar or related matter in any
jurisdiction.

            

    

     

    
      	25.6  	
              Meaning of
      “proceedings”. In
      this Clause 25, “proceedings”
      means proceedings of any kind, including an application for a provisional
      or protective measure.

            

    

     

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE 1

     

    

     

    GUARANTEE ISSUE
REQUEST

     

    

    

    To: The Royal
Bank of Scotland plc

    5-10
Great Tower Street

    London
EC3R 3HX

    

    Attention:
[l]

    

    

    [l]
2007

    

    

    GUARANTEE ISSUE
REQUEST

    

    
      	1  	
              We
      refer to the facility agreement (the “Facility
      Agreement”)
      dated [l]
      and made between Argyle Maritime Corp., Caton Maritime Corp., Dorchester
      Maritime Corp., Longwoods Maritime Corp., McHenry Maritime Corp. and
      Sunswyck Maritime Corp., as Obligors, and yourselves, as Issuer, in
      connection with a guarantee facility of up to US$84,000,000. Terms defined
      in the Facility Agreement have their defined meanings when used in this
      Guarantee Issue Request.

            

    

     

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

     

    
      	(a)  	
              Amount
      of the Guarantee: [l];

            

    

     

    
      	(b)  	
              Guarantee
      Issue Date: [l];

            

    

     

    
      	(c)  	
              Expiry
      date of the Guarantee: [l];

            

    

     

    
      	(d)  	
              Delivery
      Instructions: [l].

            

    

     

    3  We
represent and warrant that:

     

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

            

    

     

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

            

    

     

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

     

    

    [Name of
Signatory]

    

    For and
on behalf of

    [relevant
Obligor]

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE 2

     

    

     

    CONDITION PRECEDENT
DOCUMENTS

     

    PART A

    

    

    

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

    

    
      	1  	
              A
      duly executed original of each Finance Document (and of each document
      required to be delivered by each Finance Document) other than those
      referred to in Part B

            

    

     

    
      	2  	
              Copies
      of the certificate of incorporation and constitutional documents and
      evidence of the goodstanding (or its equivalent) of each Obligor and each
      Security Party.

            

    

     

    
      	3  	
              Copies
      of resolutions of the directors of each Obligor and each Security Party
      and copies of the resolutions of the shareholders of each Obligor, in each
      case authorising the execution of each of the Finance Documents to which
      that Obligor or that Security Party is a party and, in the case of each
      Obligor, authorising named officers to make Guarantee Issue Requests and
      ratifying execution of the Shipbuilding
  Contracts.

            

    

     

    
      	4  	
              The
      original of any power of attorney under which any Finance Document is
      executed on behalf of the Obligor or a Security
  Party.

            

    

     

    
      	5  	
              Copies
      of all consents which any Obligor or any Security Party requires to enter
      into, or make any payment under, any Finance Document or the Shipbuilding
      Contracts.

            

    

     

    
      	6  	
              Copies
      of the Shipbuilding Contracts of the Overall
  Agreement.

            

    

     

    
      	7  	
              Such
      documentary evidence as the Issuer and its legal advisers may require in
      relation to the due authorisation and execution by the Seller of the
      Shipbuilding Contracts of the Overall
Agreement.

            

    

     

    
      	8  	
              Documentary
      evidence that the agent for service of process named in Clause 28 has
      accepted its appointment.

            

    

     

    
      	9  	
              Favourable
      legal opinions from lawyers appointed by the Issuer on such matters
      concerning the laws of Bermuda and Marshall
  Islands.

            

    

     

    
      	10  	
              A
      written statement from a person acceptable to the Issuer confirming the
      identity of the ultimate beneficial owner or owners of the shares in the
      Obligors, the Corporate Guarantor and each other Security Party and of the
      identity of the person or persons controlling the voting rights attached
      to those shares.

            

    

     

    
      	11  	
              Such
      documents and evidence as the Issuer shall require in relation to each
      Security Party based on applicable law and regulations, and the Issuer’s
      owner internal guidelines, relating to the Issuer’s knowledge of its
      customers.

            

    

     

    
      	12  	
              Such
      documentary evidence as the Issuer and its legal advisers may require in
      relation to the due authorisation and execution by the parties to the
      Intercreditor Agreement (other than the
Issuer).

            

    

     

    
      	13  	
              If
      the Issuer so requires, in respect of any of the documents referred to
      above, a certified English translation prepared by a translator approved
      by the Issuer.

            

    

     

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

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    PART B

    

    

    

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

    

    
      	1  	
              the
      Pre-delivery Security Assignment in respect of the Shipbuilding Contract
      relating to such Ship (and of each document to be delivered thereunder);
      and

            

    

     

    
      	2  	
              favourable
      legal opinions from lawyers appointed by the Issuer on such matters
      concerning the laws of the Marshall Islands and
  China.

            

    

     

    
      	3  	
              a
      copy of the relevant Refund Guarantee together with such documentary
      evidence as the Agent, and its legal advisers may require in relation to
      the due authorisation and execution by the Refund Guarantor of that Refund
      Guarantee and that such Refund Guarantee has been registered with the
      State Administration of Foreign Exchange in
  China;

            

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE 3

     

    

     

    FINANCIAL
COVENANTS

     

    

    

    Pursuant
to Clause 9.16 the Obligors undertake to comply at all times with the following
financial covenants: 

    

    
      	(a)  	
              Minimum
      Consolidated Tangible Net Worth. Permit Consolidated Tangible Net Worth at
      any time to be less than the sum of (i) $170,000,000, plus (ii) an amount
      equal to 75% of the Consolidated Net Income earned in each full fiscal
      quarter ending after 30 June 2006 (with no deduction for a net loss in any
      such fiscal quarter) and (iii) an amount equal to 100% of the aggregate
      increases in Shareholders’ Equity of Holdings and its Subsidiaries after
      the date hereof by reason of the issuance and sale of Equity Interests of
      Holdings or any Subsidiary (other than issuances to Holdings or a
      wholly-owned Subsidiary), including upon any conversion of debt securities
      of Holdings into such Equity
Interests.

            

    

     

    
      	(b)  	
              Minimum
      Cash Liquidity. For each calendar month ending on or after the date
      hereof, Qualified Cash, plus Availability in an average daily amount
      during such calendar month not less than
  $10,000,000.

            

    

     

    
      	(c)  	
              Maximum
      Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio at any
      time during any period of four fiscal quarters of Holdings and its
      Subsidiaries to be greater than
2.50:1.00.

            

    

     

    
      	(d)  	
              Minimum
      Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed
      Charge Coverage Ratio as of the end of any fiscal quarter of Holdings to
      be less than the ratio set forth below opposite such fiscal
      quarter:

            

    

     

    
      	
               

              Trading 4 Financial
      Quarters

               

            	
               

              Minimum Consolidated
      

               

               

              Fixed Charge Coverage
      Ratio

               

            
	
               

              Closing
      Date through

               

               

              30
      September 2007

               

            	
               

              1.4
      : 1.0

               

            
	
               

              31
      December 2007 and 

               

               

              each
      fixed quarter thereafter

               

            	
               

              1.5
      : 1.0

               

            

    

    

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

    

    “Cash Equivalents” means
any of the following types of Investments, to the extent owned by the Obligors
or any of their Subsidiaries free and clear of all Security Interests (other
than 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 organized under
      the laws of the United States of America, any state thereof or the
      District of Columbia or is the principal banking subsidiary of a bank
      holding company organized under the laws of the United States of America,
      any state thereof or the District of Columbia, and is a member of the
      Federal Reserve System, (ii) issues (or the parent of which issues)
      commercial paper rated as described in Clause (c) of this definition and
      (iii) has combined capital and surplus of at least $1,000,000,000, in each
      case with maturities of not more than 90 days from the date of acquisition
      thereof;

            

    

     

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

            

    

     

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

            

    

     

    “Consolidated
EBITDA” means,
at any date of determination, an amount equal to Consolidated Net Income of
Holdings and its Subsidiaries on a consolidated basis for the most recently
completed Measurement Period, plus

     

    
      	(a)  	
              the
      following to the extent deducted in calculating such Consolidated Net
      Income (and without duplication): (i) Consolidated Interest Charges, (ii)
      the provision for Federal, state, local and foreign income taxes payable,
      (iii) depreciation and amortisation expense and (iv) prepayment of fees
      and write-offs of deferred financing fees in connection with the
      refinancing of the Existing Credit Agreements, (v) consulting fees in
      respect of the business re-engineering incurred in the second and third
      fiscal quarters of the 2006 fiscal year in an aggregate amount not to
      exceed $2,500,000 and (vi) net losses from the sales of Vessels as
      permitted under this Agreement (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);

            

    

     

    “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 scheduled to be made in respect of the Revolving Credit
      Facility;

            

    

     

    “Consolidated Funded
Indebtedness” means,
as of any date of determination, for Holdings and its Subsidiaries on a
consolidated basis, the sum of:

     

    
      	(a)  	
              the
      outstanding principal amount of all obligations, whether current or
      long-term, for borrowed money (including Obligations hereunder) and all
      obligations evidenced by bonds, debentures, notes, loan agreements or
      other similar instruments,

            

    

     

    
      	(b)  	
              all
      purchase money Indebtedness,

            

    

     

    
      	(c)  	
              all
      direct obligations arising under letters of credit (including standby and
      commercial), bankers’ acceptances, bank guaranties, surety bonds and
      similar instruments,

            

    

     

    
      	(d)  	
              all
      obligations in respect of the deferred purchase price of property or
      services (other than trade accounts payable in the ordinary course of
      business),

            

    

     

    
      	(e)  	
              all
      Attributable Indebtedness,

            

    

     

    
      	(f)  	
              without
      duplication, all Guarantees with respect to outstanding Indebtedness of
      the types specified in Clauses (a) through (e) above of Persons other than
      the Obligors or any Subsidiary, and

            

    

     

    
      	(g)  	
              all
      Indebtedness of the types referred to in Clauses (a) through (f) above of
      any partnership or joint venture (other than a joint venture that is
      itself a corporation or limited liability company) in which a Obligor or a
      Subsidiary is a general partner or joint venturer, unless such
      Indebtedness is expressly made non-recourse to such Obligor or such
      Subsidiary; provided, however, for purposes of calculating the
      “Consolidated Leverage Ratio”, Consolidated Funded Indebtedness shall not
      include any portion of Permitted New Vessel Construction Indebtedness in
      an aggregate amount up to $75,000,000 at any time outstanding and used to
      finance a multi-purpose tweendeck or bulk carrier shipping vessel so long
      as such vessel remains in the construction phase (i.e., such vessel has
      not been delivered to Holdings or its Subsidiaries ready for fleet service
      and operation).

            

    

     

    “Consolidated Interest
Charges” means,
for any Measurement Period, the sum of:

     

    
      	(a)  	
              all
      interest, premium payments, debt discount, fees, charges and related
      expenses in connection with borrowed money (including capitalized interest
      but excluding capitalized interest on Permitted New Vessel Construction
      Indebtedness) or in connection with the deferred purchase price of assets,
      in each case to the extent treated as interest in accordance with
      GAAP,

            

    

     

    
      	(b)  	
              all
      interest paid or payable with respect to discontinued operations
      and,

            

    

     

    
      	(c)  	
              the
      portion of rent expense under Capitalized Leases that is treated as
      interest in accordance with GAAP, in each case, of or by Holdings and its
      Subsidiaries on a consolidated basis for the most recently completed
      Measurement Period.

            

    

     

    “Consolidated Leverage
Ratio” means,
as of any date of determination, the ratio of:

     

    
      	(a)  	
              Consolidated
      Funded Indebtedness as of such date
to,

            

    

     

    
      	(b)  	
              Consolidated
      EBITDA of 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 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).

            

    

     

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

     

    “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.

     

    “Holdings” means
the Corporate Guarantor;

     

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

     

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

     

    “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 a
Permitted Security Interest) pledge, security interest, encumbrance, escrow or
cash collateral arrangement or any other restriction on its use.

     

    “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.

     

    “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.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE 4

     

    

     

    FORM OF COMPLIANCE
CERTIFICATE

     

    

    

    

    To: The Royal
Bank of Scotland plc

    Shipping
Business Centre

    5-10
Great Tower Street

    London
EC3P 3HX

    

    Attention:
Ship Finance Portfolio Management

    

    From: TSB
International Limited

    

    

    OFFICER’S
CERTIFICATE

    

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

    

    I, the
Chief Financial Officer of the 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, Consolidated Tangible Net Worth and Qualified
  Cash:

            

    

     

    
      	 	
               

              US
      Dollars

               

            
	
               

              Cash
      Equivalents

               

            	
               

              [l]

               

            
	
               

              Consolidated
      EBITDA

               

            	
               

              [l]

               

            
	
               

              Consolidated
      Interest Charges

               

            	
               

              [l]

               

            
	
               

              Consolidated
      Net Income

               

            	
               

              [l]

               

            
	
               

              Consolidated
      Tangible Net Worth

               

            	
               

              [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
      Consolidated Tangible Net WorthUS$[l];

            

    

     

    
      	(b)  	
              Minimum
      Cash LiquidityUS$[l];

            

    

     

    
      	(c)  	
              Maximum
      Consolidated Leverage Ratio[x.xx]

            

    

     

    
      	(d)  	
              Minimum
      Consolidated Fixed Charge Coverage Ratio[x.xx]

            

    

     

    
      	4  	
              As
      at [l]
      no Event of Default has occurred and is continuing [or, specify / identify
      any Event of Default]. 

            

    

     

    

     

    

    

    

    

    

    

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

    Chief
financial officer

    TBS
International Limited

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXECUTION PAGE

     

    

    

    OBLIGORS

    

    SIGNED by 

    

      /s/Anne-Laure Marie Roche

      Attorney-in-Fact

    

    for and
on behalf of

    ARGYLE MARITIME
CORP. 

    in the
presence of:

    
      /s/
Robert Fidoe

      Robert
Fidoe

      Solicitor

      15 Appold
Street

      London
EC2A 2HB

SIGNED by 

    

      /s/Anne-Laure Marie Roche

      Attorney-in-Fact

    

    for and
on behalf of 

    CATON MARITIME
CORP.

    in the
presence of:

    
      /s/
Robert Fidoe

      Robert
Fidoe

      Solicitor

      15 Appold
Street

      London
EC2A 2HB

SIGNED by 

    

      /s/Anne-Laure Marie Roche

      Attorney-in-Fact

    

    for and
on behalf of 

    DORCHESTER MARITIME
CORP. 

    in the
presence of:

    
      /s/
Robert Fidoe

      Robert
Fidoe

      Solicitor

      15 Appold
Street

      London
EC2A 2HB

SIGNED by 

    

      /s/Anne-Laure Marie Roche

      Attorney-in-Fact

    

    for and
on behalf of

    LONGWOODS MARITIME
CORP. 

    in the
presence of:

    
      /s/
Robert Fidoe

      Robert
Fidoe

      Solicitor

      15 Appold
Street

      London
EC2A 2HB

SIGNED by 

    

      /s/Anne-Laure Marie Roche

      Attorney-in-Fact

    

    for and
on behalf of 

    MCHENRY MARITIME
CORP. 

    in the
presence of:

    
      /s/
Robert Fidoe

      Robert
Fidoe

      Solicitor

      15 Appold
Street

      London
EC2A 2HB

SIGNED by 

    

      /s/Anne-Laure Marie Roche

      Attorney-in-Fact

    

    for and
on behalf of

    SUNSWYCK MARITIME
CORP.

    in the
presence of:

    
      /s/
Robert Fidoe

      Robert
Fidoe

      Solicitor

      15 Appold
Street

      London
EC2A 2HB

    ISSUER

    

    SIGNED by 

    /s/ Robin Leigh Perkin

    for and
on behalf of

    THE ROYAL BANK OF SCOTLAND
PLC

    in the
presence of: 

    
      /s/
Robert Fidoe

      Robert
Fidoe

      Solicitor

      15 Appold
Street

      London
EC2A 2HB

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    APPENDIX
A

    FORM
OF DELIVERY SECURITY ASSIGNMENT

    

    
      
      

    

     

    
      
      

    

    

    

     

    Date
[l]
2007

     

    [l]

     

    as
Owner

     

    -and-

     

    THE
ROYAL BANK OF SCOTLAND plc

     

    as
Issuer

    
      

       

      PREDELIVERY
SECURITY ASSIGNMENT

    

     

    relating
to Yard No. [l]

     

    at
Nantong Yahua Shipbuilding Co. Ltd.

    

    
      
        
          
            Watson,
Farley & Williams

            London

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    INDEX

     

    Clause Page

     

     

    1           DEFINITIONS AND
INTERPRETATION [INSERT PAGE
NUMBER]

     

    2           COVENANT TO PAY [INSERT PAGE NUMBER]

     

    3           ASSIGNMENT [INSERT PAGE NUMBER]

     

    4           REPRESENTATIONS AND
WARRANTIES [INSERT PAGE
NUMBER]

     

    5           COVENANTS [INSERT PAGE NUMBER]

     

    6           PROTECTION OF SECURITY [INSERT PAGE NUMBER]

     

    7           ENFORCEABILITY AND ISSUER’S
POWERS [INSERT PAGE
NUMBER]

     

    8           APPLICATION OF MONEYS [INSERT PAGE NUMBER]

     

    9           FURTHER ASSURANCES [INSERT PAGE NUMBER]

     

    10           POWER OF ATTORNEY [INSERT PAGE NUMBER]

     

    11           INCORPORATION OF GUARANTEE FACILITY
AGREEMENT PROVISIONS [INSERT PAGE
NUMBER]

     

    12           SUPPLEMENTAL [INSERT PAGE NUMBER]

     

    13           LAW AND JURISDICTION [INSERT PAGE NUMBER]

     

    EXECUTION
PAGE [INSERT PAGE NUMBER]

     

    APPENDIX
I  PART I  NOTICE OF ASSIGNMENT TO SELLER[INSERT PAGE NUMBER]

     

    APPENDIX
I  PART II  ACKNOWLEDGEMENT BY THE SELLER [INSERT PAGE NUMBER]

     

    APPPENDIX
1 PART III NOTICE OF APPOINTMENT OF ATTORNEY TO REFUND GUARANTOR [INSERT PAGE NUMBER]

     

    APPENDIX
I  PART IV  REFUND GUARANTOR’S ACKNOWLEDGEMENT [INSERT PAGE NUMBER]

     

    

    

    
      
        
          
             
RBS Guarantee (2).doc

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    THIS DEED
is made on [l]
2007

     

    BETWEEN

     

    
      	
              (1)

            	
              [l],
      a corporation organised and existing under the laws of the Marshall
      Islands whose registered office is at Trust Company Complex, Ajeltake
      Road, Ajeltake Island, Majuro, Marshall Islands M #96960 (the “Owner”);
      and

            

    

     

    
      	
              (2)

            	
              THE ROYAL BANK OF SCOTLAND
      plc, a company incorporated in Scotland acting through its office
      at Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX (the
      “Issuer”, which
      expression includes its successors and
assigns).

            

    

     

    BACKGROUND

     

    
      	
              (A)

            	
              By
      a guarantee facility agreement dated [l]
      2007 and made between (i) the Borrowers (including the Owner) and (ii) the
      Issuer it was agreed that the Issuer would make available to the Obligors
      a guarantee facility of up to
US$84,000,000.

            

    

     

    
      	
              (B)

            	
              It
      is one of the conditions precedent to the availability of the guarantee
      facility under the Guarantee Facility Agreement that the Owner enters into
      this Deed as security for the Secured
  Liabilities.

            

    

     

    
      	
              (C)

            	
              This
      Deed supplements the Guarantee Facility Agreement and is one of the
      Predelivery Security Assignments referred to in
  it.

            

    

     

    IT IS AGREED as
follows:

     

    
      	
              1  

            	
              DEFINITIONS
      AND INTERPRETATION

            

    

     

    
      	
              1.1  

            	
              Defined
      expressions.

            

    

     

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

     

    
      	
              1.2  

            	
              Definitions.

            

    

     

      In this Deed, unless
the contrary intention appears:

     

    “Assigned Contracts”
means:

     

    
      	
               
      

            	
              (a)

            	
              the
      Shipbuilding Contract; and

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      Refund Guarantees;

            

    

     

    “Assigned Property” means all
rights and interests of every kind which the Owner now or at any later time has
to, in or in connection with each of the Assigned Contracts or in relation to
any matter arising out of or in connection with any Assigned Contract,
including, but without in any way limiting the generality of the preceding
words:

     

    
      	
               
      

            	
              (a)

            	
              all
      rights and interests relating to any amount of any kind payable under the
      terms of any Assigned Contract;

            

    

     

    
      	
               
      

            	
              (b)

            	
              all
      rights to reject or take delivery of the Ship pursuant to the Shipbuilding
      Contract;

            

    

     

    
      	
               
      

            	
              (c)

            	
              all
      rights to commence, conduct, defend, compromise or abandon any legal or
      arbitration proceedings relating to any Assigned Contract or to any matter
      arising out of or in connection with an Assigned Contract;
    and

            

    

     

    
      	
               
      

            	
              (d)

            	
              all
      rights to damages, interest, costs or other sums payable under any
      judgment or order of any court, or any arbitration award, relating to any
      Assigned Contract or to any matter arising out of or in connection with an
      Assigned Contract;

            

    

     

    “Builder” means Nantong Yahua
Shipbuilding Co. Ltd, a company incorporated in China whose registered office is
at 1# Hongzha Road, Jinweigang, Nantong-Jiangsu P.C. 226 361, the People’s
Republic of China;

     

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

     

    “Guarantee Facility Agreement”
means the guarantee facility agreement referred to in Recital (A);

     

    “Receiver” means any receiver
and/or manager (or joint receivers and/or managers) appointed under Clause
7.3;

     

    “Refund Guarantees” means the
guarantees issued or to be issued by the Refund Guarantor in favour of the Owner
in respect of the Builder’s refund obligations under the Shipbuilding
Contract;

     

    “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;

     

    “Secured Liabilities” means
all liabilities which the Owner, the Security Parties or any of them have, at
the date of this Deed or at any later time or times, to the Issuer 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;

     

    “Seller” means together China
Communications and the Builder;

     

    “Ship” means the multipurpose
bulk carrier of about 35,000 dwt having the Builder’s yard number [l]
more particularly described in, and being the subject of, the Shipbuilding
Contract; and

     

    “Shipbuilding Contract” means
a shipbuilding contract dated 24 February 2007 and made between the Owner and
the Seller in respect of the Ship as the same may be supplemented and/or amended
from time to time.

     

    
      	
              1.3  

            	
              Application
      of construction and interpretation provisions of Guarantee Facility
      Agreement.

            

    

     

      Clauses
1.2 and 1.5 of the Guarantee Facility Agreement apply, with any necessary
modifications, to this Deed.

     

    
      	
              1.4  

            	
              Inconsistency
      between Guarantee Facility Agreement provisions and this
    Deed.

            

    

     

      This
Deed shall be read together with the other Finance Documents, but in case of any
conflict between the Guarantee Facility Agreement and this Deed, the provisions
of the Guarantee Facility Agreement shall prevail.

     

    
      	
              2  

            	
              COVENANT
      TO PAY

            

    

     

    
      	
              2.1  

            	
              Covenant
      to pay Secured Liabilities.

            

    

     

      The
Owner covenants with the Issuer:

     

    
      	
              (a)  

            	
              duly
      and punctually to pay the Secured Liabilities;
  and

            

    

     

    
      	
              (b)  

            	
              to
      observe and perform all its other obligations under the Finance
      Documents.

            

    

     

    
      	
              3  

            	
              ASSIGNMENT

            

    

     

    
      	
              3.1  

            	
              Assignment.

            

    

     

      The
Owner, with full title guarantee, assigns to the Issuer absolutely all rights
and interests which now or at any later time it has to, in or in connection
with, the Assigned Property

     

    
      	
              3.2  

            	
              Continuing
      security.

            

    

     

      The
Security Interests created by Clause 3.1 are fixed; and this Deed shall remain
in force until the end of the Security Period as a continuing security and, in
particular:

     

    
      	
              (a)  

            	
              the
      Security Interests created by Clause 3.1 shall not be satisfied by any
      intermediate payment or satisfaction of the Secured
      Liabilities;

            

    

     

    
      	
              (b)  

            	
              the
      Security Interests created by Clause 3.1, and the rights of the Issuer
      under this Deed, are only capable of being extinguished, limited or
      otherwise adversely affected by an express and specific term in a document
      signed by or on behalf of the
Issuer;

            

    

     

    
      	
              (c)  

            	
              no
      failure or delay by or on behalf of the Issuer to enforce or exercise a
      Security Interest created by Clause 3.1 or a right of the Issuer under
      this Deed, and no act, course of conduct, acquiescence or failure to act
      (or to prevent the Owner from taking certain action) which is inconsistent
      with such a Security Interest or such a right or with such a Security
      Interest being a fixed security shall preclude or estop the Issuer (either
      permanently or temporarily) from enforcing or exercising it or result in a
      Security Interest expressed to be a fixed security taking effect as a
      floating security; and

            

    

     

    
      	
              (d)  

            	
              this
      Deed shall be additional to, and shall not in any way impair or be
      impaired by:

            

    

     

    
      	
              (i)  

            	
              any
      other Security Interest whether in relation to property of the Owner or
      that of a third party; or

            

    

     

    
      	
              (ii)  

            	
              any
      other right of recourse as against the Owner or any third
      party,

            

    

     

    which the
Issuer now or subsequently has in respect of any of the Secured
Liabilities.

     

    
      	
              3.3  

            	
              No
      obligations imposed on Issuer.

            

    

     

      The
Owner shall remain liable to perform all obligations connected with the Assigned
Property and the Issuer shall not, in any circumstances, have or incur any
obligation of any kind in connection with the Assigned Property.

     

    
      	
              3.4  

            	
              Notice
      of assignment and notice of appointment of
  attorney.

            

    

     

    

     

    
      	
              (a)  

            	
              Immediately
      after the execution of this Deed:

            

    

     

    
      	
              (i)  

            	
              the
      Owner shall give to the Seller notice of the assignments contained in
      Clause 3.1 in the form set out in Appendix 1 and shall obtain from the
      Seller a signed acknowledgement in the form set out in that Appendix;
      and

            

    

     

    
      	
              (ii)  

            	
              the
      Owner shall give to the Refund Guarantor in relation to the first Refund
      Guarantee a notice of appointment of attorney in the form set out in
      Appendix 1 and shall obtain from the Refund Guarantor a signed
      acknowledgement in the form set out in that
  Appendix.

            

    

     

    
      	
              (b)  

            	
              Immediately
      upon receipt of the second Refund Guarantee the Owner shall give to the
      Refund Guarantor in relation to such Refund Guarantee a notice of
      appointment of attorney in the form set out in Appendix 1 and shall obtain
      from the Refund Guarantor a signed acknowledgement in the form set out in
      that Appendix.

            

    

     

    
      	
              3.5  

            	
              Negative
      pledge; disposal of assets.

            

    

     

      The
Owner shall not sell, create any Security Interest not exclusively securing the
Secured Liabilities over or otherwise dispose of any Assigned Property or any
right relating to any Assigned Property.

     

    
      	
              3.6  

            	
              Release
      of security.

            

    

     

      At
the end of the Security Period, the Issuer will, at the request and cost of the
Owner, re-assign (without any warranty, representation, covenant or other
recourse) to the Owner such rights as the Issuer then has to, or in connection
with, the Assigned Property.

     

    
      	
              4  

            	
              REPRESENTATIONS
      AND WARRANTIES

            

    

     

    
      	
              4.1  

            	
              General.

            

    

     

      The
Owner represents and warrants to the Issuer as follows.

     

    
      	
              4.2  

            	
              Repetition
      of Guarantee Facility Agreement representations and
      warranties.

            

    

     

      The
representations and warranties in clause 8 of the Guarantee Facility Agreement
remain true and not misleading if repeated on the date of this Deed with
reference to the circumstances now existing.

     

    
      	
              4.3  

            	
              Title
      to Assigned Property.

            

    

     

      The
Owner is the sole legal and beneficial owner of all rights and interests which
each of the Assigned Contracts creates in favour of the Owner.

     

    
      	
              4.4  

            	
              No
      restrictions on right to assign.

            

    

     

      The
Owner has the right, without requiring the concurrence, consent or authority of
any other person, to create, in respect of all the Assigned Property, the
Security Interests which Clause 3 purports to create.

     

    
      	
              4.5  

            	
              No
      third party Security Interests.

            

    

     

      No
third party has any Security Interest or any other right, interest or claim
over, in or in relation to any Assigned Contract.

     

    
      	
              4.6  

            	
              Validity
      and completeness of Assigned
Contracts.

            

    

     

    

     

    
      	
              (a)  

            	
              The
      copies of the Assigned Contracts delivered to the Issuer in connection
      with this Deed are true and complete copies, and there does not exist any
      addendum, supplemental agreement or other document of any kind which has
      the effect of varying the terms of any Assigned Contract or of excluding,
      restricting or qualifying any right or interest which an Assigned Contract
      creates in favour of the Owner; and

            

    

     

    
      	
              (b)  

            	
              each
      Assigned Contract is in full force and is binding on and enforceable
      against each of the parties to it in accordance with its terms but subject
      to general principles of equity and laws effecting creditors’ rights
      generally, and to the best of the Owner’s knowledge and belief no event
      has occurred or matter arisen as a result of which any party to an
      Assigned Contract is, may be or may later become entitled to rescind or
      terminate any Assigned Contract or to refuse or suspend performance of its
      obligations thereunder, or to raise any set-off or other defence in
      respect of such obligations; and

            

    

     

    
      	
              (c)  

            	
              without
      limiting the generality of paragraph (b), the Seller and the Refund
      Guarantor are each in compliance with their respective obligations under
      the Assigned Contracts.

            

    

     

    
      	
              5  

            	
              COVENANTS

            

    

     

    
      	
              5.1  

            	
              General.

            

    

     

      The
Owner shall comply with the following provisions of this Clause 5 at all times
during the Security Period except as the Issuer may otherwise
permit.

     

    
      	
              5.2  

            	
              Performance
      of Assigned Contracts.

            

    

     

      The
Owner shall:

     

    
      	
              (a)  

            	
              observe
      and perform all its obligations and meet all its liabilities under or in
      connection with each Assigned
Contract;

            

    

     

    
      	
              (b)  

            	
              use
      its best endeavours to ensure performance and observance by the other
      parties of their obligations and liabilities under each Assigned
      Contract;

            

    

     

    
      	
              (c)  

            	
              take
      any action, or refrain from taking any action, which the Issuer may
      reasonably specify in connection with any material breach, or possible
      future material breach, of an Assigned Contract by the Owner or any other
      party or with any other matter which arises or may later arise out of or
      in connection with an Assigned
Contract.

            

    

     

    
      	
              5.3  

            	
              No
      variation, release etc. of Assigned
Contracts.

            

    

     

    
      	
              5.4  

            	
                Subject to
      clause 9.11 of the Guarantee Facility Agreement, the Owner shall not,
      whether by a document, by conduct, by acquiescence or in any other
      way:

            

    

     

    
      	
              (a)  

            	
              vary
      any Assigned Contract;

            

    

     

    
      	
              (b)  

            	
              release,
      waive, suspend or subordinate or permit to be lost or impaired any
      interest or right forming part of or relating to any Assigned
      Property;

            

    

     

    
      	
              (c)  

            	
              waive
      any person’s material breach of any Assigned
  Contract;

            

    

     

    
      	
              (d)  

            	
              rescind
      or terminate any Assigned Contract or treat itself as discharged or
      relieved from further performance of any of its obligations or liabilities
      under an Assigned Contract;

            

    

     

    
      	
              (e)  

            	
              purport
      to vary or revoke any notice or instruction relating to this Deed which
      the Owner has given or may later give to any
  person.

            

    

     

    
      	
              5.5  

            	
              Payment
      of moneys received under Assigned
Contracts.

            

    

     

      After
the occurrence of a Potential Event of Default or an Event of Default the Owner
shall forthwith, upon receipt by it (or by any person acting on its behalf), pay
over or transfer to the Issuer (or as the Issuer may direct) any moneys or other
property which the Owner (or any person acting on its behalf) may receive or
recover in connection with any Assigned Contract and all property which may,
directly or indirectly, represent, accrue on or be derived from any such moneys
or property.

     

    
      	
              5.6  

            	
              Action
      to protect validity of Assigned
Contracts.

            

    

     

      The
Owner shall:

     

    
      	
              (a)  

            	
              use
      its best endeavours to ensure that all interests and rights conferred by
      each Assigned Contract remain valid and enforceable in all respects in
      accordance with its terms but subject to general principles of equity and
      laws affecting creditors’ rights generally and retain the priority which
      they were intended to have; and

            

    

     

    
      	
              (b)  

            	
              without
      prejudice to the Owner’s obligations under paragraph (a), take any action
      which the Issuer may reasonably specify with a view to ensuring or
      protecting the validity, enforceability and/or priority of any such
      interest or right.

            

    

     

    
      	
              5.7  

            	
              Action
      to enforce Assigned Contracts.

            

    

     

      The
Owner shall:

     

    
      	
              (a)  

            	
              take
      any action which the Issuer may reasonably direct for the purpose of
      enforcing (through legal process, arbitration or otherwise) any right
      which is part of, or which relates to, the Assigned Property;
      and

            

    

     

    
      	
              (b)  

            	
              in
      the absence of any such direction, not take any such
    action.

            

    

     

    
      	
              5.8  

            	
              Termination
      of, and proceedings relating to, Assigned
  Contracts.

            

    

     

      Without
limiting its generality, Clause 5.6 applies to:

     

    
      	
              (a)  

            	
              the
      termination of any Assigned
Contract;

            

    

     

    
      	
              (b)  

            	
              the
      commencement of, or any other action relating to, any legal proceedings or
      arbitration relating to any Assigned Property or to any matter arising out
      of or in connection with any Assigned
Property.

            

    

     

    
      	
              5.9  

            	
              Provision
      of information relating to Assigned
Contracts.

            

    

     

      The
Owner shall forthwith:

     

    
      	
              (a)  

            	
              inform
      the Issuer if any material breach of any Assigned Contract occurs or a
      serious risk of such a breach arises and of any other event or matter
      affecting an Assigned Contract which is material to the
      Issuer;

            

    

     

    
      	
              (b)  

            	
              provide
      the Issuer, promptly after service, with copies of all notices served on
      or by the Owner under or in connection with any Assigned
      Contract;

            

    

     

    
      	
              (c)  

            	
              provide
      the Issuer with any information which it reasonably requests about any
      Assigned Property or any matter relating to or affecting any Assigned
      Property including the progress of the construction of the Ship;
      and

            

    

     

    
      	
              (d)  

            	
              generally
      provide the Issuer and its officers and representatives with full and
      prompt co-operation and assistance relating to any Assigned
      Property.

            

    

     

    
      	
              5.10  

            	
              Builder’s
      Certificate.

            

    

     

      The
Owner shall give irrevocable instructions to the Seller to hold the Ship to the
order and at the disposal of the Issuer and to deliver the Builder’s Certificate
and any other document of title to the Ship to the Issuer and ensure that the
Builder complies with such instructions.

     

    
      	
              5.11  

            	
              Provision
      of copies of Assigned Contracts.

            

    

     

      The
Owner shall forthwith upon the Issuer’s request:

     

    
      	
              (a)  

            	
              deliver
      to the Issuer a certified copy of any Assigned Contract to which the Owner
      is a party; or

            

    

     

    
      	
              (b)  

            	
              provide
      the Issuer with a certified copy of any other Assigned
      Contract.

            

    

     

    
      	
              5.12  

            	
              No
      action to jeopardise security.

            

    

     

      The
Owner shall not knowingly do or fail to do or knowingly cause or permit another
person to do or omit to do anything which is liable to jeopardise the
effectiveness or priority, in relation to any Assigned Property, of any Security
Interest created by this Deed.

     

    
      	
              6  

            	
              PROTECTION
      OF SECURITY

            

    

     

    
      	
              6.1  

            	
              Issuer’s
      right to protect or maintain
security.

            

    

     

      The
Issuer may take any action which it may think fit for the purpose of protecting
or maintaining the security created by this Deed or for any similar or related
purpose.

     

    
      	
              7  

            	
              ENFORCEABILITY
      AND ISSUER’S POWERS

            

    

     

    
      	
              7.1  

            	
              Right
      to enforce security.

            

    

     

      On
the occurrence of an Event of Default which is continuing but without the
necessity for any court order in any jurisdiction to the effect that an Event of
Default has occurred or that the security constituted by this Deed has become
enforceable, and irrespective of whether a notice has been served under clause
13.2 of the Guarantee Facility Agreement:

     

    
      	
              (a)  

            	
              the
      security constituted by this Deed shall immediately become enforceable;
      and

            

    

     

    
      	
              (b)  

            	
              the
      Issuer shall be entitled at any time or times to exercise the powers set
      out in Clauses 7.2 and 7.3 and in any other Finance Document;
      and

            

    

     

    
      	
              (c)  

            	
              the
      Issuer shall be entitled at any time or
times:

            

    

     

    
      	
              (i)  

            	
              to
      exercise the powers possessed by it as assignee of the Assigned Property
      conferred by the law of any country or territory in which the Assigned
      Property is physically present or deemed to be sited the courts of which
      have or claim any jurisdiction in respect of the Owner, the Ship or any
      item of Assigned Property; and

            

    

     

    
      	
              (ii)  

            	
              without
      limiting the scope of the Issuer’s powers under sub-paragraph (i) above,
      to exercise the powers possessed by it as a creditor or as a person with a
      Security Interest in the Assigned Property conferred by English
      law.

            

    

     

    
      	
              7.2  

            	
              Right
      to take possession, exercise rights
etc.

            

    

     

      On
the occurrence of an Event of Default which is continuing, the Issuer shall be
entitled then or at any later time or times:

     

    
      	
              (a)  

            	
              to
      exercise any right forming part of the Assigned Property, including any
      right to terminate an Assigned
Contract;

            

    

     

    
      	
              (b)  

            	
              to
      implement the Shipbuilding Contract and to take delivery of the Ship in
      its own name and thereafter to lay up or employ the Ship as the Issuer may
      see fit;

            

    

     

    
      	
              (c)  

            	
              to
      undertake the supervision of the construction of the
  Ship;

            

    

     

    
      	
              (d)  

            	
              to
      collect and require payment of any amount payable under, or the right to
      which is assigned or charged by, any Assigned Contract or which otherwise
      forms part of the Assigned Property, and to take possession of any other
      Assigned Property;

            

    

     

    
      	
              (e)  

            	
              to
      vary the terms of any Assigned Contract, to enter into any arrangement of
      any kind connected with an Assigned Contract, to replace, novate or
      terminate any Assigned Contract and to release any person liable under any
      Assigned Contract and/or any Security Interest relating to any person’s
      obligations or liabilities under an Assigned
  Contract;

            

    

     

    
      	
              (f)  

            	
              to
      sell, mortgage, exchange, invest or in any other way deal with any
      Assigned Property in any manner and for any consideration (including
      shares, notes or other securities) and to do so, in the case of the Ship,
      either on or after its delivery under the Shipbuilding
      Contract;

            

    

     

    
      	
              (g)  

            	
              following
      delivery of the Ship, to manage, insure, maintain and repair the Ship and
      to employ, sail or lay up the Ship in such manner and for such period as
      the Issuer may think fit;

            

    

     

    
      	
              (h)  

            	
              to
      petition or apply for, or prove or claim in, any winding up,
      administration, bankruptcy or similar procedure in respect of any person
      having any liability under any Assigned
  Contract;

            

    

     

    
      	
              (i)  

            	
              to
      vote for or against and participate in, any composition, voluntary
      arrangement, scheme of arrangement or reorganisation of any person having
      a liability under any Assigned
Contract;

            

    

     

    
      	
              (j)  

            	
              to
      enter into all kinds of transactions for the purpose of hedging risks
      which have arisen or which the Issuer considers may arise in respect of
      any Assigned Property out of movements in exchange rates, interest rates
      or other risks of any kind;

            

    

     

    
      	
              (k)  

            	
              to
      employ the services of any lawyers, ship-brokers or other experts or
      advisers of any type or description, whether or not similar to the
      foregoing;

            

    

     

    
      	
              (l)  

            	
              to
      appoint all kinds of agents, whether to enforce or exercise any right
      under or in connection with any Assigned Contract or for any other
      purpose; and

            

    

     

    
      	
              (m)  

            	
              to
      take over or commence or defend (if necessary using the name of the Owner)
      any claims or legal or arbitration proceedings relating to, or affecting,
      any Assigned Property which the Issuer may think fit and to abandon,
      release or settle in any way any such claims or proceedings;
      and

            

    

     

    
      	
              (n)  

            	
              generally,
      to enter into any transaction or arrangement of any kind and to do
      anything in relation to any Assigned Property which the Issuer may think
      fit.

            

    

     

    
      	
              7.3  

            	
              Right
      to appoint Receiver.

            

    

     

      On
the occurrence of an Event of Default which is continuing, the Issuer may
appoint a receiver and/or manager (or joint receivers and/or managers) of the
Assigned Property, and the following shall apply:

     

    
      	
              (a)  

            	
              the
      Issuer may exercise any of the powers conferred by this Deed while a
      Receiver is in office and is
acting;

            

    

     

    
      	
              (b)  

            	
              an
      appointment of a Receiver shall be by deed or, at the Issuer’s option, by
      a document signed by any of its officers; and an appointment in respect of
      some only of the Assigned Property may later be extended to all or any
      part of the remaining Assigned
Property;

            

    

     

    
      	
              (c)  

            	
              the
      remuneration of a Receiver shall be fixed by the
  Issuer;

            

    

     

    
      	
              (d)  

            	
              to
      the fullest extent permitted by law, a Receiver shall be the Owner’s
      agent, and the Owner shall be responsible, to the exclusion of any
      liability on the part of the Issuer, for his remuneration and for his
      contracts, acts and defaults;

            

    

     

    
      	
              (e)  

            	
              a
      Receiver shall have all the powers conferred by Clause 7.2 as if the
      reference to the Issuer in Clause 7.2 were a reference to the Receiver,
      and all the powers conferred on a Receiver by the Law of Property Act
      1925;

            

    

     

    
      	
              (f)  

            	
              in
      addition, a Receiver who is an administrative receiver for the purposes of
      the Insolvency Act 1986 shall have all the powers which an administrative
      receiver has under that Act;

            

    

     

    
      	
              (g)  

            	
              the
      Owner irrevocably and by way of security appoints every Receiver its
      attorney on its behalf and in its name or otherwise to execute or sign any
      document and do any act or thing which that Receiver considers necessary
      or desirable with a view to or in connection with any exercise or proposed
      exercise of any of his powers;

            

    

     

    
      	
              (h)  

            	
              a
      Receiver may delegate to any person or persons of any of the powers
      (including the discretions) conferred on him by, or pursuant to, this Deed
      and may do so on terms authorising successive
    sub-delegations;

            

    

     

    
      	
              (i)  

            	
              in
      the case of joint Receivers any of the powers (including the discretions)
      conferred by this Deed or by the general law (including the Insolvency Act
      1986) may be exercised by any one or more of them, unless their
      appointment specifically states the
contrary;

            

    

     

    
      	
              (j)  

            	
              the
      Issuer may remove a Receiver, with or without appointing another Receiver;
      such a removal may be effected by a document signed by any of the Issuer’s
      officers; but this paragraph does not apply to a Receiver who is an
      administrative receiver under the Insolvency Act
  1986;

            

    

     

    
      	
              (k)  

            	
              the
      Issuer may appoint a Receiver to replace a Receiver who has resigned or
      for any other reason ceased to hold office;
and

            

    

     

    
      	
              (l)  

            	
              a
      Receiver shall be entitled to retain out of any money received by him such
      amounts in respect of his expenses (or to cover estimated future expenses)
      as he may from time to time agree with the
  Issuer.

            

    

     

    
      	
              7.4  

            	
              Law
      of Property Act 1925 not
applicable.

            

    

     

      The
Owner hereby waives the entitlement conferred by section 93 of the Law of
Property Act 1925 and agrees that section 103 of that Act shall not apply to the
security created by this Deed.

     

    
      	
              7.5  

            	
              No
      liability of Issuer or Receiver.

            

    

     

      Neither
the Issuer nor any Receiver shall be obliged to check the nature or sufficiency
of any payment received by it or him under this Deed or to preserve, exercise or
enforce any right forming part of, or relating to, any Assigned
Property.

     

    
      	
              8  

            	
              APPLICATION
      OF MONEYS

            

    

     

    
      	
              8.1  

            	
              General.

            

    

     

      All
sums received by the Issuer or by a Receiver in respect of any Assigned Property
shall be held by the Issuer or the Receiver upon trust in the first place to pay
or discharge any expenses or liabilities (including any interest) which have
been paid or incurred by the Issuer or any Receiver in or in connection with the
exercise of their respective powers and to apply the balance in accordance with
clause 12 of the Guarantee Facility Agreement.

     

    
      	
              9  

            	
              FURTHER
      ASSURANCES

            

    

     

    
      	
              9.1  

            	
              Owner’s
      obligation to execute further documents
etc.

            

    

     

      The
Owner shall:

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    which the
Issuer may, by notice to the Owner, reasonably specify for any of the purposes
described in Clause 9.2 or for any similar or related purpose.

     

    
      	
              9.2  

            	
              Purposes
      of further assurances.

            

    

     

      Those
purposes are:

     

    
      	
              (a)  

            	
              validly
      and effectively to create any Security Interest or right of any kind which
      the Issuer intended should be created by or pursuant to this Deed or any
      other Finance Document;

            

    

     

    
      	
              (b)  

            	
              to
      create a specific mortgage or assignment of any particular Assigned
      Property or otherwise to vest in the Issuer the title to any particular
      Assigned Property;

            

    

     

    
      	
              (c)  

            	
              to
      protect the priority, or increase the effectiveness, in any jurisdiction
      of any Security Interest which is created, or which the Issuer intended
      should be created, by or pursuant to this Deed or any other Finance
      Document;

            

    

     

    
      	
              (d)  

            	
              to
      enable or assist the Issuer or a Receiver to sell or otherwise deal with
      any Assigned Property, to transfer title to, or grant any interest or
      right relating to, any Assigned Property or to exercise any power which is
      referred to in Clause 7.1 above or which is conferred by any Finance
      Document;

            

    

     

    
      	
              (e)  

            	
              to
      enable or assist the Issuer to enter into any transaction to commence,
      defend or conduct any proceedings and/or to take any other action relating
      to any Assigned Property in any country or under the law of any
      country.

            

    

     

    
      	
              9.3  

            	
              Terms
      of further assurances.

            

    

     

      The
Issuer may specify the terms of any document to be executed by the Owner under
Clause 9.1, and those terms may include any covenants, powers and provisions
which the Issuer considers appropriate to protect its or a Receiver’s
interests.

     

    
      	
              9.4  

            	
              Obligation
      to comply with notice.

            

    

     

      The
Owner shall comply with a notice under Clause 9.1 by the date specified in the
notice.

     

    
      	
              9.5  

            	
              Additional
      corporate action.

            

    

     

      At
the same time as the Owner delivers to the Issuer any document executed under
Clause 9.1(a), the Owner shall also deliver to the Issuer a certificate signed
by 2 of the Owner’s directors which shall:

     

    
      	
              (a)  

            	
              set
      out the text of a resolution of the Owner’s directors specifically
      authorising the execution of the document specified by the Issuer;
      and

            

    

     

    
      	
              (b)  

            	
              state
      that either the resolution was duly passed at a meeting of the directors
      validly convened and held throughout which a quorum of directors entitled
      to vote on the resolution was present or that the resolution has been
      signed by all the directors and is valid under the Owner’s articles of
      association or other constitutional
documents.

            

    

     

    
      	
              10  

            	
              POWER
      OF ATTORNEY

            

    

     

    
      	
              10.1  

            	
              Appointment.

            

    

     

      For
the purpose of securing the Issuer’s interest in the Assigned Property and the
due and punctual performance of its obligations to the Issuer under this Deed
and every other Finance Document, the Owner irrevocably and by way of security
appoints the Issuer its attorney, on behalf of the Owner and in its name or
otherwise, to execute or sign any document and do any act or thing which the
Owner is obliged to do under any Finance Document (but which, prior to the
occurrence of an Event of Default the Owner has failed, for whatever reason, to
take).

     

    
      	
              10.2  

            	
              Ratification
      of actions of attorney.

            

    

     

      For
the avoidance of doubt and without limiting the generality of Clause 10.1, it is
confirmed that it authorises the Issuer to execute on behalf of the Owner a
document ratifying by the Owner any transaction or action which the Issuer
and/or a Receiver has purported to enter into or to take and which the Issuer
considers was or might have been outside his powers or otherwise
invalid.

     

    
      	
              10.3  

            	
              Delegation.

            

    

     

      The
Issuer may sub-delegate to any person or persons (including a Receiver and
persons designated by him) all or any of the powers (including the discretions)
conferred on the Issuer by Clauses 10.1 and/or 10.2, and may do so on terms
authorising successive sub-delegations.

     

    
      	
              11  

            	
              INCORPORATION
      OF GUARANTEE FACILITY AGREEMENT
PROVISIONS

            

    

     

    
      	
              11.1  

            	
              Incorporation
      of specific provisions.

            

    

     

      The
following provisions of the Guarantee Facility Agreement apply to this Deed as
if they were expressly incorporated therein with any necessary
modifications:

     

    clause
19, no set-off or tax deduction;

     

    clause
21, variations and waivers;

     

    clause
22, notices;

     

    clause
24, supplemental.

     

    
      	
              11.2  

            	
              Incorporation
      of general provisions.

            

    

     

      Clause
11.1 is without prejudice to the application to this Deed of any provision of
the Guarantee Facility Agreement which, by its terms, applies or relates to the
Finance Documents generally.

     

    
      	
              12  

            	
              SUPPLEMENTAL

            

    

     

    
      	
              12.1  

            	
              No
      restriction on other rights.

            

    

     

      Nothing
in this Deed shall be taken to exclude or restrict any power, right or remedy
which the Issuer may at any time have under:

     

    
      	
              (a)  

            	
              any
      other Finance Document; or

            

    

     

    
      	
              (b)  

            	
              the
      law of any country or territory the courts of which have or claim any
      jurisdiction in respect of the Owner, the Ship or any Assigned
      Property.

            

    

     

    
      	
              12.2  

            	
              Exercise
      of other rights.

            

    

     

      The
Issuer may exercise any right under this Deed before it has exercised any right
referred to in Clause 12.1(a) or (b) above.

     

    
      	
              12.3  

            	
              Settlement
      or discharge conditional.

            

    

     

      Any
settlement or discharge under this Deed between the Issuer and the Owner shall
be conditional upon no security or payment to the Issuer by the Owner or any
other person being set aside, adjusted or ordered to be repaid, whether under
any insolvency law or otherwise.

     

    
      	
              12.4  

            	
              Third
      party rights.

            

    

     

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

     

    
      	
              13  

            	
              LAW
      AND JURISDICTION

            

    

     

    
      	
              13.1  

            	
              English
      law.

            

    

     

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

     

    
      	
              13.2  

            	
              Exclusive
      English jurisdiction.

            

    

     

      Subject
to Clause 13.3, the courts of England shall have exclusive jurisdiction to
settle any disputes which may arise out of or in connection with this
Deed.

     

    
      	
              13.3  

            	
              Choice
      of forum for the exclusive benefit of the
  Issuer.

            

    

     

      Clause
13.2 is for the exclusive benefit of the Issuer, which reserves the
rights:

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

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

     

    
      	
              13.4  

            	
              Process
      agent.

            

    

     

      The
Owner irrevocably appoints Curtis Davis Garrard LLP at its registered office for
the time being, presently at Waterview House, Roundwood Avenue, Stockley Park,
Uxbridge UB11 1AU, to act as its agent to receive and accept on its behalf any
process or other document relating to any proceedings in the English courts
which are connected with this Deed.

     

    
      	
              13.5  

            	
              Issuer’s
      rights unaffected.

            

    

     

      Nothing
in this Clause 13 shall exclude or limit any right which the Issuer may have
(whether under the law of any country, an international convention or otherwise)
with regard to the bringing of proceedings, the service of process, the
recognition or enforcement of a judgment or any similar or related matter in any
jurisdiction.

     

    
      	
              13.6  

            	
              Meaning
      of “proceedings”.

            

    

     

      In
this Clause 13, “proceedings” means proceedings of any kind, including an
application for a provisional or protective measure.

     

    THIS DEED has been executed by
or on behalf of the parties and has, on the date stated at the beginning of this
Deed, been delivered as a Deed.

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

     EXECUTION
PAGE

    
      	
              OWNER

            	 
      	 
      
	
              EXECUTED as a DEED

              by
      [l]
      acting by

              expressly
      authorised in accordance with

              the
      laws of the Marshall Islands

              by
      virtue of a power of attorney granted

              by
      [l]

              on
      [l]

              such
      execution being witnessed by:

            	
              )

              )

              )

              )

              )

              )

              )

              )

            	 
      
	
              Signature
      of witness

            	 
      	 
      
	
              ISSUER

            	 
      	 
      
	
              EXECUTED as a DEED

              by
      ROYAL BANK OF SCOTLAND
      plc

              acting
      by

              expressly
      authorised in accordance with

              the
      laws of Scotland

            	
              )

              )

              )

              )

              )

            	 
      
	
              Signature
      of witness

            	 
      	 
      

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

     APPENDIX
I

    

    PART
I

    

    NOTICE
OF ASSIGNMENT TO SELLER

     

    
      	
               
      

            	
              To:

            	
              (1)

            	
              China
      Communications Construction Company
Ltd

            

    

     

    
      	
               
      

            	
              No.
      C88, An Ding Men Wai Street

            

    

     

    
      	
               
      

            	
              Beijing

            

    

     

    
      	
               
      

            	
              10011

            

    

     

    
      	
               
      

            	
              The
      People’s Republic of China

            

    

     

    
      	
               
      

            	
              (2)

            	
              Nantong
      Yahua Shipbuilding Co. Ltd.

            

    

     

    
      	
               
      

            	
              1#
      Hongzha Road

            

    

     

    
      	
               
      

            	
              Jinweigang

            

    

     

    
      	
               
      

            	
              Nantong-Jiangsu

            

    

     

    
      	
               
      

            	
              P.C.
      226361

            

    

     

    
      	
               
      

            	
              The
      People’s Republic of China

            

    

     

    We,
[l], of
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands
MH96 960 GIVE NOTICE
that, by an assignment in writing dated [l]
2007 (the “Assignment”),
we assigned irrevocably and absolutely to THE ROYAL BANK OF SCOTLAND plc
of Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX (the “Assignee”) all our right,
title and interest in and to, and all benefits accruing to us under or pursuant
to, the contract dated 24 February 2007 made between yourselves and ourselves
(as supplemented and/or amended from time to time, the “Building Contract”) for the
design, construction and delivery of one [l]
having hull number [l]
(the “Vessel”) including
(without limitation) all our rights in and to the Vessel as she is constructed,
our right to take delivery of the Vessel, all sums payable or which may become
payable to us or to our order under or pursuant to the Building Contract and all
damages and other payments (whether awarded by arbitral tribunal or by agreement
or otherwise) for breach, termination or variation of the Building Contract
(collectively the “Building
Contract Rights”).

     

    Without
prejudice to your rights, benefits and remedies under the Building Contract we
irrevocably and absolutely authorize and instruct you:-

     

    
      	
              (i)

            	
              to
      hold the Vessel (as defined in the Building Contract) to the order of the
      Assignee;

            

    

     

    
      	
              (ii)

            	
              to
      deliver to or to the order of the Assignee the Builder’s Certificate and
      any other document of title to the
Vessel;

            

    

     

    
      	
              (iii)

            	
              to
      pay to the Assignee all sums which you may become due to pay to us or to
      our order forming part of the Building Contract
  Rights.

            

    

     

    Notwithstanding
the Assignment, we hereby irrevocably and unconditionally assure and undertake
to you that (a) we will continue to be responsible to you for performance of all
the obligations of the Buyer under the Building Contract in accordance with the
terms and conditions therein, including but not limited to the supervision and
technical management of the construction of the Vessel and the full payment of
the contract price of the Vessel; (b) your rights and benefits and interests
under the Building Contract will not in any event be affected or prejudiced; (c)
this assignment will not impose on you any further additional obligations or
liabilities other than those expressly set forth in the Building Contract; and
(d) any cost, expenses and charges, or loss of time incurred in or in connection
with this assignment shall be on our account.

     

    Please
note that:

     

    
      	
              (i)

            	
              nothing
      in this notice nor in the Assignment should be interpreted as imposing any
      obligation on the Assignee to you in respect of or relating to the
      Building Contract or the Building Contract
  Rights;

            

    

     

    
      	
              (ii)

            	
              unless
      and until you receive written notice from the Assignee to the contrary,
      you should continue to deal with us in relation to the supervision of the
      construction of the Vessel and the performance of our obligations under or
      pursuant to the Building Contract;

            

    

     

    
      	
              (iii)

            	
              the
      Building Contract may not be substantially altered, amended or
      supplemented, nor may we waive performance of any of your obligations
      under or pursuant to the Building Contract, without in each case the prior
      written consent of the Assignee;

            

    

     

    
      	
              (iv)

            	
              without
      the prior written consent of the Assignee, we may have the rights to agree
      and give consents for changes to the Specifications for the purpose of
      changing technical aspects of the construction of the Vessel which do not
      change the main characteristics of the Vessel.  Such agreement
      or consent given by us shall be legally binding upon the Assignee even if
      these affect the contract price or scheduled delivery of the Vessel, until
      such time as the Assignee gives you written notice that the security of
      the Assignment has become enforceable, after which we shall cease to be
      able to exercise even these rights;
and

            

    

     

    
      	
              (v)

            	
              we
      may not exercise any right or purported right which we may have to
      terminate the Building Contract without the prior written consent of the
      Assignee.

            

    

     

    We hereby
undertake to procure a written consent in the form attached in the Appendix
hereto from The Royal Bank of Scotland plc acting through the Shipping Business
Centre, 5-10 Great Tower Street, London EC3P 311X (the “Payment Guarantor”) who will
issue or has issued the Payment Guarantee as defined in the Building
Contract.

     

    We
further confirm to you that your acknowledgement of and consent to the
assignment as set forth herein shall not become effective until your receipt of
the aforesaid statement from the Payment Guarantor.

     

    The
authority and instructions contained in this notice may not be varied or revoked
without the prior written consent of the Assignee.

     

    Kindly
acknowledge receipt of this notice by completing the acknowledgment in the form
set out below on the two enclosed copies of this notice and forwarding one copy
to us and the other to the Assignee.

     

    This
Notice is governed by the Laws of England.

     

    
      	
              Signed.

            	 	 

    

     

    
      	
               
      

            	
              For
      and on behalf of

            

    

     

    
      	
               
      

            	
              [l]

            

    

     

    Dated                                  2007

     

    Confirmed
and acknowledged by

     

    

     

    for and
on behalf of

     

    The Royal Bank of Scotland
plc

     

    (the
Assignee)

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

     APPENDIX
I

    

    PART
II

    

    ACKNOWLEDGEMENT
BY THE SELLER

     

    
      	
              To:

            	
              [l]

            

    

     

    
      	
               
      

            	
              and

            

    

     

    
      	
               
      

            	
              THE
      ROYAL BANK OF SCOTLAND plc

            

    

     

    We
acknowledge receipt of the notice set out above and confirm our consent to the
assignment referred to in that notice.  We also agree to comply in all
respects with the instructions contained in that notice.

     

    We
confirm that we have received no notice of any previous assignment of, or other
third party right affecting, any of the Building Contract Rights, and we
undertake:

     

    
      	
              (i)

            	
              to
      inform the Assignee in writing should any default be made by [l]
      in the payment of any sum due to us under or in connection with the
      Building Contract or should there occur any default or other event as a
      result of which we claim to be entitled to terminate or cancel the
      Building Contract; and

            

    

     

    
      	
              (ii)

            	
              that
      before exercising any right to terminate or cancel the Building Contract,
      we will give to the Assignee at least fourteen days’ written notice of our
      intention to do so and the opportunity during that period to rectify any
      default.

            

    

     

    This
acknowledgement shall not become effective until our receipt of a written
statement from the Payment Guarantor in the form attached in the Appendix
hereto.

     

    Furthermore,
all our rights, benefits and remedies under the Building Contract (whether in
respect of the right to terminate the Building Contract, sale of the Vessel,
retaining proceeds following any Buyer’s default, all as described in detail in
Article XI of the Building Contract) shall not be prejudiced or diminished in
any respect whatsoever on account of the assignment.

     

    This
acknowledgement is governed by the laws of England.

     

    
      	
              Signed.

            	 	 

    

     

    
      	
               
      

            	
              For
      and on behalf of

            

    

     

    
      	
               
      

            	
              China
      Communications Construction Company
Ltd

            

    

     

    
      	
              Signed.

            	 	 

    

     

    
      	
               
      

            	
              For
      and on behalf of

            

    

     

    
      	
               
      

            	
              Nantong
      Yahua Shipbuilding Co. Ltd.

            

    

     

    Dated                                2007

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    APPENDIX

     

    Letterhead
of The Royal Bank of Scotland plc (Payment Guarantor)

     

    
      	
               
      

            	
              To:

            	
              (1)

            	
              China
      Communications Construction Company
Ltd

            

    

     

    
      	
               
      

            	
              No.
      C88, An Ding Men Wai Street

            

    

     

    
      	
               
      

            	
              Beijing

            

    

     

    
      	
               
      

            	
              10011

            

    

     

    
      	
               
      

            	
              The
      People’s Republic of China

            

    

     

    
      	
               
      

            	
              (2)

            	
              Nantong
      Yahua Shipbuilding Co. Ltd.

            

    

     

    
      	
               
      

            	
              1#
      Hongzha Road

            

    

     

    
      	
               
      

            	
              Jinweigang

            

    

     

    
      	
               
      

            	
              Nantong-Jiangsu

            

    

     

    
      	
               
      

            	
              P.C.
      226361

            

    

     

    
      	
               
      

            	
              The
      People’s Republic of China

            

    

     

    
      	
              cc:

            	
              [Refund
      Guarantor]

            

    

     

    Date:                           2007

     

    Dear
Sirs,

     

    Re:
Our Payment Guarantee
No.                                                                      

     

    We refer
to our Letter of Guarantee No. __________ (“Payment Guarantee”) issued in
favour of China Communications Construction Company Ltd and Nantong Yahua
Shipbuilding Co. Ltd. (together the “Seller”) under a Shipbuilding
Contract dated 24 February 2007 (as supplemented and/or amended from time to
time, the “Contract”) in
respect of Hull No. [l]
between the Seller and [l]
(the “Buyer”).

     

    We
acknowledge our receipt of the Notice of Assignment issued by the Buyer advising
of the assignment deed (the “Assignment”) dated [l]
2007, by which the Buyer has assigned all its rights and benefits to The Royal
Bank of Scotland plc acting through its office at Shipping Business Centre, 5-10
Great Tower Street, London EC3P 3HX (“Assignee”).

     

    We hereby
give our consent to and agree with the Assignment as set out above.

     

    We
confirm that notwithstanding the Assignment as set out in the Assignment, the
Payment Guarantee remains valid in favour of you and binding on ourselves in all
respects.

     

    
      	
              Signed:

            	 	 

    

     

    
      	
               
      

            	
              For
      and on behalf of

            

    

     

    
      	
               
      

            	
              The
      Royal Bank of Scotland plc

            

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    APPENDIX
I

    

    PART
III

    

    NOTICE
OF ASSIGNMENT TO REFUND GUARANTOR

     

    
      	
              To:

            	
              Bank
      of Communications

            

    

     

    
      	
               
      

            	
              Beijing
      Branch

            

    

     

    March
2007

     

    Dear
Sirs

     

    Guarantee number [l]
dated                                                                           March 2007

     

    Please
note that, by a Predelivery Security Assignment dated March 2007 (the “Security Assignment”), we
assigned irrevocably and absolutely to THE ROYAL BANK OF SCOTLAND plc (the “Bank”) all our interests and
rights except the right for making demand which shall remain with ourselves
under, in or in connection with a guarantee dated March 2007 and given by you to
ourselves in connection with a shipbuilding contract dated 24 February 2007 (as
supplemented and/or amended from time to time, the “Shipbuilding Contract”) and
entered into by ourselves with China Communications Construction Company Ltd and
Nantong Yahua Shipbuilding Co. Ltd. (together the “Seller”) in respect of Hull
No. NYHS[l], as
that guarantee may from time to time be varied, supplemented or replaced (the
“Refund
Guarantee”).

     

    We
irrevocably and absolutely authorise and instruct you to pay to the Bank all
sums, which you may become due to pay to us or to our order in connection with
the Refund Guarantee provided that such sum becomes repayable in accordance with
the terms of the Shipbuilding Contract.

     

    Please
note that :

     

    
      	
              (a)

            	
              nothing
      in this notice nor in the Security Assignment should be interpreted as
      imposing any obligation on the Bank to you in respect of or relating to
      the Refund Guarantee;

            

    

     

    
      	
              (b)

            	
              the
      Refund Guarantee and instructions herein contained may not be altered,
      amended or supplemented without the prior written consent of the
      Bank;

            

    

     

    
      	
              (c)

            	
              we
      may not make any demand for payment under the Refund Guarantee without the
      prior written consent of the Bank;

            

    

     

    The
authority and instructions contained in this notice may not be varied or revoked
without the prior written consent of the Bank.

     

    This
notice is governed by the laws of England.

     

    We
request you to issue to the Bank a Refund Guarantor’s Acknowledgement in the
form below.

     

    Yours
faithfully

     

    

     

    for and
on behalf of

     

    [l] MARITIME
CORP.

     

    Dated:                                March
2007

     

    Confirmed
and acknowledged by

     

    

     

    for and
on behalf of

     

    The
Royal Bank of Scotland plc

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

     APPENDIX
I

    

    PART
IV

    

    REFUND
GUARANTOR’S ACKNOWLEDGEMENT

     

    
      	
              To:

            	
              THE
      ROYAL BANK OF SCOTLAND plc

            

    

     

    
      	
               
      

            	
              Shipping
      Business Centre

            

    

     

    
      	
               
      

            	
              5-10
      Great Tower Street

            

    

     

    
      	
               
      

            	
              London

            

    

     

    
      	
               
      

            	
              EC3P
      3HX

            

    

     

    March
2007

     

    Dear
Sirs

     

    [l] MARITIME CORP. (the
“Company”)

     

    We
acknowledge receipt of a Notice of Assignment to Refund Guarantor from the
Company dated
             
March 2007 which notified us that the Company has authorized you to receive
interests and rights except the right for making demand which shall remain with
the Company under or in connection with a guarantee dated
             
March 2007 issued by us in respect of a shipbuilding contract (as supplemented
and/or amended from time to time, the “Shipbuilding Contract”)
entered into by the Company with China Communications Construction Company Ltd
and Nantong Yahua Shipbuilding Co. Ltd. (together the “Seller”) in respect of Hull
No. NYHS[l],
which guarantee as from time to time varied, supplemented or replaced is
referred to below as the “Refund
Guarantee”.

     

    We hereby
give our consent to the Notice of Assignment and agree that all sums which
become due and payable under the Refund Guarantee in accordance with the terms
and conditions of the Shipbuilding Contract shall be paid to you upon our
receipt of the Company’s demand in accordance with the terms of the Refund
Guarantee.

     

    This
acknowledgement shall not become effective until the Seller’s receipt of the 1st
instalment of the contract price payable under the Shipbuilding Contract and a
written statement from the Payment Guarantor in the form set out in the Appendix
hereto.

     

    We
confirm that no consents, authorisations or permissions are required from any
authority, person or body in the People’s Republic of China to enable us to
effect payment under the Refund Guarantee to the Bank.

     

    Yours
faithfully

     

    

     

    for and
on behalf of

     

    BANK
OF COMMUNICATIONS, BEIJING BRANCH

     

    Dated:                                      2007

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    APPENDIX

     

    Letterhead
of The Royal Bank of Scotland plc (Payment Guarantor)

     

    
      	
               
      

            	
              To:

            	
              (1)

            	
              China
      Communications Construction Company
Ltd

            

    

     

    
      	
               
      

            	
              No.
      C88, An Ding Men Wai Street

            

    

     

    
      	
               
      

            	
              Beijing

            

    

     

    
      	
               
      

            	
              10011

            

    

     

    
      	
               
      

            	
              The
      People’s Republic of China

            

    

     

    
      	
               
      

            	
              (2)

            	
              Nantong
      Yahua Shipbuilding Co. Ltd. 1# Hongzha
Road

            

    

     

    
      	
               
      

            	
              Jinweigang

            

    

     

    
      	
               
      

            	
              Nantong-Jiangsu

            

    

     

    
      	
               
      

            	
              P.C.
      226361

            

    

     

    
      	
               
      

            	
              The
      People’s Republic of China

            

    

     

    
      	
              cc:

            	
              Bank
      of Communications

            

    

     

    
      	
               
      

            	
              Beijing
      Branch

            

    

     

    Date:                           2007

     

    Dear
Sirs,

     

    Re:
Our Payment Guarantee
No.                                                                      

     

    We refer
to our Letter of Guarantee No. __________ (“Payment Guarantee”) issued in
favour of China Communications Construction Company Ltd and Nantong Yahua
Shipbuilding Co. Ltd. (together “Seller”) under a Shipbuilding
Contract dated 24 February 2007 (as supplemented and/or amended from time to
time, the “Contract”) in
respect of Hull No. NYHS[l]
between the Seller and [l]
Maritime Corp. (the “Buyer”).

     

    We
acknowledge our receipt of the Notice of Assignment issued by the Buyer advising
of the assignment deed (the “Assignment”) dated March
2007, by which the Buyer has assigned all its rights and benefits to The Royal
Bank of Scotland plc acting through its office at Shipping Business Centre, 5-10
Great Tower Street, London EC3P 3HX (“Assignee”).

     

    We hereby
give our consent to and agree with the Assignment as set out above.

     

    We
confirm that notwithstanding the Assignment as set out in the Assignment, the
Payment Guarantee remains valid in favour of you and binding on ourselves in all
respects.

     

    
      	
              Signed:

            	 	 

    

     

    
      	
               
      

            	
              For
      and on behalf of

            

    

     

    
      	
               
      

            	
              The
      Royal Bank of Scotland plc

            

    

     

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    
      APPENDIX
B

    

    
      FORM
OF CORPORATE GUARANTEE

    

    

    
      
      

    

     

    Date
[l]
2007

     

    TBS
INTERNATIONAL LIMITED

     

    as
Guarantor

     

    -and-

     

    THE
ROYAL BANK OF SCOTLAND plc

     

    as
Issuer

    
      

       

      GUARANTEE

    

     

    relating
to a Guarantee Facility Agreement

     

    dated
[l]
2007

    

    
      
        
          
            Watson,
Farley & Williams

            London

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    INDEX

     

    Clause Page

     

     

    1           INTERPRETATION [INSERT PAGE NUMBER]

     

    2           GUARANTEE [INSERT PAGE NUMBER]

     

    3           LIABILITY AS PRINCIPAL AND INDEPENDENT
DEBTOR[INSERT PAGE NUMBER]

     

    4           EXPENSES [INSERT PAGE NUMBER]

     

    5           ADJUSTMENT OF
TRANSACTIONS [INSERT PAGE
NUMBER]

     

    6           PAYMENTS [INSERT PAGE NUMBER]

     

    7           INTEREST [INSERT PAGE NUMBER]

     

    8           SUBORDINATION [INSERT PAGE NUMBER]

     

    9           ENFORCEMENT [INSERT PAGE NUMBER]

     

    10           REPRESENTATIONS AND
WARRANTIES [INSERT PAGE
NUMBER]

     

    11           UNDERTAKINGS [INSERT PAGE NUMBER]

     

    12           JUDGMENTS AND CURRENCY
INDEMNITY [INSERT PAGE
NUMBER]

     

    13           SET-OFF [INSERT PAGE NUMBER]

     

    14           SUPPLEMENTAL [INSERT PAGE NUMBER]

     

    15           ASSIGNMENT [INSERT PAGE NUMBER]

     

    16           NOTICES [INSERT PAGE NUMBER]

     

    17           INVALIDITY OF GUARANTEE FACILITY
AGREEMENT[INSERT PAGE NUMBER]

     

    18           GOVERNING LAW AND
JURISDICTION [INSERT PAGE
NUMBER]

     

    EXECUTION
PAGE [INSERT PAGE NUMBER]

     

    

    

    
      
        
          
             
RBS Guarantee (2).doc

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    THIS
GUARANTEE is made on [l]

     

    BETWEEN

     

    
      	
              (1)

            	
              TBS INTERNATIONAL
      LIMITED, a company incorporated in Bermuda whose principal office
      is at Suite 306, Commerce Building, One Chancery Lane, Hamilton HM12,
      Bermuda (the “Guarantor”);
      and

            

    

     

    
      	
              (2)

            	
              THE ROYAL BANK OF SCOTLAND
      plc, a company incorporated in Scotland, acting through its office
      at Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX (the
      “Issuer”, which
      expression includes its successors and
assigns).

            

    

     

    BACKGROUND

     

    
      	
              (A)

            	
              By
      a guarantee facility agreement dated [l]
      2007 and made 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 Obligors and (ii)
      the Issuer it was agreed that the Issuer would make available to the
      Obligors a guarantee facility of up to
  US$84,000,000.

            

    

     

    
      	
              (B)

            	
              The
      execution and delivery to the Issuer of this Guarantee is one of the
      conditions precedent to the availability of the guarantee facility under
      the said Guarantee Facility
Agreement.

            

    

     

    IT IS AGREED as
follows:

     

    
      	
              1  

            	
              INTERPRETATION

            

    

     

    
      	
              1.1  

            	
              Defined
      expressions.

            

    

     

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

     

    
      	
              1.2  

            	
              Construction
      of certain terms.

            

    

     

      In
this Guarantee:

     

    “bankruptcy” includes a
liquidation, receivership or administration and any form of suspension of
payments, arrangement with creditors or reorganisation under any corporate or
insolvency law of any country;

     

    “Guarantee Facility Agreement”
means the guarantee facility agreement referred to in Recital (A) and includes
any existing or future amendments or supplements, whether made with the
Guarantor’s consent or otherwise.

     

    
      	
              1.3  

            	
              Application
      of construction and interpretation provisions of Guarantee Facility
      Agreement.

            

    

     

      Clause
1.2 and 1.5 of the Guarantee Facility Agreement apply, with any necessary
modifications, to this Guarantee.

     

    
      	
              2  

            	
              GUARANTEE

            

    

     

    
      	
              2.1  

            	
              Guarantee
      and indemnity.

            

    

     

      The
Guarantor unconditionally and irrevocably:

     

    
      	
              (a)  

            	
              guarantees
      the due payment of all amounts payable by the Obligors under or in
      connection with the Guarantee Facility Agreement and every other Finance
      Document;

            

    

     

    
      	
              (b)  

            	
              undertakes
      to pay to the Issuer, on the Issuer’s demand, any such amount which is not
      paid by the Obligors when due and payable;
and

            

    

     

    
      	
              (c)  

            	
              fully
      indemnifies the Issuer on its demand in respect of all claims, expenses,
      liabilities and losses which are made or brought against or incurred by
      the Issuer as a result of or in connection with any obligation or
      liability guaranteed by the Guarantor being or becoming unenforceable,
      invalid, void or illegal; and the amount recoverable under this indemnity
      shall be equal to the amount which the Issuer would otherwise have been
      entitled to recover.

            

    

     

    
      	
              2.2  

            	
              No
      limit on number of demands.

            

    

     

      The
Issuer may serve more than one demand under Clause 2.1.

     

    
      	
              3  

            	
              LIABILITY
      AS PRINCIPAL AND INDEPENDENT DEBTOR

            

    

     

    
      	
              3.1  

            	
              Principal
      and independent debtor.

            

    

     

      The
Guarantor shall be liable under this Guarantee as a principal and independent
debtor and accordingly it shall not have, as regards this Guarantee, any of the
rights or defences of a surety.

     

    
      	
              3.2  

            	
              Waiver
      of rights and defences.

            

    

     

      Without
limiting the generality of Clause 3.1, the Guarantor shall neither be discharged
by, nor have any claim against the Issuer in respect of:

     

    
      	
              (a)  

            	
              any
      amendment or supplement being made to the Finance
    Documents;

            

    

     

    
      	
              (b)  

            	
              any
      arrangement or concession (including a rescheduling or acceptance of
      partial payments) relating to, or affecting, the Finance
      Documents;

            

    

     

    
      	
              (c)  

            	
              any
      release or loss (even though negligent) of any right or Security Interest
      created by the Finance Documents;

            

    

     

    
      	
              (d)  

            	
              any
      failure (even though negligent) promptly or properly to exercise or
      enforce any such right or Security Interest, including a failure to
      realise for its full market value an asset covered by such a Security
      Interest; or

            

    

     

    
      	
              (e)  

            	
              any
      other Finance Document or any Security Interest now being or later
      becoming void, unenforceable, illegal or invalid or otherwise defective
      for any reason, including a neglect to register
  it.

            

    

     

    
      	
              4  

            	
              EXPENSES

            

    

     

    
      	
              4.1  

            	
              Costs
      of preservation of rights, enforcement
etc.

            

    

     

      The
Guarantor shall pay to the Issuer on its demand the amount of all expenses
incurred by the Issuer in connection with any matter arising out of this
Guarantee, including any advice, claim or proceedings relating to this
Guarantee.

     

    
      	
              4.2  

            	
              Fees
      and expenses payable under Guarantee Facility
  Agreement.

            

    

     

      Clause
4.1 is without prejudice to the Guarantor’s liabilities in respect of the
Obligors’ obligations under clause 14 of the Guarantee Facility Agreement (fees
and expenses) and under similar provisions of other Finance
Documents.

     

    
      	
              5  

            	
              ADJUSTMENT
      OF TRANSACTIONS

            

    

     

    
      	
              5.1  

            	
              Reinstatement
      of obligation to pay.

            

    

     

      The
Guarantor shall pay to the Issuer on its demand any amount which the Issuer is
required, or agrees, to pay pursuant to any claim by, or settlement with, a
trustee in bankruptcy of an Obligor or of another Security Party (or similar
person) on the ground that the Guarantee Facility Agreement, or a payment by an
Obligor or of another Security Party, was invalid or on any similar
ground.

     

    
      	
              6  

            	
              PAYMENTS

            

    

     

    
      	
              6.1  

            	
              Method
      of payments.

            

    

     

      Any
amount due under this Guarantee shall be paid:

     

    
      	
              (a)  

            	
              in
      immediately available funds;

            

    

     

    
      	
              (b)  

            	
              to
      such account as the Issuer may from time to time notify to the
      Guarantor;

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

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

            

    

     

    
      	
              6.2  

            	
              Grossing-up
      for taxes.

            

    

     

      If
the Guarantor is required by law to make a tax deduction, the amount due to the
Issuer shall be increased by the amount necessary to ensure that the Issuer
receives and retains a net amount which, after the tax deduction, is equal to
the full amount that it would otherwise have received.

     

    
      	
              6.3  

            	
              Tax
      Credits.

            

    

     

      The
provisions of Clause 16.4 of the Guarantee Facility Agreement shall apply to
this Guarantee and in relation to any increased payments made by the Guarantor
under Clause 6.2 as if the same were set out in full herein with the necessary
changes.

     

    
      	
              7  

            	
              INTEREST

            

    

     

    
      	
              7.1  

            	
              Accrual
      of interest.

            

    

     

      Any
amount due under this Guarantee shall carry interest after the second Business
Day following the date on which the Issuer demands payment of it until it is
actually paid, unless interest on that same amount also accrues under the
Guarantee Facility Agreement.

     

    
      	
              7.2  

            	
              Calculation
      of interest.

            

    

     

      Interest
under this Guarantee shall be calculated and accrue in the same way as interest
under clause 6 of the Guarantee Facility Agreement.

     

    
      	
              7.3  

            	
              Guarantee
      extends to interest payable under Guarantee Facility
      Agreement.

            

    

     

      For
the avoidance of doubt, it is confirmed that this Guarantee covers all interest
payable under the Guarantee Facility Agreement, including that payable under
clause 6 of the Guarantee Facility Agreement.

     

    
      	
              8  

            	
              SUBORDINATION

            

    

     

    
      	
              8.1  

            	
              Subordination
      of rights of Guarantor.

            

    

     

      All
rights which the Guarantor at any time has (whether in respect of this Guarantee
or any other transaction) against an Obligor, any other Security Party or their
respective assets shall be fully subordinated to the rights of the Issuer under
the Finance Documents; and in particular, the Guarantor shall not:

     

    
      	
              (a)  

            	
              claim,
      or in a bankruptcy of any Obligor or any other Security Party prove for,
      any amount payable to the Guarantor by an Obligor or any other Security
      Party, whether in respect of this Guarantee or any other
      transaction;

            

    

     

    
      	
              (b)  

            	
              take
      or enforce any Security Interest for any such
  amount;

            

    

     

    
      	
              (c)  

            	
              claim
      to set-off any such amount against any amount payable by the Guarantor to
      an Obligor or any other Security Party;
or

            

    

     

    
      	
              (d)  

            	
              claim
      any subrogation or other right in respect of any Finance Document or any
      sum received or recovered by the Issuer under a Finance
      Document.

            

    

     

    
      	
              9  

            	
              ENFORCEMENT

            

    

     

    
      	
              9.1  

            	
              No
      requirement to commence proceedings against
  Obligors.

            

    

     

      The
Issuer will not need to commence any proceedings under, or enforce any Security
Interest created by, the Guarantee Facility Agreement or any other Finance
Document before claiming or commencing proceedings under this
Guarantee.

     

    
      	
              9.2  

            	
              Conclusive
      evidence of certain matters.

            

    

     

      However,
as against the Guarantor:

     

    
      	
              (a)  

            	
              any
      judgment or order of a court in England or the Marshall Islands in
      connection with the Guarantee Facility Agreement;
  and

            

    

     

    
      	
              (b)  

            	
              any
      statement or admission of an Obligor in connection with the Guarantee
      Facility Agreement,

            

    

     

    shall be
binding and conclusive as to all matters of fact and law to which it
relates.

     

    
      	
              9.3  

            	
              Suspense
      account.

            

    

     

      The
Issuer may, for the purpose of claiming or proving in a bankruptcy of an Obligor
or any other Security Party, place any sum received or recovered under or by
virtue of this Guarantee on a separate suspense or other interest bearing
nominal account without applying it in satisfaction of the Obligors’ obligations
under the Guarantee Facility Agreement.

     

    
      	
              10  

            	
              REPRESENTATIONS
      AND WARRANTIES

            

    

     

    
      	
              10.1  

            	
              General.

            

    

     

      The
Guarantor represents and warrants to the Issuer as follows.

     

    
      	
              10.2  

            	
              Status.

            

    

     

      The
Guarantor is duly incorporated and validly existing and in good standing under
the laws of Bermuda.

     

    
      	
              10.3  

            	
              Corporate
      power.

            

    

     

      The
Guarantor has the corporate capacity, and has taken all corporate action and
obtained all consents necessary for it:

     

    
      	
              (a)  

            	
              to
      execute this Guarantee; and

            

    

     

    
      	
              (b)  

            	
              to
      make all the payments contemplated by, and to comply with this
      Guarantee.

            

    

     

    
      	
              10.4  

            	
              Consents
      in force.

            

    

     

      All
the consents referred to in Clause 10.3 remain in force and nothing to the best
of the Guarantor’s knowledge and belief has occurred which makes any of them
liable to revocation.

     

    
      	
              10.5  

            	
              Legal
      validity.

            

    

     

      This
Guarantee constitutes the Guarantor’s legal, valid and binding obligations
enforceable against the Guarantor in accordance with its terms 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 2 of the Guarantee
Facility Agreement.

     

    
      	
              10.6  

            	
              No
      conflicts.

            

    

     

      The
execution by the Guarantor of this Guarantee and its compliance with this
Guarantee 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 Guarantee;
    or

            

    

     

    
      	
              (b)  

            	
              the
      constitutional documents of the Guarantor;
or

            

    

     

    
      	
              (c)  

            	
              any
      contractual or other obligation or restriction which is binding on the
      Guarantor or any of its assets.

            

    

     

    
      	
              10.7  

            	
              No
      withholding taxes.

            

    

     

      No
tax is imposed in any jurisdiction in which the Guarantor is ordinarily resident
for tax by way of withholding or deduction on any payment to be made under this
Guarantee.

     

    
      	
              10.8  

            	
              No
      default.

            

    

     

      To
the knowledge of the Guarantor, no Event of Default or Potential Event of
Default has occurred and is continuing.

     

    
      	
              10.9  

            	
              Information.

            

    

     

      All
information which has been provided in writing by or on behalf of the Guarantor
to the Issuer in connection with any Finance Document was to the best of the
Guarantor’s knowledge and belief true and not misleading as at the time it was
given; all audited and unaudited accounts which have been so provided satisfied
the requirements of Clause 11.4; and there has been no material adverse change
in the financial position or state of affairs of the Guarantor from that
disclosed in the latest of those accounts.

     

    
      	
              10.10  

            	
              No
      litigation.

            

    

     

      No
legal or administrative action involving the Guarantor has been commenced or
taken or, to the Guarantor’s knowledge, is likely to be commenced or taken
which, in either case, would be likely to have a material adverse effect on the
Guarantor’s financial position or profitability.

     

    
      	
              11  

            	
              UNDERTAKINGS

            

    

     

    
      	
              11.1  

            	
              General.

            

    

     

      The
Guarantor undertakes with the Issuer to comply with the following provisions of
this Clause 11 at all times during the Security Period, except as the Issuer may
otherwise permit.

     

    
      	
              11.2  

            	
              Information
      provided to be accurate.

            

    

     

      All
financial and other information which is provided in writing by or on behalf of
the Guarantor under or in connection with this Guarantee will, to the best of
the Guarantor’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 the Guarantee Facility Agreement.

     

    
      	
              11.3  

            	
              Provision
      of financial statements.

            

    

     

      The
Guarantor will send to the Issuer:

     

    
      	
              (a)  

            	
              as
      soon as possible, but in no event later than 120 days after the end of
      each financial year of the Guarantor, the annual audited accounts of the
      Guarantor and its consolidated subsidiaries;
and

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              11.4  

            	
              Form
      of financial statements.

            

    

     

      All
accounts (audited and unaudited) delivered under Clause 11.3 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 Guarantor and its
      subsidiaries at the date of those accounts and of their profit for the
      period to which those accounts relate;
and

            

    

     

    
      	
              (c)  

            	
              fully
      disclose or provide for all significant liabilities of the Guarantor and
      its subsidiaries.

            

    

     

    
      	
              11.5  

            	
              Shareholder
      and creditor notices.

            

    

     

      The
Guarantor will send the Issuer, at the same time as they are despatched, copies
of all communications which are despatched to the Guarantor’s shareholders or
creditors or any class of them.

     

    
      	
              11.6  

            	
              Consents.

            

    

     

      The
Guarantor will maintain in force and promptly obtain or renew, and will promptly
send certified copies to the Issuer of, all consents required:

     

    
      	
              (a)  

            	
              for
      the Guarantor to perform its obligations under this
    Guarantee;

            

    

     

    
      	
              (b)  

            	
              for
      the validity or enforceability of this
  Guarantee;

            

    

     

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

     

    
      	
              11.7  

            	
              Further
      assurance.

            

    

     

      The
Guarantor will:

     

    
      	
              (a)  

            	
              at
      its own cost, do all that it reasonably can to ensure that this Guarantee
      validly creates the obligations which it purports to create;
      and

            

    

     

    
      	
              (b)  

            	
              without
      limiting the generality of paragraph (a) above, at its own cost, promptly
      register, file, record or enrol this Guarantee with any applicable court
      or authority, pay any applicable stamp, registration or similar tax in
      respect of this Guarantee, give any notice or take any other step which
      may be or become necessary or desirable for this Guarantee to be valid,
      enforceable or admissible in
evidence.

            

    

     

    
      	
              11.8  

            	
              Notification
      of litigation.

            

    

     

      The
Guarantor will provide the Issuer with details of any legal or administrative
action involving the Guarantor 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 the Guarantor to perform its
obligations under this Guarantee.

     

    
      	
              11.9  

            	
              Notification
      of default.

            

    

     

      The
Guarantor will notify the Issuer as soon as the Guarantor 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
thereafter keep the Issuer fully up-to-date with all developments.

     

    
      	
              11.10  

            	
              Maintenance
      of status.

            

    

     

      The
Guarantor will maintain its separate corporate existence and remain in good
standing under the laws of Bermuda.

     

    
      	
              11.11  

            	
              No
      disposal of assets, change of
business.

            

    

     

      The
Guarantor will not:

     

    
      	
              (a)  

            	
              transfer,
      lease or otherwise dispose of all or a substantial part of its assets,
      whether by one transaction or a number of transactions, whether related or
      not except in the usual course of its trading operations;
    or

            

    

     

    
      	
              (b)  

            	
              make
      any substantial change to the nature of its business from that existing at
      the date of this Guarantee.

            

    

     

    
      	
              11.12  

            	
              No
      merger etc.

            

    

     

      The
Guarantor shall not, and shall procure that none of its subsidiaries will, enter
into any form of merger, sub-division, amalgamation or other
reorganisation.

     

    
      	
              11.13  

            	
              Chief
      Executive Office.

            

    

     

      The
Guarantor will maintain is chief executive office, and keep its corporate
documents and records, at Suite 306, Commerce Building, One Chancery Lane,
Hamilton HM12, Bermuda.

     

    
      	
              12  

            	
              JUDGMENTS
      AND CURRENCY INDEMNITY

            

    

     

    
      	
              12.1  

            	
              Judgments
      relating to Guarantee Facility
Agreement.

            

    

     

      This
Guarantee shall cover any amount payable by the Obligors under or in connection
with any judgment relating to the Guarantee Facility Agreement.

     

    
      	
              12.2  

            	
              Currency
      indemnity.

            

    

     

      In
addition, clause 15.4 (currency indemnity) of the Guarantee Facility Agreement
shall apply, with any necessary adaptations, in relation to this
Guarantee.

     

    
      	
              13  

            	
              SET-OFF

            

    

     

    
      	
              13.1  

            	
              Application
      of credit balances.

            

    

     

      The
Issuer may without prior notice following the occurrence of an Event of Default
which is continuing:

     

    
      	
              (a)  

            	
              apply
      any balance (whether or not then due) which at any time stands to the
      credit of any account in the name of the Guarantor at any office in any
      country of the Issuer in or towards satisfaction of any sum then due from
      the Guarantor to the Issuer under this Guarantee;
  and

            

    

     

    
      	
              (b)  

            	
              for
      that purpose:

            

    

     

    
      	
              (i)  

            	
              break,
      or alter the maturity of, all or any part of a deposit of the
      Guarantor;

            

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (iii)  

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

            

    

     

    
      	
              13.2  

            	
              Existing
      rights unaffected.

            

    

     

      The
Issuer shall not be obliged to exercise any of its rights under Clause 13.1; and
those rights shall be without prejudice and in addition to any right of set-off,
combination of accounts, charge, lien or other right or remedy to which the
Issuer is entitled (whether under the general law or any document).

     

    
      	
              14  

            	
              SUPPLEMENTAL

            

    

     

    
      	
              14.1  

            	
              Continuing
      guarantee.

            

    

     

      This
Guarantee shall remain in force as a continuing security at all times during the
Security Period.

     

    
      	
              14.2  

            	
              Rights
      cumulative, non-exclusive.

            

    

     

      The
Issuer’s rights under and in connection with this Guarantee are cumulative, may
be exercised as often as appears expedient and shall not be taken to exclude or
limit any right or remedy conferred by law.

     

    
      	
              14.3  

            	
              No
      impairment of rights under
Guarantee.

            

    

     

      If
the Issuer omits to exercise, delays in exercising or invalidly exercises any of
its rights under this Guarantee, that shall not impair that or any other right
of the Issuer under this Guarantee.

     

    
      	
              14.4  

            	
              Severability
      of provisions.

            

    

     

      If
any provision of this Guarantee is or subsequently becomes void, illegal,
unenforceable or otherwise invalid, that shall not affect the validity, legality
or enforceability of its other provisions.

     

    
      	
              14.5  

            	
              Guarantee
      not affected by other security.

            

    

     

      This
Guarantee shall not impair, nor be impaired by, any other guarantee, any
Security Interest or any right of set-off or netting or to combine accounts
which the Issuer may now or later hold in connection with the Guarantee Facility
Agreement.

     

    
      	
              14.6  

            	
              Guarantor
      bound by Guarantee Facility
Agreement.

            

    

     

      The
Guarantor agrees with the Issuer to be bound by all provisions of the Guarantee
Facility Agreement which are applicable to the Security Parties in the same way
as if those provisions had been set out (with any necessary modifications) in
this Guarantee.

     

    
      	
              14.7  

            	
              Applicability
      of provisions of Guarantee to other
rights.

            

    

     

      Clauses
3 and 17 shall also apply to any right of set-off or netting or to combine
accounts which the Guarantor creates by an agreement entered into at the time of
this Guarantee or at any later time (notwithstanding that the agreement does not
include provisions similar to Clauses 3 and 17), being an agreement referring to
this Guarantee.

     

    
      	
              14.8  

            	
              Third
      party rights.

            

    

     

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

     

    
      	
              15  

            	
              ASSIGNMENT

            

    

     

    
      	
              15.1  

            	
              Assignment
      by Issuer.

            

    

     

      The
Issuer may assign its rights under and in connection with this Guarantee to the
same extent as it may assign its rights under the Guarantee Facility
Agreement.

     

    
      	
              16  

            	
              NOTICES

            

    

     

    
      	
              16.1  

            	
              Notices
      to Guarantor.

            

    

     

      Any
notice or demand to the Guarantor under or in connection with this Guarantee
shall be given by letter or fax at:

     

    TBS
International Limited

     

    Suite 306
Commerce Building

     

    One
Chancery Lane

     

    Hamilton
HM12

     

    Bermuda

     

    Fax No:
+44 1 295 4957

     

    or to
such other address which the Guarantor may notify to the Issuer.

     

    
      	
              16.2  

            	
              Application
      of certain provisions of Guarantee Facility
  Agreement.

            

    

     

      Clauses
22.3, 22.4 and 22.5 of the Guarantee Facility Agreement apply to any notice or
demand under or in connection with this Guarantee.

     

    
      	
              16.3  

            	
              Validity
      of demands.

            

    

     

      A
demand under this Guarantee shall be valid notwithstanding that it is
served:

     

    
      	
              (a)  

            	
              on
      the date on which the amount to which it relates is payable by the
      Obligors under the Guarantee Facility
Agreement;

            

    

     

    
      	
              (b)  

            	
              at
      the same time as the service of a notice under clause 13.2 (events of
      default) of the Guarantee Facility
Agreement;

            

    

     

    and a
demand under this Guarantee may refer to all amounts payable under or in
connection with the Guarantee Facility Agreement without specifying a particular
sum or aggregate sum.

     

    
      	
              16.4  

            	
              Notices
      to Issuer.

            

    

     

      Any
notice to the Issuer under or in connection with this Guarantee shall be sent to
the same address and in the same manner as notices to the Issuer under the
Guarantee Facility Agreement.

     

    
      	
              17  

            	
              INVALIDITY
      OF GUARANTEE FACILITY AGREEMENT

            

    

     

    
      	
              17.1  

            	
              Invalidity
      of Guarantee Facility Agreement.

            

    

     

      In
the event of:

     

    
      	
              (a)  

            	
              the
      Guarantee Facility Agreement now being or later becoming, with immediate
      or retrospective effect, void, illegal, unenforceable or otherwise invalid
      for any other reason whatsoever, whether of a similar kind or not;
      or

            

    

     

    
      	
              (b)  

            	
              without
      limiting the scope of paragraph (a), a bankruptcy of an Obligor, the
      introduction of any law or any other matter resulting in an Obligor being
      discharged from liability under the Guarantee Facility Agreement, or the
      Guarantee Facility Agreement ceasing to operate (for example, by interest
      ceasing to accrue);

            

    

     

    this
Guarantee shall cover any amount which would have been or become payable under
or in connection with the Guarantee Facility Agreement if the Guarantee Facility
Agreement had been and remained entirely valid, legal and enforceable, or that
Obligor had not suffered bankruptcy, or any combination of such events or
circumstances, as the case may be, and that Obligor had remained fully liable
under it for liabilities whether invalidly incurred or validly incurred but
subsequently retrospectively invalidated; and references in this Guarantee to
amounts payable by the Obligors under or in connection with the Guarantee
Facility Agreement shall include references to any amount which would have so
been or become payable as aforesaid.

     

    
      	
              17.2  

            	
              Invalidity
      of Finance Documents.

            

    

     

      Clause
17.1 also applies to each of the other Finance Documents to which the Obligor
are a party.

     

    
      	
              18  

            	
              GOVERNING
      LAW AND JURISDICTION

            

    

     

    
      	
              18.1  

            	
              English
      law.

            

    

     

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

     

    
      	
              18.2  

            	
              Exclusive
      English jurisdiction.

            

    

     

      Subject
to Clause 18.3, the courts of England shall have exclusive jurisdiction to
settle any disputes which may arise out of or in connection with this
Guarantee.

     

    
      	
              18.3  

            	
              Choice
      of forum for the exclusive benefit of the
  Issuer.

            

    

     

      Clause
18.2 is for the exclusive benefit of the Issuer, which reserves the
rights:

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

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

     

    
      	
              18.4  

            	
              Process
      agent.

            

    

     

      The
Guarantor irrevocably appoints Curtis Davis Garrard LLP at its registered office
for the time being, presently at Waterview House, Roundwood Avenue, Stockley
Park, Uxbridge UB11 1AU, to act as its agent to receive and accept on its behalf
any process or other document relating to any proceedings in the English courts
which are connected with this Guarantee.

     

    
      	
              18.5  

            	
              Issuer’
      rights unaffected.

            

    

     

      Nothing
in this Clause 18 shall exclude or limit any right which the Issuer may have
(whether under the law of any country, an international convention or otherwise)
with regard to the bringing of proceedings, the service of process, the
recognition or enforcement of a judgment or any similar or related matter in any
jurisdiction.

     

    
      	
              18.6  

            	
              Meaning
      of “proceedings”.

            

    

     

      In
this Clause 18, “proceedings” means
proceedings of any kind, including an application for a provisional or
protective measure.

     

    THIS GUARANTEE has been
entered into on the date stated at the beginning of this Guarantee.

    

    
      
        
          
             
RBS Guarantee (2).doc

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

     EXECUTION
PAGE

    
      	
              GUARANTOR

            	 
      	 
      
	
              SIGNED by

              for
      and on behalf of

              TBS
      INTERNATIONAL LIMITED

              in
      the presence of:

            	
              )

              )

              )

              )

            	 
      
	
              ISSUER

            	 
      	 
      
	
              SIGNED by

              for
      and on behalf of

              THE
      ROYAL BANK OF

              SCOTLAND
plc

              in
      the presence of:

            	
              )

              )

              )

              )

              )

            	 
      

    

     

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    APPENDIX
C

    FORM
OF GUARANTEE

    
       

    

     

    
      
      

    

    

    IRREVOCABLE
PAYMENT LETTER OF GUARANTEE

    FOR
THE 2nd, 3rd and 4th INSTALMENTS

     

    
      	
              From:

            	
              The
      Royal Bank of Scotland plc

            

    

     

    
      	
              To:

            	
              China
      Communications Construction Company Ltd. ("CCCC");

            

    

     

    Date:

     

    Dear
Sirs,

     

    1.           In
consideration of your entering into a Shipbuilding Contract dated 24 February
2007 (the "Shipbuilding
Contract") with Nantong Yahua Shipbuilding Co., Ltd. of 1# Hongzha Road,
Jiuweigang, Nantong, Jiangsu P.C. 226361 (the "BUILDER") and [l]
Maritime Corp. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
Marshall Islands MH96960 as the buyer (the "BUYER") for the construction
of one (1) multi-purpose vessel known as the Builder's Hull No. NYHS[l]
(the "VESSEL"), we,
The Royal Bank of Scotland
plc acting through the Shipping Business Centre, 5-10 Great Tower Street,
London EC3R 3HX, hereby IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee,
as the primary obligor and not merely as the surety, the due, and punctual
payment by the BUYER, as and when the same shall fall due, of each and all of
the 2nd, 3rd and 4th instalments (the "Instalments" and each, an
"Instalment") of the
Contract Price amounting to a total sum of United States Dollars twenty one
million (US$ 21,000,000) as specified in (2) below, being part of a total
Contract Price of United States Dollars thirty five million four hundred and
twenty thousand (US$ 35,420,000).  Terms used herein shall bear the
same meaning as in the Shipbuilding Contract, a copy of which has been provided
to us.

     

    2.           The
Instalments guaranteed hereunder, pursuant to the terms of the Shipbuilding
Contract, comprise:

     

    
      	
               
      

            	
              (a)

            	
              the
      2nd Instalment in the amount of U.S. Dollars seven million only (US$
      7,000,000) payable by the BUYER within five (5) New York business days of
      the receipt by the BUYER of (i) the Refund Guarantee issued by the
      SELLER's Bank in respect of the 2nd, 3rd and 4th Instalments together with
      documentary evidence that this has been duly registered with the State
      Administration for Foreign Exchange ("SAFE") and (ii) a
      telefax notice attaching the Stage Certificate issued by you and the
      BUILDER in the form of the draft attached as Appendix A to the Overall
      Agreement, countersigned by the Classification Surveyor, certifying that
      the steel cutting of the first plate of the VESSEL in the BUILDER's
      Shipyard has commenced,

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      3rd Instalment in the amount of U.S. Dollars seven million only (US$
      7,000,000) payable by the BUYER within five (5) New York business days of
      the receipt by the BUYER of a telefax notice attaching the Stage
      Certificate issued by you and the BUILDER in the form of the draft
      attached as Exhibit D to the Shipbuilding Contract, countersigned by the
      Classification Society, certifying that the VESSEL's keel has been laid
      within the meaning of Article 2.3 of the Shipbuilding Contract;
      and

            

    

     

    
      	
               
      

            	
              (c)

            	
              the
      4th Instalment in the amount of U.S. Dollars seven million only (USD
      7,000,000) payable by the BUYER within five (5) New York business days of
      the receipt by the BUYER of a telefax notice attaching the Stage
      Certificate issued by you and the BUILDER in the form of the draft
      attached as Exhibit D to the Shipbuilding Contract, countersigned by the
      Classification Surveyor, certifying that the VESSEL has been successfully
      launched.

            

    

     

    PROVIDED
HOWEVER that it is expressly understood and agreed that our maximum liability
under this Letter of Guarantee shall at all times be limited to the aggregate
of:

     

    (a) the
lesser of (i) United States Dollars fourteen million (USD 14,000,000) and (ii)
the difference between the Contract Price and an amount corresponding to the
aggregate of each Instalment payment made from time to time by the BUYER to the
SELLER under the Shipbuilding Contract; and

     

    (b)
interest thereon as specified in paragraph 3 below.

     

    For the
avoidance of doubt, our liability under this Letter of Guarantee shall be
limited to United States Dollars fourteen million (USD 14,000,000) plus interest
thereon as specified in paragraph 3 below until such time as the BUYER pays the
3rd instalment of the Contract Price of the VESSEL, which shall reduce our
liability under this Letter of Guarantee to United States Dollars seven million
(USD 7 million) plus interest.  Our liability shall remain at United
States Dollars seven million (USD 7 million) plus interest until the payment by
the BUYER of the 4th instalment of the Contract Price, whereupon we shall have
no further liability to you under this Letter of Guarantee
whatsoever.

     

    3.           We
also IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as primary obligor
and not merely as surety, the due and punctual payment by the BUYER of interest
on each Instalment guaranteed hereunder at the rate of five percent (5%) per
annum from and including the first day after the date this Instalment fell due
under the Shipbuilding Contract until the date of full payment by us of such
amount guaranteed hereunder.

     

    4.           In
the event that the BUYER fails to punctually pay any Instalment guaranteed
hereunder or the BUYER fails to pay any interest thereon, and such default
continues for a period of fifteen (15) calendar days from the date of notice
thereof from yourselves to the BUYER, then, upon receipt by us of your first
written demand, we shall pay to you or your Assignee duly notified in your
demand, within fifteen (15) calendar days all unpaid 2nd, 3rd and 4th
Instalments, together with the interest as specified in paragraph (3) hereof,
without requesting you to take any or further action, procedure or step against
the BUYER or with respect to any other security which you may hold, provided
that:

     

    (a) Your
demand is accompanied by an original of the relevant Stage Certificate(s)
referred to in paragraph 2 above, issued in compliance with the Stage
Certificate formalities stated in the Overall Agreement or Shipbuilding
Contract, as the case may be; and

     

    (b) Your
demand is made not earlier than 20 days after receipt by us of a valid Refund
Guarantee duly registered with SAFE in respect of each Instalment claimed under
your demand, issued in compliance with the requirements of the Shipbuilding
Contract.

     

    5.           Any
payment by us under this Letter of Guarantee shall be made in United States
Dollars by telegraphic transfer to , as receiving bank nominated by you for
credit to the account of you with Bank of Communications (Beijing Branch), the
People's Republic of China or through such other receiving bank to be nominated
in writing by you from time to time, in favour of you or your
Assignee.

     

    6.           Our
obligations under this Letter of Guarantee shall not be affected or prejudiced
by any dispute between you as the SELLER and the BUYER under the Shipbuilding
Contract or by the BUILDER's delay in the construction and/or delivery of the
VESSEL due to whatever causes or by any variation or extension of their terms
thereof or by any security or other indemnity now or hereafter held by you in
respect thereof, or by any time or indulgence granted by you or any other person
in connection therewith, or by any invalidity or unenforceability of the terms
thereof.

     

    7.           Any
claim or demand shall be in writing signed by one of your officers and may be
served on us for the attention of the Letter of Guarantee Department either by
authenticated SWIFT message via Bank of Communications (Beijing Branch), or by
hand, or by post and if sent by post to 33 Jin Rong Street, Xicheng District,
Beijing 100032, The People's Republic of China (or such other address as we may
notify to you in writing).

     

    8.           This
Letter of Guarantee shall come into full force and effect upon delivery to you
of this Letter of Guarantee and shall continue in force and effect until the
earliest of the following:

     

    (a) the
date on which the VESSEL is delivered to and accepted by the BUYER;
or

     

    (b) the
date on which full payment of the 2nd, 3rd and 4th Instalments together with the
aforesaid interest shall have been made to you by the BUYER or
ourselves,

     

    whichever
first occurs; or

     

    (c) the
date on which the Shipbuilding Contract has been rescinded in compliance with
its terms; or

     

    (d)
[l].

     

    However,
in the event that by [l] (i)
the Vessel has not been successfully launched or (ii) the full payment of the
2nd, 3rd and 4th Instalments together with interest has not been made to you by
the BUYER or ourselves or (iii) the Shipbuilding Contract has not been rescinded
in compliance with its terms, then the validity of this Letter of Guarantee
shall be automatically extended until [l].

     

    9.           All
payments by us under this Letter of Guarantee shall be made without any set-off
or counterclaim and without deduction or withholding for or on account of any
taxes, duties, or charges whatsoever unless we are compelled by law to deduct or
withhold the same.  In the latter event we shall make the minimum
deduction or withholding permitted and will pay such additional amounts as may
be necessary in order that the net amount received by you after such deductions
or withholdings shall equal the amount which would have been received had no
such deduction or withholding been required to be made.

     

    10.           We
hereby confirm that you may assign this Letter of Guarantee to your financiers
by way of security.  No other assignment of your rights under this
Letter of Guarantee shall be permissible without our prior written consent, such
consent not to be unreasonably withheld.  In any event, the right for
making a demand under this Letter of Guarantee shall exclusively remain with
you.  The term "Assignee" where used in this
Letter of Guarantee shall be construed by reference to this paragraph
10.

     

    11.           This
Letter of Guarantee shall be construed in accordance with and governed by the
laws of England: We hereby submit to the exclusive jurisdiction of the English
courts for the purposes of any legal action or proceedings in connection with
this Letter of Guarantee.

     

    12.           As
soon as this Letter of Guarantee expires as aforesaid, you shall return the same
to us without any request or demand from us.

    

     

    IN
WITNESS WHEREOF, we have caused this Letter of Guarantee to be executed and
delivered by our duly authorized representative the day and year above
written.

     

    Very
Truly Yours,

     

    For The Royal Bank of Scotland
plc

     

    
      	
              By:

            	 

    

     

    
      	
               
      

            	
              (Signature)

            

    

     

    Name:

     

    Title:

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    APPENDIX
D

    FORM
OF INTERCREDITOR AGREEMENT

    

    
      
      

    

     

    
       

    

    

     

    Date                 March
2007

     

    ARGYLE
MARITIME CORP.

     

    CATON
MARITIME CORP.

     

    DORCHESTER
MARITIME CORP.

     

    LONGWOODS
MARITIME CORP.

     

    McHENRY
MARITIME CORP.

     

    SUNSWYCK
MARITIME CORP.

     

    as
Owners

     

    -and-

     

    THE
ROYAL BANK OF SCOTLAND plc

     

    as
Security Trustee

     

    -and-

     

    THE
ROYAL BANK OF SCOTLAND plc

     

    as
Issuer

    
      

       

      INTERCREDITOR
DEED

    

     

    relating
to pre-delivery security granted by the Owners

     

    in
respect of Hull Nos NYH5200720, NYH5200721, NYH5200722,

     

    NYK5200723,
NYK5200724 and NYH5200725 at Yahua Shipyard

    

    
      
        
          
            Watson,
Farley & Williams

            London

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    INDEX

     

    Clause Page

     

     

    1           DEFINITIONS AND
INTERPRETATION [INSERT PAGE
NUMBER]

     

    2           REPRESENTATIONS AND
WARRANTIES [INSERT PAGE
NUMBER]

     

    3           RANKING OF SECURITY [INSERT PAGE NUMBER]

     

    4           AMENDMENTS TO THE LOAN AGREEMENT AND
GUARANTEE FACILITY AGREEMENT [INSERT PAGE
NUMBER]

     

    5           TRANSFER OF RIGHTS AND OBLIGATIONS
UNDER THE LOAN AGREEMENT AND GUARANTEE FACILITY AGREEMENT [INSERT PAGE NUMBER]

     

    6           NOTICES [INSERT PAGE NUMBER]

     

    7           MISCELLANEOUS [INSERT PAGE NUMBER]

     

    8           LAW AND JURISDICTION [INSERT PAGE NUMBER]

     

    EXECUTION
PAGE [INSERT PAGE NUMBER]

     

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    THIS DEED
is made
on                                                      March
2007

     

    BETWEEN

     

    
      	
              (1)

            	
              ARGYLE MARITIME CORP.
      (“Owner A”), CATON MARITIME CORP.
      (“Owner B”), DORCHESTER MARITIME
      CORP. (“Owner
      C”), LONGWOODS
      MARITIME CORP. (“Owner D”), McHENRY MARITIME CORP.
      (“Owner E”), and
      SUNSWYCK MARITIME
      CORP. (“Owner
      F”), 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
      (together the “Owners” and
      individually an “Owner”);

            

    

     

    
      	
              (2)

            	
              THE ROYAL BANK OF SCOTLAND
      plc acting through its office at Level 5, 135 Bishopsgate, London
      EC2M 3UR (the “Security
      Trustee”);

            

    

     

    
      	
              (3)

            	
              THE ROYAL BANK OF SCOTLAND
      plc acting through the Shipping Business Centre, 5-10 Great Tower
      Street, London EC3R 3HX (the “Issuer”);

            

    

     

    BACKGROUND

     

    
      	
              (A)

            	
              By
      a loan agreement (the “Loan Agreement”) dated
            March 2007 and made between (i) the Owners
      as joint and several borrowers (ii) the banks and financial institutions
      listed in Schedule 1 thereto (the “Lenders”) (iii) The
      Royal Bank of Scotland plc as mandated lead arranger (iv) The Royal Bank
      of Scotland plc as bookrunner, agent and swap bank and (iv) the Security
      Trustee, the Lenders have agreed subject to the terms and conditions
      specified therein to make a $150,000,000 term loan facility available to
      the Owners for the purpose of part financing the acquisition cost of each
      of six newbuilding multipurpose carriers being built in Yahua Shipyard,
      China having hull nos. NYH5200720, NYH5200721, NYH5200722, NYH5200723,
      NYH5200724 and NYH5200725 (hereinafter referred to as “Ship A”, “Ship B”, “Ship C”, “Ship D”, “Ship E” and “Ship F” respectively
      and together the “Ships” and singly a “Ship”);

            

    

     

    
      	
              (B)

            	
              Pursuant
      to the Loan Agreement:

            

    

     

    
      	
               
      

            	
              (i)

            	
              Owner
      A has or shall execute in favour of the Security Trustee a pre-delivery
      security assignment assigning its rights under the shipbuilding contract
      and refund guarantees in respect of Ship A (the “Ship A Loan Agreement
      Pre-delivery Security
Assignment”);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Owner
      B has or shall execute in favour of the Security Trustee a pre-delivery
      security assignment assigning its rights under the shipbuilding contract
      and refund guarantees in respect of Ship B (the “Ship B Loan Agreement
      Pre-delivery Security
Assignment”);

            

    

     

    
      	
               
      

            	
              (iii)

            	
              Owner
      C has or shall execute in favour of the Security Trustee a pre-delivery
      security assignment assigning its rights under the shipbuilding contract
      and refund guarantees in respect of Ship C (the “Ship C Loan Agreement
      Pre-delivery Security
Assignment”);

            

    

     

    
      	
               
      

            	
              (iv)

            	
              Owner
      D has or shall execute in favour of the Security Trustee a pre-delivery
      security assignment assigning its rights under the shipbuilding contract
      and refund guarantees in respect of Ship D (the “Ship D Loan Agreement
      Pre-delivery Security
Assignment”);

            

    

     

    
      	
               
      

            	
              (v)

            	
              Owner
      E has or shall execute in favour of the Security Trustee a pre-delivery
      security assignment assigning its rights under the shipbuilding contract
      and refund guarantees in respect of Ship E (the “Ship E Loan Agreement
      Pre-delivery Security
Assignment”);

            

    

     

    
      	
               
      

            	
              (vi)

            	
              Owner
      F has or shall execute in favour of the Security Trustee a pre-delivery
      security assignment assigning its rights under the shipbuilding contract
      and refund guarantees in respect of Ship F (the “Ship F Loan Agreement
      Pre-delivery Security Assignment” and together with the Ship A Loan
      Agreement Pre-delivery Security Assignment, the Ship B Loan Agreement
      Pre-delivery Security Assignment, the Ship C Loan Agreement Pre-delivery
      Security Assignment, the Ship D Loan Agreement Pre-delivery Security
      Assignment, the Ship E Loan Agreement Pre-delivery Security Assignment and
      the “Loan Agreement
      Pre-delivery Security Assignments” and singly a “Loan Agreement Pre-delivery
      Security Assignment”);

            

    

     

    
      	
              (C)

            	
              By
      a guarantee facility agreement (the “Guarantee Facility
      Agreement”) dated    March 2007 and made between (i) the
      Owners as joint and several obligors (ii) the Issuing Bank, the Issuing
      Bank has agreed subject to the terms and conditions specified therein to
      make a $84,000,000 guarantee facility available to the Owners for the
      purpose of providing performance guarantees in relation to the payment of
      the second, third and fourth scheduled stage payments payable under the
      shipbuilding contracts for each of the six
  Ships;

            

    

     

    
      	
              (D)

            	
              Pursuant
      to the Guarantee Facility
Agreement:

            

    

     

    
      	
               
      

            	
              (vii)

            	
              Owner
      A has or shall execute in favour of the Security Trustee a pre-delivery
      security assignment assigning its rights under the shipbuilding contract
      and refund guarantees in respect of Ship A (the “Ship A Guarantee Facility
      Agreement Pre-delivery Security
  Assignment”);

            

    

     

    
      	
              (viii)

            	
              Owner
      B has or shall execute in favour of the Security Trustee a pre-delivery
      security assignment assigning its rights under the shipbuilding contract
      and refund guarantees in respect of Ship B (the “Ship B Guarantee Facility
      Agreement Pre-delivery Security
  Assignment”);

            

    

     

    
      	
               
      

            	
              (ix)

            	
              Owner
      C has or shall execute in favour of the Security Trustee a pre-delivery
      security assignment assigning its rights under the shipbuilding contract
      and refund guarantees in respect of Ship C (the “Ship C Guarantee Facility
      Agreement Pre-delivery Security
  Assignment”);

            

    

     

    
      	
               
      

            	
              (x)

            	
              Owner
      D has or shall execute in favour of the Security Trustee a pre-delivery
      security assignment assigning its rights under the shipbuilding contract
      and refund guarantees in respect of Ship D (the “Ship D Guarantee Facility
      Agreement Pre-delivery Security
  Assignment”);

            

    

     

    
      	
               
      

            	
              (xi)

            	
              Owner
      E has or shall execute in favour of the Security Trustee a pre-delivery
      security assignment assigning its rights under the shipbuilding contract
      and refund guarantees in respect of Ship E (the “Ship E Guarantee Facility
      Agreement Pre-delivery Security
  Assignment”);

            

    

     

    
      	
               
      

            	
              (xii)

            	
              Owner
      F has or shall execute in favour of the Security Trustee a pre-delivery
      security assignment assigning its rights under the shipbuilding contract
      and refund guarantees in respect of Ship F (the “Ship F Guarantee Facility
      Agreement Pre-delivery Security Assignment” and together with the
      Ship A Guarantee Facility Agreement Pre-delivery Security Assignment, the
      Ship B Guarantee Facility Agreement Pre-delivery Security Assignment, the
      Ship C Guarantee Facility Agreement Pre-delivery Security Assignment, the
      Ship D Guarantee Facility Agreement Pre-delivery Security Assignment and
      the Ship E Guarantee Facility Agreement Pre-delivery Security Assignment,
      the “Guarantee Facility
      Agreement Pre-delivery Security Assignments, and singly a “Guarantee Facility Agreement
      Pre-delivery Security
Assignment”);

            

    

     

    
      	
              (E)

            	
              The
      Security Trustee (on behalf of the Lenders) and the Issuer have agreed to
      share pari passu in the security created in favour of the Security Trustee
      under the Loan Agreement Pre-delivery Security Assignments and the
      security created in favour of the Issuer under the Guarantee Facility
      Agreement Pre-delivery Security
Assignments.

            

    

     

    IT IS AGREED as
follows:

     

    
      	
              1  

            	
              DEFINITIONS
      AND INTERPRETATION

            

    

     

    
      	
              1.1  

            	
              Defined
      expressions.

            

    

     

      Words
and expressions defined in the Loan Agreement and/or the Guarantee Facility
Agreement have the same meaning when used in this Deed unless the context
otherwise requires.

     

    
      	
              1.2  

            	
              General
      Interpretation.

            

    

     

      In
this Deed:

     

    
      	
              (a)  

            	
              Clause
      headings are inserted for convenience only and shall not affect the
      construction of this Deed and, unless otherwise specified, all references
      to clauses and appendices are to clauses of, and appendices to, this
      Deed;

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

            	
              references
      to persons include bodies corporate and
  unincorporate;

            

    

     

    
      	
              (d)  

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

            

    

     

    
      	
              (e)  

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

            

    

     

    
      	
              (f)  

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

            

    

     

    
      	
              2  

            	
              REPRESENTATIONS
      AND WARRANTIES

            

    

     

    
      	
              2.1  

            	
              General.

            

    

     

      Each
party hereto (each a “Warrantor”) represents and
warrants to the others as follows.

     

    
      	
              2.2  

            	
              Status.

            

    

     

      It
is duly incorporated and validly existing under the country of its
incorporation.

     

    
      	
              2.3  

            	
              Corporate
      power.

            

    

     

      It
has the corporate capacity, and has taken all corporate action and obtained all
consents necessary for it, to execute and to comply with this Deed.

     

    
      	
              2.4  

            	
              Consents
      in force.

            

    

     

      All
the consents referred to in Clause 2.3 to the best of its knowledge and belief
remain in force and nothing has occurred which makes any of them liable to
revocation.

     

    
      	
              2.5  

            	
              Legal
      validity.

            

    

     

      This
Deed constitutes legal, valid and binding obligations enforceable against it in
accordance with its terms 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 obtained by any
party in relation hereto.

     

    
      	
              2.6  

            	
              No
      conflicts.

            

    

     

      The
execution by it of this Deed and its compliance with this Deed will not involve
or lead to a contravention of:

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

            	
              its
      constitutional documents; or

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              3  

            	
              RANKING
      OF SECURITY

            

    

     

    
      	
              3.1  

            	
              Ranking
      of security.

            

    

     

      Subject
to the provisions of Clause 3.2, the Security Trustee (on behalf of the Lenders
under the Loan Agreement) and the Issuer have agreed to share pari passu in the
security created by the Loan Agreement Pre-delivery Security Assignments and the
Guarantee Facility Pre-delivery Security Assignments so that:

     

    
      	
              (i)  

            	
              upon
      the occurrence of an Event of Default which is continuing as defined in
      the Loan Agreement and the Security Trustee taking steps to enforce the
      security created by the Loan Agreement Pre-delivery Security Assignments
      the Issuer shall co-operate in relation to such enforcement and if
      required by the Security Trustee shall take similar steps to enforce the
      security created by the Guarantee Facility Pre-delivery Security
      Assignments; and

            

    

     

    
      	
              (ii)  

            	
              upon
      the occurrence of an Event of Default which is continuing as so defined in
      the Guarantee Facility Agreement and the Issuer taking steps to enforce
      the security created by the Guarantee Facility Pre-delivery Security
      Assignments, the Security Trustee shall co-operate in relation to such
      enforcement and if required by the Security Trustee shall take similar
      steps to enforce the security created by the Loan Agreement Pre-delivery
      Security Assignments,

            

    

     

    and so
that in each case the proceeds of realisation of that security shall be shared
between the Lenders and the Issuer pro rata in relation to the amounts owing by
the Owners under the Loan Agreement in respect of the pre-delivery Advances and
the amounts owing by the Owners under the Guarantee Facility
Agreement.

     

    
      	
              3.2  

            	
              Cash
      Collateral.

            

    

     

      In
the event cash collateral is provided to the Issuer in accordance with Clause
5.6 of the Guarantee Facility Agreement:

     

    
      	
              (a)  

            	
              the
      Issuer shall not share in the proceeds of realisation of the security
      created by the Loan Agreement Pre-delivery Security
      Assignments;

            

    

     

    
      	
              (b)  

            	
              none
      of the Security Trustee or the Lenders shall share in such cash
      collateral;

            

    

     

    
      	
              (c)  

            	
              the
      Issuer shall not be obliged to take any steps to enforce the security
      created by the Guarantee Facility Pre-delivery Security
      Assignments.

            

    

     

    
      	
              3.3  

            	
              Receipt
      of Proceeds

            

    

     

    
      	
              (a)  

            	
              Any
      proceeds of the realisation of the security created by the Loan Agreement
      Pre-delivery Security Assignments received by the Security Trustee shall
      be held in trust for the Lenders and the Issuer and that part of the
      proceeds to which the Issuer is entitled pursuant to Clause 3.1 above
      shall be paid by the Security Trustee to the Issuer for application in
      accordance with Clause 12 of the Guarantee Facility Agreement and that
      part of the proceeds to which the Lenders are entitled pursuant to Clause
      3.1 above shall be applied in accordance with Clause 17 of the Loan
      Agreement.

            

    

     

    
      	
              (b)  

            	
              Any
      proceeds of realisation of the security created by the Guarantee Facility
      Agreement Pre-delivery Security Assignments received by the Issuer shall
      be held on trust for itself and the Lenders and that part of the proceeds
      to which the Lenders are entitled pursuant to Clause 3.1 above shall be
      paid by the Issuer to the Security Trustee for application in accordance
      with Clause 17 of the Loan Agreement and that part of the proceeds to
      which the Issuer is entitled pursuant to Clause 3.1 above shall be applied
      in accordance with Clause 12 of the Guarantee Facility
      Agreement.

            

    

     

    
      	
              4  

            	
              AMENDMENTS
      TO THE LOAN AGREEMENT AND GUARANTEE FACILITY
  AGREEMENT

            

    

     

    
      	
              4.1  

            	
              Amendments
      to the Loan Agreement.

            

    

     

      The
Owners and the other Creditor Parties to the Loan Agreement may effect any form
of variation and/or supplement to the Loan Agreement and the Finance Documents
as defined thereunder without requiring any consent from the Issuer (but so that
any increase to the loan facility thereunder shall rank in priority after any
amounts owing under the Guarantee Facility Agreement for the purposes of the
sharing arrangements under Clause 3.1).

     

    
      	
              4.2  

            	
              No
      restrictions to the Guarantee Facility
  Agreement.

            

    

     

      The
Owners and the Issuer may effect any form of variation and/or supplement to the
Guarantee Facility Agreement and the Finance Documents as defined thereunder
without requiring any consent from the Creditor Parties under the Loan Agreement
(but so that any increase to the guarantee facility thereunder shall rank in
priority after any amounts owing under the Loan Agreement for the purposes of
the sharing arrangements under Clause 3.1).

     

    
      	
              5  

            	
              TRANSFER
      OF RIGHTS AND OBLIGATIONS UNDER THE LOAN AGREEMENT AND GUARANTEE FACILITY
      AGREEMENT

            

    

     

    
      	
              5.1  

            	
              Transfer
      of rights and obligations of Creditor Parties under the Loan Agreement and
      the Finance Documents (as defined
thereunder).

            

    

     

      The
Creditor Parties may transfer all or any of their rights and/or obligations
under the Loan Agreement and the Finance Documents (as defined thereunder)
without any consent from the Issuer provided that the transferee shall through
the transfer arrangements under Clause 26 of the Loan Agreement becomes bound by
this Deed.

     

    
      	
              5.2  

            	
              Transfer
      of rights and obligation of Issuer under the Guarantee Facility Agreement
      and the Finance Documents (as defined
  thereunder).

            

    

     

      The
Issuer may transfer all or any of its rights and/or obligations under the
Guarantee Facility Agreement and the Finance Documents (as defined thereunder)
without any consent from the Creditor Parties provided that the transferee
undertakes to comply with the obligations of the Issuer under this Deed and in
all other respects agrees to be bound by this Deed.

     

    
      	
              6  

            	
              NOTICES

            

    

     

    
      	
              6.1  

            	
              General.

            

    

     

      Unless
otherwise specifically provided, any notice under or in connection with this
Deed shall be given by letter or fax; and references in this Deed to written
notices, notices in writing and notices signed by particular persons shall be
construed accordingly.

     

    
      	
              6.2  

            	
              Addresses
      for communications.

            

    

     

      A
notice shall be sent:

     

    
      	
               
      

            	
              (a)

            	
              to
      the Owners:

            	
              P.O.
      Box HM 2522

            

    

     

    
      	
               
      

            	
              Hamilton
      HMGX

            

    

     

    
      	
               
      

            	
              Bermuda

            

    

     

    
      	
               
      

            	
              Fax
      No: +1 441 295 4957

            

    

     

    
      	
               
      

            	
              Attn:
      William J. Can

            

    

     

    
      	
               
      

            	
              with
      a copy to:

            	
              TBS
      Shipping Services Inc.

            

    

     

    
      	
               
      

            	
              612
      East Grassy Sprain Road

            

    

     

    
      	
               
      

            	
              Yonkers,
      NY 10710 USA

            

    

     

    
      	
               
      

            	
              Fax
      No: +1 914 961 5121

            

    

     

    
      	
               
      

            	
              Attn:
      Ferdinand V. Lepere

            

    

     

    
      	
               
      

            	
              (b)

            	
              to
      the Security Trustee:

            	
              The
      Royal Bank of Scotland plc

            

    

     

    
      	
               
      

            	
              Level
      5

            

    

     

    
      	
               
      

            	
              135
      Bishopsgate

            

    

     

    
      	
               
      

            	
              London
      EC2M 3UR

            

    

     

    
      	
               
      

            	
              Fax
      No: +44 207 207 085 4564

            

    

     

    
      	
               
      

            	
              Att:
      Syndicated Loans Agency

            

    

     

    
      	
               
      

            	
              (c)

            	
              to
      the issuer

            	
              The
      Royal Bank of Scotland plc

            

    

     

    
      	
               
      

            	
              Shopping
      Business Centre

            

    

     

    
      	
               
      

            	
              5-10
      Great Tower Street

            

    

     

    
      	
               
      

            	
              London
      EC3P 3UX 1

            

    

     

    
      	
               
      

            	
              Fax
      No: +44 207 283 7538

            

    

     

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

     

    
      	
              6.3  

            	
              Effective
      date of notices.

            

    

     

      Subject
to Clauses 6.4 and 6.5:

     

    
      	
              (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.

            

    

     

    
      	
              6.4  

            	
              Service
      outside business hours.

            

    

     

      However,
if under Clause 6.3 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 6.5) be deemed to be served, and shall take
effect, at 9 a.m. on the next day which is such a business day.

     

    
      	
              6.5  

            	
              Illegible
      notices.

            

    

     

      Clauses
6.3 and 6.4 do not apply if the recipient of a notice notifies the sender within
one 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.

     

    
      	
              6.6  

            	
              Valid
      notices.

            

    

     

      A
notice under or in connection with this Deed shall not be invalid by reason that
its contents or the manner of serving it does not comply with the requirements
of this Deed if the failure to serve it in accordance with the requirements of
this Deed has not caused any party to suffer any significant loss or
prejudice.

     

    
      	
              6.7  

            	
              English
      language.

            

    

     

      Any
notice under or in connection with this Deed shall be in English.

     

    
      	
              6.8  

            	
              Meaning
      of “notice”.

            

    

     

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

     

    
      	
              7  

            	
              MISCELLANEOUS

            

    

     

    
      	
              7.1  

            	
              Counterparty.

            

    

     

      This
Deed may be executed in several counterparts, each of which shall be an
original, but which together shall constitute but one and the same
document.

     

    
      	
              7.2  

            	
              Third
      party rights.

            

    

     

      Each
of the Creditor Parties (as defined in the Loan Agreement) shall have the right
to enforce the provisions of this Deed notwithstanding that it is not a party to
this Deed by virtue of the Contracts (Rights of Third Parties) Act
1999.  Save for this a person who is not a party to this Deed has no
right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to
enjoy the benefit of any term of this Deed.

     

    
      	
              8  

            	
              LAW
      AND JURISDICTION

            

    

     

    
      	
              8.1  

            	
              English
      law.

            

    

     

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

     

    
      	
              8.2  

            	
              Exclusive
      English jurisdiction.

            

    

     

      Subject
to Clause 8.3, the courts of England shall have exclusive jurisdiction to settle
any disputes which may arise out of or in connection with this
Deed.

     

    
      	
              8.3  

            	
              Choice
      of forum for the exclusive benefit of the Security Trustee and the
      Issuer.

            

    

     

      Clause
8.2 is for the exclusive benefit of the Security Trustee and the Issuer, which
reserve the right:

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              8.4  

            	
              Process
      agent for Owners.

            

    

     

      Each
Owner irrevocably appoints Curtis Davis Garrard LLP at its registered office for
the time being, presently at Waterview House, 1 Roundwood Avenue, Stockley Park,
Heathrow Airport, Uxbridge UB11 1AU, to act as its agent to receive and accept
on its behalf any process or other document relating to any proceedings in the
English courts which are connected with this Deed.

     

    
      	
              8.5  

            	
              Security
      Trustee’s and Issuer’s rights
unaffected.

            

    

     

      Nothing
in this Clause 8 shall exclude or limit any right which the Security Trustee and
the Issuer may have (whether under the law of any country, an international
convention or otherwise) with regard to the bringing of proceedings, the service
of process, the recognition or enforcement of a judgment or any similar or
related matter in any jurisdiction.

     

    
      	
              8.6  

            	
              Meaning
      of “proceedings”.

            

    

     

      In
this Clause 8, “proceedings” means
proceedings of any kind, including an application for a provisional or
protective measure.

     

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

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

     EXECUTION
PAGE

    
      	
              OWNERS

            	 
      	 
      
	
              EXECUTED
      AS A DEED

              by

              for
      and on behalf of ARGYLE
      MARITIME CORP.

              in
      the presence of:

            	
              )

              )

              )

              )

            	 
      
	
              EXECUTED
      AS A DEED

              by

              for
      and on behalf of CATON
      MARITIME CORP.

              in
      the presence of:

            	
              )

              )

              )

              )

            	 
      
	
              EXECUTED
      AS A DEED

              by

              for
      and on behalf of DORCHESTER MARITIME
      CORP.

              in
      the presence of:

            	
              )

              )

              )

              )

              )

            	 
      
	
              EXECUTED
      AS A DEED

              by

              for
      and on behalf of LONGWOODS MARITIME
      CORP.

              in
      the presence of:

            	
              )

              )

              )

              )

              )

            	 
      
	
              EXECUTED
      AS A DEED

              by

              for
      and on behalf of McHENRY
      MARITIME CORP.

              in
      the presence of:

            	
              )

              )

              )

              )

            	 
      
	
              EXECUTED
      AS A DEED

              by

              for
      and on behalf of SUNSWYCK
      MARITIME CORP.

              in
      the presence of:

            	
              )

              )

              )

              )

            	 
      
	
              SECURITY
      TRUSTEE

              EXECUTED
      AS A DEED

              by

              for
      and on behalf of THE
      ROYAL BANK OF SCOTLAND plc

              in
      the presence of:

            	
              )

              )

              )

              )

              )

            	 
      
	
              ISSUER

              EXECUTED
      AS A DEED

              by

              for
      and on behalf of THE
      ROYAL BANK OF SCOTLAND plc

              in
      the presence of:

            	
              )

              )

              )

              )

              )ex-10_2.htm

     

    
      TBS
INTERNATIONAL LIMITED & SUBSIDIARIES                       EXHIBIT 10.2

       

    

     

     

     

     

     

    Date: as
of January 16, 2008

     

    BEDFORD
MARITIME CORP.

    BRIGHTON
MARITIME CORP.

    HARI
MARITIME CORP.

    PROSPECT
NAVIGATION CORP.

    HANCOCK
NAVIGATION CORP

    COLUMBUS
MARITIME CORP.

    and

    WHITEHALL
MARINE TRANSPORT CORP.

    as joint
and several Borrowers

     

    TBS
INTERNATIONAL LIMITED

    as
Guarantor

     

    THE
BANKS AND FINANCIAL INSTITUTIONS NAMED HEREIN

    as
Lenders

     

    DVB
GROUP MERCHANT BANK (ASIA) LTD.

    as
Facility Agent and Security Trustee

     

    THE
GOVERNOR AND COMPANY OF THE BANK OF IRELAND

    as
Payment Agent

     

    DVB
BANK AG

    THE
GOVERNOR AND COMPANY OF THE BANK OF IRELAND

    and

    NATIXIS

    as Swap
Banks

     

    MOUNT
WASHINGTON LLC

    as
Arranger

    _______________________________________________________

     

    LOAN
AGREEMENT

    _______________________________________________________

     

    relating
to

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

    59% of
the aggregate Fair Market Value of the Ships

    

     

    INDEX

     

    Clause                                                                                                                                  Page

    

    1        INTERPRETATION [INSERT PAGE NUMBER]

    2        FACILITY [INSERT PAGE NUMBER]

    3        DRAWDOWN [INSERT PAGE NUMBER]

    4        INTEREST [INSERT PAGE NUMBER]

    5        INTEREST
PERIODS [INSERT PAGE
NUMBER]

    6        DEFAULT
INTEREST [INSERT PAGE
NUMBER]

    7        REPAYMENT AND
PREPAYMENT [INSERT PAGE
NUMBER]

    8        CONDITIONS
PRECEDENT [INSERT PAGE
NUMBER]

    9        REPRESENTATIONS AND
WARRANTIES [INSERT PAGE
NUMBER]

    10        COVENANTS [INSERT PAGE NUMBER]

    11        PAYMENTS AND
CALCULATIONS [INSERT PAGE
NUMBER]

    12        APPLICATION OF
RECEIPTS [INSERT PAGE
NUMBER]

    13        EVENTS OF
DEFAULT [INSERT PAGE
NUMBER]

    14        FEES AND
EXPENSES [INSERT PAGE
NUMBER]

    15        INDEMNITIES [INSERT PAGE NUMBER]

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

    17        ILLEGALITY,
ETC [INSERT PAGE
NUMBER]

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

    19        VARIATIONS AND
WAIVERS [INSERT PAGE
NUMBER]

    20        NOTICES [INSERT PAGE NUMBER]

    21        GUARANTY [INSERT PAGE NUMBER]

    22        JOINT AND SEVERAL
LIABILITY [INSERT PAGE
NUMBER]

    23        SUPPLEMENTAL [INSERT PAGE NUMBER]

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

    25        LAW AND
JURISDICTION [INSERT PAGE
NUMBER]

    26        WAIVER OF JURY
TRIAL [INSERT PAGE
NUMBER]

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

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

    

    SCHEDULE
1                                           LENDERS
AND COMMITMENTS

    SCHEDULE
2                                           DRAWDOWN
NOTICE

    SCHEDULE
3                                           CONDITION
PRECEDENT DOCUMENTS

    SCHEDULE
4                                           FORM
OF ASSIGNMENT AND ACCEPTANCE

    SCHEDULE
4                                           FORM
OF DELETION LETTER

    SCHEDULE
5                                           FORM
OF DELETION POWER OF ATTORNEY

    

    APPENDIX
A                                           FORM
OF COMPLIANCE CERTIFICATE

    APPENDIX
B                                           FORM
OF EARNINGS ASSIGNMENT

    APPENDIX
C                                           FORM
OF INSURANCE ASSIGNMENT

    APPENDIX
D                                           FORM
OF MANAGER’S UNDERTAKINGS

    APPENDIX
E                                           FORM
OF MORTGAGE

    APPENDIX
F                                           FORM
OF NOTE

    

    

     

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

     

    AMONG

     

    
      	
              (1)

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

            

    

    

    
      	
              (2)

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

            

    

     

    
      	
              (3)

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

            

    

     

    
      	
              (4)

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

            

    

     

    
      	
              (5)

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

            

    

     

    
      	
              (6)

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

            

    

     

    
      	
              (7)

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

            

    

     

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

    

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

    

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

    

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

     

    1           INTERPRETATION

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Bareboat Charterer”
means:

     

    
      	
              (a)  

            	
              Filscan,
      in respect of the APACHE MAIDEN;

            

    

     

    
      	
              (b)  

            	
              Viking,
      in respect of the KICKAPOO BELLE;

            

    

     

    
      	
              (c)  

            	
              Sea
      Star, in respect of the NAVAJO
PRINCESS;

            

    

     

    
      	
              (d)  

            	
              General
      Charterer, in respect of the INCA
MAIDEN;

            

    

     

    
      	
              (e)  

            	
              Viking,
      in respect of the KIOWA PRINCESS;

            

    

     

    
      	
              (f)  

            	
              Intermodal,
      in respect of the SENECA MAIDEN;
and

            

    

     

    
      	
              (g)  

            	
              General
      Charterer, in respect of the CHEROKEE
PRINCESS;

            

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    

    
      	
               
      

            	
              (a)

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

            

    

    

    
      	
               
      

            	
              (b)

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

            

    

    

    
      	
               
      

            	
              (c)

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

            

    

    

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

     

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

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

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

     

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

     

    “Eligible Assignee”
means:

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

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

     

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
               
      

            	
              (e)

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

            

    

     

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

     

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

     

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

     

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

     

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

     

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

    

    
      	
              (a)  

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

            

    

    

    
      	
              (b)  

            	
              by
      a Broker;

            

    

    

    
      	
              (c)  

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

            

    

    

    
      	
              (d)  

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

            

    

    

    
      	
              (e)  

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

            

    

    

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

     

    “Finance Documents”
means:

     

    (a)           this
Agreement;

     

    (b)           the
Note;

     

    (c)           the
Earnings Assignment;

     

    (d)           the
Insurance Assignments;

     

    (e)           the
Mortgages;

     

    (f)           the
Master Agreements; and

     

    
      	
               
      

            	
              (g)

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

            

    

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

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

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
               
      

            	
              (e)

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

            

    

     

    
      	
               
      

            	
              (f)

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

            

    

     

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

     

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

     

    “Insurances” means, in respect
of each Ship:

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

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

     

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

     

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

     

    “ISM Code” means in relation
to its application to each Ship and its operation:

     

    
      	
               
      

            	
              (a)

            	
              ‘The
      International Management Code for the Safe Operation of Ships and for
      Pollution Prevention’, currently known or referred to as the ‘ISM Code’
      (including the guidelines on its implementation), adopted by the
      International Maritime Organization (“IMO”) as Resolution
      A.741(18) and Resolution A.913(22) (superseding Resolution A.788(19)) (and
      the terms “safety
      management system”, “Safety Management
      Certificate” and “Document of Compliance”
      have the same meanings as are given to them in the ISM Code);
      and

            

    

     

    
      	
               
      

            	
              (b)

            	
              all
      further resolutions, circulars, codes, guidelines, regulations and
      recommendations which are now or in the future issued by or on behalf of
      the IMO or any other entity with responsibility for implementing the ISM
      Code;

            

    

     

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

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

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

    

    “ISPS Code Documentation”
includes:

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

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

     

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

     

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

     

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

     

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

     

    “Margin” means 2.50 percent
per annum;

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
               
      

            	
              (e)

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

            

    

     

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

     

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

     

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

     

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

     

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

     

    “Relevant Interbank Market”
mean the London interbank market;

     

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

     

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

     

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

     

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

     

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

     

    “Security Interest”
means:

     

    
      	
               
      

            	
              (a)

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

            

    

    

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

    

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

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

     

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

     

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

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

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

            

    

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

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

            

    

     

    
      	
              (e)  

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

            

    

     

    
      	
              (f)  

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

            

    

     

    
      	
              (g)  

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

            

    

     

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

     

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

     

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

     

    1.2           Construction of certain
terms.  In this Agreement:

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “subsidiary” has the meaning
given in Clause 1.4;

     

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

     

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

     

    
      	
              1.3

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

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

     

    
      	
              1.4

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

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

     

    1.5           General
Interpretation.

     

    (a)           Agreement:

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

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

     

    
      	
               
      

            	
              (iv)

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

            

    

     

    
      	
              (b)

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

            

    

     

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

     

    2           FACILITY

     

    
      	
              2.1

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

            

    

     

    
      	
              2.2

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

            

    

    

    
      	
              2.3

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

            

    

     

    3           DRAWDOWN

     

    
      	
              3.1

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

            

    

    

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

    

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

    

    
      	
              (c)

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

            

    

    

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

    

    
      	
              (a)

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

            

    

    

    
      	
              (b)

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

            

    

    

    
      	
              (c)

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

            

    

    

    
      	
              (d)

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

            

    

    

    
      	
              3.3

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

            

    

    

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

    

    
      	
              (a)

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

            

    

    

    
      	
              (b)

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

            

    

    

    
      	
              (c)

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

            

    

    

    
      	
              3.5

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

            

    

    

    4           INTEREST

     

    
      	
              4.1

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

            

    

     

    
      	
              4.2

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

            

    

     

    
      	
              4.3

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

            

    

     

    
      	
              4.4

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

            

    

    

    
      	
              4.5

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

            

    

     

    
      	
              (a)

            	
              it
      is unable to determine LIBOR;

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

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

     

    
      	
              4.6

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

            

    

    

    
      	
              (a)

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

            

    

    

    
      	
              (b)

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

            

    

    

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

    

    
      	
              4.7

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

            

    

    

    
      	
              4.8

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

            

    

    

    
      	
              4.9

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

            

    

    

    
      	
              4.10

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

            

    

    

    
      	
              4.11

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

            

    

    

    
      	
              (a)

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

            

    

    

    
      	
              (b)

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

            

    

    

    
      	
              4.12

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

            

    

    

    
      	
              4.13

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

            

    

     

    5           INTEREST
PERIODS

     

    
      	
              5.1

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

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

     

    
      	
              5.2

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

            

    

     

    
      	
              (a)

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

            

    

     

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

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

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

    

    6           DEFAULT
INTEREST

     

    
      	
              6.1

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              6.2

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

            

    

     

    
      	
              6.3

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

            

    

     

    
      	
              6.4

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

            

    

     

    
      	
              6.5

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

            

    

     

    
      	
              6.6

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

            

    

     

    7           REPAYMENT
AND PREPAYMENT

     

    
      	
              7.1

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

            

    

     

    
      	
              7.2

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

            

    

     

    
      	
              7.3

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

            

    

     

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

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              7.5

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

            

    

     

    
      	
              7.6

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

            

    

     

    
      	
              7.7

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

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

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
              7.9

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

            

    

     

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

     

    
      	
              7.11

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

            

    

     

    
      	
              7.12

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

            

    

     

    8           CONDITIONS
PRECEDENT

     

    
      	
              8.1

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

            

    

     

    
      	
              (a)

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

            

    

    

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

    

    
      	
               
      

            	
              (ii)

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

            

    

    

    
      	
              (b)

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

            

    

    

    
      	
              (c)

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

            

    

    

    
      	
               
      

            	
              (i)

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

            

    

    

    
      	
               
      

            	
              (ii)

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

            

    

    

    
      	
               
      

            	
              (iii)

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

            

    

    

    
      	
               
      

            	
              (iv)

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

            

    

    

    
      	
              (h)

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

            

    

    

    
      	
              (i)

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

            

    

    

    
      	
              8.2

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

            

    

     

    9           REPRESENTATIONS
AND WARRANTIES

     

    9.1           General.  Each
Obligor represents and warrants as follows.

     

    
      	
              9.2

            	
              Status.  Each
      Obligor is:

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
              9.3

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              (e)

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

            

    

     

    
      	
              (f)

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

            

    

     

    
      	
              (g)

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

            

    

     

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

     

    
      	
              9.4

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

            

    

     

    
      	
              9.5

            	
              Legal validity; effective
      Security Interests.

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

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

     

    
      	
              9.6

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              9.7

            	
              Taxes.

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              (e)

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

            

    

     

    
      	
              (f)

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

            

    

     

    
      	
              (g)

            	
              Other
      than the recording of each Mortgage in accordance with the laws of the
      relevant Approved Primary Flag and the filing of Uniform Commercial Code
      Financing Statements in Washington, D.C. in respect of certain of the
      Finance Documents, and fees consequent thereto, it is not necessary for
      the legality, validity, enforceability or admissibility into evidence of
      this Agreement or any other Finance Document that any of them or any
      document relating thereto be registered, filed recorded or enrolled with
      any court or authority in any relevant jurisdiction or that any stamp,
      registration or similar taxes be paid on or in relation to this Agreement
      or any of the other Finance
Documents.

            

    

     

    
      	
              9.8

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

            

    

     

    
      	
              9.9

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

            

    

     

    
      	
              9.10

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

            

    

     

    
      	
              9.11

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

            

    

     

    
      	
              9.12

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

            

    

     

    
      	
              (a)

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

            

    

    

    
      	
              (b)

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

            

    

    

    
      	
              (c)

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

            

    

    

    
      	
              (d)

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

            

    

    

    
      	
              (e)

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

            

    

    

    
      	
              9.13

            	
              Intentionally
      omitted.

            

    

    

    
      	
              9.14.

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

            

    

    

    
      	
              9.15.

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

            

    

    

    
      	
              (a)

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

            

    

    

    
      	
              (b)

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

            

    

    

    
      	
              9.16.

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

            

    

    

    
      	
              9.17.

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

            

    

    

    
      	
              9.18.

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

            

    

    

    
      	
              9.19.

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

            

    

    

    
      	
              9.20.

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

            

    

    

    
      	
              9.21.

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

            

    

    

    
      	
              9.22

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

            

    

    

    Commerce
Building, One Chancery Lane

    Hamilton
HM 12, Bermuda

    

    10           COVENANTS

     

    
      	
              10.1

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              (e)

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

            

    

     

    
      	
              (f)

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

            

    

     

    
      	
              (g)

            	
              [intentionally
      omitted];

            

    

     

    
      	
              (h)

            	
              the
      Guarantor shall deliver to the Facility
Agent:

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
               
      

            	
              (iii)

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

            

    

     

    
      	
               
      

            	
              (iv)

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

            

    

     

    
      	
              (i)

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

            

    

     

    
      	
              (j)

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

            

    

     

    
      	
              (k)

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

            

    

     

    
      	
              (l)

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

            

    

     

    
      	
              (m)

            	
              each
      Borrower shall procure that:

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
               
      

            	
              (iii)

            	
              an
      approved ship security plan is in
place;

            

    

     

    
      	
              (n)

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

            

    

     

    
      	
              (o)

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

            

    

     

    
      	
              (p)

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

            

    

     

    
      	
              (q)

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

            

    

     

    
      	
              (r)

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

            

    

     

    
      	
              (s)

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

            

    

     

    
      	
              (t)

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

            

    

     

    
      	
              (u)

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

            

    

     

    
      	
              (v)

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

            

    

     

    
      	
              (w)

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

            

    

     

    
      	
              (x)

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

            

    

     

    
      	
              (y)

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

            

    

     

    
      	
              10.2

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              (e)

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

            

    

     

    
      	
              (f)

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

            

    

     

    
      	
              (g)

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

            

    

     

    
      	
              (h)

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

            

    

     

    
      	
              (i)

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

            

    

     

    
      	
              (j)

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

            

    

     

    
      	
              (k)

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

            

    

     

    
      	
              (l)

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

            

    

     

    
      	
              (m)

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

            

    

     

    
      	
              (n)

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

            

    

     

    
      	
              (o)

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

            

    

     

    
      	
              (p)

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

            

    

     

    
      	
              (q)

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

            

    

     

    10.3           Collateral
Maintenance Ratio.

    

    
      	
              (a)

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

            

    

    

    
      	
              (b)

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

            

    

     

    
      	
              10.4

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

            

    

    

    
      	
              (a)

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

            

    

    

    
      	
              (b)

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

            

    

    

    
      	
              10.5

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

            

    

    

    
      	
              (a)

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

            

    

    

    
      	
              (b)

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

            

    

    

    
      	
               
      

            	
              (i)

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

            

    

    

    
      	
               
      

            	
              (ii)

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

            

    

    

    
      	
               
      

            	
              (iii)

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

            

    

    

    
      	
               
      

            	
              (iv)

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

            

    

    

    
      	
               
      

            	
              (v)

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

            

    

    

    11           PAYMENTS
AND CALCULATIONS

     

    
      	
              11.1

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

            

    

     

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

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              11.2

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

            

    

     

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

     

    
      	
              (b)

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

            

    

     

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

     

    
      	
              11.3

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

            

    

     

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

    

    
      	
              (a)

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

            

    

    

    
      	
              (b)

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

            

    

    

    
      	
              11.5

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

            

    

    

    
      	
              11.6

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

            

    

    

    
      	
              11.7

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

            

    

    

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

    

    
      	
              (b)

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

            

    

    

    
      	
              11.8

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

            

    

    

    
      	
              11.9

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

            

    

    

    
      	
              11.10

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

            

    

    

    
      	
              11.11

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

            

    

    

    12           APPLICATION
OF RECEIPTS

     

    
      	
              12.1

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

            

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      	
              12.2

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

            

    

     

    
      	
              (a)

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

            

    

     

    (b)           for
that purpose:

     

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

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
               
      

            	
              (iii)

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

            

    

     

    
      	
              12.3

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

            

    

     

    
      	
              12.4

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

            

    

     

    13           EVENTS
OF DEFAULT

     

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

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

            	
              an
      Obligor or any other party (other than a Credit Party) commits any
      material breach of or fails to observe any of its material obligations,
      covenants or undertakings under this Agreement or any of the other Finance
      Documents, or an event of default, or an event or circumstance which, with
      the giving of any notice, the lapse of time or both would constitute an
      event of default, has occurred under any of the other Finance Documents,
      and such default continues unremedied for 10 Business Days after written
      notice from the Facility Agent requesting action to remedy the same;
      or

            

    

     

    
      	
              (c)

            	
              any
      Financial Indebtedness of an Obligor is not paid when due or, only in the
      case of sums payable on demand, when first demanded, and such default
      remains uncured for 30 days, except for any such Financial Indebtedness
      which is being contested by such Obligor in good faith and through
      appropriate proceedings; or

            

    

     

    
      	
              (d)

            	
              any
      representation or warranty made by an Obligor or any other party (other
      than a Credit Party) in or pursuant to this Agreement or any of the other
      Finance Documents or in a Bareboat Charter or Memorandum of Three Party
      Agreement shall prove to have been incorrect in any material respect when
      made or deemed made or confirmed;

            

    

     

    
      	
              (e)

            	
              any
      of the consents referred to in Clause 9.3 is modified in a manner
      unacceptable to the Majority Lenders or is not granted or is revoked or
      terminated or expires and is not renewed or otherwise ceases to be in full
      force and effect; or

            

    

     

    
      	
              (f)

            	
              an
      Obligor suspends payment of its debts or is unable or admits inability to
      pay its debts as they fall due or shall make a general assignment for the
      benefit of creditors or any proceeding shall be instituted by or against
      an Obligor seeking to adjudicate it a bankrupt or insolvent, or seeking
      liquidation, winding up, reorganization, arrangement, adjustment,
      protection, relief, or composition of it or its debts under any law of any
      relevant jurisdiction relating to bankruptcy, insolvency or reorganization
      or relief of debtors, or seeking the entry of an order for relief or the
      appointment of a receiver, trustee, custodian or other similar official
      for it or for any substantial part of its property and, in the case of any
      such proceeding instituted against it (but not instituted by it), and, in
      the case of any such proceeding instituted against it (but not instituted
      by it), either such proceeding shall remain undismissed or unstayed for a
      period of 45 days, or any of the actions sought in such proceeding
      (including, without limitation, the entry of an order for relief against,
      or the appointment of a receiver, trustee, custodian or other similar
      official for, it or for any substantial part of its property) shall occur;
      or an Obligor shall take any company action to authorize any of the
      actions set forth above in this Clause 13.1(f);
  or

            

    

     

    
      	
              (g)

            	
              the
      occurrence of any act, event or circumstance which results in the
      Guarantor owning, beneficially and of record, directly or indirectly, less
      than 100% of the issued and outstanding equity of Westbrook or Westbrook
      owning, beneficially and of record, directly or indirectly, less than 100%
      of the issued and outstanding equity of a Borrower;
  or

            

    

     

    
      	
              (h)

            	
              an
      Obligor ceases or threatens to cease to carry on its business;
      or

            

    

     

    
      	
              (i)

            	
              all
      or a material part of the undertakings, assets, rights or revenues of, or
      shares or other ownership interest in, an Obligor are seized,
      nationalized, expropriated or compulsorily acquired by or under authority
      of any government; or

            

    

     

    
      	
              (j)

            	
              a
      creditor attaches or takes possession of, or a distress, execution,
      sequestration or process (each an “arrest or attachment”)
      is levied or enforced upon or sued out against, a material part of the
      undertakings, assets, rights or revenues (the “assets”) of an Obligor
      in relation to a claim by such creditor where such Obligor does not or
      does not procure that such arrest or attachment is lifted, released or
      expunged within 30 Business Days of such action being (A) instituted and
      (B) notified to the Obligor; or

            

    

     

    
      	
              (k)

            	
              a
      Ship becomes a Total Loss and insurance proceeds are not collected or
      received by the Security Trustee from the underwriters within 120 days of
      the Total Loss Date; or

            

    

     

    
      	
              (l)

            	
              in
      the reasonable determination of the Majority Lenders, it becomes
      impossible or unlawful for an Obligor or any other party thereto (other
      than a Credit Party) to fulfill any of the covenants and obligations
      required to be fulfilled as contained in any Finance Document or any of
      the instruments granting or creating rights in any of the Collateral in
      any material respect, or for a Credit Party to exercise any of the rights
      or remedies vested in it under any Finance Document, any of the Collateral
      or any of such instruments in any material
  respect;

            

    

     

    
      	
              (m)

            	
              there
      occurs, in the reasonable opinion of the Majority Lenders, a material
      adverse change in the financial condition of an Obligor;
  or

            

    

     

    
      	
              (n)

            	
              any
      other event occurs or circumstance arises which, in the reasonable opinion
      of the Majority Lenders, is likely materially and adversely to
      affect:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      ability of an Obligor or any other party (other than a Credit Party) to
      perform all or any of its respective obligations under or otherwise to
      comply with the terms of this Agreement or any of the other Finance
      Documents to which it is a party;
or

            

    

     

    (ii)           the
security created by any of the Finance Documents; or

     

    
      	
              (o)

            	
              any
      party to a Bareboat Charter or a Memorandum of Three Party Agreement
      commits any material breach of or fails to observe any of its material
      obligations, covenants or undertakings under such Bareboat Charter or
      Memorandum of Three Party Agreement, or an event of default, or an event
      or circumstance which, with the giving of any notice, the lapse of time or
      both would constitute an event of default, has occurred under such
      Bareboat Charter or Memorandum of Three Party Agreement;
  or

            

    

     

    
      	
              (p)

            	
              the
      results of any inspection of a Ship are deemed unsatisfactory by the
      Facility Agent in its sole, reasonable discretion;
  or

            

    

     

    
      	
              (q)

            	
              the
      Guarantor fails to comply with the TBS Credit Facility Financial
      Covenants; or

            

    

     

    
      	
              (r)

            	
              an
      event of default, or an event or circumstance which, with the giving of
      any notice, the lapse of time or both would constitute an event of
      default, has occurred under any contract or agreement (other than the
      Finance Documents) to which an Obligor is a
  party.

            

    

     

    
      	
              13.2

            	
              Actions following an Event of
      Default.  On, or at any time after, the occurrence of an
      Event of Default the Facility Agent
may:

            

    

     

    
      	
              (a)

            	
              serve
      on the Borrowers a notice stating that all obligations of the Lenders to
      the Borrowers under this Agreement are terminated;
  and/or

            

    

     

    
      	
              (b)

            	
              serve
      on the Borrowers a notice stating that the Loan, all accrued interest and
      all other amounts accrued or owing under this Agreement are immediately
      due and payable or are due and payable on demand; provided that in the
      case of an Event of Default under any of Clauses 13.1 (f), the Loan and
      all accrued interest and other amounts accrued or owing hereunder shall be
      deemed immediately due and payable without notice or demand therefor;
      and/or

            

    

     

    
      	
              (c)

            	
              change
      the Approved Managers; and/or

            

    

     

    
      	
              (d)

            	
              take
      any other action which, as a result of the Event of Default or any notice
      served under paragraph (a) or (b) above, a Credit Party is entitled to
      take under any Finance Document or any applicable
  law.

            

    

     

    
      	
              13.3

            	
              Termination of
      obligations.  On the service of a notice under paragraph
      (a) of Clause 13.2, all the obligations of the Lenders to the Borrowers
      under this Agreement shall
terminate.

            

    

     

    
      	
              13.4

            	
              Acceleration of
      Loan.  On the service of a notice under paragraph (b) of
      Clause 13.2, the Loan, all accrued interest and all other amounts accrued
      or owing from the Borrowers under this Agreement and every other Finance
      Document shall become immediately due and payable or, as the case may be,
      payable on demand, and the Security Trustee shall forthwith be entitled to
      enforce the Security Interests created by this Agreement and any other
      Finance Document in any manner available to it and in such sequence as the
      Security Trustee may, in its absolute discretion,
    determine.

            

    

     

    
      	
              13.5

            	
              Multiple notices; action
      without notice.  The Facility Agent may serve notices
      under paragraphs (a) and (b) of Clause 13.2 simultaneously or on different
      dates and it may take any action referred to in that Clause if no such
      notice is served or simultaneously with or at any time after the service
      of both or either of such notices.

            

    

     

    14           FEES
AND EXPENSES

     

    14.1           Fees.  The Borrowers
shall pay:

     

    
      	
              (a)

            	
              to
      the Facility Agent, a Facility Agent’s fee of $7,500 per annum, which
      shall be non-refundable and payable upon the execution of this Agreement
      and annually upon the anniversary of the execution of this
      Agreement;

            

    

     

    
      	
              (b)

            	
              to
      the Security Trustee, a Security Trustee’s fee of $7,500 per annum, which
      shall be non-refundable and payable upon the execution of this Agreement
      and annually upon the anniversary of the execution of this
      Agreement;

            

    

     

    
      	
              (c)

            	
              to
      the Payment Agent, a Payment Agent’s fee of $10,000 per annum, which shall
      be non-refundable and payable upon the execution of this Agreement and
      annually upon the anniversary of the execution of this Agreement;
      and

            

    

     

    
      	
              (d)

            	
              to
      each Lender, a commitment fee equal to 0.75% per annum of the undrawn
      portion of the Commitment, payable monthly in arrears during the period
      from (and including) the date of execution of this Agreement to the Actual
      Drawdown Date.

            

    

     

    
      	
              14.2

            	
              Costs of negotiation,
      preparation etc.  The Borrowers shall pay to the Facility
      Agent on its demand the amount of all expenses incurred by the Facility
      Agent or any other Credit Party in connection with the negotiation,
      preparation, execution, registration or enforcement of any Finance
      Document or any related document or with any transaction contemplated by a
      Finance Document or a related document, including, without limitation, the
      reasonable fees and disbursements of the Facility Agent’s legal counsel
      and any local counsel retained by
them.

            

    

     

    
      	
              14.3

            	
              Costs of variations,
      amendments, enforcement etc.  The Borrowers shall pay to
      the Facility Agent, on the Facility Agent’s demand, the amount of all
      expenses incurred by the Facility Agent in connection
  with:

            

    

     

    
      	
              (a)

            	
              any
      amendment or supplement to a Finance Document, or any proposal for such an
      amendment to be made;

            

    

     

    
      	
              (b)

            	
              any
      consent or waiver by any Credit Party under or in connection with a
      Finance Document, or any request for such a consent or
    waiver;

            

    

     

    
      	
              (c)

            	
              the
      valuation of or any other matter relating to the Collateral;
      or

            

    

     

    
      	
              (d)

            	
              any
      step taken by a Credit Party with a view to the protection, exercise or
      enforcement of any right or Security Interest created by a Finance
      Document or for any similar
purpose.

            

    

     

    There
shall be recoverable under paragraph (d) the full amount of all legal expenses
as may be incurred by such Credit Party.

     

    
      	
              14.4

            	
              Documentary
      taxes.  The Borrowers shall promptly pay any tax payable
      on or by reference to any Finance Document, and shall, on demand, fully
      indemnify any Credit Party against any liabilities and expenses resulting
      from any failure or delay by the Borrowers to pay such a
    tax.

            

    

     

    15           INDEMNITIES

     

    
      	
              15.1

            	
              Indemnities regarding borrowing
      and repayment of Loan.  The Borrowers shall fully
      indemnify a Credit Party on such Credit Party’s first demand in respect of
      all reasonable expenses, liabilities and losses which are incurred by such
      Credit Party, or which such Credit Party reasonably and with due diligence
      estimates that it will incur, as a result of or in connection
      with:

            

    

     

    
      	
              (a)

            	
              the
      Advance not being borrowed on the Expected Drawdown Date specified in the
      Drawdown Notice for any reason other than a default by the affected
      Lender;

            

    

     

    
      	
              (b)

            	
              the
      receipt or recovery of all or any part of the Loan or an overdue sum
      otherwise than on the last day of an Interest Period or other relevant
      period;

            

    

     

    
      	
              (c)

            	
              any
      failure (for whatever reason) by the Borrowers to make payment of any
      amount due under a Finance Document on the due date or, if so payable, on
      demand (after giving credit for any default interest paid by the Borrowers
      on the amount concerned under Clause
7);

            

    

     

    
      	
              (d)

            	
              the
      occurrence and/or continuance of an Event of Default or a Potential Event
      of Default and/or the acceleration of repayment of the Loan under Clause
      13;

            

    

     

    and in
respect of any tax (other than tax on its overall net income imposed by a taxing
jurisdiction in which such Credit Party is organized, holds or books the Loan or
has a principal place of business) for which such Credit Party is liable in any
jurisdiction directly in connection with any amount paid or payable to such
Credit Party under any Finance Document.

     

    
      	
              15.2

            	
              Breakage
      costs.  Without limiting its generality, Clause 15.1
      covers any liability, expense or loss incurred by a Credit
      Party:

            

    

     

    
      	
              (a)

            	
              in
      liquidating or employing deposits from third parties acquired or arranged
      to fund or maintain all or any part of the Loan and/or any overdue amount
      (or an aggregate amount which includes the Loan or any overdue amount);
      and

            

    

     

    
      	
              (b)

            	
              in
      terminating, or otherwise in connection with, any interest and/or currency
      swap or any other transaction entered into (whether with another legal
      entity or with another office or department of such Credit Party) to hedge
      any exposure arising under this Agreement or that part which such Credit
      Party determines is fairly attributable to this Agreement of the amount of
      the liabilities, expenses or losses incurred by it in terminating, or
      otherwise in connection with, a number of transactions of which this
      Agreement is one.

            

    

     

    
      	
               
      

            	
              It
      is understood and agreed that unless an Event of Default has occurred and
      is continuing any gain realized by a Credit Party under Clause 15.2(b)
      shall be for credit against the amount then due from the Borrowers to such
      Credit Party.

            

    

     

    
      	
              15.3

            	
              Miscellaneous
      indemnities.  The Borrowers shall fully indemnify each
      Credit Party in respect of all claims, demands, proceedings, liabilities,
      taxes, losses and expenses of every kind (“liability items”)
      which may be made or brought against, or incurred by, such Credit Party,
      in any country, in relation to:

            

    

     

    
      	
              (a)

            	
              any
      action taken, or omitted or neglected to be taken, under or in connection
      with any Finance Document by such Credit Party or by any receiver
      appointed under a Finance Document;

            

    

     

    
      	
              (b)

            	
              any
      other event, matter or question which occurs or arises at any time during
      the Security Period and which has any connection with any payment or other
      transaction relating to a Finance Document or any asset covered (or
      previously covered) by a Security Interest created (or intended to be
      created) by a Finance Document;

            

    

     

    other
than liability items which are shown to have been caused by the gross negligence
or willful misconduct of such Credit Party’s own officers or
employees.

     

    
      	
              15.4

            	
              Other
      indemnities.  The Borrowers further agree to fully
      indemnify each Credit Party on any such Credit Party’s first demand in
      respect of all reasonable expenses, liabilities and losses which are
      incurred by such Credit Party, or which such Credit Party reasonably and
      with due diligence estimates that it will incur, as a result of or in
      connection with the enforcement (whether through negotiations, legal
      proceedings or otherwise) of the Finance Documents and any other document
      to be delivered hereunder.

            

    

     

    
      	
              15.5

            	
              Currency
      indemnity.  If any sum due from a Borrower to any of the
      Credit Party under a Finance Document or under any order or judgment
      relating to a Finance Document has to be converted from the currency in
      which the Finance Document provided for the sum to be paid (the “Contractual Currency”)
      into another currency (the “Payment Currency”) for
      the purpose of:

            

    

     

    
      	
              (a)

            	
              making
      or lodging any claim or proof against the Borrowers, whether in its
      liquidation, any arrangement involving it or otherwise;
  or

            

    

     

    (b)           obtaining
an order or judgment from any court or other tribunal; or

     

    (c)           enforcing
any such order or judgment;

     

    the
Borrowers shall indemnify such Credit Party against the loss arising when the
amount of the payment actually received by such Credit Party is converted at the
available rate of exchange into the Contractual Currency.

     

    In this
Clause 15.5, the “available
rate of exchange” means the rate at which the Credit Party concerned is
able at the opening of business (London time) on the Business Day after it
receives the sum concerned to purchase the Contractual Currency with the Payment
Currency.

     

    This
Clause 15.5 creates a separate liability of the Borrowers which is distinct from
its other liabilities under the Finance Documents and which shall not be merged
in any judgment or order relating to those other liabilities.

     

    
      	
              15.6

            	
              Increased
      costs.  If a Lender reasonably determines that compliance
      with any law or regulation or any guideline or request from any central
      bank or other governmental or monetary authority in regard to capital
      adequacy (whether or not having the force of law) including, without
      limitation, any guideline contemplated by the report dated July 1988
      entitled “International Convergence of Capital Management and Capital
      Standards” issued by the Bank Committee on Banking Regulations and
      Supervisory Practices, in any case in which such law, regulation,
      guideline or request became effective or was made after the date hereof,
      has or would have the effect of reducing the rate of return on the capital
      of, or maintained by, such Lender or any corporation controlling such
      Lender as a consequence of such Lender making its Ratable Portion of the
      Advance or Commitment hereunder and other commitments of this type, by
      increasing the amount of capital required or expected to be maintained by
      such Lender or any corporation controlling such Lender, to a level below
      that which such Lender or any corporation controlling such Lender could
      have achieved but for such adoption, effectiveness, change or compliance
      (taking into account such Lender’s or such corporation’s policies with
      respect to capital adequacy) then the Borrowers shall, from time to time,
      pay such Lender, upon demand by such Lender made within 60 days after the
      first date on which such Lender has actual knowledge that it is entitled
      to make demand for payment under this Clause 15.6 of such reduction in
      return, such additional amount as may be specified by such Lender as being
      sufficient to compensate such Lender for such reduction in return, to the
      extent that such Lender reasonably determines such reduction to be
      attributable to the existence of such Lender’s commitment to lend
      hereunder; provided that
      if such Lender fails to so notify the Borrowers within such 60-day
      period, such amounts shall commence accruing on such later date on which
      such Lender notifies the Borrowers.  A certificate as to such
      amounts submitted to the Borrowers by a Lender shall be conclusive and
      binding for all purposes, absent manifest
error.

            

    

     

    16           NO
SET-OFF OR TAX DEDUCTION

     

    
      	
              16.1

            	
              No
      deductions.  All amounts due from the Obligors under a
      Finance Document shall be paid:

            

    

     

    (a)           without
any form of set-off, cross-claim or condition; and

     

    
      	
              (b)

            	
              free
      and clear of any tax deduction except a tax deduction which the Borrowers
      are required by law to make.

            

    

     

    
      	
              16.2

            	
              Grossing-up for
      taxes.  If an Obligor is required by law to make a tax
      deduction from any payment:

            

    

     

    
      	
              (a)

            	
              that
      Obligor shall notify the Facility Agent as soon as it becomes aware of the
      requirement;

            

    

     

    
      	
              (b)

            	
              that
      Obligor shall pay the tax deducted to the appropriate taxation authority
      promptly, and in any event before any fine or penalty
    arises;

            

    

     

    
      	
              (c)

            	
              the
      amount due in respect of the payment shall be increased by the amount
      necessary to ensure that each of the Lenders receives and retains (free
      from any liability relating to the tax deduction) a net amount which,
      after the tax deduction, is equal to the full amount which it would
      otherwise have received.

            

    

     

    
      	
              16.3

            	
              Evidence of payment of
      taxes.  Within 30 days after making any tax deduction,
      the Obligors shall deliver to the Facility Agent documentary evidence
      satisfactory to the Facility Agent that the tax had been paid to the
      appropriate taxation authority.

            

    

     

    
      	
              16.4

            	
              Exclusion of tax on overall net
      income.  In this Clause 16 “tax deduction” means
      any deduction or withholding for or on account of any present or future
      tax except tax on a Lender’s overall net income imposed by a taxing
      jurisdiction in which such Lender is organized, holds or books the Loan or
      has a principal place of business.

            

    

     

    17           ILLEGALITY,
ETC

     

    
      	
              17.1

            	
              Illegality.  This
      Clause 17 applies if a Lender notifies the Borrowers that it has become,
      or will with effect from a specified date,
  become:

            

    

     

    
      	
              (a)

            	
              unlawful
      or prohibited as a result of the introduction of a new law, an amendment
      to an existing law or a change in the manner in which an existing law is
      or will be interpreted or applied;
or

            

    

     

    
      	
              (b)

            	
              contrary
      to, or inconsistent with, any
regulation,

            

    

     

    for such
Lender to maintain or give effect to any of its obligations under this Agreement
in the manner contemplated by this Agreement.

     

    
      	
              17.2

            	
              Notification and effect of
      illegality.  On a Lender notifying the Borrowers under
      Clause 17.1, such Lender’s obligation to make available its Commitment
      shall terminate; and thereupon or, if later, on the date specified in such
      Lender’s notice under Clause 17.1 as the date on which the notified event
      would become effective, the Borrowers shall prepay to such Lender that
      portion of the Loan then due and payable to such Lender plus all amounts
      otherwise payable under Clause 7.8.

            

    

     

    18           ASSIGNMENTS
AND PARTICIPATIONS; CHANGES IN LENDING OFFICE

     

    
      	
              18.1

            	
              Assignment by
      Borrowers.  Except as permitted by Clause 10.2(b), no
      Borrower may, without the consent of the Majority
  Lenders:

            

    

     

    (a)           transfer
any of its rights or obligations under any Finance Document; or

     

    
      	
              (b)

            	
              enter
      into any merger, de-merger or other reorganization, or carry out any other
      act, as a result of which any of its rights or liabilities under any
      Finance Document would vest in, or pass to, another
  person.

            

    

     

    
      	
              18.2

            	
              Assignments by
      Lender.

            

    

     

    
      	
              (a)

            	
              Each
      Lender may at its own expense and with the consent of the Borrowers, such
      consent not to be unreasonably withheld, assign to a bank or other entity
      all or a portion of its rights and obligations under this Agreement
      (including, without limitation, all or a portion of its Commitment or the
      Advance(s) owing to it), provided
      that:

            

    

    

    
      	
               
      

            	
              (i)

            	
              each
      such assignment shall be of a uniform, and not a varying, percentage of
      all rights and obligations under this
Agreement;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              the
      amount of the Commitment of the assigning Lender being assigned pursuant
      to each such assignment (determined as of the date of the Assignment and
      Acceptance with respect to such assignment) shall in no event be less than
      $5,000,000 and shall be an integral multiple of $1,000,000 in excess
      thereof, or shall be an assignment to another Lender or an assignment of
      all of the assigning Lender’s rights and obligations
      hereunder;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              each
      such assignment shall be to (x) another Lender or a financial Affiliate of
      the assigning Lender or (y) to an Eligible
  Assignee;

            

    

    

    
      	
               
      

            	
              (v)

            	
              at
      the time of such assignment, no such assignment shall, without the consent
      of the Borrowers, result in increased liability to the Borrowers under
      this Agreement; and

            

    

    

    
      	
               
      

            	
              (v)

            	
              the
      parties to each such assignment shall execute and deliver to the Facility
      Agent, for its acceptance and recording in the Register, an Assignment and
      Acceptance, together with a processing and recordation fee of $3,000 from
      the assignee.

            

    

    

    
      	
               
      

            	
              Upon
      such execution, delivery, acceptance and recording, from and after the
      effective date specified in each Assignment and Acceptance, (x) the
      assignee thereunder shall be a party hereto and, to the extent that rights
      and obligations hereunder have been assigned to it pursuant to such
      Assignment and Acceptance, have the rights and obligations of a Lender
      hereunder and (y) the Lender assignor thereunder shall, to the extent that
      rights and obligations hereunder have been assigned by it pursuant to such
      Assignment and Acceptance, relinquish its rights and be released from its
      further obligations under this Agreement (and, in the case of an
      Assignment and Acceptance covering all or the remaining portion of an
      assigning Lender’s rights and obligations under this Agreement, such
      Lender shall cease to be a party
hereto).

            

    

    

    
      	
              (b)

            	
              By
      executing and delivering an Assignment and Acceptance, the Lender assignor
      thereunder and the assignee thereunder confirm to and agree with each
      other and the other parties hereto as
follows:

            

    

    

    
      	
               
      

            	
              (i)

            	
              other
      than as provided in such Assignment and Acceptance, such assigning Lender
      makes no representation or warranty and assumes no responsibility with
      respect to any statements, warranties or representations made in or in
      connection with this Agreement or the execution, legality, validity,
      enforceability, genuineness, sufficiency or value of this Agreement or any
      other instrument or document furnished pursuant
  hereto;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              such
      assigning Lender makes no representation or warranty and assumes no
      responsibility with respect to the financial condition of any of the
      Obligors or the performance or observance by any of the Obligors of any of
      its obligations under this Agreement, any other Finance Document or any
      other instrument or document furnished pursuant hereto or
      thereto;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              such
      assignee confirms that it has received a copy of this Agreement, together
      with copies of such other documents and information as it has deemed
      appropriate to make its own credit analysis and decision to enter into
      such Assignment and Acceptance;

            

    

    

    
      	
               
      

            	
              (iv)

            	
              such
      assignee will, independently and without reliance upon the Facility Agent,
      the Security Trustee or the Payment Agent, such assigning Lender or any
      other Lender and based on such documents and information as it shall deem
      appropriate at the time, continue to make its own credit decisions in
      taking or not taking action under this
  Agreement;

            

    

    

    
      	
               
      

            	
              (v)

            	
              such
      assignee confirms that it is an Eligible Assignee or another Lender or a
      financial Affiliate of the assigning
Lender;

            

    

    

    
      	
               
      

            	
              (vi)

            	
              such
      assignee appoints and authorizes the Facility Agent, the Security Trustee
      and the Payment Agent to take such action on its behalf and to exercise
      such powers under this Agreement as are delegated to such party by the
      terms hereof, together with such powers as are reasonably incidental
      thereto;

            

    

    

    
      	
               
      

            	
              (vii)

            	
              such
      assignee agrees that it will perform in accordance with their terms all of
      the obligations which by the terms of this Agreement are required to be
      performed by it as a Lender; and

            

    

    

    
      	
              (viii)

            	
              such
      assigning Lender and such assignee represent and warrant that such
      assignment is not in violation of any applicable laws, including
      securities laws.

            

    

    

    
      	
              (c)

            	
              The
      Facility Agent shall maintain at its address referred to in Clause 20.2 a
      copy of each Assignment and Acceptance delivered to and accepted by it and
      a register for the recordation of the names and addresses of the Lenders
      and the Commitment of, and principal amount of the Advances owing to, each
      Lender from time to time (the “Register”).  The
      entries in the Register shall be conclusive and binding for all purposes,
      absent manifest error, and the Borrowers, the Facility Agent, the Payment
      Agent, the Security Trustee and the Lenders may treat each person whose
      name is recorded in the Register as a Lender hereunder for all purposes of
      this Agreement.  The Register shall be available for inspection
      by the Borrowers or any Lender at any reasonable time and from time to
      time upon reasonable prior notice.

            

    

    

    
      	
              (d)

            	
              Upon
      its receipt of an Assignment and Acceptance executed by an assigning
      Lender and an assignee, the Facility Agent shall, if such Assignment and
      Acceptance has been completed and is in substantially the form of Schedule
      4 hereto, (i) accept such Assignment and Acceptance, (ii) record the
      information contained therein in the Register and (iii) give prompt notice
      thereof to the Borrowers and the other Credit
  Parties.

            

    

    

    
      	
              (e)

            	
              Notwithstanding
      any other provision set forth in this Agreement, any Lender may, at its
      own expense, at any time create a security interest in all or any portion
      of its rights under this Agreement (including, without limitation, the
      Advances owing to it) in favor of any Federal Reserve Bank in accordance
      with Regulation A of the Board of Governors of the Federal Reserve
      System.

            

    

    

    
      	
              18.3

            	
              Rights of
      assignee.  In respect of any breach of a warranty,
      undertaking, condition or other provision of a Finance Document, or any
      misrepresentation made in or in connection with a Finance Document, a
      direct or indirect assignee of any of a Lender’s rights or interests under
      or by virtue of the Finance Documents shall be entitled to recover damages
      by reference to the loss incurred by that assignee as a result of the
      breach or misrepresentation irrespective of whether the Lender would have
      incurred a loss of that kind or
amount.

            

    

     

    
      	
              18.4

            	
              Subrogation
      assignment.  A Lender may assign, in any manner and on
      terms agreed by it, all or any part of those rights to an insurer or
      surety who has become subrogated to
them.

            

    

     

    
      	
              18.5

            	
              Participations.  Each
      Lender may, at is own expense, without the Borrowers’ consent, sell
      participations to one or more banks or other entities in or to all or a
      portion of its rights and obligations under this Agreement (including
      without limitation, all or a portion of its Commitment and the Advance(s)
      owing to it); provided
      that:

            

    

    

    
      	
               
      

            	
              (i)

            	
              such
      Lender’s obligations under this Agreement (including, without limitation,
      its Commitment to the Borrower hereunder) shall remain
      unchanged;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              such
      Lender shall remain solely responsible to the other parties hereto for the
      performance of such obligations;

            

    

    

    
      	
              (iii)

            	
              such
      Lender shall remain the Lender for all purposes of this
      Agreement;

            

    

    

    
      	
               
      

            	
              (iv)

            	
              the
      Borrowers, the Facility Agent, the Payment Agent, the Security Trustee and
      the other Lenders shall continue to deal solely and directly with such
      Lender in connection with such Lender’s rights and obligations under this
      Agreement; and

            

    

    

    
      	
               
      

            	
              (v)

            	
              no
      participant under any such participation shall have any right to approve
      any amendment or waiver of any provision of any Finance Document, or any
      consent to any departure by an Obligor
  therefrom.

            

    

    

    
      	
              18.6

            	
              Disclosure of
      information.  The Lenders may disclose to a potential
      assignee or sub-participant any information which the Lenders have
      received in relation to the Obligors or their affairs under or in
      connection with any Finance Document, provided that if the
      information is clearly of a confidential nature the potential assignee or
      sub-participant shall enter into a confidentiality
    agreement.

            

    

     

    
      	
              18.7

            	
              Change of lending
      office.  A Lender may change its lending office by giving
      notice to the Borrowers and the change shall become effective on the later
      of:

            

    

     

    (a)           the
date on which the Borrowers receive the notice; and

     

    
      	
              (b)

            	
              the
      date, if any, specified in the notice as the date on which the change will
      come into effect;

            

    

     

    
      	
               
      

            	
              provided that such
      change in lending office does not increase the Borrowers’ cost under this
      Agreement.

            

    

     

    19           VARIATIONS
AND WAIVERS

     

    
      	
              19.1

            	
              Variations, waivers
      etc.

            

    

     

    
      	
              (a)

            	
              A
      document shall be effective to vary, waive, suspend or limit any provision
      of a Finance Document, or a Credit Party’s rights or remedies under such a
      provision or the general law, only if the document is signed, or
      specifically agreed to by fax, by the relevant Obligor(s) and the relevant
      Credit Party.

            

    

     

    
      	
              (b)

            	
              Except
      as otherwise provided in this Agreement, this Agreement or any term hereof
      may be amended, modified, waived, discharged or terminated only by an
      instrument in writing, signed by the Majority Lenders or by the Facility
      Agent acting with the consent of the Majority Lenders; provided that so long as
      this Agreement remains in effect or there are any Designated Transactions
      continuing, no amendment, modification or waiver shall, unless by an
      instrument signed by all the Lenders or the Swap Banks, or by the Facility
      Agent acting with the consent of all the Lenders and the Swap
      Banks:

            

    

     

    
      	
               
      

            	
              (i)

            	
              increase
      the Commitment of any Lender, or increase or extend the term, or extend
      the time or waive any requirement for the reduction or termination, of the
      Advance;

            

    

     

    (ii)           extend
the date fixed for the payment of principal or interest on the
Loan;

     

    
      	
               
      

            	
              (iii)

            	
              reduce
      the amount of any payment of principal thereof or the rate at which
      interest is payable thereon or any fee is payable
    hereunder;

            

    

     

    (iv)           alter
the terms of this Clause 19;

     

    (v)           waive
any of the conditions precedent set forth in Clause 8;

     

    
      	
               
      

            	
              (vi)

            	
              release
      any Collateral, except as contemplated in this Agreement or by a Finance
      Document; or

            

    

     

    (vii)           change
the definition of the term “Majority Lenders”;

     

    provided further that any
amendment of Clause 24 shall require the written consent of the Agent and the
Security Trustee.

     

    
      	
              19.2

            	
              Exclusion of other or implied
      variations.  Except for a document which satisfies the
      requirements of Clause 19.1, no document, and no act, course of conduct,
      failure or neglect to act, delay or acquiescence on the part of a Credit
      Party (or any person acting on its behalf) shall result in such Credit
      Party (or any person acting on its behalf) being taken to have varied,
      waived, suspended or limited, or being precluded (permanently or
      temporarily) from enforcing, relying on or
  exercising:

            

    

     

    (a)           a
provision of this Agreement or another Finance Document; or

     

    (b)           an
Event of Default or Potential Event of Default; or

     

    
      	
              (c)

            	
              a
      breach by an Obligor of an obligation under a Finance Document or the
      general law; or

            

    

     

    
      	
              (d)

            	
              any
      right or remedy conferred by any Finance Document or by the general
      law;

            

    

     

    and there
shall not be implied into any Finance Document any term or condition requiring
any such provision to be enforced, or such right or remedy to be exercised,
within a certain or reasonable time.

     

    20           NOTICES

     

    
      	
              20.1

            	
              General.  Unless
      otherwise specifically provided, any notice under or in connection with
      any Finance Document shall be given by registered mail (with a copy by fax
      sent the same day) or by fax; and references in the Finance Documents to
      written notices, notices in writing and notices signed by particular
      persons shall be construed
accordingly.

            

    

     

    20.2           Addresses for
communications.  A notice shall be sent:

     

    (a)           to
the
Borrowers:                                 c/o
TBS International Limited

    Suite 306, Commerce
Building

    One
Chancery Lane

    Hamilton
HM 12, Bermuda

    Attention:
William J. Carr

    Fax:
+(441) 295-4957

    

    and

    

    TBS Shipping Services
Inc.

    612 East
Grassy Sprain Road

    Yonkers,
New York 10710

    Attention:
Ferdinand V. Lepere

    Fax: +(
914) 779-5230

    

    (b)           to
the
Guarantor:                                   TBS
International Limited

    Suite 306, Commerce
Building

    One
Chancery Lane

    Hamilton
HM 12, Bermuda

    Attention:
William J. Carr

    Fax:
+(441) 295-4957

    

    (c)           to
the Facility Agent:

    and
Security
Trustee:                          DVB
Group Merchant Bank (Asia) Ltd.

    77 Robinson Road 30-02

    Singapore

    Attention:
Martijn van Tuyl and/or Gah May Ng

    Facsimile:
+65 6511 0700

    

    (d)           to
the Payment
Agent:                        The
Governor and Company of the Bank of Ireland

    Head
Office

    Building
A3

    Lower
Baggot Street

    Dublin 2,
Ireland

    Attention:
Kimberly Jones

    Facsimile:
+353 1 611 5411

    

    (e)           to
any Swap
Bank:                                DVB
Bank AG

    Friedrich-Ebert-Anlage
2-14

    600325
Frankfurt am Main

    Federal
Republic of Germany

    Attention: Manager OP-DD

    Facsimile
No.: +49 69 97 504 581

    

    The
Governor and Company of the Bank of Ireland

    Head
Office, Building A3

    Lower
Baggot Street

    Dublin 2,
Ireland

    Attention:
Kimberly Jones

    Facsimile:
+353 1 611 5411

    

    Natixis

    Middle
Office Shipping 

    68/76,
Quai de la Rapee

    75012
Paris

    France

    Attention:
Franck Chambras / Aurélie Robert

    Facsimile:
+331 5819 3672

    

    With copy
to Antoine Saint Olive

    Fax: +1
212 354 9095

    

    (f)           to
the
Arranger:                                     Mount
Washington LLC

    c/o AER
Holding N.V.

    Zeelandia
Office Park

    Kaya
W.F.G. Mensing 14

    Curacao,
Netherlands Antilles

    Attention:
Asandro Van Aerde

    Facsimile:
+5999 465 2366

    

    (g)           to
any
Lender:                                                      At
its address listed on Schedule 1 hereto,

     

    or to
such other address or addresses as each party may notify the other.

     

    20.3           Effective date of
notices.  Subject to Clauses 20.4 and 20.5:

     

    
      	
              (a)

            	
              a
      notice which is delivered personally shall be deemed to be served, and
      shall take effect, at the time when it is
  delivered;

            

    

     

    
      	
              (b)

            	
              a
      notice which is sent by post shall be deemed to be served, and shall take
      effect, three (3) days after the date of posting;
  and

            

    

     

    
      	
              (c)

            	
              a
      notice which is sent by fax shall be deemed to be served, and shall take
      effect, two (2) hours after its successful transmission is
      completed.

            

    

     

    
      	
              20.4

            	
              Service outside business
      hours.  However, if under Clause 20.3 a notice would be
      deemed to be served:

            

    

     

    (a)           on
a day which is not a Business Day in the place of receipt; or

     

    (b)           on
such a Business Day, but after 5:00 p.m. local time;

     

    the
notice shall (subject to Clause 20.5) be deemed to be served, and shall take
effect, at 9:00 a.m. on the next day which is such a Business Day.

     

    
      	
              20.5

            	
              Illegible
      notices.  Clauses 20.3 and 20.4 do not apply if the
      recipient of a notice notifies the sender within one (1) hour after the
      time at which the notice would otherwise be deemed to be served that the
      notice has been received in a form which is illegible in a material
      respect.

            

    

     

    
      	
              20.6

            	
              Valid
      notices.  A notice under or in connection with a Finance
      Document shall not be invalid by reason that its contents or the manner of
      serving it do not comply with the requirements of this Agreement or, where
      appropriate, any other Finance Document under which it is served
      if:

            

    

     

    
      	
              (a)

            	
              the
      failure to serve it in accordance with the requirements of this Agreement
      or other Finance Document, as the case may be, has not caused any party to
      suffer any significant loss or prejudice;
or

            

    

     

    
      	
              (b)

            	
              in
      the case of incorrect and/or incomplete contents, it should have been
      reasonably clear to the party on which the notice was served what the
      correct or missing particulars should have
been.

            

    

     

    
      	
              20.7

            	
              English
      language.  Any notice under or in connection with a
      Finance Document shall be in
English.

            

    

     

    
      	
              20.8

            	
              Meaning of
      “notice”.  In this Clause “notice” includes any demand,
      consent, authorization, approval, instruction, waiver or other
      communication.

            

    

     

    
      	
              21

            	
              GUARANTY

            

    

     

    
      	
              21.1

            	
              Guaranty.  In
      order to induce the Lenders to make the Loan to the Borrowers, and to
      induce the Swap Banks to enter into Designated Transactions with the
      Borrowers, the Guarantor hereby guarantees (this “Guaranty”), as a
      primary obligor and not merely as a surety, the performance and punctual
      payment when due, whether at stated maturity, by acceleration or
      otherwise, of all Secured Liabilities of the Borrowers now or hereafter
      existing under this Agreement and any other Finance Document, whether for
      principal, interest, fees, expenses or otherwise (collectively, the “Guaranteed
      Obligations”) due or owing to any of the Lenders or the Swap Banks
      (each, a “Guaranteed
      Party”), and agrees to pay any and all expenses (including, without
      limitation, counsel fees and expenses) incurred by a Guaranteed Party, the
      Security Trustee, the Facility Agent or the Payment Agent in enforcing any
      rights under this Guaranty.  The obligations of the Guarantor
      under this Guaranty are in addition to and shall not in any way be
      prejudiced by any other guaranty or security now or subsequently held by
      the Guaranteed Parties.  The Guarantor hereby further agrees
      that if the Borrowers shall fail to pay in full when due (whether at
      stated maturity, by acceleration or otherwise) any of the Guaranteed
      Obligations, the Guarantor will promptly pay the same, on first demand,
      and that in the case of any extension of time of payment or renewal of any
      of the Guaranteed Obligations, the same will be promptly paid in full when
      due (whether at extended maturity, by acceleration or otherwise) in
      accordance with the terms of such extension or
  renewal.

            

    

     

    
      	
              21.2

            	
              Obligations
      absolute.  The Guarantor guarantees that the Guaranteed
      Obligations will be performed and paid to the Guaranteed Parties strictly
      in accordance with the terms of any applicable agreement, express or
      implied, of the Borrowers, regardless of any law, regulation or order of
      any jurisdiction affecting any term of any Guaranteed Obligation or the
      rights of the Guaranteed Parties with respect thereto, including, without
      limitation, any law, rule or policy which is now or hereafter promulgated
      by any governmental authority (including, without limitation, any central
      bank) or regulatory body any of which may adversely affect the Borrowers’
      ability or obligation to make, or right of the Guaranteed Parties to
      receive, such payments, including, without limitation, any sovereign act
      or circumstance which might otherwise constitute a defense to, or a legal
      or equitable discharge of, the
Borrowers.

            

    

     

    
      	
              21.3

            	
              Guaranty
      Unconditional.  The liability of the Guarantor hereunder
      shall be unconditional irrespective of, and the Guarantor hereby waives
      any defenses it may assert with respect
to:

            

    

     

    
      	
              (a)

            	
              any
      lack of validity or enforceability of any Guaranteed Obligation or
      agreement or instrument relating
thereto;

            

    

     

    
      	
              (b)

            	
              any
      change in the time, manner or place of payment of, or in any other term
      of, any Guaranteed Obligation;

            

    

     

    
      	
              (c)

            	
              any
      exchange, release or non-perfection of any other Collateral securing
      payment of any Guaranteed
Obligation;

            

    

     

    
      	
              (d)

            	
              any
      moratorium, bankruptcy, insolvency or other similar law or any other law,
      regulation or order of any jurisdiction affecting any term of any
      Guaranteed Obligation or a Guaranteed Party’s rights with respect thereto;
      or

            

    

     

    
      	
              (e)

            	
              any
      other circumstance which might otherwise constitute a defense available
      to, or the discharge of, any of the Borrowers, or the
      Guarantor.

            

    

     

    
      	
              21.4

            	
              Waiver of subrogation;
      Contribution.  Notwithstanding any other provision of
      this Guaranty, until payment in full of the Guaranteed Obligations in cash
      after termination of any of the Guaranteed Parties’ commitments with
      respect thereto:

            

    

     

    
      	
              (a)

            	
              the
      Guarantor hereby irrevocably waives any right to assert, enforce, or
      otherwise exercise any right of subrogation to any of the rights, security
      interests, claims, or liens which the Guaranteed Parties have against the
      Borrowers in respect of the Guaranteed
  Obligations;

            

    

     

    
      	
              (b)

            	
              the
      Guarantor shall not have any right of recourse, reimbursements,
      contribution, indemnification, or similar right (by contract or otherwise)
      against the Borrowers in respect of the Guaranteed Obligations;
      and

            

    

     

    
      	
              (c)

            	
              the
      Guarantor hereby irrevocably waives any and all of the foregoing rights
      and also irrevocably waives the benefit of, and any right to participate
      in, any Collateral or other security given to the Guaranteed Parties to
      secure payment of the Guaranteed
Obligations.

            

    

     

    
      	
              21.5

            	
              Subordination.  The
      Guarantor agrees that, so long as the Borrowers remain under any actual or
      contingent liability under this Agreement or any other Finance Document,
      any rights which the Guarantor may have at any time by reason of the
      performance by the Guarantor of the Guaranteed Obligations to take the
      benefit (in whole or in part) of any security taken pursuant to this
      Agreement or any of the other Finance Documents shall be subject and
      subordinate to the rights of the Guaranteed Parties hereunder and shall be
      exercised by the Guarantor in such manner and upon such terms as the
      Guaranteed Parties may require and further agree to hold any monies at any
      time received by the Guarantor as a result of the exercise of any such
      rights or otherwise for and on behalf of the Guaranteed Parties for
      application in or towards payment of any sums at any time owed by the
      Borrowers under the Agreement or the other Finance
    Documents.

            

    

     

    
      	
              21.6

            	
              Reinstatement.  This
      Guaranty shall continue to be effective or be reinstated, as the case may
      be, if at any time any payment of any of the Guaranteed Obligations is
      rescinded or must otherwise be returned by a Guaranteed
    Party.

            

    

     

    
      	
              21.7

            	
              Waiver.  The
      Guarantor waives promptness, diligence and notices with respect to any
      Guaranteed Obligation and this Guaranty and any requirement that a
      Guaranteed Party exhaust any right or take any action against the
      Borrowers or any other entity or any or their
  property.

            

    

     

    21.8           Payments;
No Reductions.

     

    
      	
              (a)

            	
              All
      payments under this Guaranty shall be made in accordance with Clauses 11,
      15 and 16 of this Agreement.

            

    

     

    
      	
              (b)

            	
              The
      Guarantor agrees to pay any taxes which arise from any payment made
      hereunder or from the execution, delivery or registration by such
      Guarantor of, or otherwise with respect to, this
  Agreement.

            

    

     

    
      	
              (c)

            	
              The
      Guarantor will indemnify a Guaranteed Party in accordance with Clause 15
      upon demand.

            

    

     

    
      	
              (d)

            	
              Within
      30 days after the date of any payment of taxes, the Guarantor will furnish
      to each Guaranteed Party at its address for notices, the original or a
      certified copy of a receipt evidencing payment thereof.  If no
      taxes are payable in respect of any payment, the Guarantor will furnish to
      each Guaranteed Party a certificate from each appropriate taxing
      authority, or an opinion of counsel acceptable to each Guaranteed Party,
      in either case stating that such payment is exempt from or not subject to
      taxes.

            

    

     

    
      	
              21.9

            	
              Continuing
      Guarantee.  This Guaranty is a continuing guaranty, is
      joint and several with any other guarantee given in respect of the
      Guaranteed Obligations, and shall remain in full force and effect until
      the later of the termination of any Commitment of the Lenders under this
      Agreement and the payment in full of the Guaranteed Obligations and all
      other amounts payable hereunder and shall be binding upon the Guarantor,
      its successors and permitted assigns.  The obligations of the
      Guarantor under this Guaranty shall rank pari passu with all
      other unsecured obligations of the
Guarantor.

            

    

     

    22           JOINT AND SEVERAL
LIABILITY

     

    
      	
              22.1

            	
              General.  All
      liabilities and obligations of the Borrowers under this Agreement shall be
      joint and several, whether expressed to be so or
  not.

            

    

     

    
      	
              22.2

            	
              No impairment of Borrowers’
      obligations.  The joint and several liabilities and
      obligations of a Borrower shall not be impaired
  by:

            

    

     

    
      	
              (a)

            	
              this
      Agreement or any other Finance Document being or later becoming void,
      unenforceable or illegal as regards any other
  Borrower;

            

    

     

    
      	
              (b)

            	
              any
      Lender or the Security Trustee entering into any rescheduling, refinancing
      or other arrangement of any kind with any other
  Borrower;

            

    

     

    
      	
              (c)

            	
              any
      Lender or the Security Trustee releasing any other Borrower or any
      Security Interest created by a Finance Document;
  or

            

    

     

    
      	
              (e)

            	
              any
      combination of the foregoing.

            

    

     

    
      	
              22.3

            	
              Principal
      debtors.  Each Borrower declares that it is and will,
      throughout the Security Period, remain a principal debtor for all amounts
      owing under this Agreement and the other Finance Documents to which it is
      a party and no Borrower shall in any circumstances be construed to be a
      surety for the obligations of any other Borrower under this Agreement or
      the other Finance Documents.

            

    

     

    
      	
              22.4

            	
              Subordination.  Subject
      to Clause 22.5, during the Security Period, no Borrower
    shall:

            

    

     

    
      	
              (a)

            	
              claim
      by way of any legal or administrative action any amount which may be due
      to it from any other Borrower whether in respect of a payment made, or
      matter arising out of, this Agreement or the other Finance Documents, or
      any matter unconnected with this Agreement or the other Finance Documents;
      or

            

    

     

    
      	
              (b)

            	
              take
      or enforce any form of security from any other Borrower for such an
      amount, or in any other way seek to have recourse in respect of such an
      amount against any asset of any other Borrower;
  or

            

    

     

    
      	
              (c)

            	
              set
      off such an amount against any sum due from it to any other Borrower;
      or

            

    

     

    
      	
              (d)

            	
              prove
      or claim for such an amount in any liquidation, administration,
      arrangement or similar procedure involving any other Borrower or any
      Security Party; or

            

    

     

    
      	
              (e)

            	
              exercise
      or assert any combination of the
foregoing.

            

    

     

    
      	
              22.5

            	
              Borrowers’ required
      action.  If during the Security Period, the Security
      Trustee, by notice to a Borrower, requires it to take any action referred
      to in paragraphs (a) to (d) of Clause 22.4, in relation to any other
      Borrower, that Borrower shall take that action as soon as practicable
      after receiving the Agent’s notice.

            

    

     

    23           SUPPLEMENTAL

     

    
      	
              23.1

            	
              Rights cumulative,
      non-exclusive.  The rights and remedies which the Finance
      Documents give to the Credit
Parties:

            

    

     

    (a)           are
cumulative;

     

    (b)           may
be exercised as often as appears expedient; and

     

    
      	
              (c)

            	
              shall
      not, unless a Finance Document explicitly and specifically states so, be
      taken to exclude or limit any right or remedy conferred by any
      law.

            

    

     

    
      	
              23.2

            	
              Severability of
      provisions.  If any provision of a Finance Document is or
      subsequently becomes void, unenforceable or illegal, that shall not affect
      the validity, enforceability or legality of the other provisions of that
      Finance Document or of the provisions of any other Finance
      Document.

            

    

     

    23.3           Counterparts.  A
Finance Document may be executed in any number of counterparts.

     

    
      	
              24

            	
              THE
      FACILITY AGENT, THE PAYMENT AGENT AND THE SECURITY
  TRUSTEE

            

    

     

    
      	
              24.1

            	
              Appointment and
      Granting.

            

    

    

    
      	
              (a)

            	
              The Facility
      Agent.  Each Lender and each Swap Bank irrevocably
      appoints and authorizes the Facility Agent to act as its agent hereunder
      and under any of the other Finance Documents with such powers as are
      specifically delegated to the Facility Agent by the terms of this
      Agreement and of any of the other Finance Documents, together with such
      other powers as are reasonably incidental
  thereto.

            

    

    

    
      	
              (d)

            	
              The Payment
      Agent.  Each Lender and each Swap Bank irrevocably
      appoints and authorizes the Payment Agent to act as its agent hereunder
      and under any of the other Finance Documents with such powers as are
      specifically delegated to the Payment Agent by the terms of this Agreement
      and of any of the other Finance Documents, together with such other powers
      as are reasonably incidental
thereto.

            

    

    

    (c)           The Security
Trustee.

    

    
      	
               
      

            	
              (i)

            	
              Authorization of Security
      Trustee.  Each of the Lenders, the Facility Agent, the
      Payment Agent and the Swap Banks irrevocably appoints and authorizes the
      Security Trustee to act as security trustee hereunder and under the other
      Finance Documents (other than the Notes) with such powers as are
      specifically delegated to the Security Trustee by the terms of this
      Agreement and such other Finance Documents, together with such other
      powers as are reasonably incidental
thereto.

            

    

    

    
      	
               
      

            	
              (ii)

            	
              Granting
      Clause.  To secure the payment of all sums of money from
      time to time owing (i) to the Lenders under this Agreement, the Note, and
      the other Finance Documents in the maximum principal amount of $75,000,000
      plus accrued interest thereon and (ii) to the Swap Banks under this
      Agreement, the Master Agreement and the other Finance Documents in the
      maximum principal amount of $18,750,000 plus accrued interest thereon, and
      all other amounts owing to the Lenders, the Facility Agent, the Payment
      Agent, the Security Trustee or the Swap Banks pursuant to this Agreement,
      the Notes, the Master Agreements and the other Finance Documents, and the
      performance of the covenants of the Borrowers and any other obligor herein
      and therein contained, and in consideration of the premises and of the
      covenants herein contained and of the extensions of credit by the Lenders,
      the Security Trustee does hereby declare that it will hold as such trustee
      in trust for the benefit of the Lenders, the Facility Agent, the Payment
      Agent and the Swap Banks, from and after the execution and delivery
      thereof, all of its right, title and interest as mortgagee in, to and
      under the Mortgages and its right, title and interest as assignee and
      secured party under the other Finance Documents (the right, title and
      interest of the Security Trustee in and to the property, rights and
      privileges described above, from and after the execution and delivery
      thereof, and all property hereafter specifically subjected to the lien of
      the indenture created hereby and by the Finance Documents by any amendment
      hereto or thereto are herein collectively called the “Estate”); TO HAVE AND TO
      HOLD the Estate unto the Security Trustee and its successors and assigns
      forever, BUT IN TRUST, NEVERTHELESS, for the equal and proportionate
      benefit and security of the Lenders, the Facility Agent, the Payment
      Agent, and the Swap Banks and their respective successors and assigns
      without any priority of any one over any other, UPON THE CONDITION that,
      unless and until an Event of Default under this Agreement shall have
      occurred and be continuing, the Borrowers shall be permitted, to the
      exclusion of the Security Trustee, to possess and use the
      Ships.  IT IS HEREBY COVENANTED, DECLARED AND AGREED that all
      property subject or to become subject hereto is to be held, subject to the
      further covenants, conditions, uses and trusts hereinafter set forth, and
      each Borrower, for itself and its respective successors and assigns,
      hereby covenants and agrees to and with the Security Trustee and its
      successors in said trust, for the equal and proportionate benefit and
      security of the Lenders, the Facility Agent, the Payment Agent and the
      Swap Banks as hereinafter set
forth.

            

    

    

    
      	
               
      

            	
              (iii)

            	
              Acceptance of
      Trusts.  The Security Trustee hereby accepts the trusts
      imposed upon it as Security Trustee by this Agreement, and the Security
      Trustee covenants and agrees to perform the same as herein expressed and
      agrees to receive and disburse all monies constituting part of the Estate
      in accordance with the terms
hereof.

            

    

    

    
      	
              24.2

            	
              Scope of
      Duties.  None of the Facility Agent, the Payment Agent,
      or the Security Trustee (which terms as used in this sentence and in
      Section 24.5 hereof shall include reference to their respective affiliates
      and their own respective and their respective affiliates’ officers,
      directors, employees, agents and attorneys-in-fact): (a) shall have any
      duties or responsibilities except those expressly set forth in this
      Agreement and in any of the Finance Documents, and shall not by reason of
      this Agreement or any of the Finance Documents be (except, with respect to
      the Security Trustee, as specifically stated to the contrary in this
      Agreement) a trustee for a Lender or a Swap Bank; (b) shall be responsible
      to the Lenders or the Swap Banks for any recitals, statements,
      representations or warranties contained in this Agreement or in any of the
      Finance Documents, or in any certificate or other document referred to or
      provided for in, or received by any of them under, this Agreement or any
      of the Finance Documents, or for the value, validity, effectiveness,
      genuineness, enforceability or sufficiency of this Agreement or any of the
      Finance Documents or any other document referred to or provided for herein
      or therein or for any failure by the Borrowers or any other person to
      perform any of its obligations hereunder or thereunder or for the
      location, condition or value of any property covered by any lien under any
      of the Finance Documents or for the creation, perfection or priority of
      any such lien; (c) shall be required to initiate or conduct any litigation
      or collection proceedings hereunder or under any of the Finance Documents
      unless expressly instructed to do so in writing by the Majority Lenders;
      or (d) shall be responsible for any action taken or omitted to be taken by
      it hereunder or under any of the Finance Documents or under any other
      document or instrument referred to or provided for herein or therein or in
      connection herewith or therewith, except for its own gross negligence or
      willful misconduct.  Each of the Security Trustee, the Facility
      Agent and the Payment Agent may employ agents and attorneys-in-fact and
      none of the Security Trustee, the Facility Agent or the Payment Agent
      shall be responsible for the negligence or misconduct of any such agents
      or attorneys-in-fact selected by it in good faith.  Each of the
      Security Trustee, the Facility Agent and the Payment Agent may deem and
      treat the payee of a Note as the holder thereof for all purposes hereof
      unless and until a written notice of the assignment or transfer thereof
      shall have been filed with the Facility Agent, together with the written
      consent of the Borrowers to such assignment or
  transfer.

            

    

    

    
      	
              24.3

            	
              Reliance.  Each
      of the Security Trustee, the Facility Agent and the Payment Agent shall be
      entitled to rely upon any certification, notice or other communication
      (including any thereof by telephone, telex, telefacsimile, telegram or
      cable) believed by it to be genuine and correct and to have been signed or
      sent by or on behalf of the proper person or persons, and upon advice and
      statements of legal counsel, independent accountants and other experts
      selected by the Security Trustee, the Facility Agent or the Payment Agent,
      as the case may be.  As to any matters not expressly provided
      for by this Agreement or any of the Finance Documents, each of the
      Security Trustee, the Facility Agent and the Payment Agent shall in all
      cases be fully protected in acting, or in refraining from acting,
      hereunder or thereunder in accordance with instructions signed by the
      Majority Lenders, and such instructions and any action taken or failure to
      act pursuant thereto shall be binding on all of the
    Lenders.

            

    

    

    
      	
              24.4

            	
              Knowledge.  None
      of the Security Trustee, the Facility Agent or the Payment Agent shall be
      deemed to have knowledge or notice of the occurrence of a Potential Event
      of Default or Event of Default (other than, in the case of the Payment
      Agent, the non-payment of principal of or interest on the Loan or any
      Advance) unless each of the Security Trustee, the Facility Agent and the
      Payment Agent has received notice from a Lender or a Borrower specifying
      such Potential Event of Default or Event of Default and stating that such
      notice is a “Notice of Default”.  If the Facility Agent receives
      such a notice of the occurrence of such Potential Event of Default or
      Event of Default, the Facility Agent shall give prompt notice thereof to
      the Security Trustee, the Payment Agent, the Swap Banks and the Lenders
      (and shall give each Lender prompt notice of each such
      non-payment).  Subject to Section 24.8 hereof, the Security
      Trustee, the Facility Agent and the Payment Agent shall take such action
      with respect to such Potential Event of Default or Event of Default or
      other event as shall be directed by the Majority Lenders, except that,
      unless and until the Security Trustee, the Facility Agent and the Payment
      Agent shall have received such directions, each of the Security Trustee,
      the Facility Agent and the Payment Agent may (but shall not be obligated
      to) take such action, or refrain from taking such action, with respect to
      such Potential Event of Default or Event of Default or other event as it
      shall deem advisable in the best interest of the Lenders and the Swap
      Banks.

            

    

    

    
      	
              24.5

            	
              Security Trustee, Facility
      Agent and Payment Agentas
      Lenders.  Each of the Security Trustee, the Facility
      Agent and the Payment Agent (and any successor acting as Security Trustee,
      Facility Agent or Payment Agent, as the case may be) in its individual
      capacity as a Lender hereunder shall have the same rights and powers
      hereunder as any other Lender and may exercise the same as though it were
      not acting as the Security Trustee, Facility Agent or Payment Agent, as
      the case may be, and the term “Lender” or “Lenders” shall, unless the
      context otherwise indicates, include each of the Security Trustee, the
      Facility Agent and the Payment Agent in their respective individual
      capacities.  Each of the Security Trustee, the Facility Agent
      and the Payment Agent (and any successor acting as Security Trustee,
      Facility Agent and Payment Agent, as the case may be) and their respective
      affiliates may (without having to account therefor to a Lender) accept
      deposits from, lend money to and generally engage in any kind of banking,
      trust or other business with a Borrower and any of its subsidiaries or
      affiliates as if it were not acting as the Security Trustee, Facility
      Agent or Payment Agent, as the case may be, and each of the Security
      Trustee, the Facility Agent and the Payment Agent and their respective
      affiliates may accept fees and other consideration from such Borrower for
      services in connection with this Agreement or otherwise without having to
      account for the same to the
Lenders.

            

    

    

    
      	
              24.6

            	
              Indemnification of Security
      Trustee, Facility Agent and Payment Agent.  The Lenders
      agree to indemnify each of the Security Trustee, the Facility Agent and
      the Payment Agent (to the extent not reimbursed under other provisions of
      this Agreement, but without limiting the obligations of the Borrowers
      under said other provisions, ratably in accordance with the aggregate
      principal amount of each Lenders’ participation in the Loan), for any and
      all liabilities, obligations, losses, damages, penalties, actions,
      judgments, suits, costs, expenses or disbursements of any kind and nature
      whatsoever which may be imposed on, incurred by or asserted against the
      Security Trustee, the Facility Agent or the Payment Agent in any way
      relating to or arising out of this Agreement or any of the Finance
      Documents or any other documents contemplated by or referred to herein or
      therein or the transactions contemplated hereby (including, without
      limitation, the costs and expenses which the Borrowers are to pay
      hereunder, but excluding, unless an Event of Default has occurred and is
      continuing, normal administrative costs and expenses incident to the
      performance of their respective agency duties hereunder) or the
      enforcement of any of the terms hereof or thereof or of any such other
      documents, except that no Lender shall be liable for any of the foregoing
      to the extent they arise from the gross negligence or wilful misconduct of
      the party to be indemnified.

            

    

    

    
      	
              24.7

            	
              Reliance on Security Trustee,
      Facility Agent or Payment Agent.  Each Lender agrees that
      it has, independently and without reliance on the Security Trustee, the
      Facility Agent or the Payment Agent or any other Lender, and based on such
      documents and information as it has deemed appropriate, made its own
      credit analysis of the Obligors and decision to enter into this Agreement
      and that it will, independently and without reliance upon the Security
      Trustee, the Facility Agent or the Payment Agent or any other Lender, and
      based on such documents and information as it shall deem appropriate at
      the time, continue to make its own analysis and decisions in taking or not
      taking action under this Agreement or any of the Finance
      Documents.  None of the Security Trustee, the Facility Agent or
      the Payment Agent shall be required to keep itself informed as to the
      performance or observance by the Borrowers of this Agreement or any of the
      Finance Documents or any other document referred to or provided for herein
      or therein or to inspect the properties or books of the
      Borrowers.  Except for notices, reports and other documents and
      information expressly required to be furnished to the Lenders by the
      Security Trustee, the Facility Agent or the Payment Agent hereunder, none
      of the Security Trustee, the Facility Agent or the Payment Agent shall
      have any duty or responsibility to provide a Lender with any credit or
      other information concerning the affairs, financial condition or business
      of the Obligors or any of their respective parents, subsidiaries or
      affiliates which may come into the possession of the Security Trustee, the
      Facility Agent or the Payment Agent or any of their respective
      affiliates.

            

    

    

    
      	
              24.8

            	
              Actions by Security Trustee,
      Facility Agent and Payment Agent.  Except for action
      expressly required of the Security Trustee, the Facility Agent or the
      Payment Agent hereunder and under the other Finance Documents, each of the
      Security Trustee, the Facility Agent and the Payment Agent shall in all
      cases be fully justified in failing or refusing to act hereunder and
      thereunder unless it shall receive further assurances to its satisfaction
      from the Lenders of their indemnification obligations under Section 24.5
      hereof against any and all liability and expense which may be incurred by
      it by reason of taking or continuing to take any such
    action.

            

    

    

    
      	
              24.9

            	
              Resignation and
      Removal.  Subject to the appointment and acceptance of a
      successor Security Trustee, Facility Agent or Payment Agent (as the case
      may be) as provided below, each of the Security Trustee, the Facility
      Agent and the Payment Agent may resign at any time by giving notice
      thereof to the Lenders and the Borrowers, and the Security Trustee, the
      Facility Agent or the Payment Agent may be removed at any time with or
      without cause by the Majority Lenders.  Upon any such
      resignation or removal, the Majority Lenders shall have the right to
      appoint a successor Security Trustee, Facility Agent or Payment Agent, as
      the case may be, which shall be a Lender, or a Lender with an Affiliate,
      which has an office in New York, New York.  If no successor
      Security Trustee, Facility Agent or Payment Agent, as the case may be,
      shall have been so appointed by the Lenders or, if appointed, shall not
      have accepted such appointment within 30 days after the retiring Security
      Trustee’s, Facility Agent’s, or Payment Agent’s, as the case may be,
      giving of notice of resignation or the Majority Lenders’ removal of the
      retiring Security Trustee, Facility Agent or Payment Agent, as the case
      may be, then the retiring Security Trustee, Facility Agent or Payment
      Agent, as the case may be, may, on behalf of the Lenders, appoint a
      successor Security Trustee, Facility Agent or Payment Agent, as the case
      may be, which shall be a Lender, or a Lender with an Affiliate, which has
      an office in New York, New York.  Upon the acceptance of any
      appointment as Security Trustee, Facility Agent or Payment Agent hereunder
      by a successor Security Trustee, Facility Agent or Payment Agent, such
      successor Security Trustee, Facility Agent or Payment Agent, as the case
      may be, shall thereupon succeed to and become vested with all the rights,
      powers, privileges and duties of the retiring Security Trustee, Facility
      Agent or Payment Agent, as the case may be, and the retiring Security
      Trustee, Facility Agent or Payment Agent shall be discharged from its
      duties and obligations hereunder.  After any retiring Security
      Trustee’s, Facility Agent’s or Payment Agent’s resignation or removal
      hereunder as Security Trustee, Facility Agent or Payment Agent, as the
      case may be, the provisions of this Clause 24 shall continue in effect for
      its benefit in respect of any actions taken or omitted to be taken by it
      while it was acting as Security Trustee, Facility Agent or Payment Agent,
      as the case may be.

            

    

    

    
      	
              24.10

            	
              Release of
      Collateral.  Without the prior written consent of the
      Lenders and the Swap Banks, none of the Security Trustee, the Facility
      Agent or the Payment Agent will consent to any modification, supplement or
      waiver under any of the Finance Documents nor without the prior written
      consent of all of the Lenders and the Swap Banks release any Collateral or
      otherwise terminate any lien under the Finance Documents, except that no
      such consent is required, and each of the Security Trustee, the Facility
      Agent and the Payment Agent is authorized, to release any lien covering
      property if the obligations have been paid and performed in full or which
      is the subject of a disposition of property permitted hereunder or to
      which the Lenders and the Swap Banks have
  consented.

            

    

     

    25           LAW
AND JURISDICTION

     

    
      	
              25.1

            	
              Governing
      law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
      IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
  YORK.

            

    

     

    25.2           Consent
to Jurisdiction.

     

    
      	
              (a)

            	
              Each
      Obligor hereby irrevocably submits to the jurisdiction of any New York
      State or Federal court sitting in New York County and any appellate court
      from any thereof in any action or proceeding arising out of or relating to
      this Agreement or any other Finance Document, and each Obligor hereby
      irrevocably agrees that all claims in respect of any such action or
      proceeding may be heard and determined in such New York State or in such
      Federal court.  Each Obligor hereby irrevocably waives, to the
      fullest extent that it may effectively do so, any objection it may now or
      hereafter have to the laying of the venue of any action or proceeding
      arising out of or relating to this Agreement or any other Finance Document
      and the defense of an inconvenient forum to the maintenance of any such
      action or proceeding.  Each Obligor also irrevocably consents to
      the service of any and all process in any such action or proceeding by the
      mailing of copies of such process to its address specified in Clause
      20.2.  Each Obligor hereby agrees to appoint Cardillo &
      Corbett, with offices currently located at 29 Broadway, New York, New York
      10006, Attention: Tulio R. Prieto, as its designated agent for service of
      process for any action or proceeding arising out of or relating to this
      Agreement or any other Finance Document.  Each Obligor agrees
      that a final judgment in any such action or proceeding shall be conclusive
      and may be enforced in other jurisdictions by suit on the judgment or in
      any other manner provided by law.

            

    

     

    
      	
              (b)

            	
              Nothing
      in this Clause 25.2 shall affect the right of a Credit Party to serve
      legal process in any other manner permitted by law or affect the right of
      such person to bring any action or proceeding against an Obligor or its
      property in the courts of any other jurisdictions where such action or
      proceeding may be heard.

            

    

     

    
      	
              25.3

            	
              Rights
      unaffected.  Nothing in this Clause 25 shall exclude or
      limit any right a Credit Party may have (whether under the law of any
      country, an international convention or otherwise) with regard to the
      bringing of proceedings, the service of process, the recognition or
      enforcement of a judgment or any similar or related matter in any
      jurisdiction.

            

    

     

    
      	
              25.4

            	
              Meaning of
      “proceedings”.  In this Clause 25, “proceedings” means
      proceedings of any kind, including an application for a provisional or
      protective measure.

            

    

     

    26           WAIVER
OF JURY TRIAL

     

    
      	
              26.1

            	
              WAIVER.  THE
      OBLIGORS AND THE CREDIT PARTIES MUTUALLY AND IRREVOCABLY WAIVE ANY AND ALL
      RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR
      RELATING TO THIS AGREEMENT, THE OTHER FINANCE DOCUMENTS OR THE
      TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.

            

    

    

    27           PATRIOT
ACT; OFAC AND BANK SECRECY ACT

     

    
      	
              27.1

            	
              PATRIOT Act
      Notice.  The Facility Agent hereby notifies the Obligors
      that pursuant to the requirements of the PATRIOT Act and the Credit
      Parties’ policies and practices, each of the Credit Parties is required to
      obtain, verify and record certain information and documentation that
      identifies the Obligors, which information includes the name and address
      of the Obligors and such other information that will allow the Credit
      Parties to identify the Obligors in accordance with the PATRIOT
      ACT.

            

    

    

    
      	
              27.2

            	
              OFAC and Bank Secrecy
      Act.

            

    

    

    
      	
              (a)

            	
              Each
      Obligor shall ensure that no person who owns a controlling interest in or
      otherwise controls such Obligor or any subsidiary thereof is or shall be
      listed on the Specially Designated Nationals and Blocked Person List or
      other similar lists maintained by the Office of Foreign Assets Control
      (“OFAC”), the U.S.
      Department of the Treasury or included in any Executive
      Orders.

            

    

    

    
      	
              (b)

            	
              The
      Obligors shall not use or permit the use of the proceeds of the Loan to
      violate any of the foreign asset control regulations of OFAC or any
      enabling statute or Executive Order relating
  thereto.

            

    

    

    
      	
              (c)

            	
              The
      Obligors shall comply, and shall cause each of its subsidiaries to comply,
      with all applicable Bank Secrecy Act laws and regulations, as
      amended.

            

    

    

    
      	
              28

            	
              POSITION
      OF THE LENDERS AND THE SWAP BANKS

            

    

    

    
      	
              28.1

            	
              Interests of Credit Parties
      several.  The rights of the Credit Parties under this
      Agreement are several.

            

    

    

    
      	
              28.2

            	
              Individual Credit Parties’
      right of action.  Each Lender and each of the Swap Banks
      shall be entitled to sue for any amount which has become due and payable
      by the Borrowers to it under this Agreement, any Master Agreement or any
      other Finance Document without joining the Facility Agent, the Security
      Trustee or any other Credit Party as additional parties in the
      proceedings, provided
      that neither any of the Swap Banks nor any Lender may commence
      proceedings against the Borrowers or any other Obligor in connection with
      a Finance Document without the prior consent of the Majority
      Lenders.

            

    

    

    
      	
              28.3

            	
              Obligations of Credit Parties
      several.  The obligations of the Lenders and the Swap
      Banks under this Agreement are several, and a failure of a Lender or the
      Swap Banks to perform its obligations under this Agreement shall not
      result in:

            

    

    

    
      	
              (a)

            	
              the
      obligations of the other Lenders or the Swap Banks being increased;
      or

            

    

    

    
      	
              (b)

            	
              the
      Borrowers, any other Obligor, any other Lender or the Swap Banks being
      discharged (in whole or in part) from its obligations under any Finance
      Document;

            

    

    

    and in no
circumstances shall a Lender or the Swap Banks have any responsibility for a
failure of another Lender or the Swap Banks (as the case may be) to perform its
obligations under this Agreement.

    

    
      	
              22.4

            	
              Swap Pari
      Passu.  At all times during the Security Period, each of
      the Swap Banks and the Lender agree that the rights of the Swap Banks
      under the Master Agreements (including, without limitation, any right of
      repayment) shall be pari
      passu with the rights of the Lenders under this Agreement and the
      other Finance Documents.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
               
      

            	
              [SIGNATURE
      PAGE FOLLOWS ON NEXT PAGE]

            

    

    WHEREFORE,
the parties hereto have caused this Loan Agreement to be executed as of the date
first above written.

     

    
      	
              BEDFORD
      MARITIME CORP., as Borrower

               

               

              By:  /s/ Tara DeMakes

                  Tara
      DeMakes

                  Attorney-in-Fact

               

            	
              DVB
      GROUP MERCHANT BANK (ASIA) LTD., as Lender

               

              By:
      /s/ Evan Cohen
      

              Evan Cohen

              Managing Director

               

            
	
              BRIGHTON
      MARITIME CORP., as Borrower

               

               

               

              By:  
      /s/ Tara
      DeMakes

                  Tara
      DeMakes

                  Attorney-in-Fact

            	
              DVB
      GROUP MERCHANT BANK (ASIA) LTD., as Facility Agent and Security
      Trustee

               

              By:
      /s/ Evan Cohen
      

              Evan Cohen

              Managing Director

               

            
	
              HARI
      MARITIME CORP., as Borrower

               

               

               

               

              By: /s/ Tara DeMakes 

                  Tara
      DeMakes

                  Attorney-in-Fact

            	
              THE
      GOVERNOR AND COMPANY OF THE BANK OF IRELAND, as Payment Agent

               

               

              By:
      /s/ Paul
      Packard

              Paul Packard

              Head of Maritime
      Industries

               

              By:
      /s/ John
O'Dea

              John O’Dea

              Senior Manager

               

            
	
              PROSPECT
      NAVIGATION CORP., as Borrower

               

               

              By:  /s/ Tara DeMakes 

                  Tara
      DeMakes 

                  Attorney-in-Fact

            	
              DVB
      BANK AG, as Swap Bank

               

               

              By:
      /s/ Daniel C.
      Rodgers

                  Daniel
      C. Rodgers

                  Attorney-in-Fact

               

            
	
              HANCOCK
      NAVIGATION CORP., as Borrower

               

               

               

              By:  /s/ Tara DeMakes 

                  Tara
      DeMakes

                  Attorney-in-Fact

            	
              THE
      GOVERNOR AND COMPANY OF THE BANK OF IRELAND, as Swap Bank

               

               

              By:
      /s/ Paul
      Packard

              Paul Packard

              Head of Maritime
      Industries

               

              By:
      /s/ John
O'Dea

              John O’Dea

              Senior Manager

               

            
	
              COLUMBUS
      MARITIME CORP., as Borrower

               

               

              By: /s/ Tara DeMakes 

                  Tara
      DeMakes

                  Attorney-in-Fact

               

            	
              NATIXIS,
      as Swap Bank

               

               

              By:
      /s/ Guillaume de
      Beaucorps

                  Guillaume de
      Beaucorps

                  Authorized
      Signatory

               

              By:
      /s/ Franck
      Chambras

              Franck Chambras

              Authorized Signatory

               

            
	
              WHITEHALL
      MARINE TRANSPORT CORP.,

              as
      Borrower

               

               

              By: /s/ Tara DeMakes 

                  Tara
      DeMakes

                  Attorney-in-Fact

               

            	
              MOUNT
      WASHINGTON LLC

              as
      Arranger

               

               

              By:
      /s/ Carol Ann Malinowski
      

                  Carol
      Ann Malinowski

                  Attorney-in-Fact

            
	
              TBS
      INTERNATIONAL LIMITED, as Guarantor

               

               

              By:  /s/ Tara DeMakes 

                  Tara
      DeMakes

                  Attorney-in-Fact:

            	 
      

    

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
1

     

    LENDERS
AND COMMITMENTS

     

    Lender                                                                                                                                Commitment

     

    DVB GROUP
MERCHANT BANK (ASIA) LTD.$75,000,000

    

    Lending
Office:                                           77
Robinson Road 30-02

    Singapore

    Attention:
Martijn van Tuyl and/or Gah May Ng

    Facsimile:
+65 6511 0700

    

    Address for
Notices:                                           77
Robinson Road 30-02

    Singapore

    Attention:
Martijn van Tuyl and/or Gah May Ng

    Facsimile:
+65 6511 0700

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    SCHEDULE
2

     

    DRAWDOWN
NOTICE

     

    

    To:           DVB
Group Merchant Bank (Asia) Ltd., as Facility Agent

    
      	
               
      

            	
              77
      Robinson Road 30-02

            

    

    
      	
               
      

            	
              Singapore

            

    

    

    Date:
January [l],
2008

     

    
      	
              1

            	
              We
      refer to the loan agreement (the “Loan Agreement”) dated
      as of January 16, 2008 and made between ourselves, as Borrowers, and the
      other parties named therein in connection with a loan facility of up to
      the lesser of $75,000,000 and 59% of the aggregate Fair Market Value of
      the Ships.  Terms defined in the Loan Agreement have their
      defined meanings when used in this Drawdown
  Notice.

            

    

    

    2           We
request to borrow as follows:

     

    (a)           Amount
of the Advance: $[l]

     

    (b)           Expected
Drawdown Date: [l]

     

    (c)           Duration
of the first Interest Period shall be [l] month(s).

     

    (d)           Payment
instructions:  [l]

     

    

     

    

     

    

     

    

     

    3           We
represent and warrant that:

     

    
      	
              (a)

            	
              the
      representations and warranties in Clause 9 of the Loan Agreement would
      remain true and not misleading if repeated on the date of this Drawdown
      Notice with reference to the circumstances now existing;
    and

            

    

     

    
      	
              (b)

            	
              no
      Event of Default or Potential Event of Default has occurred or will result
      from the borrowing of the Loan.

            

    

     

    4           This
notice cannot be revoked without your prior consent.

     

    
      	
              5

            	
              We
      authorize you to deduct any balance of the upfront fee referred to in
      Clause 14 outstanding on the Expected Drawdown Date from the amount of the
      Advance.

            

    

     

    
      	
              BEDFORD
      MARITIME CORP., BRIGHTON MARITIME CORP., HARI MARITIME CORP., PROSPECT
      NAVIGATION CORP., HANCOCK NAVIGATION CORP., COLUMBUS MARITIME CORP. and
      WHITEHALL MARINE TRANSPORT CORP. as Borrowers

               

               

              By:
      

              Name:
      

              Title:
      

               

            

    

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
3

     

    CONDITIONS
PRECEDENT DOCUMENTS

     

    
      	
              1.

            	
              An
      original of:

            

    

     

    
      	
               
      

            	
              (a)

            	
              each
      Finance Document and each document required to be delivered by each
      Finance Document, each duly executed by each party thereto, and
      documentary evidence that the Security Interests created by such Finance
      Documents have been duly perfected;

            

    

     

    
      	
               
      

            	
              (b)

            	
              each
      Manager’s Undertaking and each document required to be delivered by each
      Manager’s Undertaking, each duly executed by each party
      thereto;

            

    

     

    (c)           each
Deletion Letter (undated), duly executed by each party thereto; and

     

    
      	
               
      

            	
              (d)

            	
              each
      Deletion Power of Attorney, duly executed in counterparts by each party
      thereto (and, if executed by any party thereto outside of the Republic of
      the Philippines, duly consularized before a consulate of the Republic of
      the Philippines in the jurisdiction of
  execution).

            

    

     

    
      	
              2.

            	
              Copies
      of the constitutional documents, and each amendment thereto, of each
      Obligor, certified as of a date reasonably near the date of the relevant
      Drawdown Notice by the president or the secretary (or equivalent officer)
      of such party as being a true and correct copy
  thereof.

            

    

     

    
      	
              3.

            	
              Copies
      of certificates dated as of a date reasonably near the date of the
      Drawdown Notice, certifying that each Obligor is duly incorporated (or
      formed) and in goodstanding under the laws of such party’s jurisdiction of
      incorporation (or formation) and, in respect of each Borrower, that such
      Borrower is duly qualified and in goodstanding as a foreign maritime
      entity under the law of the Republic of
Liberia.

            

    

     

    
      	
              4.

            	
              Copies
      of resolutions of the directors (or equivalent governing body) (and where
      required, the shareholders or equivalent equity holders)
    of:

            

    

     

    
      	
               
      

            	
              (a)

            	
              each
      Obligor authorizing the execution of each of the Finance Documents to
      which such Obligor is or is to be a party (and additionally, in the case
      of each Borrower, the Bareboat Charter and Memorandum of Three Party
      Agreement to which such Borrower is or is to be a party) and authorizing
      named officers or attorneys-in-fact to execute such documents and, in the
      case of the Borrowers, to give the Drawdown Notice and other notices
      required by the Finance Documents;
and

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      relevant Bareboat Charterer and Pacific Rim authorizing the execution of
      the relevant Bareboat Charter(s) and Memorandum of Three Party Agreement
      to which it is a party and authorizing named officers or attorneys-in-fact
      to execute such documents and to give any notices required
      thereunder,

            

    

     

    in each
case certified as of a date reasonably near the date of the Drawdown Notice by
the president or the secretary (or equivalent officer) of such party as being a
true and correct copy thereof.

     

    
      	
              5.

            	
              The
      original of any power of attorney under which a Bareboat Charter,
      Memorandum of Three Party Agreement or any Finance Document is to be
      executed on behalf of an Obligor.

            

    

     

    
      	
              6.

            	
              Copies
      of all consents which any of the Obligors requires to enter into, or make
      any payment or perform any of its obligations under or in connection with
      the transactions contemplated by this Agreement, each certified as of a
      date reasonably near the date of the relevant Drawdown Notice by the
      president or the secretary (or equivalent officer) of such party as being
      a true and correct copy thereof, or certification by such president or
      secretary (or equivalent officer) that no such consents are
      required.

            

    

     

    
      	
              7.

            	
              Copies
      of each Bareboat Charter and Memorandum of Three Party Agreement,
      certified as of a date reasonably near the date of the relevant Drawdown
      Notice by the president or the secretary (or equivalent officer) of the
      respective Borrower thereto as being a true and correct copy thereof, each
      Bareboat Charter and Memorandum of Three Party Agreement to be in form and
      substance acceptable to the Facility
Agent.

            

    

     

    
      	
              8.

            	
              Documentary
      evidence that the agent for service of process named in Clause 25.2 has
      accepted its appointment in respect of the
  Obligors.

            

    

     

    
      	
              9.

            	
              A
      certificate of each Obligor, signed on behalf of each such party by the
      president or the secretary (or equivalent officer) of the Guarantor, dated
      as of the Expected Drawdown Date (the statements made in such certificate
      shall be true on and as of the Expected Drawdown Date), certifying as
      to:

            

    

     

    
      	
               
      

            	
              (a)

            	
              the
      absence of any proceeding for the dissolution or liquidation of such
      party;

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      veracity in all material respects of the representations and warranties
      contained in this Agreement as though made on and as of the Expected
      Drawdown Date;

            

    

     

    
      	
               
      

            	
              (c)

            	
              the
      absence of any material misstatement of fact in any information provided
      by the Borrowers to the Facility Agent or any Lender and that such
      information did not omit to state any material fact necessary to make the
      statements therein, in the light of the circumstances under which they
      were made, not misleading; and

            

    

     

    
      	
               
      

            	
              (d)

            	
              the
      absence of any event occurring and continuing, or resulting from the
      making of the Advance, that constitutes a Potential Event of Default or an
      Event of Default.

            

    

     

    10.           Documentary
evidence that:

     

    
      	
               
      

            	
              (a)

            	
              [intentionally
      omitted]

            

    

     

    
      	
               
      

            	
              (b)

            	
              each
      Ship has been delivered by the relevant Borrower to the relevant Bareboat
      Charterer in accordance with all of the terms and conditions of the
      relevant Bareboat Charter, free and clear of all liens and encumbrances
      other than the relevant Mortgage, together with a copy of the Protocol of
      Delivery and Acceptance for such Ship, duly executed by the relevant
      Borrower and the relevant Bareboat Charterer, certified as of the Expected
      Drawdown Date by the president or the secretary (or equivalent officer) of
      the relevant Borrower as being a true and correct copy of the
      original;

            

    

     

    
      	
               
      

            	
              (c)

            	
              there
      is/are no pending dispute(s) or arbitration proceedings arising out of or
      in connection with a Bareboat Charter or Memorandum of Three Party
      Agreement (which may be established by a certificate dated as of the
      Expected Drawdown Date by the president or the secretary (or equivalent
      officer) of the relevant Borrower);

            

    

     

    
      	
               
      

            	
              (d)

            	
              each
      Ship is registered in the name of the relevant Borrower under Liberian
      registry, free of all recorded liens and encumbrances, save as
      contemplated by the Finance Documents (which shall be established by a
      Certificate of Ownership and Encumbrance issued by the appropriate
      Liberian authorities stating that such Ship is owned by the relevant
      Borrower and that there are on record no other mortgages, liens or other
      encumbrances on such Ship except the relevant
  Mortgage);

            

    

     

    
      	
               
      

            	
              (e)

            	
              each
      Mortgage has been preliminarily registered against the relevant Ship as a
      valid first priority ship mortgage in accordance with the laws of the
      Republic of Liberia and the Security Interests created by the Finance
      Documents shall have been duly
perfected;

            

    

     

    
      	
               
      

            	
              (f)

            	
              the
      Government of the Republic of Liberia has authorized each Ship to be
      temporarily registered under Philippine flag without loss of Liberian
      registry;

            

    

     

    
      	
               
      

            	
              (g)

            	
              each
      Ship is bareboat registered in the name of the relevant Bareboat Charterer
      under Philippine bareboat registry, free of all recorded liens and
      encumbrances, save as contemplated by the Finance Documents (which shall
      be established by a Certificate of Ownership and Encumbrance (or similar
      instrument) issued by the Philippine Maritime Industry Authority stating
      that such Ship is bareboat registered in the name of the relevant Bareboat
      Charterer and that there are on record no other mortgages, liens or other
      encumbrances on such Ship except the relevant Mortgage), provided that, with
      respect to the Mortgage, it shall be acceptable for the relevant Borrower
      to deliver to the Facility Agent as soon as possible, but in no event
      later than 60 days, following the Actual Drawdown Date, evidence
      acceptable to the Facility Agent that the Philippine Maritime Industry
      Authority has recognized that the existence of the Mortgage with respect
      such Ship and that such Mortgage is governed by the law of the Republic of
      Liberia, and has duly noted the same in the Bareboat
    Registry;

            

    

     

    
      	
               
      

            	
              (h)

            	
              a
      cautionary notice of the Mortgage with respect to each Ship has been filed
      in the Bareboat Registry, such notice to be in form and substance
      acceptable to the Facility Agent, provided that such
      notice may be filed as soon as is feasible after the Actual Drawdown Date
      if such notice cannot be filed on or before the Actual Drawdown
      Date;

            

    

     

    
      	
               
      

            	
              (i)

            	
              each
      Ship is classed with the Classification Society in the highest
      classification and rating for vessels of the same age and type without any
      outstanding conditions or recommendations affecting class (other than
      those for which the time prescribed for curing the condition or
      recommendation has not passed), which shall be established by a
      Confirmation of Class Certificate issued by the Classification Society and
      dated a date reasonably near the Expected Drawdown Date; a “Class
      Statement” or similar instrument shall not be acceptable for purposes of
      this clause; and

            

    

     

    (j)           each
Ship:

     

    
      	
               
      

            	
              (i)

            	
              is
      insured in compliance with the terms of the relevant Mortgage, including
      mortgagee’s interest insurance;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              is
      or will be managed by the Approved Manager in accordance with management
      agreements acceptable to the Majority Lenders;
  and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              has
      been inspected and found to be in a satisfactory condition by an inspector
      appointed by the Facility Agent at the cost of the
    Borrowers.

            

    

     

    
      	
              11.

            	
              A
      certificate by the president or the secretary (or equivalent officer) of
      each Borrower, or a certificate of the Approved Manager (technical),
      identifying and giving the address and other communication details of the
      ISM Responsible Person(s).

            

    

     

    
      	
              12.

            	
              Copies
      of the Document of Compliance and Safety Management Certificate for each
      Ship referred to in paragraph (a) of the definition of the ISM Code
      Documentation, certified as true and in effect by the relevant Borrower or
      the Approved Manager (technical).

            

    

     

    
      	
              13.

            	
              Copies
      of such other ISM Code Documentation as the Facility Agent may have
      requested by written notice to the Borrowers not later than 2 days before
      the Expected Drawdown Date, certified as true and complete in all material
      respects by the Borrowers or the Approved Manager
    (technical).

            

    

     

    
      	
              14.

            	
              Certification
      by each Borrower or the Approved Manager (technical)
  that:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Ship owned by will maintain for the duration of the Security Period a
      valid International Ship Security
Certificate;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      security system of the Ship owned by it and associated security equipment
      complies with the applicable requirements of Chapter XI-2 of SOLAS and
      Part A of the ISPS Code; and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              an
      approved ship security plan is in
place.

            

    

     

    15.           A
valuation of the aggregate Fair Market Value of the Ships.

    

    
      	
              16.

            	
              A
      favorable report from an insurance consultant nominated by the Facility
      Agent confirming that the insurance placed on the Ships is in compliance
      with the Mortgage thereon (and all costs associated with such report shall
      be payable by the Borrowers).

            

    

    

    
      	
              17.

            	
              A
      favorable opinion of Watson, Farley & Williams (New York) LLP, New
      York counsel for the Credit Parties, in form, scope and substance
      satisfactory to the Credit Parties.

            

    

     

    
      	
              18.

            	
              A
      favorable opinion of Cardillo & Corbett, New York, Liberian and
      Marshall Islands counsel to the Obligors, in form, scope and substance
      satisfactory to the Credit Parties.

            

    

     

    
      	
              19.

            	
              A
      favorable opinion of Conyers Dill & Pearman, Bermuda counsel to the
      Guarantor, in form, scope and substance satisfactory to the Credit
      Parties.

            

    

     

    
      	
              20.

            	
              A
      favorable opinion of Sycip, Salazar, Hernandez & Gatmaitman,
      Philippine counsel to the Credit Parties, in form, scope and substance
      satisfactory to the Credit Parties.

            

    

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
4

     

    

     

    ASSIGNMENT
AND ACCEPTANCE

     

    Dated as
of [l]

    

    Reference is made to the Loan Agreement
dated as of January 16, 2008 (the “Loan Agreement”) among (i)
Bedford Maritime Corp., Brighton Maritime Corp., Hari Maritime Corp., Prospect
Navigation Corp., Hancock Navigation Corp., Columbus Maritime Corp. and
Whitehall Marine Transport Corp. as joint and several Borrowers, (ii) TBS
International Limited as Guarantor, (iii) the banks and financial institutions
described therein as Lenders, (iv) DVB Group Merchant Bank (Asia) Ltd. as
Facility Agent and Security Agent, (v) The Governor and Company of the Bank of
Ireland as Payment Agent, (vi) DVB Bank AG, The Governor and Company of the Bank
of Ireland  and Natixis as Swap Banks, and (vii) Mount Washington LLC
as Arranger.  Capitalized terms used but not defined herein shall have
the meaning assigned such terms in the Loan Agreement.

    

    ______________________ (the “Assignor”) and
________________________ (the “Assignee”) agree as
follows:

    

    1.           As
of the Effective Date (defined in Paragraph 4 below), the Assignor hereby sells
and assigns to the Assignee, and the Assignee hereby purchases and assumes from
the Assignor, that interest in and to all of the Assignor’s rights and
obligations under the Loan Agreement which represents the Percentage Interest
specified in Section 1 of Annex 1 hereto in the Assignor’s Commitment and the
Advance(s) owing to the Assignor.  After giving effect to such sale
and assignment, the Assignee’s Commitment and the amount of the Advance owing to
the Assignee will be as set forth in Section 2 of Annex 1.

    

    2.           The
Assignor (a) represents and warrants that it is the legal and beneficial owner
of the interest being assigned by it hereunder and that such interest is free
and clear of any adverse claim; and (b) makes no representation or warranty and
assumes no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Loan Agreement, the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Loan Agreement, or any other instrument or document furnished pursuant thereto
and (b) the financial condition of the Obligors or the performance or observance
by any of the Obligors of any of its obligations under the Loan Agreement or any
other instrument or document furnished pursuant thereto.

    

    3.           The
Assignee (a) confirms that it has received a copy of the Loan Agreement and the
other Finance Documents, together with copies of the financial statements
referred to in the Loan Agreement, and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance; (b) agrees that it will, independently and
without reliance upon the Facility Agent, the Assignor or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Agreement; (c) appoints and authorizes the Facility Agent, the
Security Trustee and the Payment Agent to take such action on its behalf and to
exercise such powers under the Loan Agreement as are delegated to such parties
by the terms thereof, together with such powers as are reasonably incidental
thereto; (d) agrees that it will be bound by the Loan Agreement and perform in
accordance with its terms all of the obligations which by the terms of the Loan
Agreement are required to be performed by it as a Lender; and (e) specifies as
its address for notices the offices set forth beneath its name on the signature
page hereof.

    

    4.           The
effective date (the “Effective
Date”) for this Assignment and Acceptance shall be the date of acceptance
hereof by the Agent, unless a later date is specified in Annex 1 hereto, provided that no Assignment
and Acceptance shall be effective until and unless the terms and conditions of
Clause 18.2 of the Loan Agreement are complied with.  Following the
execution of this Assignment and Acceptance, two counterparts will be promptly
delivered by the Assignee to the Facility Agent, and the Facility Agent shall
promptly forward a counterpart to the Borrower.

    

    5.           Upon
such acceptance and recording, as of the Effective Date, (a) the Assignee shall
be a party to the Loan Agreement and, to the extent provided in this Assignment
and Acceptance, have the rights and obligations of a Lender; and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Loan
Agreement.

    

    6.           Upon
such acceptance and recording, from and after the Effective Date, the Payment
Agent shall make all payments under the Loan Agreement in respect of the
assignment effected hereby (including, without limitation, all payments of
principal, interest and commitment fees with respect thereto) to the
Assignee.  The Assignor and Assignee shall make all appropriate
adjustments in payments under the Loan Agreement for periods prior to the
Effective Date directly between themselves.

    

    7.           This
Assignment and Acceptance shall be governed by, and shall be construed in
accordance with, the laws of the State of New York.

    

    NAME OF
ASSIGNOR                                                                                     NAME
OF ASSIGNEE

    

    

    By:
________________________                                                                                                By:
________________________

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    Address
for Notices:

    ____________________________

    ____________________________

    ____________________________

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Annex
1

    to

    Assignment
and Acceptance

    Dated as
of [l]

    

    

    Section
1

    

    Percentage Interest:

    

    

    Section
2

    

    Assignee’s
Commitment:                                                                           $

    

    Aggregate
Outstanding Principal

    Amount of Advances owing
to

    the
Assignee:                                                                           $

    

    

    Section
3

    

    Effective
Date:

    

    

    

    

    NAME OF
ASSIGNOR

    

    

    By:
_______________________

    Name

    Title

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
5

    

    FORM
OF DELETION LETTER

    

    

     

    
      	
               
      

            	
              To:

            	
              Maritime
      Industry Authority

            

    

    The
Republic of the Philippines

    

    
      	
               
      

            	
              Date:

            

    

     

    
      	
              Re:

            	
              m.v.
      “__________________” (the “Ship”)

            

    

     

    
      	
               
      

            	
              Dear
      Sirs:

            

    

     

    Please be
advised that the Bareboat Charter dated December 5, 2007 made between [l], as Owner, and [l], as Bareboat
Charterer, has been terminated.  Accordingly, we request you to
forthwith endorse and cause the deletion of the Ship from the Maritime Industry
Authority and to cancel forthwith the temporary certificate of the Philippines
registry issued in respect of the Ship.

     

    Yours
faithfully,

    

    [l], as Owner

    

    

    By:
______________________________

    Name:

    Title:

    

    

    [l], as Bareboat
Charterer

    

    

    By:
_____________________________

    Name:

    Title:

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    SCHEDULE
6

    

    FORM
OF DELETION POWER OF ATTORNEY

    

    

    
      	
               
      

            	
              IRREVOCABLE
      POWER OF ATTORNEY

            

    

     

    THIS
IRREVOCABLE POWER OF ATTORNEY is given and made this ___ day of January 2008
by

     

    (A)            [l], a corporation duly
incorporated under the laws of the Republic of The Marshall Islands (the “Owner”), having its registered
office at The Trust Company Complex, Ajeltake Island, PO Box 1405, Majuro,
Marshall Islands MH96960, and

     

    (B)            [l], a corporation duly
organized and validly existing under the laws of the Republic of the Philippines
(the “ Charterer”),
having its registered office at [2nd Floor, Harbor Center II, South Harbor, Port
Area, Manila, Philippines],

     

    
      	
               
      

            	
              IN
      FAVOR OF

            

    

     

    DVB GROUP
MERCHANT BANK (ASIA) LTD., a Singapore company, with offices at 77 Robinson Road
30-02 Singapore, and its successors and permitted assigns (the “Attorney”).

     

    PRELIMINARY
STATEMENTS:

     

    1.           The
Owner is the sole owner of the whole of the of the vessel [l] (the “Ship”), which is duly
registered in the name of the Registered Owner under the law and flag of the
Republic of Liberia;

    

    2.           Pursuant
to the terms and conditions of a Bareboat Charter dated December 5, 2007 (as
such may be amended, restated, supplemented, replaced, novated or otherwise
modified from time to time, the “Charter”), the Owner demise
chartered the Ship to the Charterer;

    

    3.           The
Charterer temporarily registered the Ship in its name with the Philippines
Registry of Vessels and the Ship is thus dually registered in the name of the
Registered Owner under the laws of the Republic of Liberia;and in the name of
the Charterer under the laws of the Republic of the Philippines pursuant to
Presidential Decree No. 1521, as amended, of the Republic of the Philippines and
carries the Philippine flag; and

    

    5.           The
Owner and the Charterer desire to appoint an attorney to effect or procure the
deletion of the Ship from its temporary registration with the Philippines
Registry of Vessels and, for such purpose, to execute and deliver on behalf the
Owner and the Charterer or either of them all notices, applications, oaths,
affidavits, confirmations, declarations, deeds and other relevant instruments
and documents in connection with or relating to the deletion of the Ship from
temporary registration of the Republic of the Philippines.

    

    NOW,
THEREFORE, the Owner and the Charterer hereby together jointly appoint and each
of them hereby severally appoints the Attorney the true and lawful attorney of
and for each of the Owner and the Charterer, and the Attorney is hereby
authorized, directed and empowered acting singly and with full power to act
alone, for and on behalf of each of the Owner and the Charterer, jointly and
each of them severally, in the name of the Owner or the Charterer (or in the
joint names of the Owner and the Charterer) to do any of the following acts and
things:

    

    A.           To
notify the Maritime Industry Authority of the Republic of the Philippines and
any other relevant authority or body (whether belonging to the government or
otherwise) of the Republic of the Philippines that the Charter has been
terminated and hence the Ship should be deleted from the temporary registration
under Presidential Decree No. 1521, as amended, of the Republic of the
Philippines or such other pertinent legislation of the Republic of the
Philippines, as the case may be.

    

    B.           To
delete, and to effect and procure the deletion of, the Ship from temporary
registration under Presidential Decree No. 1521, as amended, of the
Republic of the Philippines or such other pertinent legislation of the Republic
of the Philippines, as the case may be, and to cause or procure the cancellation
of the Temporary Certificate of Philippine Register issued by the Maritime
Industry Authority to or in respect of the Ship upon termination of the Charter,
including obtaining a deletion certificate from the Maritime Industry
Authority.

    

    C.           To
complete, sign, date, render perfect and deliver to the Maritime Industry
Authority of the Republic of the Philippines and any other relevant authority or
body (whether belonging to the government or otherwise) of the Republic of the
Philippines all notices, applications, oaths, deeds, declarations,
confirmations, affidavits and any other relevant instruments and documents,
including, without limitation, any notarial acts, whatsoever that may be
required or desirable for the purpose of deleting the Ship from temporary
registration under Presidential Decree No. 1521, as amended, or such other
pertinent legislation of the Republic of the Philippines, and for the purpose of
causing or procuring the cancellation of the Temporary Certificate of Philippine
Register issued by the Maritime Industry Authority to or in respect of the Ship,
and the execution and delivery by the Attorney of each such instrument and
document shall be conclusive evidence of its authority to do so.

    

    D.           To
do such other acts, objects, matters and things, and to complete and render
perfect all documents and transactions as may be, in the entire discretion of
the Attorney, appropriate or necessary for more effectively or expeditiously
carrying out the objects and purposes herein authorized or that the Attorney
may, for any reason, deem fit to carry out the acts, objects, matters and things
more specifically authorized herein.

    

    For the
better doing, performing and executing of the acts, objects, matters and things
hereinbefore mentioned, the Owner and the Charterer hereby fully jointly grant
and each of them severally grants unto the Attorney full power and authority to
substitute and appoint in its place, on such terms and at such salary as the
Attorney shall think fit, one or more attorney or attorneys to exercise for the
Owner and the Charterer as their respective attorney or attorneys any or all of
the powers and authorities hereby conferred and to revoke any such appointments
from time to time and to substitute or appoint any other or others in the place
of such attorney or attorneys as the Attorney shall from time to time deem
appropriate.

    

    The Owner
and the Charterer hereby jointly ratify and confirm and agree to ratify and
confirm, and each of them hereby severally ratifies and confirms and agrees to
ratify and confirm, whatsoever the Attorney shall do or purport to do by virtue
of these presents.

    

    The Owner
and the Charterer hereby further jointly declare, and each of them hereby
severally declares, that this Power of Attorney shall be irrevocable
indefinitely by virtue thereof and of this Power of Attorney having been given
for valuable consideration, the adequacy and receipt of which the Owner and the
Charterer hereby jointly acknowledge and each of them severally acknowledges,
and by virtue of such Power of Attorney being coupled with an interest, having
been granted by way of security for repayment of moneys owing to the Attorney
and various secured parties as its principals, and further by reason of this
Power of Attorney having been executed for the purposes of protecting the
Attorney (as first mortgagee of the Ship for the ratable benefit of such secured
parties) and such other secured parties and of enabling the Attorney to
foreclose the first mortgage on the Ship granted in favor of the Attorney for
the benefit of such secured parties and to enforce and implement the other
securities given or delivered to the Attorney for the ratable benefit such
secured parties as security for the payment and repayment of monies due or owing
to the Attorney or such secured parties.

    

    THIS
POWER OF ATTORNEY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.

    

    This
Power of Attorney may be executed in counterparts.

    

    IN
WITNESS WHEREOF each of the Owner and the Charterer has caused this Power of
Attorney to be duly executed and delivered on the day and year first above
written.

    

    [l], as
Charterer

    

    

    By:
______________________________

    Name:

    Title:

    

    

    

    [l], as Owner

    

    

    By:
______________________________

    Name:

    Title:

    

    

    

    

    

    

    (Add
proper notarial acknowledgment)

    

     

     

    

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

       

      APPENDIX
A

       

      FORM OF
COMPLIANCE CERTIFICATE

      NAME
OF BORROWER

       

      Via
Courier

       

      DVB Group
Merchant Bank (Asia) Ltd.

       

        As
Facility Agent

       

      77
Robinson Road 30-02

       

      Singapore

       

      Date
[●]

       

      Dear
Sirs:

       

      Compliance
Certificate for the Period Ended [●]

       

      This
Compliance Certificate is being delivered to you in connection with the Loan
Agreement dated as of [●] (the “Loan Agreement”) among (i) [●]
(the “Company”) and the
other borrowers named therein as joint and several borrowers (collectively, the
“Borrowers”), (ii) TBS
International Limited as Guarantor, (iii) the banks and financial institutions
named therein as lenders (collectively, the “Lenders”), (iv) DVB Group
Merchant Bank (Asia) Ltd. (“DVB”) as Facility Agent and
Security Trustee, (v) The Governor and Company of the Bank of Ireland (“BOI”), as Payment Agent;
(vi) DVB Bank AG, BOI and Natixis as Swap Banks, and (vii) Mount Washington
LLC as Arranger.  Capitalized terms not otherwise defined herein shall
have the meaning provided for in the Loan Agreement.

       

      I am the
Chief Financial Officer of the Company and in such capacity I hereby certify to
the Agent that:

       

      
        	
                [1.

              	
                Attached
      hereto are:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                true,
      correct and complete copies of the annual financial statements of the
      Company, and the audit thereof prepared by [●];
  and

              

      

       

      
        	
                 
      

              	
                (b)

              	
                a
      written appraisal report setting forth the Fair Market Value of the
      Ship.]

              

      

       

      
        	
                [1.

              	
                Attached
      hereto are true, correct and complete copies of the quarterly unaudited
      financial results of the Company for the quarter ended [date], including the
      balance sheet, profit and loss account and quarterly management
      accounts.]

              

      

       

      
        	
                2.

              	
                I
      have reviewed such financial statements and they fairly present the
      financial condition and the results of operations of the Company for the
      period indicated.

              

      

       

      
        	
                3.

              	
                As
      per the calculation stated in Annex A attached hereto, as at the date
      hereof the Collateral Maintenance Ratio is not less than 135% and at all
      times during the accounting period covered by the financial statements
      referred to above the Collateral Maintenance Ratio was not less than
      135%.

              

      

       

      
        	
                4.

              	
                I
      have reviewed the Loan Agreement and each of the other Finance Documents
      and have made, or caused to be made under my supervision, a review in
      reasonable detail of the transactions contemplated by the Loan Agreement
      and each of the other Finance Documents for the accounting period covered
      by the financial statements referred to above, and such review has not
      disclosed the existence during or at the end of such accounting period of
      an Event of Default or of any Potential Event of Default or any other
      event which might adversely affect any Obligor’s ability to perform its
      obligations under the Loan Agreement or any of the other Finance Documents
      to which it is a party, and I do not have knowledge of the existence of
      any such event or condition as at the date of this Certificate [except [●]
      - describe the event or
      condition, the period of its existence and what action is being taken to
      remedy the same].

              

      

       

      
        	
                5.

              	
                The
      Company maintains in full force and effect, and complies with the
      conditions and restrictions (if any) imposed in connection with, every
      consent, authorization, license or approval which may from time to time be
      necessary or required for the continued due performance of all its
      obligations under the Loan Agreement and the other Finance Documents to
      which it is a party.

              

      

       

      
        	
                6.

              	
                The
      Company is in compliance with all of the covenants set forth in the Loan
      Agreement and the other Finance Documents to which it is a
      party.

              

      

       

      
        	
                7.

              	
                The
      representations and warranties stated in Clause 9 of the Loan Agreement
      (updated mutatis
      mutandis) are true and correct as of the date
    hereof.

              

      

       

      [●]

       

      

       

      

       

      By:                                                                

       

              Name

       

              Chief
Financial Officer

       

      Attachment

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ANNEX
A

       

      Collateral Maintenance
Ratio:

       

      From the
Closing Date and until all amounts payable under the Loan Agreement have been
paid in full, the aggregate Fair Market Value of the Ships shall be not less
than 135% of the Loan (as confirmed by the most recent Fair Market Value
appraisal report delivered to the Agent under Clause 10.1(w)):

       

      Actual =
[●]% based on:

       

      Most
recent Fair Market Value appraisal report delivered to the Agent under Clause
10.1(w) = $[●]

       

      Loan
(aggregate principal amount outstanding) = $[●]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      TBS
INTERNATIONAL LIMITED

       

      Via
Courier

       

      DVB Group
Merchant Bank (Asia) Ltd.

       

        As
Facility Agent

       

      77
Robinson Road 30-02

       

      Singapore

       

      Date
[●]

       

      Dear
Sirs:

       

      Compliance
Certificate for the Period Ended [●]

       

      This
Compliance Certificate is being delivered to you in connection with the Loan
Agreement dated as of January 11, 2008 (the “Loan Agreement”) among (i)
Bedford Maritime Corp., Brighton Maritime Corp., Hari Maritime Corp., Prospect
Navigation Corp., Hancock Navigation Corp., Columbus Maritime Corp. and
Whitehall Marine Transport Corp. as joint and several Borrowers (collectively,
the “Borrowers”), (ii)
TBS International Limited as Guarantor (the “Guarantor”), (iii) the
banks and financial institutions named therein as Lenders, (iv) DVB Group
Merchant Bank (Asia) Ltd. (“DVB”) as Facility Agent (in
such capacity, the “Facility
Agent”) and Security Trustee, (v) The Governor and Company of the Bank of
Ireland (“BOI”), as
Payment Agent, (vi) DVB Bank AG, BOI and Natixis as Swap Banks and (vii) Mount
Washington LLC as Arranger.  Capitalized terms not otherwise defined
herein shall have the meaning provided for in the Loan Agreement.

       

      I am the
Chief Financial Officer of the Guarantor and in such capacity I hereby certify
to the Agent that:

       

      
        	
                1.

              	
                Attached
      hereto is a true, correct and complete copy of [insert text below as
      appropriate]

              

      

       

      [(a) the
financial statements of the Guarantor filed with the United States Securities
and Exchange Commission on Form 10-K, (b) a report on all off-balance sheet
financings and time charter hire commitments of the Guarantor, and (c) an
appraisal report setting forth the Fair Market Value of the Ships.]

       

      [the
financial statements of the Guarantor filed with the United States Securities
and Exchange Commission on Form 10-Q.]

       

      [the
report of the Guarantor filed with the United States Securities and Exchange
Commission on Form 8-K.]

       

      
        	
                2.

              	
                Each
      of the Obligors is in compliance with all of the covenants set forth in
      the Loan Agreement and the other Finance Documents to which it is a party
      and the Guarantor is in compliance with all of the TBS Credit Facility
      Financial Covenants regardless of whether the TBS Credit Facility is in
      effect or not.

              

      

       

      
        	
                3.

              	
                As
      per the calculation stated in Annex A attached hereto, as at the date
      hereof the Collateral Maintenance Ratio is not less than 135% and at all
      times during the accounting period covered by the financial statements
      referred to above the Collateral Maintenance Ratio was not less than
      135%.

              

      

       

      
        	
                4.

              	
                I
      have reviewed the Loan Agreement and each of the other Finance Documents
      and have made, or caused to be made under my supervision, a review in
      reasonable detail of the transactions contemplated by the Loan Agreement
      and each of the other Finance Documents for the accounting period covered
      by the financial statements referred to above, and such review has not
      disclosed the existence during or at the end of such accounting period of
      an Event of Default or of any Potential Event of Default or any other
      event which might adversely affect any Obligor’s ability to perform its
      obligations under the Loan Agreement or any of the other Finance Documents
      to which it is a party, and I do not have knowledge of the existence of
      any such event or condition as at the date of this Certificate [except [●]
      - describe the event or
      condition, the period of its existence and what action is being taken to
      remedy the same].

              

      

       

      
        	
                5.

              	
                Each
      of the Obligors maintains in full force and effect, and complies with the
      conditions and restrictions (if any) imposed in connection with, every
      consent, authorization, license or approval which may from time to time be
      necessary or required for the continued due performance of all its
      obligations under the Loan Agreement and the other Finance Documents to
      which it is a party.

              

      

       

      
        	
                6.

              	
                The
      representations and warranties stated in Clause 9 of the Loan Agreement
      (updated mutatis
      mutandis) are true and correct as of the date
    hereof.

              

      

       

      [TBS
INTERNATIONAL LIMITED]

       

      

       

      

       

      By:                                                                

       

              Name

       

              Chief
Financial Officer

       

      Attachment

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ANNEX
A

       

      Collateral Maintenance
Ratio:

       

      From the
Closing Date and until all amounts payable under the Loan Agreement have been
paid in full, the aggregate Fair Market Value of the Ships shall be not less
than 135% of the Loan (as confirmed by the most recent Fair Market Value
appraisal report delivered to the Agent under Clause 10.1(w)):

       

      Actual =
[●]% based on:

       

      Most
recent Fair Market Value appraisal report delivered to the Agent under Clause
10.1(w) = $[●]

       

      Loan
(aggregate principal amount outstanding) = $[●]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

       

      APPENDIX
B

       

      FORM OF
EARNINGS ASSIGNMENT

      ASSIGNMENT
OF EARNINGS

       

      THIS
ASSIGNMENT OF EARNINGS, dated January __, 2008 (this “Assignment”), is made by [●],
a Marshall Islands corporation (the “Assignor”), to and in favor of
DVB GROUP MERCHANT BANK (ASIA) LTD. as Security Trustee (the “Assignee”) for the Lenders and
the Swap Banks (each as defined below).  Capitalized terms used but
not defined herein shall have the meaning assigned such terms in the Loan
Agreement (as defined below).

       

      WHEREAS:

       

      1.           The
Assignor is the sole owner of the whole of the vessel [●] (the “Ship”), which is duly
registered in the name of the Assignor under the law and flag of the Republic of
Liberia with Official Number [●].

       

      2.           Pursuant
to and subject to the conditions contained in a loan agreement dated as of
January 16, 2008 (the “Loan
Agreement”) among (i) the Assignor and the other borrowers named therein
as joint and several borrowers (collectively, the “Borrowers”), (ii) TBS
International Limited as Guarantor, (iii) the banks and financial institutions
named therein as lenders (collectively, the “Lenders”), (iv) the Assignee
as Facility Agent and Security Trustee, (v) The Governor and Company of the Bank
of Ireland (“BOI”), as
Payment Agent; (vi) DVB Bank AG, BOI and Natixis as Swap Banks, and (vii) Mount
Washington LLC as Arranger, the Lenders agreed to make available to the
Borrowers a loan facility in an aggregate principal amount of up to SEVENTY-FIVE
MILLION UNITED STATES DOLLARS (US$75,000,000) (the “Loan”).

       

      3.           Pursuant
to Master Agreements on the 2002 ISDA Master Agreement
(Multicurrency-Crossborder) form dated January [●], 2008 made between the
Borrowers and the Swap Banks, the Borrowers have entered into certain
Transactions (as such term is defined in the said Master Agreements) pursuant to
separate Confirmations providing for, amongst other things, the payment of
certain amounts by the Borrowers to the Swap Banks.

       

      4.           It
is one of the conditions precedent to the availability of the Loan under the
Loan Agreement that the Assignor executes and delivers this Assignment in favor
of the Assignee, for the benefit of the Lenders and the Swap Banks, as security
for the Secured Liabilities and the performance and observance of and compliance
with the covenants, terms and conditions contained in the Finance Documents
(collectively, the “Obligations”).

       

      NOW,
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Assignor hereby agrees with the Assignee as follows:

       

      SECTION
1.  Assignment.  (a)
As security for the Obligations, the Assignor hereby sells, transfers, assigns
and sets over unto the Assignee, its successors and assigns, and hereby grants
to the Assignee, its successors and assigns, to it and its successors’ and
assigns’ own proper use and benefit, for and on behalf of the Lenders and the
Swap Banks, a continuing, first priority security interest in and to all of the
Assignor’s right, title and interest under, in and to (i) the Earnings and any
Requisition Compensation of the Ship and (ii) any proceeds of any of the
foregoing (collectively, the “Collateral”).

       

      (b)           When
all Obligations shall have been paid and performed in full, the Assignee shall,
upon the request of the Assignor, terminate this Assignment, and the Assignee
shall forthwith release and assign, transfer and deliver to the Assignor, at the
expense of the Assignor, the Collateral assigned hereby.

       

      SECTION
2.  Notice.  The
Assignor hereby covenants and agrees that it will:

       

      (a)           procure
that notice of this Assignment in substantially the form of Annex A attached
hereto shall be duly given to each person who becomes a party with the Assignor
in respect of the Ship to any charter or contract of affreightment or any other
contract for the transportation of cargoes or persons in excess of 12 months
duration and to any other person (including, without limitation, the Assignor’s
agents and representatives) who may receive or have control of any of the
Collateral hereby assigned; and

       

      (b)           use
its best efforts to cause each such person to whom such notice is given to
acknowledge directly to the Assignee receipt of the Assignor’s notification and
to provide consent where the consent of any such person is required pursuant to
any such charter or contract of affreightment or other contractual relationship
with the Assignor.

       

      SECTION
3.  Assignors to Remain
Liable.  Anything herein contained to the contrary
notwithstanding, the Assignee, and its respective successors and assigns, shall
have no obligation or liability by reason of or arising out of this Assignment
under any agreement, including without limitation under any charter or contract
of affreightment, pooling agreement or other contract for the transportation of
cargo, shall not be required or obligated in any manner to perform or fulfill
any obligations of the Assignor under or pursuant to any agreement, including
without limitation under any charter or contract of affreightment, pooling
agreement or other contract for the transportation of cargo, or to make any
payment or to make any inquiry as to the nature or sufficiency of any payment
received by it or to present or file any claim or to take any other action to
collect or enforce the payment of any amounts which may have been assigned to it
or to which it may be entitled hereunder at any time or times.

       

      SECTION
4.  No Other
Assignments.  The Assignor warrants and represents that it has
not assigned or pledged the rights, title and interest assigned hereunder to
anyone other than the Assignee.  The Assignor hereby covenants that,
without the prior written consent thereto of the Assignee, so long as this
Assignment shall remain in effect, it will not assign or pledge the whole or any
part of the rights, title and interest hereby assigned to anyone other than the
Assignee, and it will not take or omit to take any action, the taking or
omission of which might result in an alteration or impairment of this
Assignment, or of any of the rights created by this Assignment.

       

      SECTION
5.  Assignee
Appointed Attorney-in-Fact.  (a) The Assignor hereby
constitutes the Assignee, its successors and assigns, its true and lawful
attorney, irrevocably, with full power (in the name of the Assignor or
otherwise), upon the occurrence of an Event of Default and so long as such Event
of Default shall be continuing, to carry out the provisions of this Assignment
and to take any action and execute any instruments which the Assignee may deem
necessary or advisable to accomplish the purposes hereof, including without
limitation, to ask, require, demand, receive, compound and give acquittance for
any and all moneys and claims for moneys due and to become due under or arising
out of the Collateral assigned hereby, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or to take
any action or institute any proceedings which the Assignee may deem necessary or
advisable in the premises.

       

      (b)           The
Assignor hereby further authorizes the Assignee to file financing statements
(including Form UCC-1 and UCC-3) and amendments thereto as provided in Article 9
of the Uniform Commercial Code, and any other instrument of like effect, as the
Assignee may reasonably deem necessary in connection with the perfection of the
Assignee’s security interest in the Collateral hereby assigned.

       

      (c)           The
powers and authority granted to the Assignee herein have been given for a
valuable consideration, are coupled with an interest and are hereby declared to
be irrevocable.

       

      SECTION
6.  No
Waiver.  No failure on the part of the Assignee to exercise,
and no delay in exercising, any right, remedy, power or privilege shall operate
as waiver thereof, nor shall any single or partial exercise by the Assignee of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege.  The rights and remedies of the Assignee under this
Assignment are cumulative and may be exercised (where possible to do so) singly,
concurrently, successively and/or in conjunction with or apart from and without
prejudice to any other rights and remedies available to the Assignee under the
other Finance Documents and are not exclusive of any rights or remedies provided
by law.

       

      SECTION
7.  Further
Assurances.  The Assignor agrees that at any time and from time
to time, upon the written request of the Assignee and at the expense of the
Assignor, it shall promptly and duly execute and deliver any and all such
further instruments and documents as the Assignee may deem desirable in
obtaining the full benefits of this Assignment and of the rights and powers
herein granted.

       

      SECTION
8.  Amendments.  No
amendment or waiver of any provision of this Assignment, nor consent to any
departure by the Assignor herefrom, shall be effective unless the same shall be
in writing and signed by the Assignee, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

       

      SECTION
9.  Notices.  Any
notice, demand or other communication to be given under, or for the purpose of
this Assignment shall be made as provided in Clause 20 of the Loan
Agreement.

       

      SECTION
10.  Governing
Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

       

      IN
WITNESS WHEREOF, the Assignor has executed and delivered this Assignment of
Earnings on the date first above written.

       

      [●]

       

      

       

      

       

      By:                                                                           

       

      Name:

       

      Title:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ANNEX
A

       

      NOTICE OF
ASSIGNMENT

       

      To:

       

      PLEASE
TAKE NOTICE that, pursuant to an Assignment of Earnings dated January __,
2008 (the “Assignment”)
made by [●] (the “Assignor”) to and in favor of
DVB GROUP MERCHANT BANK (ASIA) LTD., as Security Trustee (the “Assignee”) in respect of the
Liberian flag vessel [●], Official No. [●] (the “Ship”), the Assignor has
assigned to the Assignee a continuing, first priority security interest in and
to all of the Assignor’s right, title, interest, claim and demand in and to all
moneys whatsoever which are now, or later become, payable (actually or
contingently) to the Assignor 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 Assignor in
      the event of requisition of the Ship for hire, remuneration for salvage
      and towage services, demurrage and detention moneys and damages for breach
      (or payments for variation or termination) of any charterparty or other
      contract for the employment of the
Ship;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                all
      moneys which are at any time payable under insurances in respect of loss
      of earnings; and

              

      

       

      
        	
                 
      

              	
                (c)

              	
                if
      and whenever the Ship is employed on terms whereby any moneys falling
      within paragraphs (a) or (b) above are pooled or shared with any other
      person, that proportion of the net receipts of the relevant pooling or
      sharing arrangement which is attributable to the
  Ship.

              

      

       

      You are
hereby irrevocably authorized and instructed to pay, as from the date you
receive notice and instructions from the Assignee to do so, all of such
aforesaid moneys to the Assignee to such account as Assignee may
direct.

       

      Dated:  January
__, 2008

       

      [●]

       

      

       

      

       

      By:                                                                           

       

      Name:

       

      Title:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      APPENDIX
C

       

      FORM OF
INSURANCE ASSIGNMENT

      

       

      ASSIGNMENT
OF INSURANCES

       

      THIS
ASSIGNMENT OF INSURANCES, dated January __, 2008 (this “Assignment”), is made by [●],
a Marshall Islands corporation (the “Owner”), and [●], a Philippine
corporation (the “Charterer”, and together with
the Owner, the “Assignors”), to and in favor
of DVB GROUP MERCHANT BANK (ASIA) LTD. as Security Trustee (the “Assignee”) for the Lenders and
the Swap Banks (each as defined below).  Capitalized terms used but
not defined herein shall have the meaning assigned such terms in the Loan
Agreement (as defined below).

       

      WHEREAS:

       

      1.           The
Owner is the sole owner of the whole of the vessel [●] (the “Ship”), which is duly
registered in the name of the Owner under the law and flag of the Republic of
Liberia with Official Number [●].

       

      2.           The
Owner has bareboat chartered the Ship to the Charterer pursuant to the terms of
a Bareboat Charter Agreement dated as of [●] (the “Charter”) between the Owner
and the Charterer, and the Charterer has bareboat registered the Ship in its
name under the law and flag of the Philippines.

       

      3.           Pursuant
to and subject to the conditions contained in a loan agreement dated as of
January 16, 2008 (the “Loan
Agreement”) among (i) the Owner and the other borrowers named therein as
joint and several borrowers (collectively, the “Borrowers”), (ii) TBS
International Limited as Guarantor, (iii) the banks and financial institutions
named therein as lenders (collectively, the “Lenders”), (iv) the Assignee
as Facility Agent and Security Trustee, (v) The Governor and Company of the Bank
of Ireland (“BOI”), as
Payment Agent; (vi) DVB Bank AG, BOI and Natixis as Swap Banks, and (vii) Mount
Washington LLC as Arranger, the Lenders agreed to make available to the
Borrowers a loan facility in an aggregate principal amount of up to SEVENTY-FIVE
MILLION UNITED STATES DOLLARS (US$75,000,000) (the “Loan”).

       

      4.           Pursuant
to Master Agreements on the 2002 ISDA Master Agreement
(Multicurrency-Crossborder) form dated January __, 2008 made between the
Borrowers and the Swap Banks, the Borrowers have entered into certain
Transactions (as such term is defined in the said Master Agreements) pursuant to
separate Confirmations providing for, amongst other things, the payment of
certain amounts by the Borrowers to the Swap Banks.

       

      5.           It
is one of the conditions precedent to the availability of the Loan under the
Loan Agreement that the Assignors execute and deliver this Assignment in favor
of the Assignee, for the benefit of the Lenders and the Swap Banks, as security
for the Secured Liabilities and the performance and observance of and compliance
with the covenants, terms and conditions contained in the Finance Documents
(collectively, the “Obligations”).

       

      NOW,
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Assignors hereby agree with the Assignee as follows:

       

      SECTION
1.  Assignment.  (a)
As security for the Obligations, each of the Owner and the Charterer hereby
sells, transfers, assigns and sets over unto the Assignee, its successors and
assigns, and hereby grants to the Assignee, its successors and assigns, to it
and its successors’ and assigns’ own proper use and benefit, for and on behalf
of the Lenders and the Swap Banks, a continuing, first priority security
interest in and to all of its right, title and interest under, in and to (i) all
insurances (including, without limitation, all certificates of entry in
protection and indemnity and war risks associations or clubs) in respect of the
Ship, whether heretofore, now or hereafter effected, and all renewals of or
replacements for the same, (ii) all claims, returns of premium and other moneys
and claims for moneys due and to become due under or in respect of said
insurances, (iii) all of its other rights under or in respect of said
insurances, and (iv) any proceeds of any of the foregoing.

       

      (b)           Any
payments made pursuant to the terms hereof shall be made to such account as may,
from time to time, be designated by the Assignee.

       

      (c)           When
all Obligations shall have been paid and performed in full, the Assignee shall,
upon the request of the Owner, terminate this Assignment, and the Assignee shall
forthwith release and assign, transfer and deliver to the Assignors, at the
expense of the Owner, the rights assigned hereby.

       

      SECTION
2.  Notice;
Loss Payable Clauses.  The Assignors hereby covenant and agree
to procure that notice of this Assignment in the form attached hereto as Exhibit
1 shall be duly given to all insurance brokers, underwriters and protection and
indemnity clubs, and that where the consent of any underwriter or protection and
indemnity club is required pursuant to any of the insurances assigned hereby, it
shall be obtained and evidence thereof shall be given to the Assignee, or, in
the alternative, the Assignors shall obtain, with the Assignee’s approval, a
letter of undertaking by each of the underwriters and the protection and
indemnity club that there shall be duly endorsed upon all slips, cover notes,
policies, certificates of entry or other instruments issued or to be issued in
connection with the insurances assigned hereby such notice of this Assignment
and the loss payable clauses in the forms attached hereto as Exhibits 2(a) and
2(b) or as the Assignee may otherwise approve in its sole
discretion.

       

      SECTION
3.  Assignors to Remain
Liable.  Anything contained in this Assignment to the contrary
notwithstanding, the Assignors shall at all times remain fully liable under said
insurances to perform all of the duties and obligations assumed by them
thereunder to the same extent as if this Assignment had not been executed, and
the Assignee shall have no obligation or liability (including, without
limitation, any obligation or liability with respect to the payment of premiums,
calls or assessments) under said insurances by reason of or arising out of this
Assignment nor shall the Assignee be required or obligated in any manner to
perform or fulfill any of the duties or obligations of the Assignors under or
pursuant to said insurances or to make any payment or to make any inquiry as to
the nature or sufficiency of any payment received by the Assignee or to present
or file any claim or to take any action to collect or enforce the payment of any
amounts which may have been assigned to it or to which it may be entitled
hereunder at any time or times.

       

      SECTION
4.  No Other
Assignments.  Each of the Assignors hereby represents and
warrants that it has not assigned or pledged the rights, title and interest
assigned hereunder to anyone other than the Assignee.  Each of the
Assignors hereby covenants that, without the prior written consent thereto of
the Assignee, so long as this Assignment shall remain in effect, it will not
assign or pledge the whole or any part of the rights, title and interest hereby
assigned to anyone other than the Assignee, and it will not take or omit to take
any action, the taking or omission of which might result in an alteration or
impairment of this Assignment, or of any of the rights created by this
Assignment.

       

      SECTION
5.  Assignee
Appointed Attorney-in-Fact.  (a) Each of the Assignors hereby
constitutes the Assignee, its successors and assigns, its true and lawful
attorney, irrevocably, with full power (in the name of the Assignor or
otherwise), upon the occurrence of an Event of Default and so long as such Event
of Default shall be continuing, to carry out the provisions of this Assignment
and to take any action and execute any instruments which the Assignee may deem
necessary or advisable to accomplish the purposes hereof, including without
limitation, to ask, require, demand, receive, compound and give acquittance for
any and all moneys and claims for moneys due and to become due under or arising
out of the insurances assigned hereby, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or to take
any action or institute any proceedings which the Assignee may deem necessary or
advisable in the premises.

       

      (b)           Each
of the Assignors hereby further authorizes the Assignee to file Financing
Statements (including Form UCC-1 and UCC-3) and amendments thereto as provided
in Article 9 of the Uniform Commercial Code, and any other instrument of like
effect, as the Assignee may reasonably deem necessary in connection with the
perfection of the Assignee’s security interest in the property hereby
assigned.

       

      (c)           The
powers and authority granted to the Assignee herein have been given for a
valuable consideration, are coupled with an interest and are hereby declared to
be irrevocable.

       

      SECTION
6.  No
Waiver.  No failure on the part of the Assignee to exercise,
and no delay in exercising, any right, remedy, power or privilege shall operate
as waiver thereof, nor shall any single or partial exercise by the Assignee of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege.  The rights and remedies of the Assignee under this
Assignment are cumulative and may be exercised (where possible to do so) singly,
concurrently, successively and/or in conjunction with or apart from and without
prejudice to any other rights and remedies available to the Assignee under the
other Finance Documents are not exclusive of any rights or remedies provided by
law.

       

      SECTION
7.  Further
Assurances.  Each of the Assignors agrees that at any time and
from time to time, upon the written request of the Assignee and at the expense
of the Assignor, it shall promptly and duly execute and deliver any and all such
further instruments and documents as the Assignee may deem desirable in
obtaining the full benefits of this Assignment and of the rights and powers
herein granted.

       

      SECTION
8.  Amendments.  No
amendment or waiver of any provision of this Assignment, nor consent to any
departure by any of the Assignors herefrom, shall be effective unless the same
shall be in writing and signed by the Assignee, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.

       

      SECTION
9.  Notices,
Etc.  Any notice, demand or other communication to be given
under, or for the purpose of this Assignment shall be made to as provided in
Clause 20 of the Loan Agreement, and to the Charterer at such address as it
shall provide from time to time.

       

      SECTION
10.  Governing
Law.  THIS ASSIGNMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

       

      IN
WITNESS WHEREOF, the Assignor has executed and delivered this Assignment of
Insurances on the date first above written.

       

      [●], as
Owner

       

      

       

      

       

      By:                                                                           

       

      Name:

       

      Title:

       

      [●], as
Charterer

       

      

       

      

       

      By:                                                                           

       

      Name:

       

      Title:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

       

      Exhibit
1

       

      NOTICE OF
ASSIGNMENT

       

      [●], as
Owner, and [●], as Charterer, of the Liberian registered vessel [●], with
Official Number [●] (the “Ship”), HEREBY GIVES NOTICE
that by an Assignment dated the date hereof and made by them in favor of DVB
GROUP MERCHANT BANK (ASIA) LTD. as Security Trustee (the “Assignee”), each has assigned
to the Assignee all of its right, title and interest under, in and to all
insurances and the benefit of all insurances now or hereafter taken out in
respect of the Ship.  This Notice is to be endorsed on all policies
and certificates of entry evidencing such insurance.

       

      Date:  January
__, 2008

       

      [●], as
Owner

       

      

       

      

       

      By:                                                                           

       

      Name:

       

      Title:

       

      [●], as
Charterer

       

      

       

      

       

      By:                                                                           

       

      Name:

       

      Title:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      LOSS PAYABLE
CLAUSE

       

      Hull and War
Risks

       

      Loss, if
any, payable to DVB GROUP MERCHANT BANK (ASIA) LTD. as Security Trustee and
Mortgagee (the “Mortgagee”), for distribution
by the Mortgagee to itself and to [●] as Owner (the “Owner”), and [●], as Charterer
(the “Charterer”), as
their respective interests may appear, or order, except that, unless
underwriters have been otherwise instructed by notice in writing from the
Mortgagee, in the case of any loss involving any damage to the Ship or liability
of the Ship, the underwriters may pay directly for the repair, salvage,
liability or other charges involved or, if the Owner or the Charterer shall have
first fully repaired the damage and paid the cost thereof, or discharged the
liability or paid all of the salvage or other charges, then the underwriters may
pay the Owner or the Charterer, as the case may be, as reimbursement therefor;
provided that if such
damage involves a loss in excess of U.S.$500,000 or its equivalent the
Underwriters shall not make such payment without first obtaining the written
consent thereto of the Mortgagee.

       

      In the
event of an actual or constructive total loss or a compromised or arranged total
loss or requisition of title, all insurance payments therefor shall be paid to
the Mortgagee for distribution by it in accordance with the terms of the
Mortgage over the Ship dated the date hereof.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      LOSS PAYABLE
CLAUSE

       

      Protection and
Indemnity

       

      Payment
of any recovery to which [●] and [●] are entitled to make out of the funds of
the Association in respect of any liability, costs or expenses incurred by them
shall be made to [●] and [●] or to their order unless and until the Association
receives notice from DVB Group Merchant Bank (Asia) Ltd. acting as Agent and
Security Trustee for itself and on behalf of certain other lenders that [●] is
in default under the Mortgage in which event all recoveries shall thereafter be
paid to DVB Group Merchant Bank (Asia) Ltd. acting as Agent and Security Trustee
for itself and on behalf of certain other lenders or their order; provided that
no liability whatsoever shall attach to the Association, its Managers or their
agents for failure to comply with the latter obligation until after the expiry
of two clear business days from the receipt of such notice.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      APPENDIX
D

       

      FORM OF
MANAGER’S UNDERTAKING

      MANAGER’S
UNDERTAKING

       

       

      
        	
                From:

              	
                TBS
      SHIPPING SERVICES, INC.

              

      

       

      
        	
                To:

              	
                DVB
      GROUP MERCHANT BANK (ASIA) LTD., as Facility
  Agent

              

      

       

      
        	
                Date:

              	
                [●]

              

      

       

      Dear
Sirs:

       

      m.v.
[●] (the “Ship”)

       

      
        	
                1.

              	
                Loan
      Agreement

              

      

       

      We refer
to that certain Loan Agreement dated as of January [●], 2008 (the “Loan Agreement”) among [●]
(the “Shipowner”) and
the other parties named therein as joint and several Borrowers, (ii) TBS
International Limited as Guarantor, (iii) the banks and financial institutions
described therein as Lenders, (iv) DVB Group Merchant Bank (Asia) Ltd. as
Facility Agent and Security Agent, (v) The Governor and Company of the Bank of
Ireland as Payment Agent, (vi) DVB Bank AG, The Governor and Company of the Bank
of Ireland and Natixis as Swap Banks, and (vii) Mount Washington LLC as
Arranger.  Capitalized terms used but not defined herein shall have
the meaning assigned such terms in the Loan Agreement.

       

      
        	
                2.

              	
                Confirmation
      of Appointment

              

      

       

      We hereby
confirm that we have been appointed as the commercial manager of the Ship
pursuant to a management agreement dated [●] (the “Management Agreement”) between
ourselves, TBS Worldwide Services Inc., TBS Pacific Liner, Ltd., TBS Latin
America Liner, Ltd., TBS North America Liner, Ltd., TBS Eurolines Ltd., TBS
Ocean Carriers Ltd. and TBS Middle East Carriers, Ltd.

       

      
        	
                3.

              	
                Representation
      and Warranty

              

      

       

      We hereby
represent and warrant that the copy of the Management Agreement attached hereto
is a true and complete copy of such Management Agreement, and that there have
been no amendments or variations thereto or defaults thereunder by us or, to the
best of our knowledge and belief, the Shipowner.

       

      
        	
                4.

              	
                Undertaking

              

      

       

      In
consideration of you, as Agent, granting approval to our appointment as
commercial manager of the Ship, we hereby irrevocably and unconditionally
undertake with you as follows:

       

      
        	
                (a)

              	
                all
      claims of whatsoever nature which we have or may at any time hereafter
      have against or in connection with the Ship, its earnings, insurances or
      requisition compensation, or against the Shipowner, as the case may be,
      shall rank after and be in all respects subordinate to all of the rights
      and claims of the Credit Parties against such property or
      persons;

              

      

       

      
        	
                (b)

              	
                we
      shall not institute any legal or quasi-legal proceedings under any
      jurisdiction at any time hereafter against the Ship, its earnings,
      insurances or requisition compensation, or against the Shipowner, as the
      case may be, in any capacity without your express, prior written
      consent;

              

      

       

      
        	
                (c)

              	
                we
      shall not compete with the Credit Parties in a liquidation or other
      winding-up or bankruptcy of the Shipowner, or in any proceedings in
      connection with the Ship or its earnings, insurances or requisition
      compensation;

              

      

       

      
        	
                (d)

              	
                we
      will not agree or purport to agree to any amendment or variation of the
      Management Agreement without your prior written consent, which consent
      shall not be unreasonably withheld, save where the amendment or variation
      is required to comply with applicable laws or
  regulations;

              

      

       

      
        	
                (e)

              	
                we
      will procure that any sub-manager appointed by us will, on or before the
      date of such appointment, enter into an undertaking in your favor in
      substantially the same form as this
undertaking;

              

      

       

      
        	
                (f)

              	
                we
      will immediately advise you in writing if the Ship’s Safety Management
      Certificate is withdrawn;

              

      

       

      
        	
                (g)

              	
                we
      shall use best efforts not do, or omit to do, or cause anything to be done
      or omitted, which might be contrary to or incompatible with the
      obligations undertaken by the Shipowner under the Loan Agreement and the
      other Finance Documents;

              

      

       

      
        	
                (h)

              	
                we
      shall upon your first written request deliver to you all documents of
      whatever nature held by us or any sub-manager appointed by us in
      connection with the Shipowner, the Ship, its earnings, insurances or
      requisition compensation;

              

      

       

      
        	
                (i)

              	
                we
      will advise you in writing prior to our ceasing to be the commercial
      manager of the Ship; and

              

      

       

      
        	
                (j)

              	
                if
      we are named as a co-assured on any insurances respecting the Ship, we
      will seek to enforce such co assured status only in respect of our
      provable, casualty related, out of pocket expenses that are collected from
      underwriters.

              

      

       

      
        	
                5.

              	
                Law
      and Jurisdiction

              

      

       

      The
provisions of this letter shall be governed by, and construed in accordance
with, the laws of the State of New York.

       

      Any legal
action or proceeding with respect to this letter may be brought in the New York
State or Federal court sitting in New York County and any appellate court from
any thereof or such other courts having jurisdiction over such action or
proceeding as the Agent may select.  By execution and delivery of this
letter, we irrevocably and generally and unconditionally accept the jurisdiction
of such courts.  The submission to such jurisdiction shall not, and
shall not be construed so as to, limit the rights of the Agent to take any
proceedings against us in any other competent jurisdiction nor

       

      shall the
taking of any such proceedings in any one or more jurisdictions preclude the
taking of proceedings in any other jurisdiction, whether concurrently or
not.

       

      TBS
SHIPPING SERVICES, INC.

       

      

       

      

       

      By:                                                                

       

      Name:

       

      Title:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      MANAGER’S
UNDERTAKING

       

       

      
        	
                From:

              	
                ROYMAR
      SHIP MANAGEMENT, INC.

              

      

       

      
        	
                To:

              	
                DVB
      GROUP MERCHANT BANK (ASIA) LTD., as Facility
  Agent

              

      

       

      
        	
                Date:

              	
                [●]

              

      

       

      Dear
Sirs:

       

      m.v.
[●] (the “Ship”)

       

      
        	
                1.

              	
                Loan
      Agreement

              

      

       

      We refer
to that certain Loan Agreement dated as of January [●], 2008 (the “Loan Agreement”) among [●]
(the “Shipowner”) and
the other parties named therein as joint and several Borrowers, (ii) TBS
International Limited as Guarantor, (iii) the banks and financial institutions
described therein as Lenders, (iv) DVB Group Merchant Bank (Asia) Ltd. as
Facility Agent and Security Agent, (v) The Governor and Company of the Bank of
Ireland as Payment Agent, (vi) DVB Bank AG, The Governor and Company of the Bank
of Ireland and Natixis as Swap Banks, and (vii) Mount Washington LLC as
Arranger.  Capitalized terms used but not defined herein shall have
the meaning assigned such terms in the Loan Agreement.

       

      
        	
                2.

              	
                Confirmation
      of Appointment

              

      

       

      We hereby
confirm that we have been appointed as the technical manager of the Ship
pursuant to a management agreement dated [●] (the “Management Agreement”) between
ourselves and the Shipowner.

       

      
        	
                3.

              	
                Representation
      and Warranty

              

      

       

      We hereby
represent and warrant that the copy of the Management Agreement attached hereto
is a true and complete copy of such Management Agreement, and that there have
been no amendments or variations thereto or defaults thereunder by us or, to the
best of our knowledge and belief, the Shipowner.

       

      
        	
                4.

              	
                Undertaking

              

      

       

      In
consideration of you, as Agent, granting approval to our appointment as
technical manager of the Ship, we hereby irrevocably and unconditionally
undertake with you as follows:

       

      
        	
                (a)

              	
                all
      claims of whatsoever nature which we have or may at any time hereafter
      have against or in connection with the Ship, its earnings, insurances or
      requisition compensation, or against the Shipowner, as the case may be,
      shall rank after and be in all respects subordinate to all of the rights
      and claims of the Credit Parties against such property or
      persons;

              

      

       

      
        	
                (b)

              	
                we
      shall not institute any legal or quasi-legal proceedings under any
      jurisdiction at any time hereafter against the Ship, its earnings,
      insurances or requisition compensation, or against the Shipowner, as the
      case may be, in any capacity without your express, prior written
      consent;

              

      

       

      
        	
                (c)

              	
                we
      shall not compete with the Credit Parties in a liquidation or other
      winding-up or bankruptcy of the Shipowner, or in any proceedings in
      connection with the Ship or its earnings, insurances or requisition
      compensation;

              

      

       

      
        	
                (d)

              	
                we
      will not agree or purport to agree to any amendment or variation of the
      Management Agreement without your prior written consent, which consent
      shall not be unreasonably withheld, save where the amendment or variation
      is required to comply with applicable laws or
  regulations;

              

      

       

      
        	
                (e)

              	
                we
      will procure that any sub-manager appointed by us will, on or before the
      date of such appointment, enter into an undertaking in your favor in
      substantially the same form as this
undertaking;

              

      

       

      
        	
                (f)

              	
                we
      will immediately advise you in writing if the Ship’s Safety Management
      Certificate is withdrawn;

              

      

       

      
        	
                (g)

              	
                we
      shall use best efforts not do, or omit to do, or cause anything to be done
      or omitted, which might be contrary to or incompatible with the
      obligations undertaken by the Shipowner under the Loan Agreement and the
      other Finance Documents;

              

      

       

      
        	
                (h)

              	
                we
      shall upon your first written request deliver to you all documents of
      whatever nature held by us or any sub-manager appointed by us in
      connection with the Shipowner, the Ship, its earnings, insurances or
      requisition compensation;

              

      

       

      
        	
                (i)

              	
                we
      will advise you in writing prior to our ceasing to be the technical
      manager of the Ship; and

              

      

       

      
        	
                (j)

              	
                if
      we are named as a co-assured on any insurances respecting the Ship, we
      will seek to enforce such co assured status only in respect of our
      provable, casualty related, out of pocket expenses that are collected from
      underwriters.

              

      

       

      
        	
                5.

              	
                Law
      and Jurisdiction

              

      

       

      The
provisions of this letter shall be governed by, and construed in accordance
with, the laws of the State of New York.

       

      Any legal
action or proceeding with respect to this letter may be brought in the New York
State or Federal court sitting in New York County and any appellate court from
any thereof or such other courts having jurisdiction over such action or
proceeding as the Agent may select.  By execution and delivery of this
letter, we irrevocably and generally and unconditionally accept the jurisdiction
of such courts.  The submission to such jurisdiction shall not, and
shall not be construed so as to, limit the rights of the Agent to take any
proceedings against us in any other competent jurisdiction nor

       

      shall the
taking of any such proceedings in any one or more jurisdictions preclude the
taking of proceedings in any other jurisdiction, whether concurrently or
not.

       

      ROYMAR
SHIP MANAGEMENT, INC.

       

      

       

      

       

      By:                                                                

       

      Name:

       

      Title:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

       

      APPENDIX
E

       

      FORM OF
MORTGAGE

      

       

      Date:  January
__, 2008

       

      [●]

       

      as
Owner

       

      - and
-

       

      DVB GROUP
MERCHANT BANK (ASIA) LTD.

       

      as
Security Trustee

      
        

         

        

      

       

      FIRST
PREFERRED LIBERIAN MORTGAGE

      
        

      

       

      Relating
to m.v. “[●]”

       

      Official
Number [●]

      
        
          
            WATSON,
FARLEY & WILLIAMS (NEW YORK) LLP

          

           

        

        
           

          
            

          

        

        
           

        

      

      INDEX

      
        	
                Clause

              	 
      	
                Page

              
	
                1

              	
                DEFINITIONS
      AND INTERPRETATION

              	
                2

              
	
                2

              	
                MORTGAGE

              	
                4

              
	
                3

              	
                PAYMENT
      COVENANTS

              	
                6

              
	
                4

              	
                REPRESENTATIONS
      AND WARRANTIES

              	
                7

              
	
                5

              	
                INSURANCE
      COVENANTS

              	
                7

              
	
                6

              	
                SHIP
      COVENANTS

              	
                12

              
	
                7

              	
                PROTECTION
      OF SECURITY

              	
                17

              
	
                8

              	
                ENFORCEABILITY
      AND SECURITY TRUSTEE’S POWERS

              	
                18

              
	
                9

              	
                APPLICATION
      OF MONEYS

              	
                19

              
	
                10

              	
                FURTHER
      ASSURANCES

              	
                19

              
	
                11

              	
                POWER
      OF ATTORNEY

              	
                20

              
	
                12

              	
                INCORPORATION
      OF LOAN AGREEMENT PROVISIONS

              	
                21

              
	
                13

              	
                TOTAL
      AMOUNT, ETC.

              	
                21

              
	
                14

              	
                SUPPLEMENTAL

              	
                22

              
	
                15

              	
                LAW
      AND JURISDICTION

              	
                22

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

       

      THIS FIRST PREFERRED MORTGAGE
is made on January __, 2008

       

      BY

       

      
        	
                (1)

              	
                [●], a corporation
      organized and existing under the law of the Republic of The Marshall
      Islands and duly registered as a Foreign Maritime Entity under the law of
      the Republic of Liberia, whose registered office is at The Trust Company
      Complex, Ajeltake Island, PO Box 1405, Majuro, Marshall Islands MH96960
      (the “Owner”)

              

      

       

      
        	
                 
      

              	
                IN
      FAVOR OF

              

      

       

      
        	
                (2)

              	
                DVB GROUP MERCHANT BANK (ASIA)
      LTD., with offices at 77 Robinson Road 30-02 Singapore (the “Security Trustee”, which
      expression includes its successors and
assigns).

              

      

       

      
        	
                 
      

              	
                BACKGROUND

              

      

       

      
        	
                (A)

              	
                The
      Owner is the sole owner of the whole of the m.v. “[●]” documented under
      the laws and flag of the Republic of Liberia with Official Number [●] of
      [●] gross registered tons and [●] net registered
  tons.

              

      

       

      
        	
                (B)

              	
                Pursuant
      to and subject to the conditions contained in a loan agreement dated as of
      January 16, 2008 (the “Loan Agreement”) among
      (i) the Owner and the other borrowers named therein, as joint and several
      borrowers (collectively, the “Borrowers”), (ii) TBS
      International Limited as Guarantor, (iii) the banks and financial
      institutions named therein as lenders (collectively, the “Lenders”), (iv) DVB
      Group Merchant Bank (Asia) Ltd. as Facility Agent, (v) The Governor and
      Company of the Bank of Ireland (“BOI”), as Payment Agent,
      (vi) DVB Bank AG, BOI and Natixis as Swap Banks, (vii) Mount
      Washington LLC as Arranger and (viii) the Security Trustee, the Lenders
      agreed to make available to the Borrowers a loan facility in an aggregate
      principal amount of up to SEVENTY-FIVE MILLION UNITED STATES DOLLARS
      (US$75,000,000) (the “Loan”).  The
      Loan, interest thereon, fees and all expenses, costs and charges otherwise
      from time to time payable by the Borrowers under the Loan Agreement are to
      be repaid and paid, as the case may be, as provided in the Loan Agreement
      and such provisions in the Loan Agreement are incorporated herein by
      reference and made a part of this Mortgage.  A copy of the form
      of Loan Agreement, without attachments, is annexed to this Mortgage as an
      integral part hereof and marked as Exhibit
A.

              

      

       

      
        	
                (C)

              	
                The
      obligation of the Borrowers to repay the Loan is evidenced by a secured
      promissory note (the “Note”) of the Borrowers,
      a copy of the form of which is annexed to this Mortgage as an integral
      part hereof and marked as Exhibit
B.

              

      

       

      
        	
                (D)

              	
                Pursuant
      to Master Agreements on the 2002 ISDA Master Agreement
      (Multicurrency-Crossborder) form dated January [●], 2008 made between the
      Borrowers and the Swap Banks, the Swap Banks agreed to enter into certain
      Transactions pursuant to separate Confirmations from time to time to hedge
      the exposure of the Borrower to interest rate fluctuations under the Loan
      Agreement.  A copy of the form of the Master Agreements and the
      Schedules thereto (collectively, with any amending, supplemental or
      replacement agreements, and the Confirmations exchanged thereunder, the
      “Master
      Agreements”) is annexed to this Mortgage as an integral part hereof
      and marked as Exhibit C.  The Borrowers and the Swap Banks
      estimate that the aggregate maximum amount payable by the Borrowers under
      the Master Agreements in event all Transactions entered into thereunder
      are terminated will not exceed EIGHTEEN MILLION SEVEN HUNDRED FIFTY
      THOUSAND UNITED STATES DOLLARS
(US$18,750,000).

              

      

       

      
        	
                (E)

              	
                Pursuant
      to Clause 24.1(c) of the Loan Agreement, it was agreed that the Security
      Trustee would hold the Estate in trust for the Lenders and the Swap
      Banks.

              

      

       

      
        	
                (F)

              	
                It
      is one of the conditions precedent to the availability of the facility
      under the Loan Agreement that the Owner executes and delivers this
      Mortgage in favor of the Security Trustee as security for the Secured
      Liabilities and the performance and observance of and compliance with the
      covenants, terms and conditions contained in the Finance
      Documents.

              

      

       

      
        	
                (G)

              	
                The
      Owner has authorized the execution and delivery of this Mortgage under and
      pursuant to Chapter 3 of Title 21 of the Liberian Code of Laws of 1956 as
      amended.

              

      

       

      
        	
                 
      

              	
                IT IS AGREED as
      follows:

              

      

       

      
        	
                1

              	
                DEFINITIONS
      AND INTERPRETATION

              

      

       

      
        	
                1.1

              	
                Defined
      expressions.  Words and expressions defined in the Loan
      Agreement shall have the same meanings when used in this Mortgage unless
      the context otherwise requires.

              

      

       

      
        	
                1.2

              	
                Definitions.  In
      this Mortgage, unless the contrary intention
  appears:

              

      

       

      “Environmental Claim”
means:

       

      
        	
                 
      

              	
                (a)

              	
                any
      claim by any governmental, judicial or regulatory authority which arises
      out of an Environmental Incident or an alleged Environmental Incident or
      which relates to 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 the Ship;
      or

              

      

       

      
        	
                 
      

              	
                (b)

              	
                any
      incident in which Environmentally Sensitive Material is released from a
      vessel other than the Ship and which involves a collision between the Ship
      and such other vessel or some other incident of navigation or operation,
      in either case, in connection with which the Ship is actually or
      potentially liable to be arrested, attached, detained or enjoined and/or
      the Ship or the Owner and/or any operator or manager of the 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 the Ship and in connection with which the Ship is
      actually or potentially liable to be arrested and/or where the Owner
      and/or any operator or manager of the Ship is at fault or allegedly at
      fault or otherwise liable to any legal or administrative
      action;

              

      

       

      “excess risks” means 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 her insured value being less than the value at which the Ship is
assessed for the purpose of such claims;

       

      “insurances” means all
insurances effected, or which the Owner is obliged to effect, under Clause 5
below or any other provision of this Mortgage or another Finance
Document;

       

      “Loan Agreement” means the loan
agreement referred to in Recital (B);

       

      “Mortgaged Property” means the
Ship, the Earnings, the insurances and any Requisition
Compensation;

       

      “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 therein 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;

       

      “Secured Liabilities” means all
liabilities which the Owner has at the date of this Mortgage or at any later
time or times, to the Security Trustee or any other Credit Party 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; and

       

      “Ship” means the vessel [●]
described in Recital (A) and includes any share or interest in that vessel and
her engines, machinery, boats, tackle, outfit, spare gear, fuel, consumable or
other stores, belongings and appurtenances whether on board or ashore and
whether now owned or later acquired; 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

              	
                References to Majority
      Lenders.  References in this Mortgage to an approval,
      consent, or requirement of the Majority Lenders include references to an
      approval, consent or requirement
of:

              

      

       

      
        	
                (a)

              	
                the
      Facility Agent or the Security Trustee acting with the authority of the
      Majority Lenders; or

              

      

       

      
        	
                (b)

              	
                the
      Security Trustee acting with the authority of the Facility Agent acting,
      in turn, with the authority of the Majority
  Lenders.

              

      

       

      
        	
                1.4

              	
                Application of construction and
      interpretation provisions of Loan Agreement.  Clauses 1.2
      and 1.5 of the Loan Agreement apply, with any necessary modifications, to
      this Mortgage.

              

      

       

      
        	
                1.5

              	
                Inconsistency between Loan
      Agreement provisions and this Mortgage.  This Mortgage
      shall be read together with the Loan Agreement, but in case of any
      conflict between the Loan Agreement and this Mortgage, the provisions of
      the Loan Agreement shall prevail, provided that this Mortgage shall
      always be governed by Liberian law.

              

      

       

      
        	
                2

              	
                MORTGAGE

              

      

       

      
        	
                2.1

              	
                Mortgage.  In
      consideration of the premises and other good and valuable consideration,
      the Owner grants, conveys, mortgages, pledges, confirms, assigns,
      transfers and sets over the whole of the Ship to the Security Trustee as
      security for:

              

      

       

      
        	
                (a)

              	
                the
      due and punctual payment of the Secured Liabilities;
  and

              

      

       

      
        	
                (b)

              	
                the
      performance and observance of and compliance with the covenants, terms and
      conditions contained in the Finance Documents to which the Owner is or is
      to be a party.

              

      

       

      
        	
                2.2

              	
                Extent of property
      mortgaged.  This Mortgage shall not cover property other
      than the Ship as the term “Vessel” is used in Subdivision 1 of Section 106
      of Chapter 3 of the Liberian Code of Laws of 1956 as
    amended.

              

      

       

      
        	
                2.3

              	
                Void
      provisions.  Any provision of this Mortgage construed as
      waiving the preferred status of this Mortgage shall, to such extent, be
      void and of no effect.

              

      

       

      
        	
                2.4

              	
                Continuing
      security.  This Mortgage shall remain in force until the
      end of the Security Period as a continuing security and, in
      particular:

              

      

       

      
        	
                (a)

              	
                the
      Security Interests created by Clause 2.1 shall not be satisfied by any
      intermediate payment or satisfaction of the Secured
      Liabilities;

              

      

       

      
        	
                (b)

              	
                the
      Security Interests created by Clause 2.1, and the rights of the Security
      Trustee under this Mortgage, are only capable of being extinguished,
      limited or otherwise adversely affected by an express and specific term in
      a document signed by or on behalf of the Security
  Trustee;

              

      

       

      
        	
                (c)

              	
                no
      failure or delay by or on behalf of the Security Trustee to enforce or
      exercise a Security Interest created by Clause 2.1 or a right of the
      Security Trustee under this Mortgage, and no act, course of conduct,
      acquiescence or failure to act (or to prevent the Owner from taking
      certain action) which is inconsistent with such a Security Interest or
      such a right shall preclude or estop the Security Trustee (either
      permanently or temporarily) from enforcing or exercising it;
      and

              

      

       

      
        	
                (d)

              	
                this
      Mortgage shall be additional to, and shall not in any way impair or be
      impaired by:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                any
      other Security Interest whether in relation to property of the Owner or
      that of a third party; or

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                any
      other right of recourse as against the Owner or any third
      party,

              

      

       

      which the
Security Trustee or any other Credit Party now or subsequently has in respect of
any of the Secured Liabilities.

       

      
        	
                2.5

              	
                No obligations imposed on
      Security Trustee.  The Owner shall remain liable to
      perform all obligations connected with the Ship and the Security Trustee
      shall not, in any circumstances, have or incur any obligation of any kind
      in connection with the Ship.

              

      

       

      
        	
                2.6

              	
                Waiver of rights and
      defenses.  The Owner shall neither be discharged by, nor
      have any claim against, any Credit Party in respect
  of:

              

      

       

      
        	
                (a)

              	
                any
      amendment or supplement being made to the Finance
    Documents;

              

      

       

      
        	
                (b)

              	
                any
      arrangement or concession (including a rescheduling or acceptance of
      partial payments) relating to, or affecting, the Finance
      Documents;

              

      

       

      
        	
                (c)

              	
                any
      release or loss of any right or Security Interest created by the Finance
      Documents;

              

      

       

      
        	
                (d)

              	
                any
      failure promptly or properly to exercise or enforce any such right or
      Security Interest, including a failure to realize for its full market
      value an asset covered by such a Security Interest;
  or

              

      

       

      
        	
                (e)

              	
                any
      other Finance Document or any Security Interest now being or later
      becoming void, unenforceable, illegal or invalid or otherwise defective
      for any reason, including a neglect to register
  it.

              

      

       

      
        	
                2.7

              	
                Subordination of rights of
      Owner.  All rights which the Owner at any time has with
      respect to this Mortgage against any other Obligor or their respective
      assets shall be fully subordinated to the rights of the Credit Parties
      under the Finance Documents, and in particular the Owner shall
      not:

              

      

       

      
        	
                (a)

              	
                claim,
      or in a bankruptcy of another Obligor prove for, any amount payable to the
      Owner by such Obligor, in respect of this
  Mortgage;

              

      

       

      
        	
                (b)

              	
                take
      or enforce any Security Interest for any such
  amount;

              

      

       

      
        	
                (c)

              	
                claim
      to set-off any such amount against any amount payable by the Owner to
      another; or

              

      

       

      
        	
                (d)

              	
                claim
      any subrogation or other right in respect of any Finance Document or any
      sum received or recovered by any Credit Party under a Finance
      Document.

              

      

       

      
        	
                2.8

              	
                Negative pledge; disposal of
      assets.  The Owner shall not sell, create any Security
      Interest not exclusively securing the Secured Liabilities over, or
      otherwise dispose of, the Ship or any right relating to the
      Ship.

              

      

       

      
        	
                2.9

              	
                Release of
      security.  At the end of the Security Period, the
      Security Trustee shall, at the request and cost of the Owner, discharge
      this Mortgage.

              

      

       

      
        	
                3

              	
                PAYMENT
      COVENANTS

              

      

       

      
        	
                3.1

              	
                General.  The
      Owner shall comply with the following provisions of this Clause 3 at all
      times during the Security Period provided that every
      payment which the Owner makes in accordance with the Loan Agreement shall
      pro tanto satisfy the Owner’s liability under this Clause
    3.

              

      

       

      
        	
                3.2

              	
                Covenant to repay
      Loan.  The Owner shall repay the Loan in accordance with
      the terms of the Loan Agreement.

              

      

       

      
        	
                3.3

              	
                Covenant to pay interest on
      Loan.  The Owner shall pay to the Security Trustee
      interest on the whole or any part of the Loan in accordance with the terms
      of the Loan Agreement.

              

      

       

      
        	
                3.4

              	
                Covenant to pay expenses
      etc.  The Owner shall pay to the Security Trustee all
      such expenses, claims, liabilities, losses, costs, duties, fees, charges
      or other moneys as are stated in this Mortgage to be payable by the Owner
      to or recoverable from the Owner by the Security Trustee (or in respect of
      which the Owner agrees in this Mortgage to indemnify the Security Trustee)
      at the times and in the manner specified in this
  Mortgage.

              

      

       

      
        	
                3.5

              	
                Covenant to pay default
      interest.  The Owner shall pay to the Security Trustee
      interest on any expenses, claims, liabilities, losses, costs, duties,
      fees, charges or other moneys referred to in Clause 3.4 from the date on
      which the relevant expense, claim, liability, loss, cost, duty, fee,
      charge or other money is paid or incurred by the Security Trustee (as well
      after as before judgment):

              

      

       

      
        	
                (a)

              	
                at
      the rate described in clause 6.2 of the Loan
  Agreement;

              

      

       

      
        	
                (b)

              	
                compounded
      in accordance with clause 6.5 of the Loan Agreement;
  and

              

      

       

      
        	
                (c)

              	
                on
      demand.

              

      

       

      
        	
                3.6

              	
                Covenant to pay other
      sums.  The Owner shall pay to the Security Trustee each
      and every other sum of money which may be or become owing to the Security
      Trustee under the Loan Agreement, this Mortgage and the other Finance
      Documents to which the Owner is or is to be a party at the times and in
      the manner specified in this Mortgage or in the other Finance
      Documents.

              

      

       

      
        	
                4

              	
                REPRESENTATIONS
      AND WARRANTIES

              

      

       

      
        	
                4.1

              	
                General.  The
      Owner represents and warrants to the Security Trustee as
      follows.

              

      

       

      
        	
                4.2

              	
                Repetition of Loan Agreement
      representations and warranties.  The representations and
      warranties in Clause 9 of the Loan Agreement remain true and not
      misleading as if repeated on the date of this Mortgage with reference to
      the circumstances now existing.

              

      

       

      
        	
                5

              	
                INSURANCE
      COVENANTS

              

      

       

      
        	
                5.1

              	
                General.  The
      Owner undertakes with the Security Trustee to comply with the following
      provisions of this Clause 5 at all times during the Security Period except
      as the Security Trustee may otherwise
permit.

              

      

       

      
        	
                5.2

              	
                Maintenance of obligatory
      insurances.  The Owner shall keep the Ship insured at its
      own expense against:

              

      

       

      
        	
                (a)

              	
                fire
      and usual marine risks (including hull and machinery and excess
      risks);

              

      

       

      
        	
                (b)

              	
                war
      risks;

              

      

       

      
        	
                (c)

              	
                protection
      and indemnity risks (including pollution risks and freight, demurrage and
      defense cover); and

              

      

       

      
        	
                (d)

              	
                any
      other risks against which the Security Trustee may advise or, on
      instruction of the Majority Lenders shall advise, having regard to
      practices and other circumstances prevailing at the relevant time and with
      the Charterer’s consent, such consent not to be unreasonably withheld,
      that it would be reasonable for the Owner to insure, as specified by the
      Security Trustee by notice to the
Owner.

              

      

       

      
        	
                5.3

              	
                Terms of obligatory
      insurances.  The Owner shall effect such
      insurances:

              

      

       

      
        	
                (a)

              	
                in
      Dollars;

              

      

       

      
        	
                (b)

              	
                in
      the case of fire and usual marine risks, war risks and port risks, in an
      amount on an agreed value basis equal at all times to the greater of (i)
      the Fair Market Value of the Ship and (ii) an amount which, when added to
      the amounts of such insurance on the other vessels identified in the Loan
      Agreement and mortgaged to the Mortgagee as security for the Secured
      Liabilities, is 120% of the aggregate outstanding principal amount of the
      Secured Liabilities;

              

      

       

      
        	
                (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 the international marine insurance
      market;

              

      

       

      
        	
                (d)

              	
                in
      relation to protection and indemnity risks in respect of the full tonnage
      of the Ship;

              

      

       

      
        	
                (e)

              	
                on
      approved terms; and

              

      

       

      
        	
                (f)

              	
                through
      well known marine insurance brokers and with insurance companies and/or
      underwriters with a Standard & Poor’s Rating of not less than A- 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 Owner’s obligation to obtain the prior approval of the
      Security Trustee, at all times with reputable international brokers,
      companies, underwriters and mutual insurance
  associations.

              

      

       

      
        	
                5.4

              	
                Further protections for the
      Credit Parties.  In addition to the terms set out in
      Clause 5.3, the Owner shall procure that the obligatory insurances
      shall:

              

      

       

      
        	
                (a)

              	
                if
      so required by the Security Trustee (i) except in relation to risks
      referred to in Clause 5.2(c), name (or be amended to name) the Security
      Trustee and/or any other Credit Party as an additional named assured for
      its rights and interests, warranted no operational interest and with full
      waiver of rights of subrogation against the Security Trustee (and/or such
      other Credit Party), and (ii) in relation to risks referred to in Clause
      5.2(c), name (or be amended to name) the Security Trustee and/or any other
      Credit Party as a co-assured or a co-assured under a misdirected arrows
      clause, but in all cases without the Security Trustee (and/or such other
      Credit Party) 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 in accordance with the loss payable
      clause referred to in Clause 5.6(b) below and with such directions for
      payment as the Security Trustee may
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
      (on a reasonable efforts basis) that the insurers shall waive, to the
      fullest extent permitted by applicable law, their entitlement (if any)
      (whether by statute, common law, equity, or otherwise) to be subrogated to
      the rights and remedies of the Security Trustee in respect of any rights
      or interests (secured or not) held by or available to the Security Trustee
      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 Owner or any Credit 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;

              

      

       

      
        	
                (f)

              	
                provide
      that the Security Trustee may make proof of loss if the Owner fails to do
      so;

              

      

       

      
        	
                (g)

              	
                provide
      that if any obligatory insurance is cancelled, or if any substantial
      change is made in the coverage which adversely affects the interest of the
      Security Trustee, 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 Security Trustee for 14 days (or 7 days in
      the case of war risks) after receipt by the Security Trustee of prior
      written notice from the insurers of such cancellation, change or lapse;
      and

              

      

       

      
        	
                (h)

              	
                apply
      all sums receivable under the Insurances (other than in respect of a Total
      Loss and any Major Casualty, which shall be payable to the Security
      Trustee in accordance with the provisions of the Insurance Assignment) as
      are paid to the Owner for the purpose of making good the loss and fully
      repairing all damage in respect of which such sums shall have been
      received.

              

      

       

      
        	
                5.5

              	
                Renewal of obligatory
      insurances.  The Owner
shall:

              

      

       

      
        	
                (a)

              	
                at
      least 14 days before the expiry of any obligatory insurance effected by
      it:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                notify
      the Security Trustee of (1) the brokers (or insurers) and any protection
      and indemnity or war risks association through or with whom the Owner
      proposes to renew that insurance and (2) the proposed terms of renewal;
      and

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                obtain
      the approval of the Security Trustee such consent not to be unreasonably
      withheld, to the matters referred to in paragraph (i)
    above;

              

      

       

      
        	
                (b)

              	
                at
      least 7 days before the expiry of any obligatory insurance effected by it,
      renew the insurance in accordance with the Security Trustee’s approval
      pursuant to paragraph (a)(ii) above;
and

              

      

       

      
        	
                (c)

              	
                procure
      that the approved brokers and/or the war risks and protection and
      indemnity associations with which such a renewal is effected shall notify
      the Security Trustee in writing of the terms and conditions of the renewal
      promptly after the renewal.

              

      

       

      
        	
                5.6

              	
                Copies of policies; letters of
      undertaking.  The Owner 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 of undertaking in a form required by the
      Security Trustee 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 in such form as the Security Trustee may
      require and complying with the provisions of Clause
  5.4;

              

      

       

      
        	
                (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 7 days before the expiry
      of the obligatory insurances, in the event of their not having received
      notice of renewal instructions from the Owner or its 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 the Ship under such obligatory insurances any premiums or
      other amounts due to them or any other person whether in respect of the
      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 the Ship forthwith upon
      being so requested by the Security
Trustee.

              

      

       

      
        	
                5.7

              	
                Copies of certificates of
      entry.  The Owner shall ensure that any protection and
      indemnity and/or war risks associations in which the Ship is entered
      provides the Security Trustee with:

              

      

       

      
        	
                (a)

              	
                a
      certified copy of the certificate of entry for the
  Ship;

              

      

       

      
        	
                (b)

              	
                a
      letter or letters of undertaking in such form as may be required by the
      Security Trustee; and

              

      

       

      
        	
                (c)

              	
                where
      required to be issued under the terms of insurance/indemnity provided by
      the Owner’s protection and indemnity association, but only if and when so
      requested by the Security Trustee, a certified copy of each United States
      of America voyage quarterly declaration (or other similar document or
      documents) made by the Owner in relation to the Ship in accordance with
      the requirements of such protection and indemnity association;
      and

              

      

       

      
        	
                (d)

              	
                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 such Ship, but only if and
      when so requested by the Security
Trustee.

              

      

       

      
        	
                5.8

              	
                Deposit of original
      policies.  The Owner 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.

              

      

       

      
        	
                5.9

              	
                Payment of
      premiums.  The Owner shall punctually pay all premiums or
      other sums payable in respect of the obligatory insurances effected for
      the Ship and produce all relevant receipts when so required by the
      Security Trustee.

              

      

       

      
        	
                5.10

              	
                Guarantees.  The
      Owner 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.

              

      

       

      
        	
                5.11

              	
                Restrictions on
      employment.  The Owner shall not employ the Ship, nor
      permit her to be employed, outside the cover provided by any obligatory
      insurances.

              

      

       

      
        	
                5.12

              	
                Compliance with terms of
      insurances.  The Owner 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 thereunder repayable in whole or in part; and,
      in particular:

              

      

       

      
        	
                (a)

              	
                the
      Owner 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 5.7(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
      Owner shall not make any changes relating to the classification or
      classification society or manager or operator of the Ship unless approved
      by the underwriters of the obligatory
  insurances;

              

      

       

      
        	
                (c)

              	
                the
      Owner shall make all quarterly or other voyage declarations which may be
      required by the protection and indemnity risks association 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
      Owner shall not employ the Ship, nor allow it 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.

              

      

       

      
        	
                5.13

              	
                Alteration to terms of
      insurances.  The Owner shall not make nor agree to any
      alteration to the terms of any obligatory insurance nor waive any right
      relating to any obligatory
insurance.

              

      

       

      
        	
                5.14

              	
                Settlement of
      claims.  The Owner shall not settle, compromise or
      abandon any claim under any obligatory insurance for Total Loss or for a
      Major Casualty, and 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.

              

      

       

      
        	
                5.15

              	
                Provision of copies of
      communications.  The Owner shall provide the Security
      Trustee at the time of each such communication, with copies of all written
      communications between the Owner
and:

              

      

       

      
        	
                (a)

              	
                the
      brokers; and

              

      

       

      
        	
                (b)

              	
                the
      protection and indemnity and/or war risks associations;
  and

              

      

       

      
        	
                (c)

              	
                the
      insurance companies and/or
underwriters,

              

      

       

      which
relate, in each case directly or indirectly to either any actual or threatened
termination or material adverse change in the terms of any of the obligatory
insurances or any recovery which, under the terms of any loss payable clause as
referred to in Clause 5.6(b), shall or may be payable to the Security
Trustee.

       

      
        	
                5.16

              	
                Provision of
      information.  In addition, the Owner 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)
      requests from time to time for the purpose
of:

              

      

       

      
        	
                (a)

              	
                obtaining
      or preparing any report from an independent marine insurance broker or the
      Security Trustee’s in-house insurance consultant 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
      5.17 below or dealing with or considering any matters relating to any such
      insurances,

              

      

       

      and the
Owner shall, forthwith upon demand, indemnify the Security Trustee in respect of
all fees and other expenses incurred by or for the account of the Security
Trustee in connection with any such report as is referred to in paragraph (a)
above up to $10,000; provided
that the Security Trustee shall not exercise its rights under paragraph
(a) above more than once per year.

       

      
        	
                5.17

              	
                Mortgagee’s interest and
      additional perils insurance.  The Security Trustee shall
      (unless required otherwise by the Majority Lenders) from time to time to
      subscribe and thereafter maintain and renew all of the following
      insurances in such amounts (but, in the case of the insurances referred to
      in both Clause 5.17(a) and (b), an amount equal to 120 percent of the
      principal amount of the Secured Liabilities), on such terms, through such
      insurers and generally in such manner as the Security Trustee may from
      time to time consider appropriate:

              

      

       

      
        	
                (a)

              	
                a
      mortgagee’s interest marine insurance covering the Ship and providing for
      the indemnification of the Credit Parties for any losses under or in
      connection with any Finance Document which directly or indirectly result
      from loss of or damage to the Ship covered by such insurance or a
      liability of such Ship or of the Owner, being a loss or damage which is
      prima facie covered by an obligatory insurance but in respect of which
      there is a non-payment (or reduced payment) by the underwriters by reason
      of, or on the basis of an allegation concerning, among other
      things:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                any
      act or omission on the part of the Owner, of any operator, charterer,
      manager or sub-manager of such Ship or of any officer, employee or agent
      of the Owner or of any such person, including any breach of warranty or
      condition or any non-disclosure relating to such obligatory
      insurance;

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                any
      act or omission, whether deliberate, negligent or accidental, or any
      knowledge or privity of the Owner, any other person referred to in
      paragraph (i) above, or of any officer, employee or agent of the Owner or
      of such a person, including the casting away or damaging of such Ship
      and/or such Ship being unseaworthy;
and/or

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                any
      other matter capable of being insured against under a mortgagee’s interest
      marine insurance policy whether or not similar to the foregoing;
      and

              

      

       

      
        	
                (b)

              	
                a
      mortgagee’s interest additional perils policy providing for the
      indemnification of the Credit Parties against, among other things, any
      possible losses or other consequences of any Environmental Claim,
      including the risk of expropriation, arrest or any form of detention of
      the Ship and/or of any insurance recoveries which are or may be paid or
      payable under the obligatory insurances relative to the Ship covered by
      such insurance, or the imposition of any Security Interest over such Ship
      and/or any such insurances and/or any other matter capable of being
      insured against under a mortgagee’s interest additional perils
      policy,

              

      

       

      and the
Owner shall upon demand fully indemnify the Security Trustee in respect of all
premiums and other reasonable 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.

       

      
        	
                6

              	
                SHIP
      COVENANTS

              

      

       

      
        	
                6.1

              	
                General.  The
      Owner undertakes with the Security Trustee to comply with the following
      provisions of this Clause 6 at all times during the Security Period except
      as the Security Trustee may otherwise
permit.

              

      

       

      
        	
                6.2

              	
                Ship’s name and
      registration.  The Owner
shall:

              

      

       

      
        	
                (a)

              	
                keep
      the Ship registered in its ownership under the Liberian
    flag;

              

      

       

      
        	
                (b)

              	
                not
      change the name or port of registry of the Ship;
  and

              

      

       

      
        	
                (c)

              	
                not
      do or allow to be done anything as a result of which such registration
      might be cancelled or imperiled.

              

      

       

      
        	
                6.3

              	
                Repair.  The
      Owner shall keep the Ship in a good and efficient state of repair and
      procure that all repairs to or replacement of any damaged, worn or lost
      parts or equipment are effected in such manner (both as regards
      workmanship and quality of materials) as not to materially reduce the
      value of the Ship.

              

      

       

      
        	
                6.4

              	
                Modification or replacement of
      parts; equipment owned by third parties.  The Owner shall
      not:

              

      

       

      
        	
                (a)

              	
                Except
      for the conversion of the Ship to a multipurpose carrier, make any
      modification to the Ship in consequence of which her structure, type or
      performance characteristics could or might be materially altered and/or
      her value materially reduced; or

              

      

       

      
        	
                (b)

              	
                remove
      or replace any material part of, or any item of equipment installed on,
      the 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 favor of any person other than the Security
      Trustee and becomes on installation on the Ship, the property of the Owner
      and subject to the security constituted by this Mortgage; provided that the Owner
      may install equipment owned by a third party if the equipment can be
      removed without any risk of damage to the
Ship.

              

      

       

      
        	
                6.5

              	
                Maintenance of class;
      compliance with regulations.  The Owner shall maintain
      the present class of the Ship with the Classification Society, free from
      overdue recommendations and so as to comply with the provisions of all
      regulations and requirements (statutory or otherwise) from time to time
      applicable to vessels registered under Liberian flag or otherwise
      applicable to the Ship.

              

      

       

      
        	
                6.6

              	
                Surveys.  The
      Owner shall submit the Ship to continuous surveys and such periodical or
      other surveys as may be required for classification purposes and shall
      supply to the Security Trustee, as it may reasonably request, copies of
      all survey and class reports issued in respect
  thereof.

              

      

       

      
        	
                6.7

              	
                Inspection.  Upon
      reasonable notice, the Owner shall permit the Security Trustee, by
      surveyors or other persons appointed by it for such purpose, to board the
      Ship at all reasonable times for the purpose of inspecting her condition
      and to afford all proper facilities for such inspections, provided that the person
      designated by the Security Trustee to visit and inspect the Ship shall
      execute a release and waiver satisfactory in form and substance to the
      Owner and the Security Trustee;

              

      

       

      
        	
                6.8

              	
                Prevention of and release from
      arrest.  The Owner shall pay and discharge all debts,
      damages, liabilities and outgoings whatsoever which have given or may give
      rise to maritime, statutory or possessory liens on, or claims enforceable
      against, the Ship and, in the event of a writ or libel being filed against
      the Ship or the Ship being arrested pursuant to legal process or purported
      legal process or in the event of detention of the Ship in exercise or
      purported exercise of any such lien or claim as aforesaid, the Owner shall
      procure the discharge of such writ or libel or the release of the Ship
      from such arrest or detention within 30 days of receiving notice thereof
      by providing bail or procuring the provision of security or otherwise as
      the circumstances may require.

              

      

       

      
        	
                6.9

              	
                Employment.  The
      Owner shall not employ the Ship or permit her employment in any manner,
      trade or business which is forbidden by international law, or which is
      unlawful or illicit under the law of any relevant jurisdiction, or in
      carrying illicit or prohibited goods, or in any manner whatsoever which
      may render her liable to condemnation in a Prize Court, or to destruction,
      seizure, confiscation, penalty or sanctions and, in the event of
      hostilities in any part of the world (whether war be declared or not),
      shall not employ the Ship or permit her employment in carrying any
      contraband goods or entry into or trade in any zone which is declared a
      war zone by any government or by the Ship’s war risks insurers unless the
      Security Trustee shall have first given its consent thereto in writing and
      there shall have been effected by the Owner and at its expense such
      special insurance cover as the Security Trustee may
    require.

              

      

       

      
        	
                6.10

              	
                Information.  The
      Owner shall furnish the Security Trustee promptly with all such
      information as it may front time to time reasonably require regarding the
      Ship, her employment, position and engagements, particulars of all towages
      and salvages, and copies of charters and other contracts for her
      employment, or otherwise whatsoever concerning
  her.

              

      

       

      
        	
                6.11

              	
                Notification of certain
      events.  The Owner shall notify the Security Trustee
      forthwith by fax of:

              

      

       

      
        	
                (a)

              	
                any
      damage to the Ship requiring repairs the cost of which will or might
      exceed five hundred thousand Dollars ($500,000) (or the equivalent in any
      other currency);

              

      

       

      
        	
                (b)

              	
                any
      occurrence in consequence of which the Ship has or may become a Total
      Loss;

              

      

       

      
        	
                (c)

              	
                any
      requisition of the Ship for hire;

              

      

       

      
        	
                (d)

              	
                any
      requirement or recommendation made by any insurer or classification
      society or by any competent authority which is not complied or otherwise
      dealt with in accordance with its
terms;

              

      

       

      
        	
                (e)

              	
                any
      arrest or detention of the Ship or any exercise or purported exercise of a
      lien or other claim on the Ship or the Earnings, within 3 Business Days
      thereof;

              

      

       

      
        	
                (f)

              	
                any
      petition or notice of meeting to consider any resolution to wind up the
      Owner (or any event analogous thereto under the laws of the Republic of
      The Marshall Islands);

              

      

       

      
        	
                (g)

              	
                the
      occurrence of an Event of Default;

              

      

       

      
        	
                (h)

              	
                any
      claim for breach of the ISM Code or the ISPS Code in connection with the
      Ship being made against the Owner, an ISM Responsible Person, the Approved
      Manager or otherwise; and

              

      

       

      
        	
                (i)

              	
                any
      other material 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 as regards the Ship.

              

      

       

      
        	
                6.12

              	
                Payment of outgoings and
      evidence of payments.  The Owner shall promptly pay all
      rolls, dues and other outgoings whatsoever in respect of the Ship and
      shall keep or procure there be kept proper books of account in respect of
      the Ship and the Earnings and, as and when the Security Trustee may so
      require, shall make such books available for inspection on behalf of the
      Security Trustee, and shall furnish satisfactory evidence that the wages
      and allotments and the insurance and pension contributions of the master
      and crew are being promptly and regularly paid and that all deductions
      from crew’s wages in respect of any tax liability or otherwise as required
      by law are being properly accounted for and that the master has no claim
      for disbursements other than those incurred by him in the ordinary course
      of trading on the voyage then in
progress.

              

      

       

      
        	
                6.13

              	
                Encumbrances.  The
      Owner shall not without the prior written consent of the Security Trustee
      (and then only subject to such conditions as the Security Trustee may
      impose) mortgage, charge or otherwise encumber the Ship or any other part
      of the Mortgaged Property or permit the creation of any such mortgage,
      charge or other encumbrance otherwise than to or in favor of the Security
      Trustee (save for such liens incurred in relation with the normal course
      of the operations of the Ship).

              

      

       

      
        	
                6.14

              	
                Chartering.  The
      Owner shall not without the prior written consent of the Security Trustee
      (and then only subject to such conditions as the Security Trustee may
      impose) let the Ship:

              

      

       

      
        	
                (a)

              	
                on
      demise charter for any period, provided that the
      foregoing shall not prohibit the Owner from demise chartering the Ship to
      a Bareboat Charterer pursuant to the terms of a Bareboat Charter between
      the Owner and such Bareboat
Charterer;

              

      

       

      
        	
                (b)

              	
                by
      any time or consecutive voyage charter to a person other than an Affiliate
      if the net time charter equivalent rate of such employment is less than
      $14,000 per day and the Ship is contracted for such employment for a
      period equal to or in excess of 18
months;

              

      

       

      
        	
                (c)

              	
                on
      terms whereby more than two (2) months’ hire (or the equivalent) is
      payable in advance; or

              

      

       

      
        	
                (d)

              	
                on
      any other than arm’s length terms,

              

      

       

      the
granting of such consent being at the sole and absolute discretion of the
Security Trustee;

       

      provided that:

       

      
        	
                 
      

              	
                (i)

              	
                in
      respect of the matters referred to in paragraphs (a) and (b) of this
      Clause 6.14 such consent shall not be unreasonably withheld;
      and

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                in
      respect of the matters referred to in paragraph (b) of this Clause 6.14,
      the Security Trustee’s consent shall be deemed to have been given if the
      Owner shall not have been informed by the Security Trustee orally or in
      writing that such consent has been refused within two (2) Business Days of
      receipt by the Security Trustee of the Owner’s application for such
      consent.

              

      

       

      
        	
                6.15

              	
                Sharing of
      earnings.  The Owner shall not without the prior written
      consent of the Security Trustee enter into any agreement or arrangement
      whereby the Earnings may be shared with any other person, provided that the
      foregoing shall not prohibit or prevent the pooling and sharing of
      Earnings by the Borrowers.

              

      

       

      
        	
                6.16

              	
                Manager.  The
      Owner shall not without the prior written consent of the Security Trustee,
      such consent not to be unreasonably withheld (and then only on and subject
      to such terms as the Security Trustee may approve), replace or change the
      Approved Manager.

              

      

       

      
        	
                6.17

              	
                Costs, indemnities and
      expenses.  The Owner shall pay to the Security Trustee on
      its first demand all expenses which the Security Trustee has or will incur
      in or in connection with:

              

      

       

      
        	
                (a)

              	
                the
      protection, maintenance or enforcement of the security created by this
      Mortgage or the exercise by the Security Trustee of any of the powers
      vested in it by the Loan Agreement, this Mortgage or any other Finance
      Document; and

              

      

       

      
        	
                (b)

              	
                the
      preparation, completion and registration or other perfection of this
      Mortgage and any other Finance Document or otherwise in connection with
      the Secured Liabilities and the security
  therefor.

              

      

       

      
        	
                6.18

              	
                Perfection of
      Mortgage.  The Owner
shall:

              

      

       

      
        	
                (a)

              	
                comply
      with and satisfy all the requirements and formalities established by the
      Chapter 3 of Title 21 of the Liberian Code of Laws of 1956 as amended and
      any other pertinent legislation of Liberia to perfect this Mortgage as a
      legal, valid and enforceable first preferred mortgage and maritime lien
      upon the Ship; and

              

      

       

      
        	
                (b)

              	
                promptly
      provide the Security Trustee from time to time with evidence in such form
      as the Security Trustee requires that the Owner is complying with Clause
      6.18(a).

              

      

       

      
        	
                6.19

              	
                Notice of
      Mortgage.  The Owner
shall:

              

      

       

      
        	
                (a)

              	
                carry
      on board the Ship with its papers a certified copy of this Mortgage and
      cause that certified copy of this Mortgage to be exhibited to any person
      having business with the Ship which might give rise to a lien or the Ship
      other than a lien for crew’s wages and salvage and to any representative
      of the Security Trustee on demand;
and

              

      

       

      
        	
                (b)

              	
                place
      and maintain in a conspicuous place in the navigation room and the
      Master’s cabin of the Ship a framed printed notice in plain type in
      English of such size that the paragraph of reading matter shall cover a
      space not less than 6 inches wide and 9 inches high reading as
      follows:

              

      

       

      “NOTICE
OF MORTGAGE

       

      This
Vessel is covered by a First Preferred Mortgage to DVB Group Merchant Bank
(Asia) Ltd. as Security Trustee under authority of Title 21 of the Liberian Code
of Laws of 1956 as amended.  Under the terms of the said Mortgage
neither the Owner nor any Charterer nor the Master of this Vessel nor any other
person has any right, power or authority to create, incur or permit to be
imposed upon this Vessel any lien whatsoever other than for crew’s wages and
salvage.”

       

      
        	
                6.20

              	
                Conveyance on
      default.  The Owner undertakes, where the Ship is (or is
      to be) sold in exercise of any power contained in this Mortgage, to
      execute, forthwith upon request by the Security Trustee, such form of
      conveyance of the Ship as the Security Trustee may
  require.

              

      

       

      
        	
                6.21

              	
                Compliance with laws,
      etc.  The Owner covenants with the Security Trustee that
      throughout the Security Period it
will:

              

      

       

      
        	
                (a)

              	
                comply,
      or procure compliance with, all Environmental Laws and Environmental
      Permits relating to the Ship, its operation or management and the business
      of the Owner from time to time, including, without limitation, maintaining
      evidence of compliance with the Convention on Civil Liabilities and, if
      the Ship should engage in a voyage to the United States of America or
      through U.S. waters, maintaining a Certificate of Financial Responsibility
      issued by the Office of Homeland Security, National Pollution Funds
      Center;

              

      

       

      
        	
                (b)

              	
                notify
      the Security Trustee forthwith
upon:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                any
      Environmental Claim being made against the Owner, the Approved Manager, an
      ISM Responsible Person or otherwise in connection with the Ship;
      and

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                the
      occurrence of any Environmental Incident;
and

              

      

       

      keep the
Security Trustee advised, in writing on such regular basis and in such detail as
the Security Trustee shall require, of the Owner’s response to any Environmental
Claim or Environmental Incident.

       

      
        	
                7

              	
                PROTECTION
      OF SECURITY

              

      

       

      
        	
                7.1

              	
                Security Trustee’s right to
      protect or maintain security.  The Security Trustee may
      take any reasonable action which it may think fit for the purpose of
      protecting or maintaining the security created by this Mortgage or for any
      similar or related purpose.

              

      

       

      
        	
                7.2

              	
                Security Trustee’s right to
      insure, repair etc.  Without limiting the generality of
      Clause 7.1, if the Owner does not comply with Clause 5, the Security
      Trustee may:

              

      

       

      
        	
                (a)

              	
                effect,
      replace and renew any insurances;

              

      

       

      
        	
                (b)

              	
                arrange
      for the carrying out of such surveys and/or repairs of the Ship as it
      reasonably deems expedient or necessary;
and

              

      

       

      
        	
                (c)

              	
                discharge
      any liabilities charged on the Ship, or otherwise relating to or affecting
      it, and/or take any measures which the Security Trustee may reasonably
      think expedient or necessary for the purpose of securing its
      release.

              

      

       

      
        	
                8

              	
                ENFORCEABILITY
      AND SECURITY TRUSTEE’S POWERS

              

      

       

      
        	
                8.1

              	
                Right to enforce
      security.  On the occurrence of an Event of Default which
      is continuing but without the necessity for any court order in any
      jurisdiction to the effect that an Event of Default has occurred or that
      the security constituted by this Mortgage has become enforceable, and
      irrespective of whether a notice has been served under Clause 13.2 of the
      Loan Agreement:

              

      

       

      
        	
                (a)

              	
                the
      security constituted by this Mortgage shall immediately become
      enforceable;

              

      

       

      
        	
                (b)

              	
                the
      Security Trustee shall be entitled at any time or times to exercise the
      powers set out in Clause 8.2 and in any other Finance
      Document;

              

      

       

      
        	
                (c)

              	
                the
      Security Trustee shall be entitled at any time or times to exercise the
      powers possessed by it as mortgagee of the Ship conferred by the law of
      any country or territory the courts of which have or claim any
      jurisdiction in respect of the Owner or the Ship;
  and

              

      

       

      
        	
                (d)

              	
                the
      Security Trustee shall be entitled to exercise all the rights and remedies
      in foreclosure and otherwise given to mortgagees by applicable law
      including the provisions of Chapter 3 of Title 21 of the Liberian Code of
      Laws of 1956, as amended.

              

      

       

      
        	
                8.2

              	
                Right to take possession, sell
      etc.  On the occurrence of an Event of Default and whilst
      the same is continuing, the Security Trustee shall be entitled then or at
      any later time or times:

              

      

       

      
        	
                (a)

              	
                to
      take possession of the Ship whether actually or constructively and/or
      otherwise to take control of the Ship wherever the Ship may be and cause
      the Owner or any other person in possession of the Ship forthwith upon
      demand to surrender the Ship to the Security Trustee without legal process
      and without the Security Trustee or any other Credit Party being liable
      for any losses thereby caused or to account to the Owner in connection
      therewith;

              

      

       

      
        	
                (b)

              	
                to
      sell the Ship or any share in the Ship by public auction or private
      contract with or without the benefit of any charterparty or other contract
      for its employment, at any time, at any place and upon any terms
      (including, without limitation, on terms that all or any part or parts of
      the purchase price be satisfied by shares, loan stock or other securities
      and/or be left outstanding as a debt, whether secured or unsecured and
      whether carrying interest or not) which the Security Trustee may think
      fit, with power for the Security Trustee to purchase the Ship at any such
      public auction and to set off the purchase price against all or any part
      of the Secured Liabilities, with notice of such sale, whether by public
      auction or private contract, addressed to the Owner at its last known
      address, twenty (20) calendar days prior to the date fixed for entering
      into the contract for sale and by first publishing notice of any such
      public sale for ten (10) consecutive days, in daily newspapers of general
      circulation published in the City of New York, State of New York, and if
      the place of such sale should not be New York City, then also by
      publication of a similar notice in a daily newspaper, if any, published at
      the place of sale and in the event that the Vessel shall be offered by
      private contract, no newspaper publication of notice shall be required,
      nor notice of adjournment of sale;;

              

      

       

      
        	
                (c)

              	
                to
      manage, insure, maintain and repair the Ship and to charter, employ, lay
      up or in any other manner whatsoever deal with the Ship in any manner,
      upon any terms and for any period which the Security Trustee may think
      fit, in all respects as if the Security Trustee were the owner of the Ship
      and without the Security Trustee or any other Credit Party being
      responsible for any loss thereby
incurred;

              

      

       

      
        	
                (d)

              	
                to
      collect, recover and give good discharge for any moneys or claims arising
      in relation to the Ship and to permit any brokers through whom collection
      or recovery is effected to charge the usual brokerage
      therefor;

              

      

       

      
        	
                (e)

              	
                to
      take over or commence or defend (if necessary using the name of the Owner)
      any claims or proceedings relating to, or affecting, the Ship which the
      Security Trustee may think fit and to abandon, release or settle in any
      way any such claims or proceedings;
and

              

      

       

      
        	
                (f)

              	
                generally,
      to enter into any transaction or arrangement of any kind and to do
      anything in relation to the Ship which the Security Trustee may reasonably
      think fit.

              

      

       

      
        	
                8.3

              	
                No liability of Security
      Trustee.  The Security Trustee shall not be obliged to
      check the nature or sufficiency of any payment received by it under this
      Mortgage or to preserve, exercise or enforce any right relating to the
      Ship.

              

      

       

      
        	
                8.4

              	
                No requirement to commence
      proceedings.  Neither the Security Trustee nor any other
      Credit Party will need to commence any proceedings under, or enforce any
      Security Interest created by, the Loan Agreement or any other Finance
      Document before commencing proceedings under, or enforcing any Security
      Interest created by, this Mortgage.

              

      

       

      
        	
                9

              	
                APPLICATION
      OF MONEYS

              

      

       

      
        	
                9.1

              	
                General.  All
      sums received by the Security
Trustee:

              

      

       

      
        	
                (a)

              	
                in
      respect of sale of the Ship or any share in the
  Ship;

              

      

       

      
        	
                (b)

              	
                in
      respect of net profits arising out of the employment of the Ship pursuant
      to Clause 8.2(c); or

              

      

       

      
        	
                (c)

              	
                in
      respect of any other transaction or arrangement under Clauses 8.1 or
      8.2,

              

      

       

      shall be
held by the Security Trustee upon trust in the first place to pay or discharge
any expenses or liabilities (including any interest) which have been paid or
incurred by the Security Trustee in or in connection with the exercise of its
powers and to apply the balance in accordance with Clause 12 of the Loan
Agreement.

       

      
        	
                10

              	
                FURTHER
      ASSURANCES

              

      

       

      
        	
                10.1

              	
                Owner’s obligation to execute
      further documents etc.  The Owner
  shall:

              

      

       

      
        	
                (a)

              	
                execute
      and deliver to the Security Trustee (or as it may direct) any assignment,
      mortgage, power of attorney, proxy or other document, as the Security
      Trustee may, in any particular case, reasonably specify;
    and

              

      

       

      
        	
                (b)

              	
                effect
      any registration or notarisation, give any notice or take any other
      step,

              

      

       

      which the
Security Trustee may, by notice to the Owner, and with the consent of the
Majority Lenders reasonably specify for any of the purposes described in Clause
10.2 or for any requisite similar or related purpose.

       

      
        	
                10.2

              	
                Purposes of further
      assurances.  The purposes referred to in Clause 10.1
      are:

              

      

       

      
        	
                (a)

              	
                validly
      and effectively to create any Security Interest or right of any kind which
      the Security Trustee intended should be created by or pursuant to this
      Mortgage;

              

      

       

      
        	
                (b)

              	
                to
      protect the priority, or increase the effectiveness, in any jurisdiction
      of any Security Interest which is created, or which the Security Trustee
      intended should be created, by or pursuant to this
    Mortgage;

              

      

       

      
        	
                (c)

              	
                to
      enable or assist the Security Trustee to sell or otherwise deal with the
      Ship, to transfer title to, or grant any interest or right relating to,
      the Ship or to exercise any power which is referred to in Clauses 8.1 or
      8.2; or

              

      

       

      
        	
                (d)

              	
                to
      enable or assist the Security Trustee to enter into any transaction to
      commence, defend or conduct any proceedings and/or to take any other
      action relating to the Ship in any country or under the law of any
      country.

              

      

       

      
        	
                10.3

              	
                Terms of further
      assurances.  The Security Trustee may (subject to the
      provisions of Clause 10.2) specify the terms of any document to be
      executed by the Owner under Clause 10.1, and those terms may include any
      covenants, undertakings, powers and provisions which the Security Trustee
      reasonably considers appropriate to protect its, and any other Credit
      Party’s, interests.

              

      

       

      
        	
                10.4

              	
                Obligation to comply with
      notice.  The Owner shall comply with a notice under
      Clause 10.1 by the date specified in the
notice.

              

      

       

      
        	
                10.5

              	
                Additional company
      action.  At the same time as the Owner delivers to the
      Security Trustee any document executed under Clause 10.1(a), the Owner
      shall also deliver to the Security Trustee a certificate signed by 2 of
      the Owner’s officers which shall:

              

      

       

      
        	
                (a)

              	
                set
      out the text of a resolution of the Owner’s managing members specifically
      authorizing the execution of the document specified by the Security
      Trustee; and

              

      

       

      
        	
                (b)

              	
                state
      that either the resolution was duly passed at a meeting of the managing
      members validly convened and held throughout which a quorum of managing
      members entitled to vote on the resolution was present or that the
      resolution has been signed by all the managing members and is valid under
      the Owner’s organizational
documents.

              

      

       

      
        	
                11

              	
                POWER
      OF ATTORNEY

              

      

       

      
        	
                11.1

              	
                Appointment.  For
      the purpose of securing the Security Trustee’s interest in the Ship and
      the due and punctual performance of the Owner’s obligations to the
      Security Trustee under this Mortgage and every other Finance Document to
      which the Owner is or is to be a party, the Owner irrevocably and by way
      of security appoints the Security Trustee its attorney, on behalf of the
      Owner and in its name or otherwise, to execute or sign any document and do
      any act or thing which the Owner is obliged to do under any Finance
      Document provided that such power shall become exercisable only after the
      occurrence of an Event of Default which is
  continuing.

              

      

       

      
        	
                11.2

              	
                Ratification of actions of
      attorney.  For the avoidance of doubt and without
      limiting the generality of Clause 11.1, the Owner confirms that Clause
      11.1 authorizes the Security Trustee to execute on its behalf a document
      ratifying any transaction or action which the Security Trustee has
      purported to enter into or to take and which the Security Trustee
      considers was or might have been outside its powers or otherwise
      invalid.

              

      

       

      
        	
                11.3

              	
                Delegation.  The
      Security Trustee may sub-delegate to any person or persons all or any of
      the powers (including the discretions) conferred on the Security Trustee
      by Clauses 11.1 and/or 11.2, and may do so on terms authorizing successive
      sub-delegations.

              

      

       

      
        	
                12

              	
                INCORPORATION
      OF LOAN AGREEMENT PROVISIONS

              

      

       

      
        	
                12.1

              	
                Incorporation of specific
      provisions.  The following provisions of the Loan
      Agreement apply to this Mortgage as if they were expressly incorporated in
      this Mortgage with any necessary
modifications:

              

      

       

      Clause
16, no set-off or tax deduction;

       

      Clause
19, variations and waivers;

       

      Clause
20, notices; and

       

      Clause
23, supplemental.

       

      
        	
                12.2

              	
                Incorporation of general
      provisions.  Clause 12.1 is without prejudice to the
      application to this Mortgage of any provision of the Loan Agreement which,
      by its terms, applies or relates to the Finance Documents generally or
      this Mortgage specifically.

              

      

       

      
        	
                13

              	
                TOTAL
      AMOUNT, ETC.

              

      

       

      
        	
                13.1

              	
                Total
      amount.  For the purpose of recording this Mortgage as
      required by Chapter 3 of Title 21 of the Liberian Code of Laws of 1956, as
      amended, the total amount of the direct and contingent obligations secured
      by this mortgage is NINETY-THREE MILLION SEVEN HUNDRED FIFTY THOUSAND
      UNITED STATES DOLLARS (US$93,750,000) of which (i) SEVENTY-FIVE MILLION
      UNITED STATES DOLLARS (US$75,000,000) is in respect of the Loan, and (ii)
      EIGHTEEN MILLION SEVEN HUNDRED FIFTY THOUSAND UNITED STATES DOLLARS
      (US$18,750,000) is in respect of the Master Agreements, together with
      interest, fees, commissions and performance of mortgage
      covenants.  The date of maturity of this Mortgage is January
      [●], 2013.

              

      

       

      
        	
                14

              	
                SUPPLEMENTAL

              

      

       

      
        	
                14.1

              	
                No restriction on other
      rights.  Nothing in this Mortgage shall be taken to
      exclude or restrict any power, right or remedy which the Security Trustee
      or any other Credit Party may at any time have
  under:

              

      

       

      
        	
                (a)

              	
                any
      other Finance Document; or

              

      

       

      
        	
                (b)

              	
                the
      law of any country or territory the courts of which have or claim any
      jurisdiction in respect of the Owner or the
  Ship.

              

      

       

      
        	
                14.2

              	
                Exercise of other
      rights.  The Security Trustee may exercise any right
      under this Mortgage before it or any other Credit Party has exercised any
      right referred to in Clause 15.1(a) or
(b).

              

      

       

      
        	
                14.3

              	
                Settlement or discharge
      conditional.  Any settlement or discharge under this
      Mortgage between the Security Trustee or any other Credit Party and the
      Owner shall be conditional upon no security or payment to the Security
      Trustee or any other Credit Party by the Owner or any other person being
      set aside, adjusted or ordered to be repaid, whether under any insolvency
      law or otherwise.

              

      

       

      
        	
                15

              	
                LAW
      AND JURISDICTION

              

      

       

      
        	
                15.1

              	
                Liberian
      law.  This Mortgage shall be governed by, and construed
      in accordance with, Liberian law.

              

      

       

      
        	
                15.2

              	
                Choice of
      forum.  The Security Trustee reserves the
      rights:

              

      

       

      
        	
                (a)

              	
                to
      commence proceedings in relation to any matter which arises out of or in
      connection with this Mortgage in the courts of any country which have or
      claim jurisdiction to that matter;
and

              

      

       

      
        	
                (b)

              	
                to
      commence such proceedings in the courts of any such country or countries
      concurrently with or in addition to proceedings in Liberia or without
      commencing proceedings in Liberia.

              

      

       

      
        	
                15.3

              	
                Action against
      Ship.  The rights referred to in Clause 16.2 include the
      right of the Security Trustee to arrest and take action against the Ship
      at whatever place the Ship shall be found lying and for the purpose of any
      action which the Security Trustee may bring before the courts of that
      jurisdiction or other judicial authority and for the purpose of any action
      which the Security Trustee may bring against the Ship, any writ, notice,
      judgment or other legal process or documents may (without prejudice to any
      other method of service under applicable law) be served upon the Master of
      the Ship (or upon anyone acting as the Master) and such service shall be
      deemed good service on the Owner for all
  purposes.

              

      

       

      
        	
                15.4

              	
                Security Trustee’s rights
      unaffected.  Nothing in this Clause 16 shall exclude or
      limit any right which any Credit Party may have (whether under the law of
      any country, an international convention or otherwise) with regard to the
      bringing of proceedings, the service of process, the recognition or
      enforcement of a judgment or any similar or related matter in any
      jurisdiction.

              

      

       

      
        	
                15.5

              	
                Meaning of
      “proceedings”.  In this Clause 16, “proceedings” means
      proceedings of any kind, including an application for a provisional or
      protective measure.

              

      

       

      THIS MORTGAGE has been
executed by the duly authorized Attorney-in-Fact of the Owner on the date stated
at the beginning of this Mortgage.

       

      [●]

       

      

       

      

       

      By:                                                                

       

      Name:

       

      Title:

      ACKNOWLEDGMENT
OF MORTGAGE

       

      STATE OF
NEW
YORK                                                      )

      )  ss.:

      COUNTY OF
NEW
YORK                                                                )

       

      On this
[●] day of January, 2008, before me personally appeared [●], to me known, who,
being by me duly sworn, did depose and say that he resides at [●]; that he is
the Attorney-in-Fact of [●], the Marshall Islands corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the Board of Directors of said corporation

       

      

       

      Notary
Public

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      APPENDIX
F

       

      FORM OF
NOTE

      SECURED PROMISSORY
NOTE

       

      New York,
New York

      $75,000,000 January
23, 2008

       

      FOR VALUE
RECEIVED, the undersigned Bedford Maritime Corp., Brighton Maritime Corp., Hari
Maritime Corp., Prospect Navigation Corp., Hancock Navigation Corp., Columbus
Maritime Corp. and Whitehall Marine Transport Corp., each a Marshall Islands
corporation, as joint and several borrowers (collectively, the “Borrowers”), hereby promise to
pay to the order of The Governor and Company of the Bank of Ireland, acting in
its capacity as Payment Agent (in such capacity, the “Payment Agent”) for the
Lenders under the Loan Agreement referred to below, the principal sum of
SEVENTY-FIVE MILLION UNITED STATES DOLLARS ($75,000,000) or, if less, the
aggregate unpaid principal amount of the Loan (as such term is defined in the
Loan Agreement referred to below) from time to time outstanding made by the
Lenders to the Borrowers pursuant to the Loan Agreement dated as of January 16,
2008 (the “Loan
Agreement”) among the (i) Borrowers, (ii) TBS International Limited as
Guarantor, (iii) the banks and financial institutions named therein as Lenders
(the “Lenders”), (iv)
DVB Group Merchant Bank (Asia) Ltd. as Facility Agent and Security Trustee, (v)
the Payment Agent, (vi) DVB Bank AG, The Governor and Company of the Bank of
Ireland, and Natixis, as Swap Banks, and (vii) Mount Washington LLC as
Arranger.  Capitalized terms used but not defined herein shall have
the meaning assigned such terms in the Loan Agreement.

       

      The
Borrower shall also pay interest on the Loan from the Actual Drawdown Date until
payment in full at the rates determined from time to time in accordance with
Clause 4 of the Loan Agreement, which provisions are incorporated herein with
full force and effect as if they were fully set forth herein.  Any
principal payment not paid when due, whether on an installment payment date or
by acceleration, shall bear interest thereafter at the default rate determined
in accordance with Clause 6.2 of the Loan Agreement.  All interest
shall accrue and be calculated on the actual number of days elapsed and on the
basis of a 360-day year.

       

      All
payments of principal and interest to be made by the Borrowers under this Note
shall be made in Dollars to the Payment Agent, for the account of the
Lenders:

       

      
        	
                (a)

              	
                not
      later than 11:00 a.m. (New York City time) on the due date (any payment
      received after 11:00 a.m. New York City time shall be deemed to have been
      paid on the next Business Day);

              

      

       

      
        	
                (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 Payment Agent shall specify as being customary at
      the time for the settlement of international transactions of the type
      contemplated by this Agreement);
and

              

      

       

      
        	
                (c)

              	
                at
      JP Morgan Chase Manhattan Bank, New York, ABA No. 021000021,
      SWIFT:  CHASUS33, for credit to Bank of Ireland Global Markets
      (Account No. 0011015815), SWIFT:  BIGTIE2D,
      Reference:  Corporate Loans Administration – TBS Int., or to
      such other account with such other bank as the Payment Agent may from time
      to time notify to the Borrowers.

              

      

       

      The
Payment Agent shall endorse the amount and the date of the making of the Advance
and any prepayment or payment of principal hereunder on the grid annexed hereto
and made a part hereof, which endorsement shall constitute prima facie evidence
of the accuracy of the information so endorsed; provided that any failure to
endorse such information on such grid shall not in any manner affect the
obligation of the Borrowers to make payment of principal and interest in
accordance with the terms of the Loan Agreement and this Note.

       

      If this
Note or any payment required to be made hereunder becomes due and payable on a
day which is not a Business Day, the due date thereof shall be extended until
the next following Business Day and interest shall be payable during such
extension at the rate applicable immediately prior thereto, unless such next
following Business Day falls in the following calendar month, in which case the
due date thereof shall be adjusted to the immediately preceding Business
Day.

       

      This Note
is the Note referred to in the Loan Agreement and is entitled to the security
and benefits therein provided, including, but not limited to, such security as
provided in the Finance Documents, as defined in the Loan
Agreement.  Upon the occurrence of any Event of Default under Clause
13 of the Loan Agreement, the principal hereof and accrued interest hereon may
be declared to be (or, with respect to certain Events of Default, automatically
shall become) immediately due and payable.

       

      In the
event that any holder of this Note shall institute any action for the
enforcement or the collection of this Note, there shall be immediately due and
payable, in addition to the unpaid balance hereof, all late charges and all
costs and expenses of such action, including reasonable attorneys’
fees.

       

      The
Borrowers hereby waive presentment, protest, demand for payment, diligence,
notice of dishonor and of nonpayment, and any and all other notices or demands
in connection with the delivery, acceptance, performance, default or enforcement
of this Note, hereby waive and renounce all rights to the benefits of any
statute of limitations and any moratorium, appraisement, exemption and homestead
now provided or which may hereafter be provided by any federal or state statute,
including, without limitation, exemptions provided by any federal or state
statute, including, without limitation, exemptions provided by or allowed under
any federal or state bankruptcy or insolvency laws, both as to itself and as to
all of its property, whether real or personal, against the enforcement and
collection of the obligations evidenced by this Note and any and all extensions,
renewals and modifications hereof and hereby consent to any extensions of time,
renewals, releases of any party this Note, waiver or modification that may be
granted or consented to by the holder of this Note.

       

      The
Borrowers agree that their liabilities hereunder are absolute and unconditional
without regard to the liability of any other party and that no delay on the part
of the holder hereof in exercising any power or right hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any power or right
hereunder preclude other or further exercise thereof or the exercise of any
other power or right.

       

      If at any
time this transaction would be usurious under applicable law, then regardless of
any provision contained in the Loan Agreement or this Note or any other
agreement made in connection with this transaction, it is agreed that (a) the
total of all consideration which constitutes interest under applicable law that
is contracted for, charged or received upon the Loan Agreement, this Note or any
other agreement shall under no circumstances exceed the maximum rate of interest
authorized by applicable law, if any, and any excess shall be credited to the
Borrowers and (b) if the Lenders elect to accelerate the maturity of, or if the
Borrowers prepay the indebtedness described in this Note, any amounts which
because of such action would constitute interest may never include more than the
maximum rate of interest authorized by applicable law and any excess interest,
if any, provided for in the Loan Agreement, in this Note or otherwise, shall be
credited to the Borrowers automatically as of the date of acceleration or
prepayment.

       

      EACH
OF THE UNDERSIGNED, AND THE PAYMENT AGENT BY ITS ACCEPTANCE HEREOF, EACH HEREBY
WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING IN
RESPECT OF ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THIS NOTE.

       

      This Note
shall be governed by and construed in accordance with the laws of the State of
New York.

       

      IN
WITNESS WHEREOF, the Borrowers have executed and delivered this Note on the date
and year first above written.

       

      BEDFORD
MARITIME CORP., BRIGHTON MARITIME CORP., HARI MARITIME CORP., PROSPECT
NAVIGATION CORP., HANCOCK NAVIGATION CORP., COLUMBUS MARITIME CORP. and
WHITEHALL MARINE TRANSPORT CORP. as Borrowers

       

      

       

      

       

      By:                                                                           

       

                  Frank
J. Pittella

                  Attorney-in-Fact

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ADVANCES AND PAYMENTS OF
PRINCIPAL

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              	
                                                                                      Date

                                                                                    	
                                                                                      Advance

                                                                                    	
                                                                                      Amount
      of Principal Paid or Prepaid

                                                                                    	
                                                                                      Unpaid
      Principal Balance

                                                                                    	
                                                                                      Notation

                                                                                      Made
      By

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