Document:

Exhibit 10.1

 

$401,000,000

 

CREDIT AGREEMENT

 

Dated as of October [•], 2005

 

 

Among

 

DOUBLE HULL TANKERS, INC.

 

as Borrower,

 

ANIA AFRAMAX CORPORATION

ANN TANKER CORPORATION

CATHY TANKER CORPORATION

CHRIS TANKER CORPORATION

REBECCA TANKER CORPORATION

REGAL UNITY TANKER CORPORATION

SOPHIE TANKER CORPORATION

 

and the Additional Guarantors party hereto from time to time,

 

as Guarantors,

 

and

 

THE ROYAL BANK OF SCOTLAND PLC

 

as Lender

 

 

	
  ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

  	
   

  	
   

  
	
  SECTION 1.01.

  	
  Certain Defined Terms

  	
   

  	
   

  
	
  SECTION 1.02.

  	
  Interpretation

  	
   

  	
   

  
	
  SECTION 1.03.

  	
  Computation of Time Periods

  	
   

  	
   

  
	
  SECTION 1.04.

  	
  Accounting Terms

  	
   

  	
   

  
	
  ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES

  	
   

  	
   

  
	
  SECTION 2.01.

  	
  The Commitment

  	
   

  	
   

  
	
  SECTION 2.02.

  	
  Additional Vessels

  	
   

  	
   

  
	
  SECTION 2.03.

  	
  Drawdown

  	
   

  	
   

  
	
  SECTION 2.04.

  	
  Repayment/Automatic Reduction of Commitment

  	
   

  	
   

  
	
  SECTION 2.05.

  	
  Voluntary Reduction of Commitment

  	
   

  	
   

  
	
  SECTION 2.06.

  	
  Interest

  	
   

  	
   

  
	
  SECTION 2.07.

  	
  Interest Rate Determination

  	
   

  	
   

  
	
  SECTION 2.08.

  	
  Fees

  	
   

  	
   

  
	
  SECTION 2.09.

  	
  Master Agreement

  	
   

  	
   

  
	
  SECTION 2.10.

  	
  Increased Costs

  	
   

  	
   

  
	
  SECTION 2.11.

  	
  Illegality

  	
   

  	
   

  
	
  SECTION 2.12.

  	
  Payments and Computations

  	
   

  	
   

  
	
  SECTION 2.13.

  	
  Taxes

  	
   

  	
   

  
	
  ARTICLE III CONDITIONS OF LENDING

  	
   

  	
   

  
	
  SECTION 3.01.

  	
  Conditions Precedent to First
  Notice of Drawdown

  	
   

  	
   

  
	
  SECTION 3.02.

  	
  Conditions Precedent to the
  First Advance

  	
   

  	
   

  
	
  SECTION 3.03.

  	
  Conditions Precedent to Each
  Advance for Additional Vessels

  	
   

  	
   

  
	
  SECTION 3.04.

  	
  Conditions Precedent to Each
  Advance

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND
  WARRANTIES

  	
   

  	
   

  
	
  SECTION 4.01.

  	
  Representations and
  Warranties

  	
   

  	
   

  
	
  ARTICLE V GUARANTEE

  	
   

  	
   

  
	
  SECTION 5.01.

  	
  Guarantee

  	
   

  	
   

  
	
  SECTION 5.02.

  	
  Obligations Absolute

  	
   

  	
   

  
	
  SECTION 5.03.

  	
  Guarantee Unconditional

  	
   

  	
   

  
	
  SECTION 5.04.

  	
  Waiver of Subrogation;
  Contribution

  	
   

  	
   

  
	
  SECTION 5.05.

  	
  Reinstatement

  	
   

  	
   

  
	
  SECTION 5.06.

  	
  Waiver

  	
   

  	
   

  
	
  SECTION 5.07.

  	
  Payments; No Reductions

  	
   

  	
   

  
	
  SECTION 5.08.

  	
  Set-Off

  	
   

  	
   

  
	
  SECTION 5.09.

  	
  Continuing Guarantee

  	
   

  	
   

  
	
  SECTION 5.10.

  	
  Right of Contribution

  	
   

  	
   

  
	
  SECTION 5.11.

  	
  Limitation of Liability

  	
   

  	
   

  
	
  ARTICLE VI COVENANTS OF THE
  BORROWER

  	
   

  	
   

  
	
  SECTION 6.01.

  	
  Affirmative Covenants

  	
   

  	
   

  
	
  SECTION 6.02.

  	
  Negative Covenants

  	
   

  	
   

  
	
  ARTICLE VII EVENTS OF DEFAULT

  	
   

  	
   

  
	
  SECTION 7.01.

  	
  Events of Default.

  	
   

  	
   

  
	
  ARTICLE VIII MISCELLANEOUS

  	
   

  	
   

  
	
  SECTION 8.01.

  	
  Amendments, Etc

  	
   

  	
   

  
	
  SECTION 8.02.

  	
  Notices, Etc

  	
   

  	
   

  
	
  SECTION 8.03.

  	
  No Waiver, Remedies

  	
   

  	
   

  
	
  SECTION 8.04.

  	
  Costs; Expenses

  	
   

  	
   

  
	
  SECTION 8.05.

  	
  Right of Set-off

  	
   

  	
   

  
	
  SECTION 8.06.

  	
  Assignments and Participations

  	
   

  	
   

  

 

 

	
  SECTION 8.07.

  	
  Judgment

  	
   

  	
   

  
	
  SECTION 8.08.

  	
  Governing Law; Submission to
  Jurisdiction

  	
   

  	
   

  
	
  SECTION 8.09.

  	
  Execution in Counterparts

  	
   

  	
   

  
	
  SECTION 8.10.

  	
  WAIVER OF JURY TRIAL

  	
   

  	
   

  
	
  SECTION 8.11.

  	
  Entire Agreement

  	
   

  	
   

  
	
  SECTION 8.12.

  	
  Severability of Provisions

  	
   

  	
   

  

 

	
  Exhibit A -

  	
   

  	
  Form of Notice of
  Drawdown

  	
   

  	
   

  
	
  Exhibit B-1-

  	
   

  	
  Form of
  Tranche A Note

  	
   

  	
   

  
	
  Exhibit B-2-

  	
   

  	
  Form of
  Tranche B Note

  	
   

  	
   

  
	
  Exhibit B-3-

  	
   

  	
  Form of
  Tranche C Note

  	
   

  	
   

  
	
  Exhibit C -

  	
   

  	
  Form of
  Account Charge

  	
   

  	
   

  
	
  Exhibit D -

  	
   

  	
  Form of
  Master Agreement Security Deed

  	
   

  	
   

  
	
  Exhibit E -

  	
   

  	
  Form of
  Mortgage

  	
   

  	
   

  
	
  Exhibit F -

  	
   

  	
  Form of
  Assignment of Earnings

  	
   

  	
   

  
	
  Exhibit G -

  	
   

  	
  Form of
  Assignment of Insurances

  	
   

  	
   

  
	
  Exhibit H 

  	
   

  	
  Form of
  Charter Hire Guarantee Assignment, together with the form of the Consent of
  OSG

  	
   

  	
   

  
	
  Exhibit I -

  	
   

  	
  Form of
  Approved Manager’s Undertaking

  	
   

  	
   

  
	
  Exhibit J -

  	
   

  	
  Form of
  Credit Agreement Supplement

  	
   

  	
   

  

 

ii

 

CREDIT AGREEMENT dated as
of October [•], 2005 (as such may be amended,
supplemented (including, without limitation, by way of each Credit Agreement
Supplement executed and delivered from time to time, or otherwise modified,
this “Agreement”) among (i) DOUBLE HULL TANKERS, INC., a Marshall
Islands corporation (the “Borrower”), (ii) ANIA AFRAMAX
CORPORATION, ANN TANKER CORPORATION, CATHY TANKER CORPORATION, CHRIS TANKER
CORPORATION, REBECCA TANKER CORPORATION, REGAL UNITY TANKER CORPORATION and
SOPHIE TANKER CORPORATION, each a Marshall Islands corporation (collectively,
the “Initial Guarantors”), and the Additional Guarantors party hereto
from time to time, and (iii) THE ROYAL BANK OF SCOTLAND PLC, as Lender
(the “Lender”).

 

PRELIMINARY STATEMENTS:

 

1.                                       The
Borrower has requested that the Lender advance an aggregate amount of up to
$401,000,000 to the Borrower in order (a) together with the proceeds of
the IPO, to assist in the financing of the Initial Vessels, (b) to provide
working capital in an amount up to $15,000,000, and (c) to finance all or
a portion of the purchase price of Additional Vessels.

 

2.                                       The
Initial Guarantors have agreed, in order to induce the Lender to make such
amounts available to the Borrower hereunder, to guarantee all of the
obligations of the Borrower under this Agreement, the Notes and the other Loan
Documents.

 

3.                                       The
Lender has agreed to make available a term loan and revolving credit facility
in the initial aggregate principal amount of up to $401,000,000 to the Borrower
upon the terms and conditions set forth herein.

 

NOW, THEREFORE, in
consideration of the premises and the mutual covenants and agreements contained
herein, the parties hereto hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS AND ACCOUNTING TERMS

 

SECTION 1.01.                 Certain
Defined Terms.  As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):

 

“Account Charge”
means the deed containing, among other things, a first priority account charge
made or to be made

 

 

by the Borrower in
favor of the Lender in respect of the Operating Account and in substantially
the form of Exhibit C (as amended from time to time in accordance with its
terms).

 

“Accounting
Information” means the quarterly financial statements and/or the annual
audited financial statements to be provided by the Borrower and OSG to the
Lender in accordance with Section 6.01(h).

 

“Accounting Period”
means each consecutive period of approximately three months (ending on the last
day in March, June, September and December of each year) for which
quarterly Accounting Information is required to be delivered in accordance with
Section 6.01(h).

 

“Additional Guarantor”
means any wholly-owned Subsidiary of the Borrower formed under the laws of the
Republic of the Marshall Islands that (i) is acceptable to the Lender in
its sole and absolute discretion, and (ii) shall execute and deliver to
the Lender a Credit Agreement Supplement.

 

“Additional Vessel”
means any double hull tanker (other than an Initial Vessel) which the Borrower
notifies to the Lender pursuant to Section 2.02 as a vessel which the
Borrower wishes to finance or purchase with the assistance of an Advance of
Tranche C, and which the Lender, in its sole and absolute discretion, shall
notify to the Borrower as being acceptable to the Lender, in accordance with Section 2.02,
and which is or is to be registered in the ownership of a Guarantor under the
laws and flag of the Marshall Islands or another flag acceptable to the Lender,
and everything belonging to such vessel; and “Additional Vessels” means,
collectively, all such vessels approved by the Lender in accordance with Section 2.02.

 

“Advance” has the
meaning specified in Section 2.01 hereof.

 

“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. 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, membership or partnership interests, or
other similar interests of such Person or to direct or cause direction of the
management and policies of such Person, whether

 

2

 

through the
ownership of voting stock, membership or partnership interests, or other
similar interests, by contract or otherwise.

 

“Agreement” has
the meaning specified in the recital hereto.

 

“Applicable Margin”
means, in the case of Tranche A and Tranche B, seven tenths of one percent
(0.70%) per annum and, in the case of Tranche C, eighty-five hundredths of one
percent (0.85%) per annum.

 

“Approved Broker”
means, as the context may require, any of H. Clarkson & Company,
Galbraiths Limited, Braemar Seascope, P.F. Bassoe AS, R.S. Platou Shipbrokers
a.s., Fearnleys A/S, Jacq. Pierot Jr. & Sons, Inc. and Compass
Maritime Services, LLCor such other independent London based sale and purchase
ship broker as may from time to time be appointed by the Lender.

 

“Approved Manager”
means a direct or indirect wholly-owned subsidiary of OSG or any other company
approved by the Lender from time to time as the manager of a Vessel, which
approval shall not unreasonably be withheld.

 

“Approved Manager’s
Undertakings” means each of the undertakings made or to be made by an
Approved Manager in favor of the Lender in respect of a Vessel and in
substantially the form of Exhibit I (as amended from time to time in
accordance with its terms).

 

“Assignments of
Earnings” means each of the first priority assignments of earnings made or
to be made by a Guarantor in favor of the Lender in respect of a Vessel and in
substantially the form of Exhibit F (as amended from time to time in
accordance with its terms).

 

“Assignments of
Insurances” means each of the first priority assignments of insurances made
or to be made by a Guarantor in favor of the Lender in respect of a Vessel and
in substantially the form of Exhibit G (as amended from time to time in
accordance with its terms).

 

“Availability Date”
means the date on which all the conditions precedent specified in Sections
3.01, 3.02 and, to the extent applicable, 3.04 hereof have been satisfied (in
the opinion of the Lender) in full or waived and the first Advance is drawndown
under this Agreement and shall in no event be later

 

3

 

than [  ], 2005 unless the Lender otherwise agrees in
its sole and absolute discretion.

 

“Borrower” has the
meaning specified in the recital hereof.

 

“Business Day”
means a day of the year on which dealings are carried on in the London
interbank market and banks are open for business in both London and in New York
City.

 

“Charter Hire
Guarantees” means each of those certain time charter payment guaranties
given or to be given by OSG to each of the Guarantors, each such guarantee to
be in form and substance acceptable to the Lender.

 

“Charter Hire
Guarantee Assignments” means each of the assignments in respect of the
Charter Hire Guarantees made or to be made by the relevant Guarantor in favor
of the Lender and in substantially the form of Exhibit H (as amended from
time to time in accordance with its terms).

 

“Charters” means
any and all of the separate time charter contracts entered into or to be
entered into by and between the Charterer and each Guarantor in respect of such
Guarantor’s Vessel, which Charters shall be non-cancelable by the Charterer
(other than upon the sale or Total Loss of the subject Vessel or as otherwise
provided in the Borrower’s registration statement on Form F-1 as filed
with the Securities and Exchange Commission on [•], 2005) and
otherwise shall be as described in such registration statement.

 

“Charterer(s)”
means each of the indirect wholly-owned subsidiaries of OSG described in Schedule II
hereto or which charters an Additional Vessel.

 

“Classification
Society” means in respect of any Vessel, American Bureau of Shipping,
Bureau Veritas, Det norske Veritas, Germanischer Lloyd, Lloyd’s Register of
Shipping, Nippon Kaiji Kyokai or, in any case, such other classification
society as is selected by the Borrower with the prior consent of the Lender.

 

“Collateral” means
all “Collateral” referred to in the Collateral Documents and all other property
that is or is intended to be subject to any Lien in favor of the Lender.

 

4

 

“Collateral Documents”
means (a) this Agreement (where the context so admits), (b) the
Account Charge, (c) the Master Agreement Security Deed, (d) the
Mortgages, (e) the Assignments of Earnings, (f) the Assignments of
Insurances, (g) the Charter Hire Guarantee Assignments, (h) the
Approved Manager’s Undertakings, and (i) any other document that provides
for the guarantee of the obligations of any Obligor under any Loan Document or
that creates, or purports to create, a Lien in favor of, or for the benefit of,
the Lender to secure the obligations of any Obligor under or in connection with
this Agreement.

 

“Commitment”
means, at any time, the maximum sum available to be advanced at such time by
the Lender to the Borrower pursuant to Section 2.01 of this Agreement, as
such amount may be reduced from time to time pursuant to Sections 2.05, 2.10,
2.11 or 8.01 hereof.

 

“Consent[s] of OSG”
means the consents of OSG to each of the Charter Hire Guarantee Assignments, in
substantially the form set out in Exhibit H.

 

“Commitment Period”
has the meaning specified in Section 2.01.

 

“Commitment
Termination Date” means (i) [  ], 2005, in the case of
Tranche A, and the tenth anniversary of the date of the drawdown of the first
Advance, in the case of both Tranche B and Tranche C, or, if any such day is
not a Business Day, the next succeeding Business Day, provided that, if such
succeeding Business Day would fall in the next following calendar month, the
Commitment Termination Date shall be the immediately preceding Business Day, or
(ii) such earlier day as the Commitment shall have been canceled in full
pursuant to the provisions of this Agreement.

 

“Credit Agreement
Supplement” means a supplement to this Agreement made or to be made by an
Additional Guarantor by which it becomes a Guarantor hereunder, substantially
the form of Exhibit J (as amended from time to time in accordance with its
terms).

 

“Debt” means in
relation to any member of the Group (the “debtor”):

 

(a)                                  Financial
Indebtedness of the debtor;

 

5

 

(b)                                 liability
for any credit to the debtor from a supplier of goods or services or under any
installment purchase or payment plan or other similar arrangement;

 

(c)                                  contingent
liabilities of the debtor (including without limitation any taxes or other
payments under dispute) which have been or, under GAAP, should be recorded in
the notes to the Accounting Information with respect to the Borrower;

 

(d)                                 deferred
tax of the debtor; and

 

(e)                                  liability
under a guarantee, indemnity or similar obligation entered into by the debtor
in respect of a liability of another Person who is not a member of the Group
which would fall within (a) to (d) if the references to the debtor
referred to the other Person.

 

“Default” means
any Event of Default or any event that would constitute an Event of Default but
for the requirement that notice be given or time elapse or both.

 

“Dollars” and the
sign “$” each means lawful money of the United States.

 

“Drawdown Date”
means each requested date for the borrowing of an Advance, which shall not be
later than the relevant Commitment Termination Date.

 

“Early Termination
Date” has the meaning ascribed thereto in Section 14 of the Master
Agreement.

 

“Environmental Action”
means any administrative, regulatory or judicial action, suit, demand, demand
letter, claim, notice of non-compliance or violation, investigation,
proceeding, consent order or consent agreement based upon or arising out of any
Environmental Law including without limitation (a) any claim by any
governmental or regulatory authority for enforcement, cleanup, removal,
response, remedial or other actions, or fines, penalties or damages pursuant to
any Environmental Law, and (b) any claim by any third party seeking
damages, contribution, or injunctive relief arising from alleged injury or
threat of injury to health, safety or the environment.

 

“Environmental Laws”
means any and all applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants,  franchises,
licenses, agreements or other

 

6

 

governmental
restrictions relating to the environment or to emissions, discharges, releases
or threatened releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment, including, without limitation, ambient air, surface water,
ground water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or industrial,
toxic or hazardous substances or wastes or the clean-up or other remediation
thereof.

 

“Environmentally
Sensitive Material” means oil, oil products, any other substance which is
polluting, toxic or hazardous or any substance the release of which into the
environment is regulated, prohibited or penalized by or pursuant to any
Environmental Law.

 

“Event of Loss”,
means any of the following events:  (x)
the actual or constructive total loss or the agreed or compromised total loss
of a Vessel; or (y) the capture, condemnation, confiscation, requisition
(excluding any requisition for hire for a fixed period not in excess of one
hundred and eighty (180) days), purchase, seizure or forfeiture of, or any
taking of title to, a Vessel.  An Event
of Loss shall be deemed to have occurred (i) in the event of an actual
loss of a Vessel, at noon Greenwich Mean Time on the date of such loss or if
that is not known on the date which such Vessel was last heard from; (ii) in
the event of damage which results in a constructive or compromised or arranged
total loss of a Vessel, at noon Greenwich Mean Time on the date of the event
giving rise to such damage; or (iii) in the case of an event referred to
in clause (y) above, at noon Greenwich Mean Time on the date on which such
event is expressed to take effect by the Person making the same.  Notwithstanding the foregoing, if the
relevant Vessel shall have been returned to the relevant Borrower following any
capture, requisition or seizure referred to in clause (y) above prior to the
date upon which payment if required to be made under Section 2.04(d) hereof,
no Event of Loss shall be deemed to have occurred by reason of such capture,
requisition or seizure.

 

“Events of Default”
has the meaning specified in Section 7.01.

 

“Fair Market Value”
means, in relation to any Vessel, the fair market value of such Vessel
determined by means of a 

 

7

 

valuation made (at
the expense of the Borrower) at any relevant time by one of the Approved
Brokers.  Such valuation shall be made
with or without physical inspection of such Vessel (as the Lender may require),
on the basis of a sale for prompt delivery for cash at arms’ length on normal
commercial terms as between a willing seller and a willing buyer, free of any
existing charter or other contracts of employment, and shall be conclusive
evidence of the fair market value of such Vessel at the date of such
valuation.  If the Borrower is not
satisfied with any such valuation, it shall immediately so notify the Lender
and the Borrower shall have the right to select another of the Approved Brokers
to provide (at the expense of the Borrower) an additional valuation of such
Vessel or Vessels and the applicable valuation for purposes of this Agreement shall
be the arithmetical mean of the two valuations.

 

“Final Payment Date”
means the tenth anniversary of the date of the drawdown of the first Advance
or, if such day is not a Business Day, the Business Day immediately preceding
such tenth anniversary date.

 

“Financial
Indebtedness” means, in relation to any member of the Group (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 (in each case,
other than in respect of assets or services obtained on normal commercial terms
in the ordinary course of business) or any other agreement having the
commercial effect of a borrowing or raising of money by the debtor;

 

(e)                                  under
any foreign exchange transaction, 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

 

8

 

(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.

 

“GAAP” means
accounting principles, concepts, bases and policies generally adopted and
accepted in the United States of America consistently applied.

 

“Group” means the
Borrower and its Subsidiaries (whether direct or indirect and including, but
not limited to, the Guarantors) from time to time and “member of the Group”
shall be construed accordingly.

 

“Guaranteed
Obligations” has the meaning specified in Section 5.01.

 

“Guarantors”
means, collectively, the Initial Guarantors and each Additional Guarantor, if
any, and “Guarantor” means any of them as the context may require.

 

“Guarantee” means
the joint and several guarantee of the Guarantors provided in Article V as
supplemented by each Credit Agreement Supplement executed and delivered from
time to time.

 

“Indemnified Party”
has the meaning specified in Section 8.04(c).

 

“Initial Guarantors”
has the meaning specified in the recital hereto.

 

“Initial Vessels”
means, collectively, the vessels described in Schedule II hereto.

 

“Interest Period”
means, in relation to each Advance (or any relevant portion thereof), (x) in
the case of the first such period, the period commencing on the Drawdown Date
for such Advance (or any relevant portion thereof) and ending on the last day
of the period selected by the Borrower pursuant to the provisions below and (y)
thereafter, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of the period
selected by the Borrower pursuant to the provisions below.  The duration of each such Interest Period
shall be one, three, six or twelve months (or such other period as may be
requested by the Borrower and consented to by the Lender so as to ensure that
the relevant

 

9

 

Commitment
Termination Date is the last day of an Interest Period) as the Borrower may,
upon notice received by the Lender not later than 11:00 A.M. (New York
City time) on the third Business Day prior to the first day of such Interest
Period, select or request;  provided,
however, that:

 

(a)                                  the
Borrower may not select any Interest Period with respect to any Advance that
ends after (i) its next repayment date, unless the aggregate outstanding
principal amount of Advances which have Interest Periods which end or are
deemed to end after such repayment date will not exceed the aggregate amount of
principal due hereunder and under the Notes on such date or (ii) the
relevant Commitment Termination Date;

 

(b)                                 whenever
the last day of any Interest Period would otherwise occur on a day other than a
Business Day, the last day of such Interest Period shall be extended to occur
on the next succeeding Business Day, provided that, if such extension would
cause the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on the next
preceding Business Day;

 

(c)                                  whenever
the first day of any Interest Period occurs on a day in a calendar month for
which there is no numerically corresponding day in the calendar month that
succeeds such initial calendar month by the number of months equal to the
number of months in such Interest Period, such Interest Period shall end on the
last Business Day of such succeeding calendar month;

 

(d)                                 any
notice given by the Borrower selecting the duration of an Interest Period shall
be irrevocable and, if the Borrower fails to select an Interest Period then,
subject as provided herein, the Borrower shall be deemed to have selected an
Interest Period of three (3) months; and

 

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

 

10

 

“IPO” means an
underwritten initial public offering registered under the Securities Act of
1933, as amended, of shares of common stock of the Borrower.

 

“ISM Code” means
in relation to its application to each Guarantor, any relevant Approved
Manager, each Vessel and its operation, the International Safety Management
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)), as the same may be
amended, supplemented or replaced from time to time (and the terms “safety
management system”, “Safety Management Certificate” and “Document of Compliance”
have the meanings specified in the ISM Code).

 

“ISPS Code” means
in relation to its application to each Guarantor, any relevant Approved
Manager, each Vessel 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).

 

“Lender” has the
meaning ascribed thereto in the recital hereof.

 

“Lender’s Account”
means the account of the Lender maintained by the Lender with American Express
Bank Limited, 3 World Financial Center, 23rd Floor, New York, New York 10285-2300,
Account No. [•], SWIFT:  AEIBUS33, or such other account as may from
time to time be notified by the Lender to the Borrower.

 

“Lien” means any
lien, security interest or other charge or encumbrance of any kind, or any
other type of preferential arrangement, including, without limitation, the lien
or retained security title of a conditional vendor.

 

“Loan Documents”
means this Agreement, the Master Agreement, the Notes and the Collateral
Documents.

 

“Management Agreements”
means any and all of the management agreements entered into or to be entered
into by and between the Approved Manager and each Guarantor in respect of such
Guarantor’s Vessel.

 

11

 

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

 

“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 the Master Agreement (on the 1992 ISDA (Multicurrency-Cross Border) form
as amended) dated as of the date hereof between the Borrower and the Lender
pursuant to which the Borrower and the Lender may enter into one or more
interest rate swap transactions to hedge the Borrower’ exposure under this
Agreement to interest rate fluctuations, and includes all transactions from
time to time entered into and confirmations from time to time exchanged under
such Master Agreement, and any amending, supplementing or replacement
agreements made from time to time.

 

“Master Agreement
Security Deed” means the deed containing, among other things, a charge in
respect of the Master Agreement made or to be made by the Borrower in favor of
the Lender in substantially in the form of Exhibit D (as amended from time
to time in accordance with its terms).

 

“Material Adverse
Effect” means, with respect to any Person, a material adverse effect upon (a) the
condition (financial or otherwise), operations, assets or business of such
Person and its Subsidiaries, taken as a whole, (b) the ability of such
Person to perform any of its material obligations under any Loan Document to
which it is a party, or (c) the material rights and remedies of the Lender
under any Loan Document to which such Person is a party.

 

“Memorandum of
Agreement” means, in relation to an Additional Vessel, a memorandum of
agreement executed by the owner of such Vessel, as seller, and a Guarantor, as
buyer, providing for the purchase by such Guarantor of such Vessel (as amended
from time to time in accordance with its terms).

 

“Mortgage” means
each of the first preferred mortgages made or to be made by a Guarantor in
favor of the Lender in

 

12

 

respect of a
Vessel and in substantially the form of Exhibit E (as amended from time to
time in accordance with its terms).

 

“Notes” means
collectively, the Tranche A Note, the Tranche B Note and the Tranche C Note.

 

“Notice of Drawdown”
has the meaning specified in Section 2.03(a).

 

“Obligors” means,
collectively, the Borrower and the Guarantors, and “Obligor” means any
of them as the context may require.

 

“Operating Account”
means the account opened or to be opened in the name of the Borrower with the
Lender (or such other account with any other branch of the Lender or with a
bank or financial institution other than the Lender (whether associated with
the Lender or not) substituted therefor pursuant to this Agreement).

 

“OSG” means
Overseas ShipholdingGroup, Inc., a Delaware corporation.

 

“Other Taxes” has
the meaning specified in Section 2.13(b).

 

“Permitted
Encumbrances” has the meaning specified in the Mortgages.

 

“Person” means an
individual, partnership, corporation (including a business trust), joint stock
company, limited liability company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.

 

“Public Offering
Documents” means the Borrower’s registration statement on Form F-1, as
filed with the Securities Exchange Commission on July [•],
2005, and each other agreement or document executed in connection with the IPO
(as amended from time to time).

 

“RBS LIBOR” means,
the rate per annum at which deposits in Dollars in an amount approximately
equal to the Advances (or any relevant portion thereof) are (or would have
been) offered by the Lender to leading banks in the London Interbank Dollar
Market at or about 11.00 a.m. (London time) on the second Business Day
prior to the commencement of such

 

13

 

Interest Period
for a period equal to such Interest Period and for delivery on the first
Business Day thereof.

 

“Relevant Interest
Rate” means TELERATE, or, where TELERATE is not quoted for such Interest
Period or where TELERATE is not elected pursuant to Section 2.06(d), RBS
LIBOR.

 

“Relevant Percentage”
shall mean, in relation to any Vessel that is sold or becomes the subject of an
Event of Loss, a fraction (expressed as a percentage, rounded up to the nearest
tenth of a percent) where (i) the numerator is the Fair Market Value of
the Vessel sold or lost, and (ii) the denominator is the aggregate amount
of the Fair Market Values of all Vessels (including the Vessel sold or lost)
subject to a Mortgage immediately prior to such sale or loss, in each case
determined on the basis of the most recent valuation delivered pursuant to Section 3.03(c)(iv) or
Section 6.01(l).

 

 “Securities and Exchange Commission”
shall mean the United States Securities and Exchange Commission or any other
governmental authority of the United States of America at the time
administrating the Securities Act of 1933, as amended, the Investment Company
Act of 1940, as amended, or the Securities Exchange Act of 1934, as amended.

 

“Solvent” means,
with respect to any Person on a particular date, that on such date (a) the
fair value of the property of such Person is greater than the total amount of
liabilities, including, without limitation, contingent liabilities, of such
Person, (b) the present fair saleable value of the assets of such Person
is not less than the amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and matured, (c) such
Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay as such debts and liabilities
mature and (d) such Person is not engaged in business or a transaction,
and is not about to engage in business or a transaction, for which such Person’s
property would constitute an unreasonably small capital. The amount of
contingent liabilities at any time shall be computed as the amount that, in the
light of all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.

 

“Subsidiary” of
any Person means any corporation, limited liability company, partnership, joint
venture, trust or estate or other entity of which (or in which) more than 50%
of

 

14

 

(a) the
voting stock or membership interests of such corporation or company, (b) the
interest in the capital or profits of such partnership or joint venture or (c) the
beneficial interest in such trust or estate is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more
of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

 

“Taxes” has the
meaning specified in Section 2.13(a).

 

“TELERATE” means,
for any Interest Period: 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 Interest Period or other relevant period which appears on Telerate Page 3750
at or about 11.00 a.m. (London time) on the second Business Day prior to
the commencement of that Interest Period or other period (and, for the purposes
of this Agreement, “Telerate Page 3750” means the display designated as “page 3750”
on the Telerate Service or such other page as may replace Page 3750
on that service for the purpose of displaying rates comparable to that rate or
on such other service as may be nominated by the British Bankers’ Association
as the information vendor for the purpose of displaying British Bankers’
Association Interest Settlement Rates for Dollars).

 

“Tranche” means
any of Tranche A, Tranche B or Tranche C, as the context may require.

 

“Tranche A” has
the meaning specified in Section 2.01(a).

 

“Tranche A Note”
means the promissory note of the Borrower payable to the order of the Lender,
in substantially the form of Exhibit B-1 hereto, evidencing the Tranche A
Advance.

 

“Tranche B” has
the meaning specified in Section 2.01(b).

 

“Tranche B Note”
means the promissory note of the Borrower payable to the order of the Lender,
in substantially the form of Exhibit B-2 hereto, evidencing the Tranche B
Advances.

 

“Tranche C” has
the meaning specified in Section 2.01(c).

 

15

 

“Tranche C Note”
means the promissory note of the Borrower payable to the order of the Lender,
in substantially the form of Exhibit B-3 hereto, evidencing the Tranche C
Advances.

 

“Transaction” has
the meaning ascribed thereto in the introductory paragraph of the Master
Agreement.

 

“Vessels” means,
collectively, the Initial Vessels and the Additional Vessels, and everything
belonging to each such vessel, and, in the case of each Additional Vessel, to
be purchased by a Guarantor, and registered by such Guarantor in its ownership
under the laws and flag of the Republic of the Marshall Islands, and “Vessel”
means any of them as the context may require.

 

SECTION 1.02.                 Interpretation.  When used in this Agreement, (i) the words
“herein”, “hereof” and “hereunder” and words of similar import shall refer to
this Agreement as a whole and not to any provision of this Agreement, and the
words “Article”, “Section”, “Schedule” and “Exhibit” shall refer to Articles
and Sections of, and Schedules and Exhibits to, this Agreement unless otherwise
specified and (ii)whenever the context so requires, the neuter gender includes
the masculine or feminine, the masculine gender includes the feminine, and the
singular number includes the plural, and vice versa.

 

SECTION 1.03.                 Computation of
Time Periods.  In this Agreement in
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including” and the words “to” and “until”
each means “to but excluding”.

 

SECTION 1.04.                 Accounting
Terms.  All accounting terms not
specifically defined herein shall be construed in accordance with GAAP.

 

ARTICLE II

 

AMOUNTS AND TERMS OF THE ADVANCES

 

SECTION 2.01.                 The Commitment.  The Lender agrees, on the terms and
conditions hereinafter set forth, to make available advances (each an “Advance”)
to the Borrower from time to time on any Business Day during the period from
the Availability Date until the relevant Commitment Termination Date (the “Commitment
Period”) in an aggregate amount not to exceed 

 

16

 

at any time an aggregate
principal amount of $401,000,000 in three (3) Tranches as follows:

 

(a)                                  Up
to the principal amount of $236,000,000 (“Tranche A”), in one Advance;
such Advance to be applied by the Borrower, together with the proceeds of the
IPO, to assist the Initial Guarantors to finance up to 100% of the purchase
price of the Initial Vessels;

 

(b)                                 Up
to an aggregate principal amount of $15,000,000 (“Tranche B”), in one or
more Advances, for working capital purposes; and

 

(c)                                  Up
to an aggregate principal amount of $150,000,000 (“Tranche C”), in one
or more Advances, whereof each such Advance shall be applied by the Borrower to
assist a Guarantor to finance all or a portion of the purchase price of an
Additional Vessel under the relevant Memorandum of Agreement, and shall be an
amount which, together with all other Advances of the Commitment then
outstanding, shall not exceed sixty-five percent (65%) of the aggregate amount
of the Fair Market Values of all Vessels which would be subject to a Mortgage
immediately after the making of such Advance (determined on the basis of the
most recent valuation for each Vessel delivered pursuant to Section 3.03(c)(iv)).

 

Within the limits of the
Commitment and the relevant Tranche of the Commitment, and of Section 2.02
hereof, the Borrower may borrow under Section 2.01(b) and (c), repay
pursuant to Section 2.04 and reborrow under Section 2.01(b) and
(c); provided however, that no reborrowing will be permitted under Section 2.01(c) after
the fifth anniversary of the date of the drawdown of the first Advance.

 

SECTION 2.02.                 Additional
Vessels.  Where the Borrower wishes
to borrow an Advance of Tranche C in relation to the proposed purchase of a
vessel by a Guarantor, the Borrower shall notify the Lender (i) the name
of such vessel, (ii) the general description and deadweight tonnage (which
shall not be less than 45,000 deadweight tons), (iii) the age of such
vessel (which on the Final Payment Date would not be more than 15 years old), (iv) the
identity of the current owner, (v) the identity of the Guarantor, (vi) the
purchase price of such vessel paid or to be paid by such Guarantor, and (vii) such
further information as the Lender may require. 
If available, the Borrower shall also provide the Lender with a true and
complete copy of the relevant Memorandum of Agreement or equivalent agreement
for such vessel.

 

17

 

The Lender shall, as soon
as reasonably practical, notify the Borrower of the Lender’s acceptance or
rejection of such vessel for the purposes of an Advance of Tranche C, which
acceptance or rejection shall be in the absolute discretion of the Lender,
taking into account, among other things, (a) the employment of such
vessel, (b) the ability of forecast earnings of such vessel being able to
amortize the debt incurred with respect thereto for the period from the fifth
anniversary of the date of the drawdown of the first Advance through the Final
Payment Date, including the balloon, within an acceptable percentage of
historical averages and (c) the Lender’s satisfaction in its sole
discretion as to the Borrower’s ability to raise additional capital via the
equity markets of an amount acceptable to the Lender.  In the absence of any acceptance of a vessel
being notified, the Lender shall be under no obligation to make any Advance for
such vessel.

 

SECTION 2.03.                 Drawdown.  (a)  Each Advance shall be made on
notice given not later than 11:00 A.M. (New York City time) on the third
Business Day prior to the proposed Drawdown Date by the Borrower to the Lender;
provided, however, that such notice with respect to the Tranche A
Advance shall be made within one day after the execution of the underwriting
agreement for the IPO.  Each such notice
of drawdown (a “Notice of Drawdown”) shall be in writing, in
substantially the form of Exhibit A hereto, specifying therein (i) the
requested Drawdown Date, which shall be a Business Day during the Commitment
Period, (ii) the relevant Tranche and the aggregate principal amount of
the Advance thereof requested on such Drawdown Date, (iii) the duration of
the initial Interest Period applicable to such Advance, and (iv) the
recipients (including payment instructions) of the proceeds of such
Advance.  Upon fulfillment of the
applicable conditions set forth in Article III, the Lender will make such
funds available to, or for the account of, the Borrower according to the
payment instructions set forth in the Notice of Drawdown.  Each Advance shall be $5,000,000 ($1,000,000
in the case of Tranche B) or an integral multiple of $1,000,000 in excess
thereof.  Anything in this subsection (a) above
to the contrary notwithstanding, there may not be outstanding more than ten (10) separate
Advances at any time.

 

(b)                                   Each
Notice of Drawdown shall be irrevocable and binding on the Borrower.  The Borrower shall indemnify the Lender
against any loss, cost or expense incurred by the Lender as a result of any
failure to fulfill on or before the Drawdown Date specified in any Notice of
Drawdown the applicable conditions set

 

18

 

forth in Article III,
including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by the
Lender to fund the Advance to be made by the Lender on such Drawdown Date when
such Advance, as a result of such failure, is not made on such date.

 

SECTION 2.04.                 Repayment/Automatic
Reduction of Commitment.  (a) 
The Borrower shall repay the principal of Tranche A in twenty (20) consecutive
quarterly installments commencing three months after the fifth anniversary of
the date of the drawdown of the first Advance and ending of the Final Payment
Date, each of such quarterly installments to be in the principal amount of
$6,062,500 and the last such quarterly installment to be accompanied by a
balloon payment of $114,750,000.

 

(b)                                   The
Commitment to provide Tranche B Advances shall be reduced quarterly by $750,000
commencing three (3) months after the fifth anniversary of the
Availability Date and ending on the Final Payment Date..

 

(c)                                    The
Borrower shall repay the principal amount of any Tranche C Advance in such
amounts and at such times as the parties shall agree.  The commitment to provide Tranche C Advances
shall be reduced quarterly by $$7,500,000 commencing three (3) months
after the fifth anniversary of the Availability Date and ending on the Final
Payment Date.

 

(d)                                   In
addition to, and without limitation of, the provisions of Section 6.01(l),
on (i) the date of any transfer of title of a Vessel by the relevant
Guarantor, and (ii) the earlier of (A) the date which is one hundred
fifty (150) days following an Event of Loss of a Vessel, and (B) the date
of receipt by the relevant Guarantor, the Borrower or the Lender of the
insurance proceeds relating to such Event of Loss, the Borrower shall repay the
Advances in an amount equal to the Relevant Percentage of the Advances
outstanding immediately prior to such sale or Event of Loss.

 

(e)                                    The
Borrower may, upon not less than fourteen (14) days’ notice to the Lender
identifying the Advance to be prepaid in whole or in part and stating the
proposed date and aggregate principal amount of such prepayment (which notice
shall be irrevocable), and if such notice is given the Borrower shall prepay
the outstanding principal amount of such Advance, in whole or in part; provided,
however, that each partial

 

19

 

prepayment shall be in an
aggregate principal amount of not less than $1,000,000 or an integral multiple
of $1,000,000 in excess thereof (or, if the aggregate outstanding principal
amount of such Advance is less, such aggregate principal amount).

 

(f)                                      Anything
contained in this Agreement to the contrary notwithstanding, all then
outstanding Advances shall be repaid on the Final Payment Date.

 

(g)                                   With
respect to each repayment of Advances required by this Section 2.04, the
Borrower may designate the specific Advance or Advances pursuant to which a
repayment is made, provided that all Advances with Interest Periods
ending on such date of required repayment shall be paid in full prior to the
payment of any other Advances.  In the
absence of a designation by the Borrower as described in the preceding
sentence, the Lender shall, subject to the preceding provisions of this subsection (g),
make such designation in its sole reasonable discretion with a view, but no
obligation, to minimize breakage costs owing pursuant to Section 8.04(b) hereof.

 

(h)                                   Each
such repayment of any Advance or relevant part thereof shall be accompanied by
accrued interest to the date of such prepayment on the principal amount so
repaid plus any amount payable pursuant to Section 8.04(b) hereof.

 

SECTION 2.05.                 Voluntary
Reduction of Commitment.  The
Borrower may, upon not less than five (5) Business Days’ notice to the
Lender, terminate in whole or reduce in part the unused portion of the
Commitment; provided, however, that each partial reduction of the
Commitment shall be in an aggregate principal amount of $1,000,000 or an
integral multiple of not less than $1,000,000 in excess thereof.

 

SECTION 2.06.                 Interest.  (a) Ordinary Interest. Subject to
subsection (c) of this Section 2.06, the Borrower shall pay
interest on the aggregate unpaid principal amount of each Advance from the
relevant Drawdown Date until such principal amount shall be paid in full, at a
rate per annum equal at all times during each Interest Period for such Advance to
the sum of (i) the Relevant Interest Rate for such Interest Period plus (ii) the
Applicable Margin plus (iii) the Mandatory Cost Rate in effect from time
to time, payable in arrears on the last day of such Interest Period and, if
such Interest Period has a duration of more than three (3) months, on each
day that occurs during such Interest Period every three (3) months from
the first day of such Interest Period.

 

20

 

(b)                                 Default
Interest.  The Borrower shall pay on
demand interest on the unpaid principal amount of each Advance and on the
unpaid amount of all interest, fees and other amounts then due and payable
hereunder that is not paid when due from the due date thereof to the date paid,
in the case of Advances and interest thereon, at a rate per annum equal at such
time to two percent (2%) per annum above the rate per annum required to be paid
on such Advance pursuant to clause (a) above, or, in the case of unpaid
fees and/or other amounts, at a rate per annum equal at such time to two
percent (2%) per annum above the rate per annum required to be paid pursuant to
clause (a) above on the most recent Advance made under this Agreement.

 

(c)                                  Interest
Upon Default.  Upon the occurrence
and during the continuance of any Event of Default (or, in the case of any
involuntary proceeding described in Section 7.01(f), a Default), the
Borrower shall pay interest on the aggregate unpaid principal amount of each
Advance from the date of the occurrence of such Event of Default or Default, as
the case may be, until such Event of Default or Default, as the case may be,
shall have been cured or waived, at a rate per annum equal to two percent (2%)
per annum above the rate per annum required to be paid on such Advance pursuant
to clause (a) above.

 

(d)                                 Interest
Rate when Transactions under Master Agreement.  If a Transaction is to be entered into under
the Master Agreement, the Relevant Interest Rate for each Interest Period
applicable to any Advance the subject of the Transaction (commencing with the
first Interest Period relating to such Transaction) shall be TELERATE unless
the Borrower, by giving written notice (which shall be irrevocable) to the
Lender not later than 11.00 A.M. (New York City time) three Business Days
before the commencement of such first Interest Period, elects that the Relevant
Interest Rate shall be RBS LIBOR rather than TELERATE.

 

SECTION 2.07.                 Interest Rate
Determination.  The Lender shall give
prompt notice to the Borrower of the applicable interest rate determined by the
Lender for purposes of Section 2.06(a).

 

SECTION 2.08.                 Fees.  (a)  The Borrower agrees to pay to the
Lender a non-refundable arrangement fee of $1,500,000, of which $50,000 has
been paid and $1,450,000 shall be payable on the date of the funding of the
IPO.

 

21

 

(b)                                 The
Borrower agrees to pay to the Lender a commitment fee on the unused portion of
the Lender’s Commitment from the Availability Date until the relevant
Commitment Termination Date in the case of each of Tranche B and Tranche C,
calculated on a 360 day year basis, at a rate per annum equal to three tenths
of one percent (0.30%), payable quarterly in arrears, commencing three (3) months
from the Availability Date .

 

SECTION 2.09.                 Master
Agreement.   (a)  If for any
reason any proposed Advance is not drawn down under this Agreement but
nonetheless a Transaction has been entered into under the Master Agreement in
relation thereto then, subject to Section 2.09(c), the Lender shall be entitled
but not obliged to amend, supplement, cancel, net out, terminate, liquidate,
transfer or assign all or any part of the rights, benefits and obligations
created by the Master Agreement and/or to obtain or re-establish any hedge or
related trading position in any manner and with any Person the Lender in its
absolute discretion decides, and in the event of the Lender exercising any part
of its entitlement aforesaid the Borrower’s continuing obligations under the
Master Agreement shall, unless agreed otherwise by the Lender, be calculated so
far as the Lender considers it practicable by reference to the repayment and
reduction schedules for the Commitment taking into account the fact that such
Advance has not been advanced.

 

(b)                                 In
the case of repayment of all or part of any Advance under this Agreement or a
reduction of the Commitment (whether scheduled or not) then, subject to Section 2.09(c),
the Lender shall be entitled but not obliged to amend, supplement, cancel, net
out, transfer or assign all or such part of the rights, benefits and
obligations created by the Master Agreement which equate or relate to the
Advance so repaid or prepaid or the part of the Commitment so reduced and/or to
obtain or re-establish any hedge or related trading position in any manner and
with any person the Lender in its absolute discretion decides, and in the case
of such repayment or a partial prepayment or repayment of part of the
Commitment and the Lender exercising any part of its entitlement as aforesaid
the Borrower’s continuing obligations under the Master Agreement shall, unless
agreed otherwise by the Lender, be calculated so far as the Lender considers it
practicable by reference to the repayment and reduction schedules (as it may be
amended) for the Commitment taking account of the fact that more or less than
the

 

22

 

originally
scheduled amount of the Commitment remains outstanding.

 

(c)                                  If
either (i) less than the full amount of any proposed Advance is drawn down
under this Agreement, or (ii) more or less than the originally scheduled
amount of the Commitment remains outstanding following a repayment or a
reduction of the Commitment under this Agreement, and the Lender in its
absolute discretion agrees, following a written request of the Borrower, that
the Borrower may be permitted to maintain all or part of a Transaction in an
amount not wholly matched with or linked to all or part of an Advance, the
Borrower shall within ten (10) days of being notified by the Lender of
such requirement provide the Lender with, or procure the provision to the
Lender of, such additional security as shall in the opinion of the Lender
acting reasonably be adequate to secure the performance of such Transaction,
which additional security shall take such form, be constituted by such
documentation, and be entered into between such parties, as the Lender in its
absolute discretion may approve or require, and each document comprising such
additional security shall constitute a Credit Support Document (as defined in Section 14
of the Master Agreement).

 

(d)                                 The
Borrower shall on the first written demand of the Lender indemnify the Lender
in respect of all loss, cost and expense (including the fees of legal advisers)
incurred or sustained by the Lender as a consequence of or in relation to the
effecting of any matters or transactions referred to in this Section 2.09.

 

(e)                                  Without
prejudice to or limitation of the obligation of the Borrower under Section 2.09(d),
in the event that the Lender exercises any of its rights under Section 2.09(a) or
(b) and such exercise results in all or part of a Transaction being
terminated, such termination shall be treated under the Master Agreement in the
same manner as if it were a Terminated Transaction (as defined in Section 14
of the Master Agreement) effected by the Lender after an Event of Default by
the Borrower and, accordingly, the Lender shall be permitted to recover from
the Borrower payment for early termination calculated in accordance with the
provisions of Section 6(e)(i) of the Master Agreement.

 

SECTION 2.10.                 Increased
Costs.   (a)  If, due to either (i) the
introduction of or any change (other than any change in the Mandatory Cost
Rate) in or in the interpretation of any law or regulation or (ii) the compliance
by the Lender

 

23

 

with any guideline or
request from any central bank or other governmental authority in any case
introduced, changed, interpreted or requested after the date hereof (whether or
not having the force of law), there shall be (x) imposed, modified or deemed
applicable any reserve, special deposit or similar requirement against assets
held by, or deposits in or for the account of, the Lender or (y) imposed on the
Lender any other condition relating to this Agreement or the Advances, and the
result of any event referred to in clause (x) or (y) shall be to increase the
cost to the Lender of agreeing to make or making, funding or maintaining the
Advances, then the Lender will so notify the Borrower in sufficient detail for
the Borrower to verify such increased cost and the Borrower shall, upon demand
by the Lender, pay to the Lender additional amounts sufficient to compensate
the Lender for such increased cost;  provided,
however, that, before making any such demand, the Lender agrees to use
its best efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different lending office for monitoring the
Advances if the making of such a designation would avoid the need for, or
reduce the amount of, such increased cost and would not, in the reasonable
judgment of the Lender, be otherwise disadvantageous to the Lender.  A certificate as to the amount of such
increased cost, submitted to the Borrower by the Lender, shall be conclusive
and binding for all purposes, absent manifest error.

 

(b)                                 If
the Lender 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), 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, the Lender or
any corporation controlling the Lender as a consequence of the Lender’s
Commitment or the Advances hereunder and other commitments of this type, by
increasing the amount of capital required or expected to be maintained by the
Lender or any corporation controlling the Lender, to a level below that which
the Lender or any corporation controlling the Lender could have achieved but
for such adoption, effectiveness, change or compliance (taking into account the
Lender’s or such corporation’s policies with respect to capital adequacy) then
the Lender will so notify the Borrower in sufficient detail for the Borrower to
verify such reduction in return and the Borrower shall pay the Lender, upon
demand by the Lender, such additional amount as may be specified by the

 

24

 

Lender as being
sufficient to compensate the Lender for such reduction in return, to the extent
that the Lender reasonably determines such reduction to be attributable to the
existence of the Lender’s commitment to lend hereunder; provided  however,
that before making such demand, the Lender agrees to use its best efforts
(consistent with its internal policy and legal and regulatory restrictions) to
enter into consultations with the Borrower in good faith and without prejudice
to the rights of the Lender under this Agreement and the other Loan Documents
with regard to the impact of such law, regulation, guideline or request and the
amount of compensation required by the Lender as aforesaid.  A certificate as to such amounts submitted to
the Borrower by the Lender shall be conclusive and binding for all purposes,
absent manifest error.

 

SECTION 2.11.                 Illegality.  Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation of
any law or regulation makes it unlawful, or any central bank or other
governmental authority asserts that it is unlawful, for the Lender to perform
its obligations hereunder to make the Advances or to fund or maintain the
Advances or any portion thereof hereunder, then, upon written notice by the
Lender to the Borrower, the Lender and the Borrower shall negotiate in good
faith to agree on terms for the Lender to continue the Advances or any portion thereof
on a basis which is not unlawful.  If no
agreement shall be reached between the Borrower and the Lender within a period
which in the sole discretion of the Lender is reasonable, the Lender shall be
entitled to give notice to the Borrower that the obligation of the Lender to
make or maintain the Advances or any portion thereof shall be forthwith
terminated and the amount of the Lender’s Commitment shall be reduced
accordingly, and thereupon the aggregate outstanding principal amount of the
Advances or any relevant portion thereof shall become due and payable in full,
together with accrued interest thereon and other sums payable hereunder, and
such amounts as the Borrower shall be obligated to reimburse the Lender
pursuant to Section 8.04(b) if earlier prepayment is required by any
law, regulation and/or regulatory requirement; 
provided, however, that, before making any such demand,
the Lender shall designate a different lending office for monitoring the
Advances if the making of such a designation would avoid the need for giving
such notice and demand and would not, in the judgment of the Lender, be
otherwise disadvantageous to the Lender.

 

25

 

SECTION 2.12.                 Payments and
Computations.   (a)  The Borrower shall
make each payment hereunder and under the Notes not later than 11:00 A.M.
(New York City time) on the day when due in Dollars to the Lender at the Lender’s
Account in same day funds.  Partial
payments of overdue amounts in respect of fees, expenses, interest and/or
principal shall (unless specifically provided for elsewhere herein or in any
other Loan Document) be applied to the payment of such overdue fees, expenses,
interest and/or principal, as the case may be, in such order as the Lender may
determine.

 

(b)                                 The
Borrower hereby authorizes the Lender, if and to the extent payment of
principal, interest or fees owed to the Lender is not made when due hereunder
or under any of the Notes held by the Lender, to charge from time to time
against any or all of the accounts of the Borrower with the Lender any amount
so due.

 

(c)                                  All
computations of interest shall be made by the Lender, on the basis of a year of
360 days for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest is payable.  Each determination by the Lender of an
interest rate hereunder shall be conclusive and binding for all purposes,
absent manifest error.

 

(d)                                 Whenever
any payment hereunder or under any of the Notes shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or commitment fee, as the
case may be; provided, however, if such extension would cause payment of
interest on or principal of the Advances to be made in the next following
calendar month, such payment shall be made on the next preceding Business Day.

 

SECTION 2.13.                 Taxes.   (a) All payments by the Borrower of
principal of, and interest on, the Advances, the Notes and all other amounts
payable by the Borrower hereunder shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income or
franchise taxes and other taxes, fees, levies, duties, withholdings or other
charges of any nature whatsoever now or hereafter imposed, withheld, collected
or assessed by any taxing authority, but excluding (such non-excluded items
being called “Taxes”), in the case of the Lender, (i) net income,
capital, doing business and franchise taxes imposed on the Lender by the

 

26

 

jurisdiction under the
laws of which the Lender is organized or any political subdivision or taxing
authority thereof or therein, or by any jurisdiction in which the Lender’s
lending office with respect to this Agreement is located, as the case may be,
or any political subdivision or taxing authority thereof or therein and (ii) any
taxes, fees, levies, duties, withholdings or other charges that would not have
been imposed but for the failure of the Lender to comply with any
certification, identification or other similar requirement with which the
Lender is in its reasonable judgment eligible to comply to establish
entitlement to exemption from such tax. 
If the Borrower shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder or under any of the Notes to the Lender, (i) the
sum payable shall be increased as may be necessary so that after making all
required deductions of Taxes (including deductions of Taxes applicable to
additional sums payable under this Section 2.13) the Lender receives an
amount equal to the sum it would have received had no such deductions of Taxes
been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law;  provided, however, that the
Lender shall designate a different lending office for monitoring the Advances
if, in the judgment of the Lender, such designation would avoid the need for,
or reduce the amount of, any Taxes required to be deducted from or in respect
of any sum payable hereunder to the Lender and would not, in the judgment of
the Lender, be otherwise disadvantageous to the Lender.

 

(b)                                 In
addition, the Borrower agrees to pay any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies that
arise from any payment made hereunder or under any of the Notes or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement, any of the Notes or any of the other Loan Documents (hereinafter
referred to as “Other Taxes”).

 

(c)                                  The
Borrower will indemnify the Lender for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.13) paid by the
Lender and any liability (including penalties, additions to tax, interest and
expenses) arising therefrom or with respect thereto.  This indemnification shall be made within
forty-five (45) days from the date the Lender makes written demand therefor.

 

27

 

(d)                                 Within
thirty (30) days (or as soon thereafter as available) after the date of any
payment of Taxes under this Section 2.13, the Borrower will furnish to the
Lender, at its address referred to in Section 8.02, appropriate evidence
of payment thereof.

 

(e)                                  The
Lender shall, on or prior to the Availability Date and from time to time
thereafter if requested in writing by the Borrower (but only so long as the
Lender is and remains lawfully able to do so), provide the Borrower with two
duly completed copies of Internal Revenue Service Form W-8BEN or W-8ECI,
as appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that the Lender is entitled to benefits under an income tax
treaty to which the United States of America is a party that reduces the rate
of withholding tax on payments under this Agreement or the Notes or certifying
that the income receivable pursuant to this Agreement or the Notes is
effectively connected with the conduct of a trade or business in the United
States of America.

 

(f)                                    For
any period with respect to which the Lender has failed to provide the Borrower
with the appropriate forms described in subsection (e) above (other
than if such failure is due to a change in law occurring after the date on
which the Lender was originally required to provide such forms, or if such
forms are otherwise not required under subsection (e) above), the
Lender shall not be entitled to increased payments or indemnification under subsection (a) or
(c) above with respect to Taxes imposed by the United States of
America;  provided, however,
that should the Lender become subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps as the
Lender shall reasonably request to assist the Lender to recover such Taxes if,
in the judgment of the Borrower, such steps would avoid the need for, or reduce
the amount of, any Taxes required to be deducted from or in respect of any sum
payable hereunder to the Lender and would not, in the judgment of the Borrower,
be disadvantageous to the Borrower.

 

(g)                                 Without
prejudice to the survival of any other agreement of the Borrower hereunder, the
agreements and obligations of the Borrower contained in this Section 2.13
shall survive the payment in full of principal and interest hereunder and under
the Notes.

 

28

 

ARTICLE III

 

CONDITIONS OF LENDING

 

SECTION 3.01.                 Conditions
Precedent to First Notice of  Drawdown.  The obligation of the Lender to make any
Advance is subject to the conditions precedent that, on or before the giving of
the first Notice of Drawdown for any Advance, the Lender shall have received,
in form and substance satisfactory to the Lender (unless otherwise specified):

 

(a)                                  certified
copies of the resolutions of the board of directors of the Borrower and the
board of directors and shareholders of each of the Initial Guarantors approving
each Loan Document and each other document contemplated thereby to which such
corporation is or is to be a party, and of all documents evidencing other
necessary corporate action by, and governmental approvals relating to, each
Obligor, if any, with respect to such Loan Documents and other documents to
which it is or is to be a party;

 

(b)                                 certificates
of an officer of the Borrower and of each of the Initial Guarantors certifying
the names and true signatures of the respective officers and attorneys-in-fact
of each thereof authorized to sign each Loan Document and each other document
contemplated thereby to which it is or is to be a party;

 

(c)                                  copies
of the articles of incorporation and by-laws of the Borrower and of each of the
Initial Guarantors and each amendment thereto, certified (as of a date
reasonably near the first Drawdown Date) by an officer of the Borrower or such
Initial Guarantor, as the case may be, as being true and correct copies
thereof;

 

(d)                                 copies
of certificates of goodstanding of the Borrower and of each of the Initial
Guarantors dated as of a date reasonably near the first Drawdown Date,
certifying, in each case, that such corporation is duly organized and in good
standing under the laws of the Republic of the Marshall Islands;

 

(e)                                  evidence
that the Borrower has duly opened the Operating Account and has delivered to
the Lender all resolutions, signature cards and other documents or evidence
required in connection with the opening, maintenance and operation of the
Operating Account;

 

1

 

(f)                                    the
Master Agreement, duly executed by the Borrower and the Lender;

 

(g)                                 the
Master Agreement Security Deed, duly executed by the Borrower;

 

(h)                                 copies
of each of the Management Agreements and each of the Charters covering the
Initial Vessels, as well as copies of each of the Charter Hire Guarantees
relating to such Charters;

 

(i)                                     valuations
(one per Vessel), addressed to the Lender (at the expense of the Borrower) by
an Approved Broker indicating the Fair Market Value of each of the Initial
Vessels;

 

(j)                                     a
written confirmation from the Borrower as to which individuals are authorized
to give verbal and/or written instructions to the Lender on behalf of the
Borrower in respect of the selection of any Interest Period pursuant to this
Agreement;

 

(k)                                  a
satisfactory review by the Lender’s counsel of the equity structure of the
Borrower, including confirmation that the rights of the equity holders of the
Borrower shall be legally or effectively subordinated to the right of the
Lender to payment of any and all amounts due to the Lender under this
Agreement, under the Notes and under the Loan Documents; and

 

(l)                                     such
documents and evidence as the Lender shall reasonably require, based on
applicable law and regulations and the Lender’s own internal guidelines,
relating to the Lender’s knowledge of its customers.

 

SECTION 3.02.                 Conditions
Precedent to the First Advance.   The
obligation of the Lender to make the first Advance (which shall be the Advance
specified in Section 2.01(a)) is subject to the following conditions
precedent having been satisfied (or waived in writing by the Lender) on or
prior to the relevant Drawdown Date:

 

(a)                                  the
Lender shall have received, in form and substance satisfactory to the Lender,
evidence that the IPO has been consummated in all material respects in
accordance with the Public Offering Documents and all applicable law, all of
which Public Offering Documents shall be in form and substance reasonably
satisfactory to the Lender, and the Borrower shall have received net proceeds
(after deducting costs and expenses)

 

2

 

from the IPO which, when added to the Tranche A
Advance, shall enable the Initial Guarantors both to purchase the Initial
Vessels in full and to comply with Section 6.01(l)(i).

 

(b)                                 The
Lender shall have received each of the Notes duly executed by the Borrower to
the order of the Lender;

 

(c)                                  the
Lender shall have received on or before the relevant Drawdown Date the
following, each dated as of such Drawdown Date (unless otherwise specified), in
form and substance satisfactory to the Lender (unless otherwise specified):

 

(i)                                     the
Account Charge relating to the Operating Account, duly executed by the
Borrower;

 

(ii)                                  a
Mortgage relating to each Initial Vessel, duly executed by the relevant Initial
Guarantor;

 

(iii)                               an
Assignment of Earnings relating to each Initial Vessel, duly executed by the
relevant Initial Guarantor;

 

(iv)                              an
Assignment of Insurances relating to each Initial Vessel, duly executed by the
relevant Initial Guarantor, together with a signed Notice of Assignment,
substantially in the form attached thereto;

 

(v)                                 a
Charter Hire Guarantee Assignment relating to each Charter Hire Guarantee, duly
executed by the relevant Initial Guarantor, together, in each instance, with
the relevant Consent of OSG;

 

(vi)                              an
Approved Manager’s Undertaking relating to each Initial Vessel, duly executed
by the Approved Manager of such Initial Vessel;

 

(vii)                           evidence
of insurance in respect of each of the Initial Vessels naming the Lender as
loss payee and, if required by the Lender, as co-assured with such responsible
and reputable insurance companies or associations, and in such amounts and
covering such risks, as is required pursuant to the relevant Mortgages;

 

(viii)                        a
favorable opinion from an independent insurance consultant acceptable to the
Lender and at the cost of the Borrower on such matters relating to the
insurances for each of the Initial Vessels as the Lender may require;

 

3

 

(ix)                                a
Certificate of Ownership and Encumbrance issued by the Maritime Administrator
for the Marshall Islands stating that each of the Initial Vessels is owned by
the relevant Initial Guarantor and that there are on record no Liens on such
Initial Vessel except the relevant Mortgage;

 

(x)                                   evidence
of the completion of all other recordings and filings of, or with respect to,
the Collateral Documents executed in connection with the making of the first
Advance that the Lender may deem necessary or desirable in order to perfect and
protect the Liens created thereby, including under the Uniform Commercial Code
of New York (or such other jurisdiction where the relevant Initial Guarantor
and/or any Collateral may be located);

 

(xi)                                certificates
duly issued by the Classification Society, dated within seven (7) days of
the relevant Drawdown Date, to the effect that each of the Initial Vessels has
received the highest classification and rating for vessels of the same age and
type, free of all recommendations of the Classification Society affecting class
unless otherwise agreed by the Lender;

 

(xii)                             evidence
that each of the Initial Vessels will, as from the relevant Drawdown Date, be
managed by the Approved Manager on terms acceptable to the Lender, together
with copies of the Document of Compliance and Safety Management Certificate
issued pursuant to the ISM Code in respect of such Initial Vessel;

 

(xiii)                          such
other certificates relating any of the Initial Vessels, or the operation
thereof, as may be reasonably requested by the Lender;

 

(xiv)                         a
favorable opinion of James Edelson, Esq., counsel for the Obligors, in
respect of the Loan Documents executed in connection with the making of the first
Advance and as to such other matters as the Lender may reasonably request
addressed to the Lender in form and substance satisfactory to the Lender; and

 

(xv)                            a
favorable opinion of Seward & Kissel LLP, counsel for the Lender,
addressed to the Lender and in form and substance satisfactory to the Lender.

 

SECTION 3.03.                 Conditions
Precedent to Each Advance for Additional Vessels.  The obligation of the Lender to make an

 

4

 

Advance of Tranche C in
relation to any Additional Vessel is subject to the following conditions
precedent having been satisfied (or waived in writing by the Lender) on or
prior to the relevant Drawdown Date (for purposes of this Section 3.03, “relevant
Advance” means, in relation to an Additional Vessel, the Advance to be used to
assist in financing such Vessel, “relevant Vessel” refers to the Additional
Vessel to be financed by the relevant Advance, and “relevant Guarantor” refers
to the Additional Guarantor acquiring the relevant Vessel):

 

(a)                                  the
amount of the relevant Advance shall not exceed the purchase price of the
relevant Vessel under the Memorandum of Agreement for such Vessel;

 

(b)                                 the
amount of the relevant Advance shall not exceed the amount permitted for such
Advance under Section 2.01(c);

 

(c)                                  the
Lender shall have received on or before the relevant Drawdown Date the
following, each dated as of such Drawdown Date (unless otherwise specified), in
form and substance satisfactory to the Lender (unless otherwise specified):

 

(i)                                     a
Credit Agreement Supplement duly executed by such Additional Guarantor;

 

(ii)                                  documentation
respecting such Additional Guarantor specified mutatis
mutandis in Section 3.01(a), (b),(c) and (d);

 

(iii)                               a
copy of the Memorandum of Agreement or such equivalent agreement (together with
all amendments and addenda thereto) for such Additional Vessel, duly executed
by the relevant Guarantor and the relevant seller, together with evidence of
any address or similar commission arrangements, all of which shall be on terms
acceptable to the Lender (certified by an officer of the relevant Guarantor to
be a true, correct and complete copy thereof);

 

(iv)                              valuations
(one per Vessel), each dated not more than twenty one (21) days prior to the
date of such Advance, addressed to the Lender (at the expense of the Borrower)
by one of the Approved Brokers (subject to the right of the Borrower to select
an additional Approved Broker valuation as more fully set out in the definition
of Fair Market

 

5

 

Value) indicating the
Fair Market Value of each of the Vessels, including the relevant Vessel,
mortgaged to the Lender;

 

(v)                                 such
evidence as the Lender and its counsel shall require in relation to the due
authorization and execution by the relevant seller of the Memorandum of
Agreement or such equivalent agreement relating to the relevant Vessel and all
documents to be executed by the relevant seller pursuant thereto;

 

(vi)                              evidence
that (A) the relevant Vessel has been unconditionally delivered by the
relevant seller to the relevant Guarantor in accordance with all the terms of
the relevant Memorandum of Agreement or such equivalent agreement, warranted
free and clear of all Liens, (B) the relevant seller shall have been paid
in full under the terms of the relevant Memorandum of Agreement or such
equivalent agreement; and (C) the relevant Vessel has been duly registered
in the ownership of the relevant Guarantor under the laws and flag of the
Republic of the Marshall Islands or another flag acceptable to the Lender;

 

(vii)                           evidence
that the relevant Guarantor has entered into a Management Agreement with the
Approved Manager covering the relevant Vessel;

 

(viii)                        a Mortgage
relating to the relevant Vessel, duly executed by the relevant Guarantor;

 

(ix)                                an
Assignment of Earnings relating to the relevant Vessel, duly executed by the
relevant Guarantor;

 

(x)                                   an
Assignment of Insurances relating to the relevant Vessel, duly executed by the
relevant Guarantor, together with a signed Notice of Assignment, substantially
in the form attached thereto;

 

(xi)                                an
Approved Manager’s Undertaking relating to the relevant Vessel, duly executed
by the Approved Manager of the relevant Vessel;

 

(xii)                             evidence
of insurance in respect of the relevant Vessel naming the Lender as loss payee
and, if required by the Lender, as co-assured with such responsible and
reputable insurance companies or associations, and in such amounts and covering
such risks, as is required pursuant to the relevant Mortgage;

 

6

 

(xiii)                          a
favorable opinion from an independent insurance consultant acceptable to the
Lender and at the cost of the Borrower on such matters relating to the
insurances for the relevant Vessel as the Lender may require;

 

(xiv)                         a
Certificate of Ownership and Encumbrance issued by the maritime administrator
for the Marshall Islands or other relevant jurisdiction stating that the
relevant Vessel is owned by the relevant Guarantor and that there are on record
no Liens on such Vessel except the relevant Mortgage;

 

(xv)                            evidence
of the completion of all other recordings and filings of, or with respect to,
the Collateral Documents executed in connection with the making of the relevant
Advance that the Lender may deem necessary or desirable in order to perfect and
protect the Liens created thereby, including under the Uniform Commercial Code
of New York (or such other jurisdiction where the relevant Guarantor and/or any
Collateral may be located);

 

(xvi)                         a
certificate duly issued by the Classification Society, dated within seven (7) days
of the relevant Drawdown Date, to the effect that the relevant Vessel has
received the highest classification and rating for vessels of the same age and
type, free of all recommendations of the Classification Society affecting class
unless otherwise agreed by the Lender;

 

(xvii)                      evidence
that the relevant Vessel will, as from the relevant Drawdown Date, be managed
by the Approved Manager on terms acceptable to the Lender, together with copies
of the Document of Compliance and Safety Management Certificate issued pursuant
to the ISM Code in respect of the relevant Vessel;

 

(xviii)                   such other
certificates relating to the relevant Vessel, or the operation thereof, as may
be reasonably requested by the Lender;

 

(xix)                           a
favorable opinion of counsel for the Obligors, in respect of the Loan Documents
executed in connection with the advance of the relevant Advance and as to such
other matters as the Lender may reasonably request addressed to the Lender in
form and substance satisfactory to the Lender; and

 

7

 

(xx)                              a
favorable opinion of Messrs. Seward & Kissel LLP, counsel for the
Lender, addressed to the Lender and in form and substance satisfactory to the
Lender.

 

SECTION 3.04.                 Conditions
Precedent to Each Advance.   The
obligation of the Lender to make each Advance, including the first Advance on
the first Drawdown Date, is subject to the following conditions precedent
having been satisfied (or waived in writing by the Lender) on or prior to the
relevant Drawdown Date:

 

(a)                                  the
Lender shall have received a Notice of Drawdown as required by Section 2.03(a);

 

(b)                                 the
Borrower shall have paid the fees due pursuant to Section 2.08 and any
other fees payable pursuant hereto;

 

(c)                                  immediately
after the making of the relevant Advance, (i) the aggregate outstanding
principal amount of the Advances of each Tranche will not exceed the maximum
amount available under such Tranche, and (ii) the aggregate outstanding
principal amount of all Advances will not exceed the Commitment;

 

(d)                                 evidence
that, if the test set out in Section 6.01(l)(i) were applied
immediately following the making of the relevant Advance, the Borrower would
not be obliged to provide additional security or repay part of the Advances as
therein provided (determined on the basis of the most recent valuation for each
Vessel delivered pursuant to Section 3.03(c)(iv) or Section 6.01(l)(ii),
as the case may be);

 

(e)                                  immediately
after the making of the relevant Advance, no Default or Event of Default shall
have occurred and be continuing;

 

(f)                                    the
representations and warranties of the Obligors contained in this Agreement
shall be true mutatis mutandis on and as of the
date of the relevant Advance, unless such representation or warranty shall
expressly relate to a different date;

 

(g)                                 the
Lender shall have received on or before the relevant Drawdown Date the
following, each dated as of such Drawdown Date (unless otherwise specified), in
form and substance satisfactory to the Lender (unless otherwise specified):

 

8

 

(i)                                     certificates
of an officer of the Borrower and of each of the Initial Guarantors and of any
Additional Guarantor which has theretofor acquired, or is on the date of such
Advance acquiring, an Additional Vessel, each dated as of the relevant Drawdown
Date (the statements made in such certificate shall be true on and as of such
Drawdown Date), certifying as to (A) the absence of any amendments to such
Obligor’s articles of incorporation and by-laws as certified to the Lender
pursuant to Sections 3.01(c) or 3.03(c)(ii) above, (B) the due
incorporation and good standing of such Obligor as a corporation organized
under the laws of the Republic of the Marshall Islands or another jurisdiction
acceptable to the Lender and the absence of any proceeding for the dissolution
or liquidation of such Obligor, (C) the veracity of the representations
and warranties of such Obligor contained in this Agreement mutatis
mutandis on and as of the date of the relevant Advance, unless such
representation or warranty shall expressly relate to a different date, and (D) the
absence of any event occurring and continuing or resulting from the making of
the relevant Advance that constitutes a Default;

 

(ii)                                  the
original of any power of attorney issued in favor of any Person executing any
Loan Document (or any other document delivered pursuant to a Loan Document) on
behalf of any Obligor in relation to the relevant Advance;

 

(iii)                               true
and complete copies of any governmental or regulatory consents, filings,
registrations, approvals and waivers required in connection with the execution,
delivery and performance of (A) each Loan Document executed in relation to
the relevant Advance, and (B) the consummation of the transactions
contemplated thereby;

 

(iv)                              if
applicable, the relevant confirmation exchanged under the Master Agreement and
which evidences a Transaction entered into between the Borrower and the Lender
in connection with the relevant Advance, and any mandates required in
connection therewith; and

 

(v)                                 such
opinions, consents, agreements and documents in connection with this Agreement,
the Master Agreement and the Collateral Documents as the Lender may reasonably
request by notice to the Borrower prior to the relevant Drawdown Date.

 

9

 

(h)                                 to
the extent required by any change in applicable law and regulation or any
changes in the Lender’s own internal guidelines since the date on which the applicable
documents and evidence were delivered to the Lender pursuant to Section 3.01(l),
such further documents and evidence as the Lender shall require relating to the
Lender’s knowledge of its customers.

 

The making of each
Advance hereunder shall be deemed to be a representation and warranty by the
Obligors on the date of such Advance as to the facts specified in clauses (c),
(d), (e) and (f) of this Section 3.04.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

SECTION 4.01.                 Representations
and Warranties.  Each of the
Obligors, jointly and severally, represents and warrants as follows:

 

(a)                                  Existence
and Power.  Each Obligor (i) is
a corporation duly organized, validly existing and in good standing under the
laws of the Republic of the Marshall Islands, (ii) is duly qualified and
in good standing as a foreign corporation 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, and (iii) has all requisite corporate power
and authority to own or lease and operate its properties and to carry on its
business as now conducted and as proposed to be conducted.

 

(b)                                 Authorization;
No Violation.  The execution,
delivery and performance by each Obligor of this Agreement, the Notes and each
other Loan Document to which it is or is to be a party, and the consummation of
other transactions contemplated thereby, are within such Obligor’s corporate
powers, have been duly authorized by all necessary corporate action, and do not
(i) contravene such Obligor’s articles of incorporation or by-laws, (ii) violate
any applicable law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award, (iii) conflict with or result in the
breach of, or constitute a default under, any loan agreement, contract,
indenture, mortgage, deed of trust, lease or other instrument binding on or
affecting such Obligor or any of its properties, or (iv) except for the
Liens created by the Collateral Documents, result in or require the creation or
imposition of any Lien upon or with

 

10

 

respect to any of the properties of such Obligor.  None of the Obligors is in violation of any
such law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award or in breach of any such loan agreement, contract, indenture,
mortgage, deed of trust, lease or other instrument.

 

(c)                                  Governmental
Consents, Etc.  Except for the
recording of the Mortgages and filing of proper financing statements in respect
of the Assignments of Earnings and the Charter Hire Guarantee Assignments
specified in Section 4.01(s), no authorization, approval, consent or other
action by, and no notice to or filing with, any governmental authority or
regulatory body or any other consent or approval of any other Person is
required for (i) the due execution, delivery and performance by any
Obligor of this Agreement, any of the Notes or any other Loan Document to which
it is or is to be a party or for the consummation of the transactions
contemplated thereby, (ii) the grant by any Obligor of the Liens granted
by it pursuant to the Collateral Documents, (iii) the perfection or
maintenance of the Liens created by the Collateral Documents (including the
first priority nature thereof), or (iv) subject to filing with the
appropriate court of all documents required to commence and maintain
litigation, the exercise by the Lender of its rights under the Loan Documents
or the remedies in respect of the Collateral pursuant to the Collateral
Documents.

 

(d)                                 Binding
Effect.  This Agreement has been, and
each of the Notes and each other Loan Document when delivered hereunder will
have been, duly executed and delivered by each Obligor party thereto.  This Agreement is, and each of the Notes and each
other Loan Document when delivered hereunder will be, the legal, valid and
binding obligations of each Obligor party thereto, enforceable against each
such Obligor in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforceability of creditor’s rights generally.

 

(e)                                  Compliance
with Laws.  Each Obligor is in
compliance with all applicable statutes, regulations and laws, including,
without limitation, all Environmental Laws, the noncompliance with which, in
the reasonable opinion of the Lender, would have a Material Adverse Effect on
such Obligor.

 

(f)                                    Financial
Information;  Other Obligations.  The pro forma consolidated balance sheet of
the Borrower and its Subsidiaries set forth in the aforereferenced Borrower’s
registration statement on Form F-1, a copy of which has been

 

11

 

delivered to the Lender by the Borrower, fairly
presents, in all material respects, the financial condition of the Borrower and
its Subsidiaries taken as a whole as at such date.  None of the Obligors has engaged in any
business other than that contemplated by this Agreement.  None of the Obligors is a party to any other
loan or security agreement and none has filed or permitted to be filed any
financing statement, mortgage, pledge or charge with respect to any assets
owned by it and, as of the date hereof, there is (except as aforesaid) no Lien
of any kind on any of the properties or assets of any of the Obligors.

 

(g)                                 No
litigation.  There is no pending, or
(to the best knowledge of any Obligor) threatened action, proceeding,
governmental investigation or arbitration affecting any Obligor or any of its
properties before any court, governmental agency or arbitrator which may affect
the legality, validity or enforceability of this Agreement, any of the Notes or
any other Loan Document, or the consummation of the transactions contemplated
hereby or thereby.

 

(h)                                 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 any Advance will be used to purchase
or carry any Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock.

 

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

 

(j)                                     Not
“Investment Company”.  None of the
Obligors is an “investment company”, or a company “controlled” by an “investment
company”, within the meaning of the Investment Company Act of 1940, as amended.

 

(k)                                  Subsidiaries.  None of the Guarantors has any direct or
indirect Subsidiaries.

 

(l)                                     Not
“National”.  None of the Obligors is
a “national” of any “designated foreign country”, within the meaning of the
Foreign Asset 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 any
regulations or rulings issued thereunder.

 

12

 

(m)                               No
Restriction.  Neither the making or
any Advance nor the use of the proceeds thereof nor the performance by the
Obligors of this Agreement 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.

 

(n)                                 Ownership
of Obligors.  All of the issued and
outstanding shares of each of the Initial Guarantors is, and of each Additional
Guarantor shall be, directly owned and controlled by the Borrower.

 

(o)                                 Solvency.  Each of the Obligors is, individually, and
the Borrower and its Subsidiaries are, together, Solvent.

 

(p)                                 Use
of Proceeds.  The Borrower is using
the proceeds of the Advances solely for the purposes set forth in the
Preliminary Statement hereof.

 

(q)                                 Place
of Business.  None of the Obligors
has a place of business in the United States of America, the District of
Columbia, the United States Virgin Islands, or any territory or insular
possession subject to the jurisdiction of the United States of America.

 

(r)                                    Veracity
of Statements.  No representation,
warranty or statement made or certificate, document or financial statement
provided by any of the Obligors in or pursuant to this Agreement, any of the
Notes or any other Loan Document, or in any other document furnished in
connection therewith, is untrue or incomplete in any material respect or
contains any misrepresentation of a material fact or omits to state any material
fact necessary to make any such statement herein or therein, in light of the
circumstances under which such representation, warranty or statement was made,
not misleading.

 

(s)                                  Collateral
Documents.  The provisions of each of
the Collateral Documents create, or when delivered will create, in favor of the
Lender, (i) in the case of the Mortgages, a valid first “preferred
mortgage” within the meaning of Chapter 3 of the Marshall Islands Maritime Act,
1990, as amended, on the Vessels in favor of the Lender, subject to the
recording of the Mortgages as described in the following sentence, and (ii) in
the case of the Assignments of Earnings, the Assignments of Insurances and the
Charter Hire Guarantee Assignments, a valid, binding and executed and
enforceable security interest and Lien in all right, title and interest in the
Collateral therein

 

13

 

described, and shall constitute a fully perfected
first priority security interest in favor of the Lender in all right, title and
interest in such Collateral, subject to no other Liens and subject in the case
of (A) the Assignments of Earnings and the Charter Hire Guarantee
Assignments, to notice being given to account parties and to filing proper
financing statements in the District of Columbia, and (B) the Assignments
of Insurances, to notice being given to underwriters and protection and
indemnity clubs, and their consent being obtained where policy provisions or
club rules so require.  Upon
execution and delivery by the relevant Guarantor and recording in accordance
with the laws of the Republic of the Marshall Islands, each of the Mortgages
will be a first “preferred mortgage” within the meaning of Chapter 313 of Title
46 of the United States Code and will qualify for the benefits accorded a “preferred
mortgage” under Chapter 313 of Title 46 of the United States Code and no other
filing or recording or refiling or rerecording or any other act is necessary or
advisable to create or perfect such security interest under the Mortgages or in
the mortgaged property therein described.

 

(t)                                    No
Money Laundering.  Without prejudice
to the generality of the foregoing provisions of this Section 4.01, in
relation to the borrowing by the Borrower of the Advances, the performance and
discharge of its obligations under this Agreement and the other Loan Documents
and the transactions and other arrangements affected or contemplated by this
Agreement and the other Loan Documents, the Borrower confirms that it is acting
for its own account and that the foregoing will not involve or lead to
contravention of any law, official requirement or other regulatory measure or
procedure implemented to combat “money laundering” (as defined in Article 1
of the Directive (91/308/EEC) of the Council of the European Communities).

 

ARTICLE V

 

GUARANTEE

 

SECTION 5.01.                 Guarantee.   In order to induce the Lender to make
Advances to the Borrower, each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably guarantees, as primary obligor and not merely
as surety, the performance and punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all obligations of the Borrower now
or hereafter existing under this Agreement, under any of the Notes and under
any other Loan Document,

 

14

 

whether for principal,
interest, fees, expenses or otherwise (collectively the “Guaranteed
Obligations”) due or owing to the Lender, and agrees to pay any and all
expenses (including, without limitation, counsel fees and expenses) incurred by
the Lender in enforcing any rights under this Guarantee.  Each of the Guarantors hereby unconditionally
and irrevocably agrees to indemnify the Lender immediately on demand against
any cost, loss or liability suffered by the Lender (i) if any Guaranteed
Obligation is or becomes unenforceable, invalid or illegal, or (ii) by
operation of law.  The amount of the
cost, loss or liability shall be equal to the amount which the Lender would
otherwise have been entitled to recover. 
The obligations of the Guarantors under this Article V are in
addition to and shall not in any way be prejudiced by any other guarantee or
security now or subsequently held by the Lender.

 

SECTION 5.02.                 Obligations
Absolute.  Each of the Guarantors
guarantees that the Guaranteed Obligations will be performed and paid to the
Lender strictly in accordance with the terms of any applicable agreement,
express or implied, with the Borrower, regardless of any law, regulation or
order of any jurisdiction affecting any term of any Guaranteed Obligation or
the rights of the Lender 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 Borrower’s ability or
obligation to make, or right of the Lender 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 Borrower.

 

SECTION 5.03.                 Guarantee
Unconditional.  The liability of each
Guarantor under this Guarantee shall be unconditional irrespective of (i) any
amendment or waiver or consent to departure from the terms of any Guaranteed
Obligation, including any extension of the time or change of the manner or
place of payment, (ii) any exchange, release, or non-perfection of any
collateral securing payment of any Guaranteed Obligation, (iii) any change
in the corporate existence, structure or ownership of the Borrower, or any
insolvency, bankruptcy, reorganization or other similar proceeding affecting
the Borrower or its assets or any resulting release or discharge of any of the
Guaranteed Obligations, (iv) the existence of any claim, set-off or other
rights which any of the Guarantors may have at any time against the Borrower,
the Lender or any other corporation or person,

 

15

 

whether in connection
herewith or any unrelated transactions, and (v) any other circumstance
whatsoever that might otherwise constitute a defense available to, or a legal
or equitable discharge of, the Borrower.

 

SECTION 5.04.                 Waiver of
Subrogation; Contribution.  Notwithstanding
any other provision of this Guarantee, until payment in full of the Guaranteed
Obligations in cash after termination of any of the Lender’s commitments with
respect thereto, (i) each of the Guarantors 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 Lender have
against the Borrower in respect of the Guaranteed Obligations, (ii) none
of the Guarantors shall have any right of recourse, reimbursement,
contribution, indemnification, or similar right (by contract or otherwise)
against the Borrower in respect of the Guaranteed Obligations, and (iii) each
of the Guarantors 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 Lender to secure payment of the
Guaranteed Obligations.

 

SECTION 5.05.                 Reinstatement.  This Guarantee 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 the
Lender.

 

SECTION 5.06.                 Waiver.  Each of the Guarantors waives promptness,
diligence, notice of acceptance, presentment, demand, protest and notice of
dishonor with respect to any Guaranteed Obligation and this Guarantee and any
requirement that the Lender exhaust any right or take any action against the
Borrower or any other entity or any Collateral.

 

SECTION 5.07.                 Payments; No
Reductions.  (a) All payments
under this Guarantee shall be made in accordance with Section 2.12 of this
Agreement (concerning payments) free and clear of and without deduction for any
and all present or future Taxes.  If any
Guarantor shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder, (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this paragraph) the Lender receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) such Guarantor shall make such deductions and (iii) such
Guarantor shall pay the full

 

16

 

amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.  In addition, each of the Guarantors
agrees to pay any Other Taxes which arise from any payment made hereunder or
from the execution, delivery or registration by the Guarantors of, or otherwise
with respect to, this Agreement.  Each of
the Guarantors will indemnify the Lender for the full amount of Taxes or Other
Taxes (including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this paragraph) paid by the Lender and
any liability (including, without limitation, penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. 
This indemnification shall be made within forty-five (45) days from the
date the Lender makes written demand therefor. 
Within thirty (30) days after the date of any payment of Taxes the
Guarantors will furnish to the Lender the original or a certified copy of a
receipt evidencing payment thereof.  If
no Taxes are payable in respect of any payment, the Guarantors will furnish to
the Lender a certificate from each appropriate taxing authority, or an opinion
of counsel acceptable to the Lender, in either case stating that such payment
is exempt from or not subject to Taxes. 
Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations of the Guarantors contained in this Section shall
survive the payment in full of the Guaranteed Obligations and principal and
interest hereunder and any termination or revocation of this Guarantee.

 

SECTION 5.08.                 Set-Off.  If any of the Guarantors shall fail to pay
any of its obligations hereunder when the same shall become due and payable,
the Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by the Lender to or for the Guarantor’s
credit or account against any and all of the Guaranteed Obligations, whether or
not the Lender shall have made any demand under this Guarantee.  The Lender agrees promptly to notify the
relevant Guarantor after any such set-off and application, provided that the
failure to give such notice shall not affect the validity of such set-off and
application.  The rights of the Lender
under this paragraph are in addition to any other rights and remedies
(including, without limitation, other rights of set-off) which the Lender may
have.

 

17

 

SECTION 5.09.                 Continuing
Guarantee.  This Guarantee is a
continuing guarantee, 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 Lender under
this Agreement and the payment in full of the Guaranteed Obligations and all
other amounts payable hereunder and shall be binding upon each of the
Guarantors, and their respective successors and permitted assigns.  The obligations of each of the Guarantors
under this Guarantee shall rank pari  passu with all other
unsecured obligations of such Guarantor.

 

SECTION 5.10.                 Right of
Contribution.  At any time a payment
in respect of the Guaranteed Obligations is made under this Guarantee, the
right of contribution of each Guarantor against each other Guarantor shall be
determined as provided in the immediately following sentence, with the right of
contribution of each Guarantor to be revised and restated as of each date on
which a payment (a “Relevant Payment”) is made on the Guaranteed
Obligations under this Guarantee.  At any
time that a Relevant Payment is made by a Guarantor that results in the
aggregate payments made by such Guarantor in respect of the Guaranteed
Obligations to and including the date of the Relevant Payment exceeding such
Guarantor’s Contribution Percentage (as defined below) of the aggregate
payments made by all Guarantors in respect of the Guaranteed Obligations to and
including the date of the Relevant Payment (such excess, the “Aggregate
Excess Amount”), each such Guarantor shall have a right of contribution
against each other Guarantor who has made payments in respect of the Guaranteed
Obligations to and including the date of the Relevant Payment in an aggregate
amount less than such other Guarantor’s Contribution Percentage of the
aggregate payments made to and including the date of the Relevant Payment by
all Guarantors in respect of the Guaranteed Obligations (the aggregate amount
of such deficit, the “Aggregate Deficit Amount”) in an amount equal to
(x) a fraction the numerator of which is the Aggregate Excess Amount of such
Guarantor and the denominator of which is the Aggregate Excess Amount of all
Guarantors multiplied by (y) the Aggregate Deficit Amount of such other
Guarantor.  A Guarantor’s right of
contribution pursuant to the preceding sentences shall arise at the time of
each computation, subject to adjustment to the time of each computation; provided
that no Guarantor may take any action to enforce such right until the
Guaranteed Obligations have been paid in full in cash, it being expressly recognized
and agreed by all parties hereto that any Guarantor’s right of contribution

 

18

 

arising pursuant to this Section 5.10
against any other Guarantor shall be expressly junior and subordinate to such
other Guarantor’s obligations and liabilities in respect of the Guaranteed
Obligations and any other obligations under this Guarantee.  As used in this Section 5.10:  (i) each Guarantor’s “Contribution
Percentage” shall mean the percentage obtained by dividing (x) the Relevant
Net Worth (as defined below) of such Guarantor by (y) the aggregate Relevant
Net Worth of all Guarantors; (ii) the “Relevant Net Worth” of each
Guarantor shall mean the greater of (x) the Net Worth (as defined below) of
such Guarantor and (y) zero; and (iii) the “Net Worth” of each
Guarantor shall mean the amount by which the fair saleable value of such
Guarantor’s assets on the date of any Relevant Payment exceeds its existing
debts and other liabilities (including contingent liabilities, but without
giving effect to any Guaranteed Obligations arising under this Guarantee) on
such date.  All parties hereto recognize
and agree that, except for any right of contribution arising pursuant to this Section 5.10,
each Guarantor who makes any payment in respect of the Guaranteed Obligations
shall have no right of contribution or subrogation against any other Guarantor
in respect of such payment until all of the Guaranteed Obligations have been
irrevocably paid in full in cash.  Each
Guarantor recognizes and acknowledges that the rights to contribution arising
hereunder shall constitute an asset in favor of the party entitled to such
contribution.  In this connection, each
Guarantor has the right to waive its contribution right against any Guarantor to
the extent that after giving effect to such waiver such Guarantor would remain
Solvent, in the determination of the Lender.

 

SECTION 5.11.                 Limitation of
Liability.  Each Guarantor and the
Lender hereby confirms that it is its intention that the Guaranteed Obligations
not constitute a fraudulent transfer or conveyance for purposes of the
Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar Federal or state law.  To effectuate the foregoing intention, each
Guarantor and the Lender hereby irrevocably agrees that the Guaranteed
Obligations guaranteed by each Guarantor shall be limited to such amount as
will, after giving effect to such maximum amount and all other (contingent or
otherwise) liabilities of such Guarantor that are relevant under such laws and
after giving effect to any rights to contribution pursuant to any agreement
providing for an equitable contribution among such Guarantor and the other
Guarantors, result in the Guaranteed Obligations of such 

 

19

 

Guarantor in respect of
such maximum amount not constituting a fraudulent transfer or conveyance.

 

ARTICLE VI

 

COVENANTS OF THE BORROWER

 

SECTION 6.01.                 Affirmative
Covenants.  So long as any Advance shall
remain unpaid or the Lender shall have any Commitment hereunder, each of the
Obligors shall:

 

(a)                                  Compliance
with Laws, Etc.  Comply with all
applicable laws, rules, regulations and orders, including Environmental Laws,
the ISM Code and the ISPS Code in all material respects.

 

(b)                                 Compliance
with Agreements.  Comply with,
observe and perform all of the terms, covenants and provisions of the Loan
Documents to which it is a party.

 

(c)                                  Preservation
of Corporate Existence, Etc. 
Preserve and maintain its corporate existence, as well as its material
rights and franchises.

 

(d)                                 Visitation
Rights.  Permit at any reasonable
time and from time to time, upon reasonable prior notice, the Lender or its
representatives, at the Lender’s risk and cost, to the extent reasonably
requested, to examine and make copies of and abstracts from the records and
books of account of, and visit the properties of, such Obligor and to discuss
the affairs, finances and accounts of such Obligor with any of its officers or
representatives and with its independent certified public accountants.

 

(e)                                  Keeping
of Books.  Keep, and cause to be
kept, proper books of record and account, in which full and correct entries
shall be made in accordance with GAAP of all financial transactions and the
assets and business of such Obligor to the extent necessary to permit the
preparation of the financial statements required to be delivered hereunder.

 

(f)                                    Maintenance
of Properties, Etc.  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.

 

20

 

(g)                                 Approvals
and Other Consents.  Obtain all such
governmental licenses, authorizations, consents, permits and approvals as are
required, by applicable law or otherwise, for such Obligor to perform its
obligations under this Agreement and all other Loan Documents, as well as all
such governmental licenses, authorizations, consents, permits and approvals as
are required by applicable law or otherwise, and which, in the reasonable
opinion of the Lender, are material for the operation of the Vessels.

 

(h)                                 Reporting
Requirements.  Furnish, or cause to
be furnished, to the Lender:

 

(i)                                     as
soon as available and in any event within one hundred and eighty (180) days
after the end of each fiscal year of the Borrower and its Subsidiaries, as well
as of OSG and its Subsidiaries, the consolidated balance sheets of the Borrower
and its Subsidiaries and OSG and its Subsidiaries, both as of the end of such
year, and the related consolidated statements of profit and loss and changes in
financial position of the Borrower and its Subsidiaries and OSG and its
Subsidiaries for the fiscal year then ended, setting forth in each case in
comparative form the corresponding figures for the preceding fiscal year, and
in each case certified by Ernst & Young LLP or by another independent
public or chartered accountant satisfactory to the Lender stating that in
making the examination necessary for the audit of such financial statements it
has obtained no knowledge of the existence of any condition, event or act which
constitutes a Default or Event of Default, or if it has obtained knowledge of
the existence of any such condition, event or act, specifying the same;

 

(ii)                                  as
soon as available and in any event within ninety (90) days after the close of
each of the first three quarterly accounting periods in each fiscal year of the
Borrower and its Subsidiaries, as well as of OSG and its Subsidiaries, the
consolidated balance sheets of the Borrower and its Subsidiaries and OSG and
its Subsidiaries, both as of the end of such quarterly period, and the related
consolidated statements of profit and loss and changes in financial position of
the Borrower and its Subsidiaries and OSG and its Subsidiaries for the period
then ended, setting forth in each case in comparative form the corresponding
figures for the corresponding periods in the preceding fiscal year, all of
which shall be certified by an officer of the Borrower or OSG, as the case may
be, and subject only to normal year-end adjustments;

 

21

 

(iii)                               simultaneously
with the delivery of each set of financial statements referred to in clauses (i) and
(ii) above, a certificate of an officer of the Borrower stating whether
any Default or Event of Default exists on the date of such certificate and, if
any Default or Event of Default then exists, setting forth the details thereof
and the action which the Borrower is taking or proposes to take with respect
thereto;

 

(iv)                              promptly
upon the Borrower becoming aware of (A) the occurrence of a Default or
Event of Default, or (B) the commencement of any action, suit, litigation
or proceeding of the kind described in Section 4.01(g), a statement of an
officer of the Borrower setting forth the details thereof and the action which
the Borrower is taking or proposes to take with respect thereto;

 

(v)                                 promptly
upon the mailing thereof to the shareholders of the Borrower generally, copies
of all financial statements, reports and proxy statements so mailed;

 

(vi)                              if
and when requested by the Lender, copies of all registration statements and
reports on Forms 6-K and 20-F (or their equivalents) and Form 8-K (or its
equivalent) and other material filings which the Borrower shall have filed with
the Securities and Exchange Commission or any similar governmental authority,
or any national securities exchange, including, any reports or other
disclosures required to be made in relation to the Borrower under Regulation FD
or the Sarbanes-Oxley Act of 2002; and

 

(vii)                           from
time to time such additional information regarding the financial position,
results of operations, business or prospects of the Borrower and its
Subsidiaries and OSG and its Subsidiaries as the Lender may reasonably request.

 

(i)                                     Payment
of Obligations.  Pay and discharge at
or before maturity, all its material obligations and liabilities, including,
without limitation, tax liabilities, except where the same may be contested in
good faith by appropriate proceedings, and maintain in accordance with GAAP
appropriate reserves for the accrual of any of the same.

 

(j)                                     Use
of Proceeds.  Use the proceeds of the
Advances solely for the purposes set forth in the Preliminary Statement hereof.

 

22

 

(k)                                  Maintenance
of Insurance.  Maintain insurance on
any of its properties other than the Vessels, 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 reasonably satisfactory to
the Lender.

 

(l)                                     Vessel
Value Maintenance.

 

(i)                                     ensure
that the aggregate Fair Market Value of the Vessels subject to a Mortgage (plus
the market value of any additional security for the time being actually
provided to the Lender pursuant to this Section 6.01(1)(i)) is at all
times not less than one hundred twenty percent (120%) of the sum of (A) the
aggregate outstanding principal amount of the Advances plus (B) the
notional amount or actual cost, if any (determined by the Lender), that would
be payable by the Borrower to the Lender under Section 6(e)(i) of the
Master Agreement if an Early Termination Date was deemed to have occurred in
relation to all then subsisting Transactions after an Event of Default by the
Borrower.  If the Obligors at any time
shall not be in compliance with the preceding sentence, and in any event within
ten (10) days of being notified by the Lender of such noncompliance (which
notification shall be conclusive and binding on the Obligors), the Obligors
shall either:  (1) provide the
Lender with, or procure the provision to the Lender of, such additional security
as shall in the opinion of the Lender be adequate to make up such deficiency,
which additional security shall take such form, be constituted by such
documentation and be entered into between such parties as the Lender in its
absolute discretion may approve or require (and, if the Obligors do not make
proposals satisfactory to the Lender in relation to such additional security
within five (5) days of the date of the Lender’s notification to the
Obligors aforesaid, the Obligors shall be deemed to have elected to repay in
accordance with (2) below); or (2) repay (subject to, and in
accordance with Section 2.04(e), (g) and (h)) such part of the
Advances as will ensure compliance with this Section 6.01(l)(i).

 

(ii)                                  for
purposes of this Section 6.01(l), at their expense, cause a valuation of
each Vessel to be

 

23

 

made by an Approved Broker indicating the Fair Market
Value of such Vessel at any time the Lender may request upon not less than five
(5) days’ prior written notice from the Lender to the Borrower; provided,
however, that unless an Event of Default has occurred and is continuing,
no more than one (1) such request shall be made during each calendar
quarter.  The Obligors shall supply to
the Lender and to any relevant Approved Broker such information concerning the
Vessels and their condition as such Approved Broker may require for the purpose
of making valuations of the Vessels.

 

(m)                               Operating
Account.  In the case of the
Borrower, Maintain the Operating Account with the Lender and cause all earnings
in respect of the Vessels to be deposited into the Operating Account.

 

(n)                                 “Know  Your Customer” Documentation.  Produce such documents and evidence as the
Lender shall from time to time require based on applicable law and regulations
from time to time and the Lender’s own internal guidelines from time to time
relating to the Lender’s knowledge of its customers.

 

SECTION 6.02.                 Negative
Covenants.   So long as any Advance
shall remain unpaid or the Lender shall have any Commitment hereunder, none of
the Obligors shall:

 

(a)                                  Liens,
Etc.  Create, incur, assume or suffer
to exist any Lien on any of its properties whether now owned or hereafter
acquired, or sign or file, under the Uniform Commercial Code (or analogous statute
or law) of any jurisdiction, a financing statement that names it as debtor, or
sign any security agreement authorizing any secured party thereunder to file
such financing statement, or assign any right to receive income, other than: (i) Liens
on Collateral in favor of the Lender, (ii) Liens permitted by the Loan
Documents, (iii) Permitted Encumbrances, and (iv) in the case of the
Borrower, Liens incurred in the ordinary course of its business and which do
not secure Financial Indebtedness.

 

(b)                                 Consolidations,
Mergers.  Consolidate or merge with
or into any other Person.

 

(c)                                  Sales,
Etc. of Assets.  Sell, transfer or
otherwise dispose of any assets or grant any option or other right to purchase
or otherwise acquire any Collateral other than

 

24

 

in the ordinary course of its business, except (i) sales
in the ordinary course of its business and (ii) dispositions of obsolete,
worn out or surplus property disposed of in the ordinary course of business; provided,
that any Guarantor may sell the Vessel it owns but only if the Borrower shall
be in compliance with the provisions of Sections 2.04(d) and 6.01(l)
immediately after giving effect to such sale.

 

(d)                                 Restrictions
on Chartering.  Without the consent
of the Lender,  which consent shall not
unreasonably be withheld (i) let any Vessel on demise charter for any
period; (ii) except for the Charters, enter into any time or consecutive
voyage charter in respect of any Vessel for a term which exceeds, or which by virtue
of any optional extensions may exceed, thirteen (13) months; (iii) enter
into any charter in relation to any Vessel under which more than 2 months’ hire
(or the equivalent) is payable in advance; (iv) charter any Vessel
otherwise than on bona fide arm’s length terms at the time when such Vessel is
fixed; (v) de-activate or lay up any Vessel; or (iv) put any Vessel
into the possession of any Person for the purpose of work being done upon her
in an amount exceeding or likely to exceed $2,000,000 (or the equivalent in any
other currency) unless that Person has first given to the Lender and in terms
satisfactory to it a written undertaking not to exercise any Lien on such
Vessel or her earnings for the cost of such work or for any other reason.

 

(e)                                  Change
in Nature of Business.  Engage in any
line of business other than directly or indirectly owning and operating the
Vessels.

 

(f)                                    Debt.  Create, incur, assume or suffer to exist any
Debt other than (i) Debt under the Loan Documents, (ii) Debt for (A) trade
payables and expenses accrued in the ordinary course of business and that are
not overdue, or (B) customer advance payments and customer deposits
received in the ordinary course of business, and (iii) Debt owing to
Affiliates provided that such Debt is subordinated on terms and conditions
acceptable to the Lender and subject in right of payment to the prior payment
in full of all amounts outstanding under this Agreement and under the Notes.

 

(g)                                 Dividends.  Declare or pay any dividend of any kind or
make any purchase or redemption of or distribution on any stock or other equity
interest without the prior written consent of the Lender except that (i) any
Guarantor may make distributions to the Borrower and (ii) for any
Accounting

 

25

 

Period, the Borrower may pay a dividend, if and so
long as both immediately before and after the declaration and payment of such
dividend no Default or Event of Default shall have occurred and be continuing
and the then aggregate Fair Market Value of the Vessels subject to a Mortgage
(plus the market value of any additional security for the time being actually
provided to the Lender pursuant to Section 6.01(l)(i))is not less than one
hundred thirty five percent (135%) of the sum of (A) the aggregate
outstanding principal amount of the Advances plus (B) the notional amount
or actual cost, if any (determined by the Lender), that would be payable by the
Borrower to the Lender under Section 6(e)(i) of the Master Agreement
if an Early Termination Date was deemed to have occurred in relation to all the
then subsisting Transactions after an Event of Default by the Borrower.

 

(h)                                 Loans,
Investments.  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, except loans to another
Obligor to the extent such Obligor is permitted to incur such Debt under Section 6.02(f).

 

(i)                                     Acquisitions.  Make any acquisition of an asset (other than
a Vessel) outside the ordinary course of its business.

 

(j)                                     Constitutive
Document Amendments.  Permit any
amendment of its articles of incorporation and by-laws without giving the
Lender prior written notice of such proposed amendment.

 

(k)                                  Transactions
with Affiliates.  Enter into or
become a party to any material transaction or arrangement with any Affiliate
(including, without limitation, the purchase from, sale to or exchange of
property with, or the rendering of any service by or for, any Affiliate),
except pursuant to (i) the reasonable requirements of its business and
upon terms which are fair and reasonable and in its best interests, or (ii) existing
arrangements heretofore disclosed to the Lender in writing and approved by the
Lender.

 

(l)                                     Place
of Business.  Establish a place of
business in the United States of America, the District of Columbia, the United
States Virgin Islands, or any territory or insular possession subject to the
jurisdiction of the United States of

 

26

 

America unless sixty (60) days’ prior written notice
of such establishment is given to the Lender.

 

(m)                               Approved
Manager.  Employ a manager of any
Vessel other than an Approved Manager, or change the terms and conditions of
the management of such Vessel in any material respect other than upon such
terms and conditions as the Lender shall approve.

 

(n)                                 Operating
Account.  Make any withdrawal from
the Operating Account except, so long as no Event of Default shall have
occurred and be continuing, any amount credited to the Operating Account shall
be available to the Obligors to pay (i) the reasonable operating expenses
of the Vessels, (ii) the principal amount of the Advances, interest
thereon and any other amounts payable to the Lender hereunder or under the
other Loan Documents, (iii) the reasonable overhead, legal and other
expenses of the Obligors incurred in connection with their involvement in the
acquisition, ownership and operation of the Vessels, as well as any other fees
and expenses to which the Lender may in its reasonable discretion agree from
time to time, and (iv) any dividends or distributions permitted under Section 6.02(g).

 

(o)                                 Capital
Stock.  Permit the Borrower to issue
any class of capital stock unless such stock is legally or effectively
subordinated to the right of the Lender to payment of any and all amounts due
to the Lender under this Agreement, under the Notes and under the Loan
Documents.

 

ARTICLE VII

 

EVENTS OF DEFAULT

 

SECTION 7.01.                 Events of
Default.   If any of the following
events (“Events of Default”) shall occur and be continuing:

 

(a)                                  The
Borrower shall fail to pay any installment of principal of any Advance when due
and payable; or

 

(b)                                 The
Borrower shall fail to pay any interest on any Advance or any fee payable to
the Lender hereunder, or the Borrower shall fail to make any other payment
hereunder, in each case within three (3) Business Days after the same
becomes due and payable; or

 

27

 

(c)                                  Any
representation or warranty made by any Obligor under or in connection with any
Loan Document shall prove to have been incorrect in any material respect when
made or deemed made or confirmed; or

 

(d)                                 (i)                                     Any
Obligor shall fail to perform or observe any term, covenant or agreement
contained in Article VI or in Sections 6.01(h), 6.01(l) and 6.02 to be
observed by it, or (ii) any Obligor shall fail to perform or observe any
other term, covenant or agreement contained in any Loan Document on its part to
be performed or observed if such failure shall remain unremedied (A) beyond
the expiration of any applicable notice and/or grace period or (B) if
there is no applicable notice and/or grace period, for fifteen (15) days after
written notice thereof shall have been given to the Borrower by the Lender; or

 

(e)                                  Any
Obligor shall fail to pay any principal of or premium or interest on any Debt
which such Obligor is liable to pay, when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to such Debt and the
principal amount of all such aggregate unpaid Debt exceeds $2,000,000; or any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt and shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if the effect
of such event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Debt or any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each case prior
to the stated maturity thereof; or

 

(f)                                    Any
Obligor shall generally not pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against any 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
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

 

28

 

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), either such proceeding shall remain undismissed or unstayed for a period
of forty-five (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 any Obligor shall
take any corporate or company action to authorize any of the actions set forth
above in this Section 7.01(f); or

 

(g)                                 In
the reasonable determination of the Lender, it becomes impossible or unlawful
for any Obligor to fulfill any of the covenants and obligations required to be
fulfilled as contained in any Loan Document or any of the instruments granting
or creating rights in any of the Collateral in any material respect, or for the
Lender to exercise any of the rights or remedies vested in it under any Loan
Document, any of the Collateral or any of such instruments in any material
respect; or

 

(h)                                 Any
judgment or order shall be rendered against any Obligor that is reasonably
likely to result in a Material Adverse Effect with respect to such Obligor, and
there shall be any period of thirty (30) consecutive days during which a stay
of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect unless such judgment or order shall have been
vacated, satisfied, discharged or bonded pending appeal; or

 

(i)                                     Any
material provision of any Loan Document after delivery thereof pursuant to
Sections 3.01, 3.02 or 3.03 shall for any reason cease to be valid and binding
on or enforceable against any Borrower or any such Borrower shall so state in
writing; or

 

(j)                                     Any
Collateral Document after delivery thereof shall for any reason (other than
pursuant to the terms thereof) cease to create (i) in the case of any
Mortgage, a valid first preferred mortgage under the Marshall Islands Maritime
Act, 1990, as amended, or, if the Vessel is not registered in the Marshall
Islands, a valid first preferred or first statutory mortgage under the laws of
such Vessel’s flag and (ii) in the case of any Assignment of Earnings,
Assignment of Insurance or Charter Hire Guarantee Assignment, a valid and
perfected first

 

29

 

priority Lien on the Collateral purported to be
covered thereby; or

 

(k)                                  An
“Event of Default” as defined in any Mortgage shall occur; or

 

(l)                                     A
material breach by either party thereto shall occur under any of the Charters
or by OSG under any Charter Hire Guarantee; or

 

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

 

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

 

(o)                                 An
Event of Default (as defined in Section 14 of the Master Agreement) shall
occur; or

 

(p)                                 The
Master Agreement is terminated, cancelled, suspended, rescinded or revoked or
otherwise ceases to remain in full force and effect for any reason; or

 

(q)                                 Any
event occurs which in the reasonable opinion of the Lender has a Material
Adverse Effect on the Obligors taken as a whole ;

 

then, and in any such event, the Lender may, by notice
to the Borrower, (i) declare the Commitment and the obligation of the
Lender to make the Advances available to be terminated, whereupon the same
shall forthwith terminate, and (ii) declare the Notes, all interest
thereon and all other amounts payable under this Agreement to be forthwith due
and payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that, in the event of an actual or deemed entry of
an order for relief with respect to any of the Borrower under the Federal
Bankruptcy Code, (A) the obligation of the Lender to make the Advances
available shall automatically be terminated and (B) the Notes, all such
interest and all such amounts shall automatically become and be due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower and provided further,
however, that if the Event of Default occurs due to a default of a

 

30

 

Guarantor in its obligations under a Charter, any or
all of the  Charterers shall have the
right within thirty (30) days of the Lender giving notice to the Borrower of
such default to purchase the Lender’s position under this Agreement, the Notes
and the other Loan Documents for a consideration equal to all amounts then due
the Lender under this Agreement, the Notes and the other Loan Documents.

 

ARTICLE VIII

 

MISCELLANEOUS

 

SECTION 8.01.                 Amendments,
Etc.   No amendment or waiver of any
provision of this Agreement or of any of the Notes, nor consent to any
departure by any Obligor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Lender or, if the Lender shall have
assigned a part of its rights under this Agreement and the other Loan Documents
pursuant to Section 8.06, by those Lenders holding not less than 66-2/3%
of the Notes, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.

 

SECTION 8.02.                 Notices, Etc.   Except as otherwise provided for in this
Agreement, all notices or other communications under or in respect of this
Agreement to any party hereto shall be in writing (that is by letter or
telefacsimile) and shall be deemed to be duly given or made when delivered (in
the case of personal delivery or letter) and when dispatched (in the case of
telefacsimile) to such party addressed to it at the address appearing below (or
at such address as such party may hereafter specify for such purpose to the
other by notice in writing):

 

(a) if
to any Obligor:

 

c/o
Double Hull Tankers, Inc.

26 New Street

St. Helier

Jersey JE2 3RA

 

Facsimile
No:  [•]

 

(b) if
to the Lender:

 

Shipping
Business Centre

5-10
Great Tower Street

 

31

 

London
EC3P 3HY

England

Attention:  Ship Finance Portfolio Management Team

 

Facsimile
No: +44 207 615 0112

 

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

 

SECTION 8.03.                 No Waiver,
Remedies.   No failure on the part of
the Lender to exercise, and no delay in exercising, any right hereunder or
under any of the Notes shall operate as a waiver thereof; nor shall any single
or partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. 
The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

 

SECTION 8.04.                 Costs;
Expenses.   (a) Whether or not
any Advance is made or the transactions contemplated by this Agreement are
consummated (including the proposed execution and delivery of the other Loan
Documents), the Borrower agrees to pay on demand all reasonable out-of-pocket
costs and expenses of the Lender in connection with the preparation, execution,
delivery, administration, modification and amendment of the Loan Documents and
the other documents to be delivered hereunder including, without limitation,
the reasonable fees and out-of-pocket expenses of counsel for the Lender with
respect thereto, and for advising the Lender as to its rights and
responsibilities, or the protection or preservation of rights or interests,
under the Loan Documents.  The Borrower
further agrees to pay on demand all reasonable out-of-pocket costs and expenses
of the Lender in connection with the enforcement of the Loan Documents and the
other documents to be delivered hereunder, whether in action, suit, litigation,
any bankruptcy, insolvency or other similar proceeding affecting creditors’
rights generally or otherwise (including, without limitation, the reasonable
fees and reasonable expenses of counsel for the Lender with respect thereto)
and expenses in connection with the enforcement of rights under this Section 8.04(a).

 

(b)                                 If
any payment of principal of any Advance (or any relevant portion thereof) is
made by the Borrower to the Lender other than on the last day of the Interest
Period for such Advance (or relevant portion thereof), as a result of a payment
pursuant to Section 2.04, acceleration of the maturity of the Notes
pursuant to Section 7.01 or for any other reason,

 

32

 

the Borrower
shall, upon demand by the Lender pay to the Lender any amounts required to
compensate such Lender for any additional losses, costs or expenses which it
may reasonably incur as a result of such payment, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by the Lender to fund or
maintain such Advance (or any relevant portion thereof).

 

(c)                                  Each
of the Obligors jointly and severally agrees to indemnify and hold harmless the
Lender and each of its Affiliates, and their respective officers, directors,
employees, agents, advisors and representatives (each, an “Indemnified Party”)
from and against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and disbursements of counsel),
that may be incurred by or asserted or awarded against any Indemnified Party,
arising out of or in connection with or relating to (i) the execution or
delivery of this Agreement or any agreement or instrument contemplated hereby,
the performance by the parties hereto of their respective obligations hereunder
or the making of the Advances or consummation of any other transaction
contemplated hereby, (ii) the Advances or the use of the proceeds
therefrom, (iii) any actual or alleged presence or release of
Environmentally Sensitive Material on or from any property owned or operated by
any Obligor, or any Environmental Action related in any way to any Obligor, or (iv) any
actual or prospective claim, litigation, investigation or proceeding relating
to any of the foregoing, whether based on contract, tort or any other theory
and regardless of whether any Indemnified Party is a party thereto, except, with
respect to any particular Indemnified Party, to the extent such claim, damage,
loss, liability or expense is either admitted to by such Indemnified Party or
found in a final, non-appealable judgment of a court of competent jurisdiction
to have resulted from such Indemnified Party’s gross negligence or willful
misconduct, provided that the foregoing exceptions to the liability of the
Obligors with respect to such Indemnified Person shall not limit or affect the
liability of the Obligors to any other Indemnified Party.  Each of the Obligors jointly and severally
further agrees that no Indemnified Party shall have any liability (whether
direct or indirect, in contract, tort or otherwise) to any Obligor or any of
their respective shareholders, members or creditors for or in connection with
the transactions contemplated hereby, except, with respect to any particular
Indemnified Party, to the extent such liability is either

 

33

 

admitted to by
such Indemnified Party or found in a final, non-appealable judgment of a court
of competent jurisdiction to have resulted from such Indemnified Party’s gross
negligence or willful misconduct.  The
indemnities of this Section 8.04(c) shall survive the termination of
this Agreement and the other Loan Documents.

 

SECTION 8.05.                 Right of
Set-off.  Upon the occurrence and
during the continuance of any Event of Default, the Lender is hereby authorized
at any time and from time to time to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by the Lender to or for the credit or the account of the Borrower against any
and all of the obligations of the Borrower to the Lender now or hereafter
existing under this Agreement and under any of the Notes held by the Lender,
whether or not the Lender shall have made any demand under this Agreement or
under any of the Notes and although such obligations may be unmatured.  The Lender agrees promptly to notify the
Borrower after any such set-off and application shall be made by the
Lender,  provided that the failure
to give such notice shall not affect the validity of such set-off and
application.  The rights of the Lender
under this Section 8.05 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Lender may
have.

 

SECTION 8.06.                 Assignments
and Participations.   (a) This
Agreement shall be binding upon and inure to the benefit of the Lender and the
Borrower and their respective successors and permitted assigns.

 

(b)                                   The
Borrower may not assign or transfer all or any part of its rights and/or
obligations under this Agreement.

 

(c)                                    The
Lender may, at the Lender’s expense subject to the prior consent of the
Borrower, which consent shall not unreasonably be withheld, assign or transfer
all or any part of its rights or obligations under this Agreement and the other
Loan Documents to one or more banks or other financial institutions; provided,
however, that without such consent, the Lender may assign or transfer
all or any part of its rights or obligations under this Agreement and the other
Loan Documents to any Affiliate of the Lender or, if an Event of Default shall
have occurred and is continuing, to any other Person.  The Lender shall notify the Borrower promptly
following any such assignment or transfer.

 

34

 

(d)                                   The
Lender may change its lending office without the consent of the Borrower
provided that the Lender shall notify the Borrower promptly following any such
change of lending office, such change of lending office shall not result in a
Material Adverse Effect with respect to the Borrower and its Subsidiaries,
taken as a whole, and such change shall be at no increased cost to the
Borrower.

 

(e)                                    The
Lender may, at its own expense, 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, any Advance and the Notes);  provided,
however, that (i) the Lender’s obligations under this Agreement
(including, without limitation, its Commitment to the Borrower hereunder) shall
remain unchanged, (ii) the Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
Lender shall remain the holder of the Notes for all purposes of this Agreement,
(iv) the Borrower shall continue to deal solely and directly with the
Lender in connection with 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 Loan Document, or any consent to any departure by the
Borrower therefrom, except to the extent that such amendment, waiver or consent
would reduce or postpone any date fixed for payment of principal of, or
interest on, any of the Notes or any fees or other amounts payable hereunder,
in each case to the extent subject to such participation.

 

(f)                                      The
Lender may, in connection with any assignment or participation or proposed
assignment or participation pursuant to this Section 8.06, disclose to the
assignee or participant or proposed assignee or participant, any information
relating to the Obligors furnished to the Lender by or on behalf of the
Obligors.

 

SECTION 8.07.                 Judgment.   (a)  If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due hereunder or under
any of the Notes in Dollars into another currency, the parties hereto agree, to
the fullest extent that they may effectively do so, that the rate of exchange
used shall be that at which in accordance with normal banking procedures the
Lender could purchase Dollars with such other currency on the Business Day
preceding that on which final judgment is given.

 

(b)                                 The
obligation of each Obligor in respect of any sum due from it to the Lender
hereunder, under any of the Notes

 

35

 

or under any other
Loan Document shall, notwithstanding any judgment in a currency other than
Dollars, be discharged only to the extent that on the Business Day following
receipt by the Lender of any sum adjudged to be so due in such other currency
the Lender may in accordance with normal banking procedures purchase Dollars
with such other currency; if the Dollars so purchased are less than the sum
originally due to the Lender in Dollars, such Obligor agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify the Lender
against such loss, and if the Dollars so purchased exceed the sum originally
due to the Lender in Dollars, the Lender agrees to remit to such Obligor such
excess.

 

SECTION 8.08.                 Governing Law;
Submission to Jurisdiction.   (a) This
Agreement and the Notes shall be governed by, and construed in accordance with,
the laws of the State of New York.

 

(b)                                 Each
Obligor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court thereof, in any action or proceeding arising out of or relating
to this Agreement, or for recognition or enforcement of any judgment, and each
Obligor hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
New York State Court or, to the extent permitted by law, in such Federal court.  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.  Subject to the foregoing and to paragraph (c) below,
nothing in this Agreement shall affect any right that any party hereto may
otherwise have to bring any action or proceeding relating to this Agreement
against any other party hereto in the courts of any jurisdiction.

 

(c)                                  Each
Obligor hereby irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement in any New York State or Federal court and the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court and any immunity from jurisdiction of any court or
from any legal process with respect to itself or its property.

 

36

 

(d)                                 Each
Obligor agrees that service of process may be made on it by personal service of
a copy of the summons and complaint or other legal process in any such suit,
action or proceeding, or by registered or certified mail (postage prepaid) to
its address specified in Section 8.02, or by any other method of service
provided for under the applicable laws in effect in the State of New York.

 

SECTION 8.09.                 Execution in
Counterparts.   This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.

 

SECTION 8.10.                 WAIVER OF JURY
TRIAL.   EACH OF THE OBLIGORS AND THE
LENDER IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE ADVANCES OR THE ACTIONS OF THE
LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

 

SECTION 8.11.                 Entire
Agreement.   This Agreement, the
Notes and the other Loan Documents embody the entire agreement between the
parties relating to the subject matter hereof and supersede all prior
agreements, representations and understandings, if any, relating to such
subject matter.

 

SECTION 8.12.                 Severability
of Provisions.   Any provision of the
Loan Documents that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
enforceability without invalidating the remaining provisions thereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.

 

37

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed by their respective
officers thereunto duly authorized as of the date first above written.

 

	
  DOUBLE HULL
  TANKERS, INC.

  	
  ANIA AFRAMAX CORPORATION

  
	
   

  	
   

  
	
  By:  

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
  Name:

  	
  Title:

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
  ANN TANKER
  CORPORATION

  	
  CATHY TANKER CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  By:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Name:

  
	
  Title:

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  CHRIS TANKER
  CORPORATION

  	
  REBECCA TANKER CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Name:

  
	
  Title:

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  REGAL UNITY
  TANKER CORPORATION

  	
  SOPHIE TANKER CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:  

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
  Name:

  	
  Title:

  
	
  Title:

  	
   

  
							

 

38

 

	
   

  	
  THE ROYAL BANK OF SCOTLAND PLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  

 

39

 

Schedule I

 

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

 

	
   

  	
  F x 0.01

  	
   

  
	
   

  	
  300

  	
   

  

 

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

 

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

 

For the purposes of this
Schedule:

 

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

 

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

 

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

 

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

 

40

 

Schedule II

 

Initial Vessels

 

	
  Owner

  	
   

  	
  Vessel

  	
   

  	
  Flag

  	
   

  	
  Official No.

  	
   

  	
  Charterer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ania Aframax
  Corporation

  	
   

  	
  ANIA

  	
   

  	
  Marshall Islands

  	
   

  	
   

  	
   

  	
  DHT Ania Aframax
  Corp.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ann Tanker
  Corporation

  	
   

  	
  OVERSEAS ANN

  	
   

  	
  Marshall Islands

  	
   

  	
   

  	
   

  	
  DHT Ann VLCC
  Corp.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cathy Tanker
  Corporation

  	
   

  	
  OVERSEAS CATHY

  	
   

  	
  Marshall Islands

  	
   

  	
   

  	
   

  	
  DHT Cathy
  Aframax Corp.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Chris Tanker
  Corporation

  	
   

  	
  OVERSEAS CHRIS

  	
   

  	
  Marshall Islands

  	
   

  	
   

  	
   

  	
  DHT Chris VLCC
  Corp.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rebecca Tanker
  Corporation

  	
   

  	
  REBECCA

  	
   

  	
  Marshall Islands

  	
   

  	
   

  	
   

  	
  DHT Rebecca
  Aframax Corp.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Regal Unity
  Tanker Corporation

  	
   

  	
  REGAL UNITY

  	
   

  	
  Marshall Islands

  	
   

  	
   

  	
   

  	
  DHT Regal Unity
  VLCC Corp.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sophie Tanker
  Corporation

  	
   

  	
  OVERSEAS SOPHIE

  	
   

  	
  Marshall Islands

  	
   

  	
   

  	
   

  	
  DHT Sophie
  Aframax corp.

  	
   

  

 

41Exhibit 10.2.1

 

MEMORANDUM OF AGREEMENT

 

Dated:  September 20, 2005

 

1320
TANKER CORPORATION, MAJURO, MARSHALL ISLANDS,
hereinafter called the Seller, have agreed to sell and ANN TANKER
CORPORATION, MAJURO, MARSHALL ISLANDS, hereinafter called the Buyer,
have agreed to purchase M/T OVERSEAS ANN (the “Vessel”)

 

	
  Classification:
  Lloyd’s Register

  	
   

  	
   

  
	
  Built: August 2001

  	
   

  	
  by: Hyundai Heavy Industries Co., Ltd., Ulsan, So. Korea

  
	
  Flag: Marshall Islands

  	
   

  	
  Place of
  Registration: Majuro, Marshall Islands

  
	
  Call sign. V7CV6

  	
   

  	
  Register
  tonnage: GRT: 157,883; NRT: 109,555

  
	
  Register
  number: IMO #9217979

  	
   

  	
   

  
	
  on the
  following conditions:

  	
   

  	
   

  

 

1.              Purchase
Price

 

The Purchase Price for the
Vessel shall consist of common shares of Double Hull Tankers, Inc. (“DHT”)
and cash in the amounts set forth below, and shall be payable in accordance
with Clause 3.

 

A.  The number of common shares
of DHT that will comprise the Purchase Price shall be determined by:

 

1.                                       multiplying the initial public offering price
per share of DHT common stock (without deduction for underwriters’ discounts or
fees) by the number of shares of DHT common stock that are issued to OSG
International, Inc. in connection with the purchase of the seven vessels
that will comprise DHT’s initial fleet;

 

2.                                       multiplying the result by the percentage that
corresponds to the Vessel below:

 

	
  Overseas
  Ann

  	
   

  	
  21.5

  	
  %

  
	
  Overseas Chris

  	
   

  	
  21.5

  	
  %

  
	
  Regal Unity

  	
   

  	
  16.8

  	
  %

  
	
  Overseas Cathy

  	
   

  	
  12.2

  	
  %

  
	
  Overseas Sophie

  	
   

  	
  11.8

  	
  %

  
	
  Rebecca

  	
   

  	
  8.1

  	
  %

  
	
  Ania

  	
   

  	
  8.1

  	
  %; and

  

 

3.                                       dividing the result by the initial public
offering price per share of DHT common stock (without deduction for
underwriters’ discounts or fees).

 

B.  The amount of cash that will
comprise the Purchase Price shall be determined by:

 

1.                                       multiplying
the initial public offering price per share of DHT common stock (without deduction for underwriters’
discounts or fees) by the number of shares of DHT common stock that are
sold to the public in the underwritten public offering (which, for the
avoidance of doubt, excludes any shares issued to OSG International, Inc.)
to obtain the “Gross IPO Proceeds” and then adding $236,000,000 to the Gross
IPO Proceeds to obtain the “Gross Proceeds”;

 

2.                                       deducting
from the Gross Proceeds: (i) the product of the Gross IPO Proceeds and 6%,
(ii) all fees paid by DHT to The Royal Bank of Scotland in connection with
its entering into its $401 million secured credit facility and (iii) the
estimated total expenses of issuance and distribution found under the caption “Other
Expenses of Issuance and Distribution” in the final prospectus related to the
initial public offering of shares of DHT common stock to obtain “Net Proceeds”;
and

 

3.                                       multiplying
Net Proceeds by the percentage that corresponds to the Vessel in the table in
Section 1.A.2 above.

 

 

 

2.              Deposit

 

Security for
the correct fulfillment of this contract has been waived.

 

3.              Payment

 

In exchange
for those delivery documents required to be delivered by Seller to Buyer in
accordance with this MOA, Buyer shall deliver to Seller (i) the cash
portion of the Purchase Price, to be paid on the Delivery Date (as defined
below), net of any bank charges by wire transfer from Buyer’s bank or its
correspondent bank in New York City, United States to Seller’s nominated bank
account in New York City, and confirmed by Seller’s nominated bank to have been
received, and (ii) the portion of the Purchase Price paid in DHT shares,
to be transferred on the Delivery Date (as defined below) into Seller’s
nominated custody account and confirmed to have been received.

 

The closing of
the delivery of, and transfer of title to, the Vessel by the Seller to the Buyer
shall take place at a place designated by OSG Ship Management, Inc.  At such closing the Seller shall deliver to
the Buyer the documents in accordance with Clause 16.

 

4.              Inspections

 

The Buyer has
inspected the Vessel and its class records between April and June, 2005
and has accepted the Vessel and such class records.  This sale is therefore outright and subject
only the terms and conditions of this MOA incorporating the terms set forth herein
and not subject to any subsequent or additional inspections of the Vessel or
her records by the Buyer.

 

5.              Place
and time of delivery

 

The Vessel
shall be delivered and taken over safely afloat, at sea or at a safe port, at a
safe berth, safely alongside or at a safe and readily accessible anchorage of
anywhere in the Atlantic, Pacific or Indian Ocean(s), or Arabian, Caribbean,
Mediterranean or Red Sea(s) or any connecting bodies of water or the islands
thereof, within Institute Warranty Limits, all in the Seller’s option, on the
date of the closing of DHT’s initial public offering (the “Delivery Date”)
after payment is received by the Seller and confirmed to be received in
accordance with Clause 3.

 

The Seller
shall keep the Buyer informed about the Vessel’s schedule and the Vessel
is to be delivered to the Buyer wherever the Vessel may be at the designated
time and date of closing.

 

Should the Vessel
become a total or constructive total loss before delivery this contract shall
be considered null and void.

 

 

 

6.              Drydocking

 

No predelivery drydocking as
per NSF 1987.

 

7.              Spares/bunkers
etc.

 

The Seller
shall deliver the Vessel to the Buyer with everything belonging to her, unless
excluded herein, on board, including broached/unbroached stores and with all
spare parts and spare equipment including a spare anchor, a spare tail-end
shaft or a spare propeller, if any. 
Forwarding charges, if any, shall be for the Buyer’s account.  The Seller is not required to replace spare
parts, including spare tail-end shaft, spare propeller or a spare anchor, if
any, which are taken out of spare and used as replacement prior to delivery,
but the replaced items shall be the property of the Buyer.  The wireless station/equipment and all
navigational aids/equipment on board the Vessel, and the above items, shall be
included in the sale without any extra cost to the Buyer.  The Seller has the right to take ashore
crockery, plate, cutlery, linen and other articles bearing the Seller’s flag or
name, provided they replace same with similar unmarked items.  Library, forms, etc., exclusively for use in
the vessels of the Seller, its parent or affiliates, shall be excluded without
compensation.  Personal belongings of
master, officers and crew including slop chest to be excluded from the sale
without compensation, as well as the additional items as per exclusions in
Clause 18.

 

The Buyer
shall not be required to pay for bunkers or lubricating oils and greases remaining
onboard at the time of delivery, but the quantities of IFO and MDO/MGO and
lubricating oils and greases at the time of delivery shall be recorded.

 

Items on
Exclusions List as per Clause 18 are the only ones other than the personal
effects of master, officers and crew and victualling (provisions) and leased
gas bottles/cylinders which are excluded from the sale.

 

8.              Documentation

 

In exchange
for payment of the Purchase Price, the Seller shall, on the Delivery Date, furnish
the Buyer with the documents specified in Clause 17(A) of this
Contract.

 

The Seller
shall, on the Delivery Date, leave to the Buyer all classification
certificates, not required to be returned to any Authority, as well as all
plans etc. which are onboard the Vessel. 
Other technical documentation which may be in the Seller’s possession
shall promptly upon the Buyer’s instructions be forwarded to the Buyer.  The Seller may keep the log books kept up to
the time of delivery, but the Buyer has the right to take copies of same at its
own expense.

 

9.              Encumbrances

 

The Seller
warrants that the Vessel, at the time of delivery, is free from all
encumbrances, mortgages, and maritime liens or any other debts whatsoever.  However, the Vessel may be on a charter (voyage
or time), and delivery shall not affect the performance of such charter.  Should any claims which have been incurred
prior to the time of delivery be made against the Vessel, the Seller hereby
undertakes to indemnify the Buyer against all consequence of such claims.

 

10.       Taxes
etc.

 

Any taxes,
fees and expenses connected with the purchase and registration under the Buyer’s
flag shall be for the Buyer’s account, whereas similar charges connected with
the closing of the Seller’s register shall be for the Seller’s account.

 

11.       Condition
on delivery

 

The Vessel,
with everything belonging to her, shall be at the Seller’s risk and expense
until she is delivered to the Buyer on the Delivery Date.  Subject to the terms of this contract, she
shall be delivered and taken over as she is at the time of inspection, fair
wear and tear excepted.  The Vessel shall
be delivered with her present class maintained, free of recommendations, and
the Vessel’s continuous survey cycles of machinery are to be clean and
up-to-date.  All trading,
national/international certificates shall be valid and unextended on the
Delivery

 

 

Date.  The Seller shall notify the Classification
Society of any matters coming to their knowledge prior to delivery which upon
being reported to the Classification Society would lead to the withdrawal of
the Vessel’s class or to the imposition of a recommendation relating to her
class.  If a recommendation is issued by Class prior
to the Vessel’s delivery, the Seller will make arrangements to have the
recommendation cleared at their time and expense in accordance with the Class recommendation
that was issued.

 

12.       Name/markings

 

(not
applicable)

 

13.       Buyer’s
default

 

Should the
Purchase Price not be paid on the Delivery Date, the Seller has the right to
cancel this contract.

 

14.       Seller’s
default

 

If the Seller
fails to execute a legal transfer or to deliver the Vessel with everything
belonging to her (unless excluded herein) on the Delivery Date, the Buyer shall
have the right to cancel this contract.

 

15.       Arbitration

 

If any dispute
should arise in connection with the interpretation and fulfillment of this
contract, same shall be decided by arbitration in the city of New York, New
York and shall be referred to a single Arbitrator to be appointed by the
parties hereto.  If the parties cannot
agree upon the appointment of the single Arbitrator, the dispute shall be
settled by three Arbitrators, each party appointing one Arbitrator, the third
being appointed by the two Arbitrators already chosen unless they fail to agree
or refuse to appoint a third Arbitrator in which case The Society of Maritime
Arbitrators in New York City shall select the third Arbitrator.

 

If either of
the appointed Arbitrators refuses or is incapable of acting, the party who
appointed him, shall appoint a new Arbitrator in his place.

 

If one of the
parties fails to appoint an Arbitrator — either originally or by way of
substitution — for two weeks after the other party having appointed his
Arbitrator has sent the party making default notice by mail, cable or telex to
make the appointment, the party appointing the third Arbitrator shall, after
application from the party having appointed his Arbitrator, also appoint an
Arbitrator on behalf of the party making default.

 

The award
rendered by the Arbitrators shall be final and binding upon the parties and
judgment on the award may be entered in any court of competent
jurisdiction.  The Arbitrators shall
determine which party shall bear the expense of the arbitration or the
proportion of such expense that each party shall bear.  The Arbitrators shall be commercial men
conversant with shipping matters.  To the
extent not otherwise set forth in this Contract or agreed by the parties, the rule of
the Society of Maritime Arbitrators, Inc. shall apply.

 

This contract
shall be governed by the law of the State of New York.

 

16.       Closing
and Delivery

 

The closing of the delivery
of, and transfer of title to, the Vessel by the Seller to the Buyer shall take
place on the Delivery Date after payment is received by Seller and is confirmed
to be received in accordance with Clause 3, at a place designated by OSG Ship
Management, Inc. The Seller's obligation to sell the Vessel and the
Buyer's obligation to purchase the Vessel shall be conditioned upon delivery of
(i) a time charter agreement and related charter framework agreement as
described in the prospectus related to the initial public offering of shares of
DHT by each of the parties thereto and (ii) a final underwriting agreement
related to the initial public offering of shares of DHT by each of Overseas
Shipholding Group, Inc., DHT and the underwriters party thereto.

 

The Seller shall keep the Buyer
informed about the Vessel’s schedule.

 

At such closing:

 

A.           Seller shall deliver to Buyer the following documents:

 

1.               Original notarized bill of sale in
triplicate, in proper form for recording with the Marshall Islands
authorities, transferring title to the vessel and everything belonging to her
(unless excluded herein) to

 

 

the Buyer free from all debts, claims,
encumbrances, mortgages, and maritime liens and warranting such title.

 

2.               Certificate of
ownership and encumbrance issued by the Marshall Islands authorities dated on the
Delivery Date evidencing ownership of the vessel by the Seller free and clear
from all liens and encumbrances of record.

 

3.               Permission from the
Marshall Islands authorities to transfer the Vessel to the Buyer for
re-registration under Marshall Islands flag.

 

4.               Copies of Seller’s Articles
of Incorporation and By-laws and an incumbency certificate of the Seller.

 

5.               Certificate of Good
Standing.

 

6.               Notarized copies of
resolutions of the board of directors and shareholders of Seller authorizing
the sale of the Vessel to the Buyer on the terms set forth in this MOA and the
appointment of the Seller’s attorneys-in-fact.

 

7.               A notarized power
of attorney authorizing the officers and attorneys-in-fact of the Seller to
execute and deliver all documents relevant to the sale and delivery of the Vessel,
including the bill of sale for the Vessel.

 

8.               A confirmation of
class certificate from Lloyd’s Register issued not earlier than three (3) business
days prior to the Delivery Date, confirming that the Vessel is in class with
certificates valid as onboard.

 

9.               Written
instructions directing the master to record the change of ownership in the Vessel’s
logbook at the time of delivery.

 

10.         Commercial invoice in
triplicate giving main particulars of the Vessel.

 

11.         A copy of the Vessel’s
international/national, class and trading certificates as follows:

 

•                  Certificate
of Registry

•                  International
tonnage certificate

•                  Radio
station license

•                  Safety
construction certificate

•                  Safety
radiotelegraphy certificate

•                  Oil
pollution (IOPP) certificate

•                  Load
line certificate

•                  Safe
manning certificate

•                  Vessel’s
classification certificate

•                  Current
SMC issued to the Vessel and doc as per the ISM code

•                  International
ship security certificate

 

The Seller shall
email scanned copies of draft documents prior to intended date of delivery and the
Buyer shall provide comments on such draft documents.  Seller also to provide reasonable additional
documentation required for re-registration provided same is communicated prior
to intended date of delivery.

 

B.             The Buyer shall
deliver to the Seller:

 

1.               Payment of the Purchase
Price as provided in Clauses 1 and 3 of this MOA.

 

2.               A notarized power
of attorney authorizing the officers and attorneys-in-fact of the Buyer to
execute and deliver all documents relevant to the purchase of the Vessel,
including this MOA.

 

3.               A notarized copy of
resolutions of the board of directors of the Buyer authorizing the purchase of
the Vessel from the Seller on the terms set forth in this MOA and authorizing
the execution and delivery of the MOA, and any other documents required in
connection therewith.

 

 

C.            Buyer and Seller shall
execute:

 

1.               A protocol of
delivery and acceptance fixing the place, date and time of the transfer of
title to the Vessel.

 

17.       Certain
Included and Excluded Items

 

The Vessel
shall be delivered with everything belonging to her as on board, unless
excluded herein, including broached/unbroached stores and with all spare parts
and spare equipment, wireless station/equipment and all navigational
aids/equipment on board the Vessel.  There
is nothing ashore that belongs to the Vessel.

 

The above
items shall be included in the sale without any extra cost to the Buyer.  All spares shall be treated as per clause
seven (7) of the NSF 1987.

 

Bunkers (IFO
and MDO/MGO) and lubricating oils and greases remaining on board at the time of
delivery are excluded from sale without compensation and remain the property of
the Seller, who may transfer ownership of same to affiliates at or subsequent
to delivery.  Sale to exclude without
compensation the personal effects of master, officers and crew.

 

Exclusions
listed below are the only ones other than the personal effects of master, officers
and crew, victualling (provisions) and leased gas bottles/cylinders which are
excluded from the sale.

 

The following
items are excluded from the sale without compensation and remain the property
of the Seller, and the Seller may transfer ownership of same to affiliates at
or subsequent to delivery.  These items
may remain on board at the sole discretion of and for the use and convenience
of the Seller or its affiliate(s) (as the case may be) and may be removed at
any time after delivery at the expense of such party.

 

1.               All onboard log
books up to the time and date of delivery for deck, engine and radio with the Buyer’s
right to photocopy these logs at its own expense.

 

2.               Seller’s company
forms, documents / stationery and all correspondence and company manuals.

 

3.               All ISPS, ISM and
quality documentation and correspondence.

 

4.               Vessel’s Rydex
communications e-mail system and server.

 

5.               Training video
library, books.

 

6.               Oxygen / acetylene
/ freon / nitrogen / argon cylinders / bottles.

 

7.               Crew/officers
library / walport videos.

 

8.               Master’s
slopchest/bonded stores; personal effects of master, officers and crew.

 

9.               Personal hand-held
computers.

 

10.         Personal cell phones.

 

11.         Contents of master’s safe.

 

12.         Arms / ammunition.

 

13.         Works of art, originals,
copies, prints, statues.

 

14.         Safety clothing / hats or
other shirts/hats with logo of OSG and/or the Seller, otherwise unmarked items
will remain.

 

15.         Certificates/documents to
be returned to authorities.

 

 

16.         Seagull training software.

 

17.         All Seller’s non-class
computer software and server.

 

18.         Chartco
digital chart updates system software.

 

19.         Any rented or leased or
third party’s equipment are excluded from the sale of the Vessel whether or not
removed from the Vessel prior to delivery.

 

18.       Notices

 

All notices
required to be given in accordance with this MOA shall be in writing, by email
or fax and shall be addressed as follows:

 

To the Seller:

 

	
  Mr. Charles
  F. Nolfo

  
	
  OSG Ship
  Management, Inc.

  
	
  511 Fifth
  Avenue, New York, NY 10017

  
	
  Tele: 212 –
  578 – 1807

  
	
  Fax: 212 –
  251 – 1139

  
	
  e-mail:
  cnolfo@osg.com

  

 

To the Buyer:

 

	
  Mr. Ole
  Jacob Diesen

  
	
  Chief
  Executive Officer

  
	
  Double Hull
  Tankers, Inc.

  
	
  26 New
  Street

  
	
  St. Helier,
  Jersey JE23RA

  
	
  Channel Islands

  
	
  Tele: 44-1534-639759

  

 

19.       No
Representations or Warranties

 

EXCEPT AS
EXPRESSLY SET FORTH IN THIS CONTRACT, SELLER MAKES NO WARRANTY AND NONE SHALL
BE IMPLIED AS TO THE DESCRIPTION OR CONDITION OF THE VESSEL OR ITS FITNESS OR
ELIGIBILITY FOR A PARTICULAR TRADE, REGISTRY OR PURPOSE, THE VESSEL’S PERFORMANCE,
MERCHANTABILITY, INSURABILITY OR SEAWORTHINESS OR ITS COMPLIANCE WITH NATIONAL
OR INTERNATIONAL CODES, CONVENTIONS, LAWS OR REGULATIONS.

 

If the Seller shall
be unable to deliver the Vessel or the Buyer shall be unable to accept delivery
of the Vessel due to outbreak of war, restraint of government, princes or
people or other reasons that may be brought about by force majeure, the Seller or
the Buyer may terminate this contract without any liability upon either party.

 

This contract
or any interest herein may not be assigned by either party without the prior
written consent of the other.  Any
assignment by either of the parties hereto in violation of the foregoing
sentence shall be void.  This contract
may not be modified in any respect except in writing signed by both parties and
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns.

 

The parties
hereto agree that the price, terms, and conditions of this contract will not be
disclosed until it may be otherwise mutually agreed, unless such disclosure is
required to be made in order to comply with any law, regulation, order or
process binding on either of the parties or their respective parents,
subsidiaries, agents, directors, officers or legal or accounting advisors.

 

 

	
  For the Seller

  	
  For the Buyer

  
	
  1320 TANKER CORPORATION

  	
  ANN TANKER CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Myles R. Itkin

  	
   

  	
  By:

  	
  /s/ Ole Jacob Diesen

  	
   

  
	
   

  	
  Myles R. Itkin

  	
   

  	
  Ole Jacob Diesen

  
	
   

  	
  Senior Vice President and Treasurer

  	
   

  	
  Chief Executive Officer

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