Document:

SHARE PLEDGE AGREEMENT

         This Share Pledge Agreement (this "Agreement"), dated as of March 2,
2006, among Laurus Master Fund, Ltd. (the "Pledgee"), Essential Innovations
Technology Corp., a Nevada corporation (the "Company"), and Essential
Innovations Corp., a Canadian corporation ("Essential, and together with the
Company, the "Pledgor").

                                   BACKGROUND

         The Company has entered into a Securities Purchase Agreement, dated as
of the date hereof (as amended, modified, restated or supplemented from time to
time, the "Securities Purchase Agreement"), pursuant to which the Pledgee
provides or will provide certain financial accommodations to the Company.

         In order to induce the Pledgee to provide or continue to provide the
financial accommodations described in the Securities Purchase Agreement, the
Pledgor has agreed to pledge and grant a security interest in the collateral
described herein to the Pledgee on the terms and conditions set forth herein.

         NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt of which is hereby acknowledged, the parties
hereto agree as follows:

         1. Defined Terms. All capitalized terms used herein which are not
defined shall have the meanings given to them in the Securities Purchase
Agreement.

         2. Pledge and Grant of Security Interest. To secure the full and
punctual payment and performance of (the following clauses (a) and (b),
collectively, the "Indebtedness") (a) the obligations under the Securities
Purchase Agreement and the Related Agreements referred to in the Securities
Purchase Agreement (the Securities Purchase Agreement and the Related
Agreements, as each may be amended, restated, modified and/or supplemented from
time to time, collectively, the "Documents") and (b) all other indebtedness,
obligations and liabilities of the Pledgor to the Pledgee whether now existing
or hereafter arising, direct or indirect, liquidated or unliquidated, absolute
or contingent, due or not due and whether under, pursuant to or evidenced by a
note, agreement, guaranty, instrument or otherwise (in each case, irrespective
of the genuineness, validity, regularity or enforceability of such Indebtedness,
or of any instrument evidencing any of the Indebtedness or of any collateral
therefor or of the existence or extent of such collateral, and irrespective of
the allowability, allowance or disallowance of any or all of such in any case
commenced by or against the Pledgor under Title 11, United States Code, the
Bankruptcy and Insolvency Act (Canada) (the "BIA") and the Companies' Creditors
Arrangement Act (the "CCAA") including, without limitation, obligations or
indebtedness of the Pledgor for post-petition interest, fees, costs and charges
that would have accrued or been added to the Indebtedness but for the
commencement of such case), the Pledgor hereby pledges, assigns, hypothecates,
transfers and grants a security interest to Pledgee in all of the following (the
"Collateral"):

                  (a) the shares set forth on Schedule A annexed hereto and
         expressly made a part hereof (together with any additional shares or
         other equity interests acquired by the Pledgor, the "Pledged Shares"),
         the certificates representing the Pledged Shares and all dividends,
         cash, instruments and other property or proceeds from time to time
         received, receivable or otherwise distributed in respect of or in
         exchange for any or all of the Pledged Shares;

                  (b) all additional shares of any issuer (each, an "Issuer") of
         the Pledged Shares from time to time acquired by the Pledgor in any
         manner, including, without limitation, dividends or a distribution in
         connection with any increase or reduction of capital, reclassification,
         merger, amalgamation, consolidation, sale of assets, combination of
         shares, stock split, spin-off or split-off (which shares shall be
         deemed to be part of the Collateral), and the certificates representing

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         such additional shares, and all dividends, cash, instruments and other
         property or proceeds from time to time received, receivable or
         otherwise distributed in respect of or in exchange for any or all of
         such shares; and

                  (c) all options and rights, whether as an addition to, in
         substitution of or in exchange for any Pledged Shares and all
         dividends, cash, instruments and other property or proceeds from time
         to time received, receivable or otherwise distributed in respect of or
         in exchange for any or all such options and rights.

         3. Delivery of Collateral. All certificates representing or evidencing
the Pledged Shares shall be delivered to and held by or on behalf of Pledgee
pursuant hereto and shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Pledgee. The Pledgor hereby authorizes the Issuer upon demand by the Pledgee to
deliver any certificates, instruments or other distributions issued in
connection with the Collateral directly to the Pledgee, in each case to be held
by the Pledgee, subject to the terms hereof. Upon an Event of Default (as
defined below) under the Note that has occurred and is continuing beyond any
applicable grace period, the Pledgee shall have the right, during such time in
its discretion and without notice to the Pledgor, to transfer to or to register
in the name of the Pledgee or any of its nominees any or all of the Pledged
Shares. In addition, the Pledgee shall have the right at such time to exchange
certificates or instruments representing or evidencing Pledged Shares for
certificates or instruments of smaller or larger denominations.

         4. Representations and Warranties of each Pledgor. The Pledgor
represents and warrants to the Pledgee (which representations and warranties
shall be deemed to continue to be made until all of the Indebtedness has been
paid in full and each Document and each agreement and instrument entered into in
connection therewith has been irrevocably terminated) that:

                  (a) the execution, delivery and performance by the Pledgor of
         this Agreement and the pledge of the Collateral hereunder do not and
         will not result in any violation of any agreement, indenture,
         instrument, license, judgment, decree, order, law, statute, ordinance
         or other governmental rule or regulation applicable to the Pledgor;

                  (b) this Agreement constitutes the legal, valid, and binding
         obligation of the Pledgor enforceable against the Pledgor in accordance
         with its terms, except to the extent that the enforceability thereof
         may be limited by applicable bankruptcy, insolvency, moratorium,
         reorganization and other similar laws of general application limiting
         the enforcement of creditors' rights generally and the fact that the
         courts may deny the granting or enforcement of equitable remedies;

                  (c) (i) all Pledged Shares owned by the Pledgor are set forth
         on Schedule A hereto and (ii) the Pledgor is the direct and beneficial
         owner of all of the Pledged Shares;

                  (d) all of the Pledged Shares have been duly authorized,
         validly issued and are fully paid and nonassessable;

                  (e) no consent or approval of any person (including any
         Issuer), corporation, governmental body, regulatory authority or other
         entity, is or will be necessary for (i) the execution, delivery and
         performance of this Agreement, (ii) the exercise by the Pledgee of any
         rights with respect to the Collateral or (iii) the pledge and
         assignment of, and the grant of a security interest in, the Collateral
         hereunder;

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                  (f) there are no pending or, to the best of Pledgor's
         knowledge, threatened actions or proceedings before any court, judicial
         body, administrative agency or arbitrator which may materially
         adversely affect the Collateral;

                  (g) the Pledgor has the requisite power and authority to enter
         into this Agreement and to pledge and assign the Collateral to the
         Pledgee in accordance with the terms of this Agreement;

                  (h) the Pledgor owns the Collateral set out in Schedule A
         hereto and, except for the pledge and security interest granted to
         Pledgee hereunder, the Collateral shall be, immediately following the
         closing of the transactions contemplated by the Documents, free and
         clear of any other security interest, pledge, claim, lien, charge,
         hypothecation, assignment, offset or encumbrance whatsoever
         (collectively, "Liens");

                  (i) other than restrictions generally applicable under the US
         Securities Act (as defined below) or the Securities Act (British
         Columbia), there are no restrictions on transfer of the Pledged Shares
         contained in the certificate of incorporation or by-laws (or equivalent
         organizational documents) of the Issuer or otherwise which have not
         otherwise been enforceably and legally complied with or waived as the
         case may be, by the necessary parties;

                  (j) none of the Pledged Shares have been issued or transferred
         in violation of the securities registration, securities disclosure or
         similar laws of any jurisdiction to which such issuance or transfer may
         be subject;

                  (k) the pledge and assignment of the Collateral and the grant
         of a security interest under this Agreement vest in the Pledgee all
         rights of the Pledgor in the Collateral as contemplated by this
         Agreement; and

                  (l) except as set forth on Schedule A hereto, the Pledged
         Shares constitute one hundred percent (100%) of the issued and
         outstanding shares of each Issuer.

         5. Covenants. The Pledgor covenants that, until the Indebtedness shall
be satisfied in full and each Document and each agreement and instrument entered
into in connection therewith is irrevocably terminated:

                  (a) The Pledgor will not sell, assign, transfer, convey, or
         otherwise dispose of its rights in or to the Collateral or any interest
         therein; nor will the Pledgor create, incur or permit to exist any Lien
         whatsoever with respect to any of the Collateral or the proceeds
         thereof other than that created hereby.

                  (b) The Pledgor will, at its expense, defend Pledgee's right,
         title and security interest in and to the Collateral against the claims
         of any other party.

                  (c) The Pledgor shall at any time, and from time to time, upon
         the written request of Pledgee, execute and deliver such further
         documents and do such further acts and things as Pledgee may reasonably
         request in order to effect the purposes of this Agreement including,
         but without limitation, delivering to Pledgee upon the occurrence of an
         Event of Default irrevocable proxies in respect of the Collateral in
         form satisfactory to Pledgee. Until receipt thereof, upon an Event of
         Default that has occurred and is continuing beyond any applicable grace
         period, this Agreement shall constitute Pledgor's proxy to Pledgee or
         its nominee to vote all shares of Collateral then registered in each
         Pledgor's name.

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                  (d) The Pledgor will not consent to or approve the issuance of
         (i) any additional shares of any class of shares or other equity
         interests of the Issuer; or (ii) any securities convertible either
         voluntarily by the holder thereof or automatically upon the occurrence
         or nonoccurrence of any event or condition into, or any securities
         exchangeable for, any such shares, unless, in either case, such shares
         are pledged as Collateral pursuant to this Agreement.

         6. Voting Rights and Dividends. Until the occurrence of an Event of
Default which is continuing: i) the Pledgor may exercise all rights to vote and
to exercise all rights of conversion or retraction or other similar rights with
respect to any Collateral; provided that no such exercise, in the opinion of the
Pledgee, will have an adverse effect on the value of Collateral and all expenses
of the Pledgee in connection therewith have been paid in full and provided
further that, upon the exercise of the conversion or retraction right, the
additional Collateral resulting therefrom shall be paid or delivered to the
Pledgee; (ii) the Pledgor shall be entitled to receive all dividends (whether
paid or distributed in cash, securities or other property) and interest declared
and paid or distributed in respect of the Collateral, and such dividends and
interest shall cease to be subject to the security interest if paid or
distributed to the Pledgor prior to the occurrence of an Event of Default but
not otherwise; and (iii) the Collateral will remain registered in the name of
the Pledgor and will not be transferred into the name of the Pledgee or its
nominee. In addition to the Pledgee's rights and remedies set forth in Section 9
hereof, in case an Event of Default shall have occurred and be continuing,
beyond any applicable cure period, the Pledgee shall (i) be entitled to vote the
Collateral, (ii) be entitled to give consents, waivers and ratifications in
respect of the Collateral (the Pledgor hereby irrevocably constituting and
appointing the Pledgee, with full power of substitution, the proxy and
attorney-in-fact of the Pledgor for such purposes) and (iii) be entitled to
collect and receive for its own use cash dividends paid on the Collateral. The
Pledgor shall not be permitted to exercise or refrain from exercising any voting
rights or other powers if, in the reasonable judgment of the Pledgee, such
action would have a material adverse effect on the value of the Collateral or
any part thereof; and, provided, further, that the Pledgor shall give at least
five (5) days' written notice of the manner in which the Pledgor intends to
exercise, or the reasons for refraining from exercising, any voting rights or
other powers other than with respect to any election of directors and voting
with respect to any incidental matters. Following the occurrence of an Event of
Default, all dividends and all other distributions in respect of any of the
Collateral, shall be delivered to the Pledgee to hold as Collateral and shall,
if received by the Pledgor, be received in trust for the benefit of the Pledgee,
be segregated from the other property or funds of the Pledgor, and be forthwith
delivered to the Pledgee as Collateral in the same form as so received (with any
necessary endorsement).

         7. Attachment. The Pledgor acknowledges and agrees that: (i) value has
been given, or will be given upon the making of payment under the Securities
Purchase Agreement by Laurus; (ii) the Pledgor has rights in the Collateral; and
(iii) Pledgor and Laurus have not agreed to postpone the time for attachment of
the security interest granted hereunder which shall attach upon the execution of
this Agreement and, in the case of Collateral acquired after the date hereof,
when the Pledgor has rights therein.

         8. Event of Default. An Event of Default shall be deemed to have
occurred and may be declared by the Pledgee upon the occurrence of an "Event of
Default" under and as defined in the Note which shall have occurred and be
continuing beyond any applicable cure period.

         9. Remedies. In case an Event of Default shall have occurred and is
continuing and be declared by the Pledgee, the Pledgee may:

                  (a) Transfer any or all of the Collateral into its name, or
         into the name of its nominee or nominees;

                  (b) Exercise all corporate rights with respect to the
         Collateral including, without limitation, all rights of conversion,
         exchange, subscription or any other rights, privileges or options

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         pertaining to any shares of the Collateral as if it were the absolute
         owner thereof, including, but without limitation, the right to
         exchange, at its discretion, any or all of the Collateral upon the
         merger, consolidation, amalgamation, reorganization, recapitalization
         or other readjustment of the Issuer thereof, or upon the exercise by
         the Issuer of any right, privilege or option pertaining to any of the
         Collateral, and, in connection therewith, to deposit and deliver any
         and all of the Collateral with any committee, depository, transfer
         agent, registrar or other designated agent upon such terms and
         conditions as it may determine, all without liability except to account
         for property actually received by it; and

                  (c) Subject to any requirement of applicable law including for
         greater certainty, the Personal Property Security Act (British
         Columbia) and any other similar provincial statute (as amended from
         time to time, which Act, including amendments thereto and any Act
         substituted therefore and amendments thereto is herein referred to as
         the "PPSA") and the Uniform Commercial Code of New York (the "UCC"),
         sell, assign and deliver the whole or, from time to time, any part of
         the Collateral at the time held by the Pledgee, at any private sale or
         at public auction, with or without demand, advertisement or notice of
         the time or place of sale or adjournment thereof or otherwise (all of
         which are hereby waived, except such notice as is required by
         applicable law and cannot be waived), for cash or credit or for other
         property for immediate or future delivery, and for such price or prices
         and on such terms as the Pledgee in its sole discretion may determine,
         or as may be required by applicable law, provided that the foregoing
         shall be done in a commercially reasonable manner.

         The Pledgor hereby waives and releases any and all right or equity of
redemption, whether before or after sale hereunder. At any such sale, unless
prohibited by applicable law, the Pledgee may bid for and purchase the whole or
any part of the Collateral so sold free from any such right or equity of
redemption. All moneys received by the Pledgee hereunder whether upon sale of
the Collateral or any part thereof or otherwise shall be held by the Pledgee and
applied by it as provided in Section 11 hereof. No failure or delay on the part
of the Pledgee in exercising any rights hereunder shall operate as a waiver of
any such rights nor shall any single or partial exercise of any such rights
preclude any other or future exercise thereof or the exercise of any other
rights hereunder. The Pledgee shall have no duty as to the collection or
protection of the Collateral or any income thereon nor any duty as to
preservation of any rights pertaining thereto, except to apply the funds in
accordance with the requirements of Section 11 hereof. The Pledgee may exercise
its rights with respect to property held hereunder without resort to other
security for or sources of reimbursement for the Indebtedness. In addition to
the foregoing, to the extent applicable, Pledgee shall have all of the rights,
remedies and privileges of a secured party under the UCC and the PPSA regardless
of the jurisdiction in which enforcement hereof is sought.

         10. Private Sale. The Pledgor recognizes that the Pledgee may be unable
to effect (or to do so only after delay which would adversely affect the value
that might be realized from the Collateral) a public sale of all or part of the
Collateral by reason of certain prohibitions contained in the Securities Act of
1933 (the "US Securities Act"), or the Securities Act (Ontario), and may be
compelled to resort to one or more private sales to a restricted group of
purchasers who will be obliged to agree, among other things, to acquire such
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. The Pledgor agrees that any such private sale
may be at prices and on terms less favorable to the seller than if sold at
public sales and that such private sales shall be deemed to have been made in a
commercially reasonable manner. The Pledgor agrees that the Pledgee has no
obligation to delay sale of any Collateral for the period of time necessary to
permit the Issuer to register the Collateral for public sale under the US
Securities Act or the Securities Act (Ontario).

         11. Proceeds of Sale. Subject to applicable law, the proceeds of any
collection, recovery, receipt, appropriation, realization or sale of the
Collateral shall be applied by the Pledgee as follows:

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                  (a) First, to the payment of all costs, reasonable expenses
         and charges of the Pledgee and to the reimbursement of the Pledgee for
         the prior payment of such costs, reasonable expenses and charges
         incurred in connection with the care and safekeeping of the Collateral
         (including, without limitation, the reasonable expenses of any sale or
         any other disposition of any of the Collateral), the expenses of any
         taking, legal fees and reasonable expenses, court costs, any other fees
         or expenses incurred or expenditures or advances made by Pledgee in the
         protection, enforcement or exercise of its rights, powers or remedies
         hereunder;

                  (b) Second, to the payment of the Indebtedness, in whole or in
         part, in such order as the Pledgee may elect, whether or not such
         Indebtedness is then due;

                  (c) Third, to the extent applicable, to such persons, firms,
         corporations or other entities as required by applicable law including,
         without limitation, Section 9-504(1)(c) of the UCC and 64(1) of the
         PPSA; and

                  (d) Fourth, to the extent of any surplus to the Pledgor or as
         a court of competent jurisdiction may direct.

         In the event that the proceeds of any collection, recovery, receipt,
appropriation, realization or sale are insufficient to satisfy the Indebtedness,
the Pledgor shall be liable for the deficiency plus the costs and fees of any
lawyers employed by Pledgee to collect such deficiency.

         12. Waiver of Marshaling. The Pledgor hereby waives any right to compel
any marshaling of any of the Collateral.

         13. No Waiver. Any and all of the Pledgee's rights with respect to the
Liens granted under this Agreement shall continue unimpaired, and Pledgor shall
be and remain obligated in accordance with the terms hereof, notwithstanding (a)
the bankruptcy, insolvency or reorganization of the Pledgor, (b) the release or
substitution of any item of the Collateral at any time, or of any rights or
interests therein, or (c) any delay, extension of time, renewal, compromise or
other indulgence granted by the Pledgee in reference to any of the Indebtedness.
The Pledgor hereby waives all notice of any such delay, extension, release,
substitution, renewal, compromise or other indulgence, and hereby consents to be
bound hereby as fully and effectively as if the Pledgor had expressly agreed
thereto in advance. No delay or extension of time by the Pledgee in exercising
any power of sale, option or other right or remedy hereunder, and no failure by
the Pledgee to give notice or make demand, shall constitute a waiver thereof, or
limit, impair or prejudice the Pledgee's right to take any action against the
Pledgor or to exercise any other power of sale, option or any other right or
remedy.

         14. Expenses. The Collateral shall secure, and the Pledgor shall pay to
Pledgee on demand, from time to time, all reasonable costs and expenses,
(including but not limited to, reasonable legal fees and costs, taxes, and all
transfer, recording, filing and other charges) of, or incidental to, the
custody, care, transfer, administration of the Collateral or any other
collateral, or in any way relating to the enforcement, protection or
preservation of the rights or remedies of the Pledgee under this Agreement or
with respect to any of the Indebtedness.

         15. The Pledgee Appointed Attorney-In-Fact and Performance by the
Pledgee. Upon the occurrence of an Event of Default, the Pledgor hereby
irrevocably constitutes and appoints the Pledgee as such Pledgor's true and
lawful attorney-in-fact, with full power of substitution, to execute,
acknowledge and deliver any instruments and to do in such Pledgor's name, place
and stead, all such acts, things and deeds for and on behalf of and in the name
of the Pledgor, which the Pledgor could or might do or which the Pledgee may
deem necessary, desirable or convenient to accomplish the purposes of this
Agreement, including, without limitation, to execute such instruments of
assignment or transfer or orders and to register, convey or otherwise transfer

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title to the Collateral into the Pledgee's name. The Pledgor hereby ratifies and
confirms all that said attorney-in-fact may so do and hereby declares this power
of attorney to be coupled with an interest and irrevocable. If the Pledgor fails
to perform any agreement herein contained, the Pledgee may itself perform or
cause performance thereof, and any costs and expenses of the Pledgee incurred in
connection therewith shall be paid by the Pledgor as provided in Section 0
hereof.

         16. Waivers. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER
THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OTHER AGREEMENT EXECUTED
OR DELIVERED BY THEM IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HERETO HEREBY AGREES
AND CONSENTS THAT ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF EACH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

         17. Recapture. Notwithstanding anything to the contrary in this
Agreement, if the Pledgee receives any payment or payments on account of the
Indebtedness, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver, interim receiver, receiver and
manager or any other party under the United States Bankruptcy Code, the BIA, the
CCAA, or any other federal, provincial or state bankruptcy, reorganization,
moratorium or insolvency law relating to or affecting the enforcement of
creditors' rights generally, common law or equitable doctrine, then to the
extent of any sum not finally retained by the Pledgee, the Pledgor's obligations
to the Pledgee shall be reinstated and this Agreement shall remain in full force
and effect (or be reinstated) until payment shall have been made to Pledgee,
which payment shall be due on demand.

         18. Captions. All captions in this Agreement are included herein for
convenience of reference only and shall not constitute part of this Agreement
for any other purpose.

         19. Miscellaneous.

                  (a) This Agreement constitutes the entire and final agreement
         among the parties with respect to the subject matter hereof and may not
         be changed, terminated or otherwise varied except by a writing duly
         executed by the parties hereto.

                  (b) No waiver of any term or condition of this Agreement,
         whether by delay, omission or otherwise, shall be effective unless in
         writing and signed by the party sought to be charged, and then such
         waiver shall be effective only in the specific instance and for the
         purpose for which given.

                  (c) In the event that any provision of this Agreement or the
         application thereof to the Pledgor or any circumstance in any
         jurisdiction governing this Agreement shall, to any extent, be invalid
         or unenforceable under any applicable statute, regulation, or rule of
         law, such provision shall be deemed inoperative to the extent that it
         may conflict therewith and shall be deemed modified to conform to such
         statute, regulation or rule of law, and the remainder of this Agreement
         and the application of any such invalid or unenforceable provision to
         parties, jurisdictions, or circumstances other than to whom or to which
         it is held invalid or unenforceable shall not be affected thereby, nor
         shall same affect the validity or enforceability of any other provision
         of this Agreement.

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<PAGE>

                  (d) This Agreement shall inure to the benefit of and be
         binding upon the Pledgor, and the Pledgor's successors and assigns, and
         shall inure to the benefit of and be binding upon the Pledgee and its
         successors and assigns.

                  (e) Any notice or other communication required or permitted
         pursuant to this Agreement shall be given in accordance with the
         Securities Purchase Agreement.

                  (f) This Agreement shall be governed by and construed and
         enforced in all respects in accordance with the laws of the Province of
         British Columbia and the federal laws of Canada.

                  (g) THE PLEDGOR EXPRESSLY CONSENTS TO THE JURISDICTION AND
         VENUE OF EACH COURT OF COMPETENT JURISDICTION LOCATED IN THE STATE OF
         NEW YORK FOR ALL PURPOSES IN CONNECTION WITH THIS AGREEMENT. ANY
         JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY ANY MATTER OR
         CLAIM IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS
         AGREEMENT SHALL BE BROUGHT ONLY IN A STATE COURT LOCATED IN THE COUNTY
         OF NEW YORK, STATE OF NEW YORK. THE PLEDGOR FURTHER CONSENTS THAT ANY
         SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS (INCLUDING, WITHOUT
         LIMITATION, ANY NOTICE OR MOTION OR OTHER APPLICATION TO EITHER OF THE
         AFOREMENTIONED COURTS OR A JUDGE THEREOF) OR ANY NOTICE IN CONNECTION
         WITH ANY PROCEEDINGS HEREUNDER, MAY BE SERVED INSIDE OR OUTSIDE OF THE
         STATE OF NEW YORK OR THE SOUTHERN DISTRICT OF NEW YORK BY REGISTERED OR
         CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY PERSONAL SERVICE
         PROVIDED A REASONABLE TIME FOR APPEARANCE IS PERMITTED, OR IN SUCH
         OTHER MANNER AS MAY BE PERMISSIBLE UNDER THE RULES OF SAID COURTS. THE
         PLEDGOR WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION
         INSTITUTED HEREON AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF
         JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS.

                  (h) It is understood and agreed that any person or entity that
         desires to become a Pledgor hereunder, or is required to execute a
         counterpart of this Share Pledge Agreement after the date hereof
         pursuant to the requirements of any Document, shall become a Pledgor
         hereunder by (x) executing a joinder agreement in form and substance
         satisfactory to the Pledgee, (y) delivering supplements to such
         exhibits and annexes to such Documents as the Pledgee shall reasonably
         request and (z) taking all actions as specified in this Agreement as
         would have been taken by such Pledgor had it been an original party to
         this Agreement, in each case with all documents required above to be
         delivered to the Pledgee and with all documents and actions required
         above to be taken to the reasonable satisfaction of the Pledgee.

                  (i) This Agreement may be executed in one or more
         counterparts, each of which shall be deemed an original and all of
         which when taken together shall constitute one and the same agreement.
         Any signature delivered by a party by facsimile transmission or by
         sending a scanned copy by electronic mail shall be deemed an original
         signature hereto.

                  (j) If there is any inconsistency between the provisions of
         this Agreement and the provisions of the Note, the provisions of the
         Note shall prevail.

                  [Remainder of Page Intentionally Left Blank]

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         IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first written above.

                                        ESSENTIAL INNOVATIONS TECHNOLOGY CORP.
                                        By: /s/ Jason McDiarmid
                                        Name: Jason McDiarmid
                                        Title: President

                                        ESSENTIAL INNOVATIONS CORP.
                                        By: /s/ Steve Wuschke
                                        Name: Steve Wuschke
                                        Title: President

                                        LAURUS MASTER FUND, LTD.
                                        By: /s/ David Grin
                                        Name: David Grin
                                        Title: Director

                                       9
<PAGE>
<TABLE>
<CAPTION>
                                                SCHEDULE A to the Share Pledge Agreement

                                                           Pledged Shares

                                                                                  Share
                                                                               Certificate      Number of      Percentage of
            Pledgor                        Issuer            Class of Share      Number           Shares        Shares Owned
--------------------------------- -------------------------- --------------- ---------------- --------------- -----------------
<S>                               <C>                            <C>               <C>          <C>                <C>
Essential Innovations             Essential Innovations          Common             2           1,000,000           100%
Technology Corp.                  Corp. (Canada)
--------------------------------- -------------------------- --------------- ---------------- --------------- -----------------
Essential Innovations Corp.       n/a                             n/a              n/a             n/a              n/a
--------------------------------- -------------------------- --------------- ---------------- --------------- -----------------
</TABLE>Exhibit 10.8

 

and

 

SHIP
MANAGEMENT AGREEMENT

 

1

 

MANAGEMENT AGREEMENT

 

INDEX

 

	
  PART

  	
   

  	
  SUBJECT MATTER

  	
   

  	
  PAGE NO.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part i

  	
   

  	
  Vessel Details

  	
   

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part ii

  	
   

  	
  Terms of Agreement

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Definitions & Interpretation

  	
   

  	
   

  	
  5

  	
   

  
	
   

  	
   

  	
  2.

  	
  Appointment of Managers

  	
   

  	
   

  	
  5

  	
   

  
	
   

  	
   

  	
  3.

  	
  Basic Services

  	
   

  	
   

  	
  5

  	
   

  
	
   

  	
   

  	
  3.1

  	
  Crewing

  	
   

  	
   

  	
  5

  	
   

  
	
   

  	
   

  	
  3.2

  	
  Technical Management

  	
   

  	
   

  	
  6

  	
   

  
	
   

  	
   

  	
  3.3

  	
  Purchasing

  	
   

  	
   

  	
  6

  	
   

  
	
   

  	
   

  	
  3.4

  	
  Insurance

  	
   

  	
   

  	
  6

  	
   

  
	
   

  	
   

  	
  3.5

  	
  Accounting and Budgeting

  	
   

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
  3.6

  	
  Operations

  	
   

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
  3.7

  	
  Information System Software

  	
   

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
  3.8

  	
  Shipboard Oil Pollution Emergency Plan

  	
   

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
  3.9

  	
  OPA

  	
   

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
  3.10

  	
  Assistance with Sale of Vessel

  	
   

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
  4.

  	
  Other Services

  	
   

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
  5.

  	
  Manager’s Obligations

  	
   

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
  6.

  	
  Owner’s Obligations

  	
   

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
  7.

  	
  Management Fee

  	
   

  	
   

  	
  9

  	
   

  
	
   

  	
   

  	
  8.

  	
  Payments and Management of Funds

  	
   

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
  9.

  	
  Manager’s Right to Sub-Contract

  	
   

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
  10.

  	
  Responsibilities

  	
   

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
  10.1

  	
  Force Majeure

  	
   

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
  10.2

  	
  Liability to Owners

  	
   

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
  10.3

  	
  Indemnity – General

  	
   

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
  10.4

  	
  Indemnity – Tax

  	
   

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
  10.5

  	
  Himalaya

  	
   

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
  11.

  	
  Prosecution of Claims/  Disputes other than Insurance

  	
   

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
  12.

  	
  Auditing, Records

  	
   

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
  13.

  	
  Inspection of Vessel

  	
   

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
  14.

  	
  Compliance with Laws & Regulations

  	
   

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
  15.

  	
  Duration of the Agreement

  	
   

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
  15.1

  	
  Termination by Notice

  	
   

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
  15.2

  	
  Termination by Default – Owners

  	
   

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
  15.3

  	
  Termination by Default – Managers

  	
   

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
  15.4

  	
  Liquidation

  	
   

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
  15.5

  	
  Extraordinary Termination

  	
   

  	
   

  	
  12

  	
   

  
	
   

  	
   

  	
  16.

  	
  Confidentiality

  	
   

  	
   

  	
  12

  	
   

  
	
   

  	
   

  	
  17.

  	
  Third Party Rights

  	
   

  	
   

  	
  12

  	
   

  
	
   

  	
   

  	
  18.

  	
  Law and Arbitration

  	
   

  	
   

  	
  12

  	
   

  

 

2

 

	
   

  	
   

  	
  19.

  	
  Amendments to Agreement

  	
   

  	
   

  	
  12

  	
   

  
	
   

  	
   

  	
  20.

  	
  Time Limit for Claims

  	
   

  	
   

  	
  12

  	
   

  
	
   

  	
   

  	
  21.

  	
  Condition of Vessel

  	
   

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
  22.

  	
  Use of Associated Companies

  	
   

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
  23.

  	
  Notices

  	
   

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
  24.

  	
  Staff Loyalty

  	
   

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
  25.

  	
  Entire Agreement

  	
   

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part iii

  	
   

  	
  Other Services

  	
   

  	
   

  	
  14-15

  	
   

  
	
  Part iv

  	
   

  	
  Fee Schedule

  	
   

  	
   

  	
  16

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part v

  	
   

  	
  Fleet Details

  	
   

  	
   

  	
  17

  	
   

  
	
  Part vi

  	
   

  	
  Initial Budget

  	
   

  	
   

  	
  18

  	
   

  
	
  Part vii

  	
   

  	
  Special Running Expenses

  	
   

  	
   

  	
  19

  	
   

  

 

3

 

SHIP MANAGEMENT AGREEMENT
- PART I

 

	
  1. Vessel Details

  	
   

  
	
  Name:

  	
  GT/NT

  
	
  Flag:

  	
  Class

  
	
  Type:

  	
  Year Built

  
	
   

  	
   

  
	
  2. Owners

  	
   

  
	
  Name:

  	
   

  
	
  Registered Office:

  	
   

  
	
  Country of Incorporation:

  	
   

  
	
  Principal Place of
  Business:

  	
   

  
	
   

  	
   

  
	
  Telephone Number

  	
  Fax Number:

  
	
  Contact Name:

  	
  Position:

  
	
   

  	
   

  
	
  3. Managers

  	
   

  
	
  Name:

  	
  V.Ships Management Limited

  
	
  Registered Office:

  	
  Eaglehurst, Belmont Hill, Douglas, Isle of Man

  
	
  Country of Incorporation:

  	
  Isle of Man

  
	
   

  	
   

  
	
  Telephone Number:  +44
  1624 688 886

  	
  Fax Number: +44 1624 688 899

  
	
  Contact Name: David
  Greenhalgh

  	
  Position: Managing Director

  
	
   

  	
   

  
	
  4. Date of Commencement of Agreement
  (Clause 2.1)

  
	
   

  
	
  5. Notices to Owners:

  	
  at the address and fax numbers stated in Box 2

  
	
   

  	
   

  
	
  6. Notices to Managers:

  	
  at the address and fax numbers stated in Box 2 with a copy to  Marine Legal Services Limited, Gate House, 1
  Farringdon Street, London EC4M
  7NS tel (44) (0) 20 7329 2422 fax (44) (0) 20 7236 2894

  
					

 

It is mutually agreed between the party mentioned in Box 2 of Part I
(hereinafter called “the Owners”) and the party mentioned in Box 3 of Part I
(hereinafter called “the Managers”) that this Agreement consisting of PARTS I
to VI inclusive shall be performed subject to the conditions contained herein.
In the event of a conflict of conditions, the provisions of an applicable
Appendix of Part III shall prevail over the provisions of PART II to the extent
of such conflict but only in respect of the Management Service to be provided
in terms of such applicable Appendix. In the event of a conflict between the
Fee Schedule and the provisions of an applicable Appendix of Part III, the
provisions of the Fee Schedule shall prevail.

 

	
  Signature(s) (Owners)

  	
   

  	
  Signature(s) (Managers)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  	
  Title

  	
   

  	
   

  
	
  Date:

  	
   

  	
  Date:

  	
   

  

 

4

 

SHIP MANAGEMENT AGREEMENT
- PART II

 

1.             Definitions and
Interpretation

 

1.1           In this Agreement, in addition to terms
defined in Part I, save where the
context otherwise requires, the following words and expressions shall have the meanings hereby
assigned to them. “Basic Services” means services relating to
Crewing, Technical Management,
Purchasing, Insurance, Accounting and Budgeting, Operations, Managers’ Information System Software, Shipboard Oil Pollution Emergency
Plan, OPA and Assistance with
Sale provided in accordance with Clause 3. “Crew Support Costs” means
all expenses of a general nature
not particularly referable to any individual vessel for the time being managed by the Managers and
incurred for the purpose of
providing an efficient supply of officers and ratings, including training schemes for officers and
ratings, cadet training schemes,
study pay, recruitment and interviews. “Fee Schedule” means the
Schedule comprising Part IV or any revised
Fee Schedule prepared by the Managers after the date hereof to record adjustments to the fees
payable from time to time under
this Agreement.

 

“Fleet” shall mean any vessel owned or operated now or  hereafter by the Owners or any parent
subsidiary or associated company
of the Owners and the vessels (if any) details of which are set out in Part V hereto or any
revised Part V executed after the
date hereof to record changes in the constitution of the Fleet.

 

“Information System Software” means the Managers’  proprietary ship management software in
executable object code form as
described in Clause 3.7 l as the same may be upgraded and updated from time to time.

 

“ISM Code” means the International Management Code for  the Safe Operation of Ships and for Pollution
Prevention adopted by Resolution
A.714 (18) of the International Maritime Organisation on 4 November 1994 and incorporated on 19 May 1994 into the SOLAS Convention 1974 as Chapter
IX or any subsequent amendment
thereto.

 

“ISPS Code” means the International Ship and Port Facility
Security Code as adopted on 12 December 2002 by resolution 2 of the Conference of Contracting Governments
to the International Convention
for the Safety of Life at Sea 1974.

 

“Management Services” means Basic Services and Other Services.

 

“OPA” means the United States Oil Pollution Act of 1990,
regulations made thereunder, and
any subsequent amendment thereto.

 

“Other Services” means any Services provided by Managers
except Basic Services, and
includes, but is not limited to any of the functions affirmatively indicated in Boxes 1 to 8 of the Fee Schedule.

 

“Severance Costs” means the costs which are required in law
to be paid to the Crew as a
result of the early termination of contracts
for service on board the Vessel.

 

“SMS” means a Safety Management System in accordance with
the ISM Code.

 

“SSP” means a Ship Security Plan in accordance with
the ISPS Code.

 

“STCW” means the International Maritime Organisation  Convention on Standards of Training
Certification and Watchkeeping for
Seafarers 1978 and as subsequently amended.

 

“the Vessel” shall mean the vessel details of which are set out
in Box 1 of Part I.

 

1.2           Clause Headings are inserted for convenience
and shall be ignored in
construing this Agreement; words denoting the singular number shall include the plural number and vice  versa;
references to Parts are to Parts of this Agreement; references to Clauses are to Clauses of Part II except
where otherwise expressly stated;
and references to any enactment include any re-enactments, amendments and extensions thereof.

 

2.             Appointment of Managers

 

2.1           With effect from the date stated in Box 4 of
Part I (the “Date of Commencement”)
and continuing unless and until terminated as provided herein, the Owners hereby appoint the Managers and the Managers hereby agree to act as the
Managers of the Vessel.

 

2.2           In performing any of the Management Services
the Managers shall, as agents for
and on behalf of the Owners, have authority to take such steps as the Managers may from time to time in their absolute discretion consider to be
necessary to enable them to
perform this Agreement in accordance with sound ship management practice.

 

3.             Basic Services

 

Subject to the terms and
conditions herein provided, during the  period of this Agreement the Managers shall carry out, as agents for and on behalf of the Owners, Basic
Services in accordance with the
following provisions of this Clause.

 

3.1           Crewing

 

3.1.1        The Managers shall provide suitably qualified
crew for the Vessel and its trade
as required by the Owners and in accordance
with current STCW requirements, provision of which includes but is not limited to the following
functions:-

 

(i)    selecting and engaging Master, officers and
crew (hereinafter collectively
referred to as the “Crew”); where the
Owners make a complaint about any member of the Crew the Managers will promptly investigate the same and if it proves to be justified, replace the
Crew member concerned as soon as
practicable;

 

(ii)   ensuring that the applicable requirements of
the law of the flag of the Vessel
are satisfied in respect of manning levels, rank, qualification and certification of the Crew, and employment regulations including Crew’s
tax, social insurance, discipline
and other requirements;

 

(iii)  ensuring that all members of the Crew have passed
a medical examination with a
qualified doctor certifying that
they are fit for the duties for which they are engaged and are in possession of valid medical
certificates issued in accordance
with appropriate flag state and P&I Club requirements. In the absence of applicable flag state requirements the medical certificate shall be
dated not more than three months
prior to the respective Crew members
leaving their country of domicile and maintained for the duration of their
service on board the Vessel.

 

(iv)  arrangement of transportation of the Crew,
including repatriation;

 

(v)   supervising the efficiency of the Crew and
using the Manager’s standard crew
appraisal system (written or electronic)
and administration of all other Crew matters such as planning for the manning of the Vessel;

 

(vi)  making payroll arrangements, including
settling manning and agency
expenses for the manning agents in the Crew’s country of origin and, if applicable, payment of Severance Costs;

 

(vii) conducting union
negotiations and making agreed  payments to unions;

 

(viii) operating the Managers’
Drug and Alcohol Policy;

 

(ix)   arranging Crew training in accordance with the
Managers’ policies but always in
compliance with STCW, records of such
training being maintained in the Manager’s standard format.

 

	
  OMEGA - Ship
  Management Agreement

  	
   

  	
  OWNERS

  	
   

  	
  o

  	
   

  	
  MANAGERS

  	
   

  	
  o

  

 

5

 

3.1.2        Crew Claims

 

The
Managers will prepare and process all Crew insurance claims.

 

*The final claim will be
presented by the Managers direct to Owners’ P & I Club.

 

(*delete as appropriate)

 

Technical
Management

 

3.2           The Managers shall provide technical management which includes, but is
not limited to the following functions:-

 

	
  (i)

  	
   

  	
  provision of personnel to supervise the maintenance and general
  efficiency of the Vessel;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  arrangement and supervision of drydockings, repairs,  modifications to and the upkeep of the
  Vessel to the standards
  required by the Owners provided that the Managers shall be entitled to incur the necessary expenditure to ensure that the Vessel will
  comply with all requirements
  and recommendations of the classification society and equipment manufacturers, and with the laws and regulations of the country of registry
  of the Vessel and of the places
  where she trades;

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  arrangement of periodic analysis of the bunker fuel,  lubricating oils and chemicals by third
  parties (the costs being
  included in the Vessel’s running costs);

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  appointment of surveyors and technical consultants as  the Managers may consider from time to time
  to be necessary;

  
	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  visits to the Vessel by superintendents (other than cargo  superintendents pursuant to Appendix 7 or in
  relation to drydockings or
  vetting procedures) or other staff of the Managers for up to 24 days in any calendar year (or pro  rata for part of a calendar year);

  
	
   

  	
   

  	
   

  
	
  (vi)

  	
   

  	
  notifying the Owners of any extraordinary and/or non  budgeted expenditure in excess of US$ 10,000; and

  
	
   

  	
   

  	
   

  
	
  (vii)

  	
   

  	
  development, implementation and maintenance of an  SMS and an SSP.

  

 

3.3           Purchasing

 

3.3.1        The Managers shall arrange for the supply of
necessary victualling, stores,
spares, provisions, lubricating oils and services for the Vessel. To enable the Managers to arrange such supplies on the most advantageous terms, the
Managers shall be entitled to
join with other parties in making arrangements
for bulk purchase. The Managers are presently members of Marine Contracting Association Limited (“MARCAS”), a company established to negotiate
on behalf of its members prices,
terms and conditions regulating the bulk purchasing of goods and services for the marine industry.

 

3.3.2        Where MARCAS has negotiated terms and
conditions with suppliers of any
stores, spares provisions, or lubricating oils (“Goods”) and/or suppliers of services required by the Vessel, then the purchase of such Goods and services
will, unless operational or other
circumstances otherwise require, be undertaken with such suppliers on the basis of the terms and conditions negotiated by MARCAS.

 

3.3.3        The Owners have received details from the
Managers of the business rules
and operating procedures adopted by MARCAS, and agree to comply with such rules and operating procedures as the same may be amended from time to time.

 

3.3.4        Details of the suppliers contracted by MARCAS
and prices available from such
suppliers will be available to Owners. Owners acknowledge that all information relating to prices is confidential and undertake not to disclose the
same to third parties without the
prior written consent of the Managers.

 

3.3.5        The Owners acknowledge that they are aware
that prices obtained from
suppliers require strict adherence to the payment terms agreed with suppliers (normally 45 days
from date of invoice), and any
failure by the Owners to provide the Managers with funds to settle sums due to suppliers on time will (in the absence of a good faith dispute)
result in an immediate 5% surcharge, and monthly interest charges of 1% per
month or part thereof being rigorously applied by suppliers. The Managers are hereby expressly authorised
to settle such surcharge and
interest charges from any sums held by them on behalf of Owners, unless same is disputed by Owners in writing and with reasonable cause. The Owners further
acknowledge that they are aware
if payments to suppliers are regularly made late, or if suppliers are not satisfied with Owners’ credit rating,suppliers may refuse to supply at the
prices and on the terms negotiated
by MARCAS.

 

3.3.6        MARCAS will where practicable obtain a best
price charter from suppliers that
the prices for all Goods and services purchased by MARCAS’s members will be the lowest prices available. If the Owners are able to obtain in good faith,
on arms’ length terms, on a true
like for like basis (including quality, certification, timing, manufacturer, place of supply, etc, but ignoring taxes and exchange rate
fluctuations), the same Goods and/or
services at a lower price than that obtained by MARCAS, the Owners will supply full details to the
Managers who will promptly raise
the matter with MARCAS and pass on to Owners any refund obtained by MARCAS from the supplier.

 

3.3.7        The Owners acknowledge that they are aware
that in the event of the
activities of MARCAS (or any other company or association or consortium of which the Managers may from time to time be members) generating a surplus,
such surplus may be distributed
among and retained by its members, including
the Managers.

 

3.4           Insurance

 

3.4.1        The Managers shall arrange such insurances as
agreed with the Owners in accordance with the following provisions.

 

3.4.2        The Managers shall arrange such insurances as
the Owners shall have instructed
or agreed, in particular as regards values, deductibles and franchises. At each renewal or at such intervals as the Owners may instruct the
Managers will:

 

	
  (i)

  	
   

  	
  consult with Owners as to any changes in insured values required;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  agree premiums, franchises and deductibles and any other changes for
  the new policy year; and

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  update the budget to reflect changes in insurance premiums.

  

 

For the avoidance of doubt
under no circumstances will the  Managers be liable to the Owners for any losses which the Owners may incur as a result of the level of
insured values.

 

3.4.3        The Managers shall engage the services of
their appointed insurance brokers
to assist them in arranging such insurances and advise Owners of any commission payable to the brokers.

 

3.4.4        It is Manager’s responsibility to do so
(following Owner’s advice), that
throughout the period of this Agreement the Vessel will be insured at the Owners’ expense for not less than sound market value or entered for full gross
tonnage, as the case may be, for:

 

	
  (i)

  	
   

  	
  usual hull and machinery risks (including crew negligence  and, if obtainable, by the insertion of a
  liner negligence clause) and
  excess liabilities (including Increased Value Insurance);

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  loss of hire insurance (should the Owners so direct)

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  protection and indemnity risks (including pollution risks), Freight
  Demurrage and Defence; and

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  war risks (including protection and indemnity risks and crew risks)

  

 

in
accordance with the best practice of prudent owners of  vessels of a similar type to the Vessel, with
first class insurance companies underwriters or associations (“the Owners’Insurances”). Owners will have the right
to request specific Underwriters
or associations to participate, with the consent of the Managers.

 

6

 

3.4.5        The Owners shall procure that Owners’
Insurances name the Managers and
any additional party designated by the Owners or the Managers as a joint assured for protection and indemnity risks (including pollution risks) and a named
assured on all other policies,
with the benefit of full cover or as a loss payee (in case of financing arrangements) and full
waiver of subrogation. The
Managers shall obtain cover in respect of each of the insurances specified in Clause 3.4.4 above (if reasonably obtainable) on terms whereby the Managers and
any such third party are not
liable in respect of premiums or calls arising in connection with the Owners’ Insurances.

 

3.4.6        As between the Owners and the Managers, the
Managers shall not be responsible
for paying any premiums or calls arising in connection with such insurances, unless funds have been provided to that effect in accordance with
Clause 8 in which case the
Mangers shall be responsible for the due and punctual payment of the premium. On termination of this
Agreement (howsoever occasioned)
or where the Owners make a change in
the P & I Club in which the Vessel is entered, the Owners shall, unless the Managers otherwise agree,
pay such release call as is
required by the P & I Club in which the Vessel was entered. For the avoidance of doubt, it is
agreed that the Owners shall be
liable for all deductibles applying to any insurance policy.

 

3.4.7        The Managers shall compile such statistics and
enter into negotiations with such
underwriters and P & I Clubs as they consider necessary or desirable in order to arrange such insurances (following also Owners’
instructions).

 

3.4.8.       Once insurances are placed the Managers shall
arrange for all cover notes to be
checked and for all debit notes to be paid as required.

 

3.4.9        Unless otherwise indicated by the Owners, the
Managers shall handle and or
procure the settling of all insurance average and salvage claims in connection with the Vessel.

 

3.4.10      The Managers shall be entitled to receive
additional remuneration for time
spent on the insurance, average and salvage claims (charged at the rate of US$650 per man per day of 8 hours in respect of the preparation and
prosecution of claims, the
supervision of repairs and the provision of documentation relating to adjustments).

 

3.5           Accounting and Budgeting

 

3.5.1        The Managers shall:

 

	
  (i)

  	
   

  	
  maintain the records of all costs and expenditure incurred  hereunder as well as data necessary or
  proper for the settlement of
  accounts between the parties;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  establish an accounting system for the Vessel and supply  regular reports in accordance therewith in
  the Managers’ standard format
  or such other form as may be mutually agreed in writing with the Owners.

  

 

3.5.2        The Managers shall present to the Owners
annually a budget for the
following twelve months in the Managers’ standard format or such other form as may be mutually
agreed in writing. The budget for
the period following the date stated in Box 4 of Part I is set out in Part VI. Subsequent annual budgets shall be prepared by the Managers and
submitted to the Owners in each
year in respect of the following year not later than three months before the end of the period.

 

3.5.3        The Owners shall indicate to the Managers
their acceptance and approval of
the annual budget within 14 days of presentation and in the absence of such acceptance the Managers shall be entitled to assume that the Owners have
accepted the said budget.
Following the agreement of the budget, the Managers shall prepare and present to the Owners their
estimate of the working capital
requirement of the Vessel. The budget will be discussed between the Managers and Owners, and adjustments made as agreed. Should agreement not be
reached, the Owners and/or
Manager will have a right to terminate this agreement, as per clause 15.1.

 

3.5.4        The Managers shall produce a monthly
comparison between budgeted and
actual expenditure of the Vessel in the Managers’ standard format or such other form as may be
mutually agreed in writing. In
addition the Managers shall provide a narrative report on such comparisons on a quarterly basis.

 

Operations

 

3.6           As required by the Owners, the Managers shall,
as agents for the Owners, provide the following functions:-

 

	
  (i)

  	
   

  	
  monitoring voyage instructions and liaising as appropriate with the
  Owners, the Owners’ brokers and charterers;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  appointment of agents;

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  appointment of stevedores;

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  arrangement of surveying of cargoes.

  

 

3.7           Information System Software

 

3.7.1        The Managers will, subject to the remaining
provisions of this Clause 3.7,
provide the Owners and the Vessel with the Information System Software to allow information from both the Vessel’s and the Managers’ office to be
accessed directly by the Owners
via the “Partnership Network” secure website. Financial, technical and operational information relating to the Vessel will be available from both the Vessel
and office outputs, with the
ability to “drill down” on accounts. This will provide the Owners with immediate access to the same
information available to the
Managers and to reports generated for the Owners, with a view to providing improved efficiency and cost savings to the Owners in his overview of the
management of the Vessel.

 

3.7.2        Should the Owners have existing software
applications on board the Vessel
which they wish to retain, the Owners will permit the Managers to carry out an on board audit to assess the suitability, compatibility with the
Information System Software, and
any risks or disadvantages associated with the continued use of such applications.

 

3.7.3        The main features of the Information System
Software at the date of this Agreement are:

 

	
  (i)

  	
   

  	
  comprehensive management software providing single  point of entry to the Vessel incorporating
  crew administration and
  payroll, vessel noon reporting, operational
  and port reporting, defect and deficiency reporting and performance monitoring;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  a ship to shore and shore to ship e-mail package with  itemised billing providing cost efficient
  communications available to
  both Owners and their charterers; and

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  a computerised maintenance system including inventory  control and automated purchase order
  handling. (An initial charge,
  to be agreed with Owners, may be made for the set-up of the maintenance database, depending on the system currently existing on board
  the Vessel).

  

 

3.7.4        The costs for the Information System Software
are set out in the Fee Schedule,
and are included in the Vessel’s running costs, as follows:

 

	
  (i)

  	
   

  	
  the licence fee;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  remote access from the Owners’ Office through the Managers’
  PartnerShip network;

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  maintenance, updates and upgrades;

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  24 hour support;

  
	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  provision of anti-virus
  software and regular upgrades;

  
	
   

  	
   

  	
   

  
	
  (vi)

  	
   

  	
  operational manuals on CD ROM and regular updates;

  
	
   

  	
   

  	
   

  
	
  (vii)

  	
   

  	
  annual audit on board the Vessel providing a system health check;

  
	
   

  	
   

  	
   

  
	
  (viii)

  	
   

  	
  user manuals and training of the Crew in the use of the Information
  System Software; and

  
	
   

  	
   

  	
   

  
	
  (ix)

  	
   

  	
  e-mail on board the Vessel with itemised billing for Owners and
  charterers.

  

 

7

 

3.7.5        Such costs do not include:

 

	
  (i)

  	
   

  	
  the costs of appropriate hardware on board the Vessel;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  travel and other related costs for installation and set-up of the
  Information System Software on board the Vessel;

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  travel costs to and from the Vessel in connection with the annual audit;

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  the set-up cost of the data base for the maintenance system; and

  
	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  any specific reports specified by the Owners where new data/specialist
  reporting is required.

  

 

3.7.6        Installation and set-up of the Information
System Software will be
undertaken on a date agreed between the Managers and the Owners having regard to the Vessel’s
schedule and the availability of
the Managers’ personnel.

 

3.7.7        Solely for the duration of this Agreement the
Managers hereby grant the Owners
a personal, non-transferable non-exclusive licence to use a single copy of the Information System Software as installed by the Managers on a single
computer on board the Vessel.

 

3.7.8        The Information System Software is owned by
the Managers or its subsidiaries
and is protected by applicable copyright and patent laws. The Owners may not copy the Information System Software (except for back-up purposes only) or
any written materials which
accompany it, and may not sell, rent, lease, lend, sub-licence, reverse engineer or distribute the Information System Software or such written
materials.

 

3.7.9        The Managers do not warrant that the
Information System Software will
meet the Owners’ requirements or that the use or operation of the Information System Software will be uninterrupted or error free.

 

3.8           Shipboard Oil Pollution
Emergency Plan

 

3.8.1        The Managers will prepare and obtain all
necessary approvals for a
shipboard oil pollution emergency plan (SOPEP) in a form approved by the Marine Environment Protection
Committee of the International
Maritime Organisation pursuant to the requirements of Regulation 26 of Annex I of the International Convention for the Prevention of Pollution
from Ships, 1973, as modified by
the Protocol of 1978 relating thereto, as amended (MARPOL 73/78).

 

3.8.2        The SOPEP will be written in the English
language and will be reviewed and
updated from time to time. If required the Managers will arrange for the translation of the SOPEP into another language, the cost of translation
being recoverable in terms of
Clause 7.4.

 

3.8.3        The Managers will also undertake regular
training of the Crew in the use
of the SOPEP including drills to ensure that the SOPEP functions as expected and that contact and information details specified are accurate.

 

3.9           OPA

 

3.9.1        The Managers will:-

 

	
  (i)

  	
   

  	
  arrange for the preparation, filing and updating of a  contingency Vessel Response Plan in
  accordance with the requirements
  of OPA and instruct the Crew in all aspects of the operation of such plan; The Vessel will carry the necessary COFR on board as well as any other
  contingency plans and permits to trade in the USA.

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  identify and ensure the availability by contract or  otherwise of a Qualified Individual, a Spill
  Management Team, an Oil Spill
  Removal Organisation, resources having
  salvage, firefighting, lightering and, if applicable, dispersant capabilities, and public
  relations/media personnel to
  assist the Owners to deal with the media in the event of discharges of oil.

  

 

3.9.2        The Managers are expressly authorised as agents
for the Owners to enter into such
arrangements by Contract or otherwise
as are required to ensure the availability of the services outlined in Clause 3.9.1. The
Managers are further expressly
authorised as agents for the Owners to enter into such other arrangements as may from time to
time be necessary to satisfy the
requirements of OPA or other Federal or State laws.

 

3.9.3        The Owners will pay the fees due to third
parties providing the services
described above together with a fee to the Managers for their services. The level of fees will be
included in the Vessel’s running
costs.

 

3.9.4        On termination of this Agreement, the Vessel
Response Plan and all
documentation will be returned to the Managers at the expense of the Owners.

 

Assistance
with Sale of Vessel

 

3.10         The Managers shall, if requested, provide
Owners with technical assistance
in connection with any sale of the Vessel. The Managers will, if requested in writing by the Owners, comment on the terms of any proposed Memorandum of
Agreement, but the Owners will
remain solely responsible for agreeing the terms of any Memorandum of Agreement regulating any sale.

 

4.             Other Services

 

4.1           Subject to the terms and conditions herein
provided, during the period of
this Agreement the Managers shall carry out, as agents for and on behalf of the Owners, such Other Services as shall have been indicated in Boxes 1 to 7 of
the Fee Schedule.

 

4.2           Other Services shall be provided in accordance
with the terms of the Appendices
contained in Part III.

 

5.             Managers’ Obligations

 

5.1           The Managers undertake to use all reasonable
endeavours to provide the Basic
Services and the Other Services to be provided in accordance with Clauses 3 and 4 as agents for and on behalf of the Owners in accordance with
sound ship management practice
and to protect and promote the interests of the Owners in all matters relating to the provision of Management Services

 

PROVIDED HOWEVER that the
Managers in the performance of  Management Services shall be entitled to have regard to their overall responsibility in relation to all
vessels which may from time to
time be entrusted to their management and in particular, but without prejudice to the generality of the foregoing, the Managers shall be entitled to
allocate available supplies,
manpower and services in such manner as in the prevailing circumstances the Managers in their absolute discretion consider to be fair and reasonable.

 

5.2           Where the Managers are providing technical
management in accordance with
Clause 3.2, they shall procure that the requirements of the law of the flag of the vessel are satisfied, and they shall be deemed to be “the Company”
as defined by the ISM Code,
assuming the responsibility for the operation of the Vessel and taking over the duties and responsibilities imposed by the ISM Code and by the ISPS Code.

 

6.             Owners’ Obligations

 

6.1           The Owners shall pay all sums due to the Managers punctually in
accordance with the terms of this Agreement.

 

6.2           Where the Managers are not providing technical
management in accordance with
Clause 3.2, the Owners, or such third party as may be appointed by them and identified to the Managers, shall be deemed to be “the Company” as defined
by the ISM Code, assuming the
responsibility for the operation of the Vessel and taking over the duties and responsibilities imposed by the ISM Code and by the ISPS Code.

 

6.3           The Owners will deliver to the Managers copies
of the Vessel’s Certificate of
Registry and copies of all her trading and classification certificates. In addition, in the case of a new Vessel, the Owners will deliver a copy of the
Building Contract and
specification, and in the case of a second hand vessel, a copy of the Memorandum of Agreement in terms
of which the Owners acquired the
Vessel.

 

8

 

The Owners shall be entitled
to delete any confidential  information
(such as price) from the Building Contract or Memorandum of Agreement.

 

6.7           The Owners will on request provide the
Managers with full details, in
writing, of the ultimate beneficial owners of their share capital provided that the Managers
substantiate the reasonableness
of their request for the fulfillment of their duties.

 

6.8           The Owners agree to implement in full the
terms and conditions of
employment under which the Crew are engaged by the Managers as agent for the Owners. The Owners shall be the employer of the Crew and under no
circumstances shall the Managers
be deemed to be the employer of the Crew. If the Vessel is covered by an ITF approved agreement the Owners authorize the Managers to sign the ITF Special
Agreement on their behalf and
agree to provide all information necessary for this purpose.

 

6.9           The Owners shall be obliged to obtain the SCAC
code and International Carrier
Bond as required in order to access the US Bureau of Customs and Border Protection automated manifest system, as required by 68 Fed Reg 68139 and as
amended.

 

6.10        Data Protection

 

6.10.1      In respect of any Personal Data supplied to the Owners, the Owners warrant (save as provided in Clause
16.3):

 

	
  (i)

  	
   

  	
  that they are legally entitled to process the Personal Data  and will do so only on behalf of the
  Managers and in compliance with
  their instructions and will take all appropriate technical and organisational security
  measures to protect the Personal
  Data against destruction, loss, alteration, unauthorized disclosure or access and against all other
  unlawful forms of processing;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  to notify the Managers promptly of (a) any legally binding request for
  disclosure of the Personal Data by a law  enforcement authority unless otherwise
  prohibited; (b) any accidental
  or unauthorized access in respect of the Personal Data; (c) any request from a Data Subject
  for access to his Personal
  Data, without responding to that request, unless it has been otherwise authorized to do so; and (d)
  any reason why they are unable
  to comply with clause 6.9.1(i), in which case the Managers are entitled to suspend the transfer of data; (iii) to destroy promptly all Personal Data
  transferred and certify to the
  Managers that they have done so (a) if the Data Subject is not offered or does not accept
  employment on the Vessel and
  (b) on termination of this Agreement.

  

 

6.10.2      “Personal Data” means any information or data
relating to an identified or
identifiable living individual (“Data Subject”) who can be identified from that information or data or from that information or data and other information
or data which is in the
possession of or likely to come into the possession of the Managers.

 

“Processing” of Personal Data
means obtaining, recording or  holding Personal Data or carrying out any operation or set of operations on the Personal Data, including its
organization, adaptation or
alteration; its retrieval, consultation or use; its disclosure by transmission, dissemination or
by being otherwise made
available; or its alignment, combination, blocking, erasure or destruction.

 

7.             Management Fee

 

7.1           The Owners shall pay to the Managers a fee in
the amount stated in the Fee
Schedule in respect of Basic Services which shall be payable by equal monthly instalments in advance, the first instalment being payable one month
before the Vessel is handed over
to the Managers and subsequent instalments being payable monthly in advance.

 

7.2           If the Managers ’ superintendents or other
staff spend more than 24 days
visiting the Vessel in any calendar year (or pro  rata for part of a calendar year) visits in excess of 24 days shall be
charged at the rate of US$ 650 per day, unless in case of drydock.

 

7.3           Where Other Services are provided, the Owners
shall pay to the Managers fees therefore
at the rates and times specified in the applicable Appendix or Appendices of Part III and/or the Fee Schedule.

 

7.4           The Managers shall, at no extra cost to the
Owners, provide their own office
accommodation, office staff and office stationery. The Owners shall reimburse the Managers for all expenses properly incurred under the terms of
this Agreement on behalf of the
Owners, including, without prejudice to the foregoing generality, postage and communication expenses (which the Managers shall allocate among all
vessels managed by them on a
basis which the Managers consider to be fair and reasonable having regard to the trade of the vessels, the nationality of the crews and other relevant
factors), Crew Support Costs (as included
in the Vessel’s running costs), vessel documentation, administrative expenses of the SOPEP and SSP, traveling expenses and other out of pocket
expenses properly incurred by the
Managers in pursuance of the Management Services.

 

7.5           In the event of the termination of this
Agreement the fees payable to the Managers according to the provisions of
Clauses 7.1, 7.2 and 7.3 shall,
save as aftermentioned, be paid for a further period of two calendar months from the date of termination (or in the case of Other Services
such longer period (if any) as is
provided in the applicable Appendices) to compensate the Managers for the ongoing work which the Managers will have to continue to perform
notwithstanding such termination.
The only occasion on which the foregoing provision will not apply is where the Agreement is properly terminated by the Owners in terms of Clause
15.3 as a result of the Managers’
default. The Owners shall also pay on demand Severance Costs together with repatriation costs and expenses.

 

7.6           Fees payable to the Managers will be adjusted
annually by reference to the U.K.
retail price index. In addition where Management Services are wholly or partly provided by third parties, the fees therefore shall be adjusted
immediately to take account of increases
in the cost of such services. The Managers will, however, use all reasonable endeavours in negotiations with such third parties to minimise such
increases.

 

7.7           All fees are exclusive of Value Added Taxes or other applicable taxes.

 

7.8           Save as otherwise provided in this Agreement,
all discounts and commissions
obtained by the Managers in the course of the management of the Vessel shall be credited to the Owners.

 

7.9           If as a result of collision, accident,
emergency, or any other extraordinary
circumstances, the Managers’ workload is increased beyond that which the parties could reasonably have anticipated, the Managers shall be entitled to
reasonable additional
remuneration as allowed under the respective Insurance Policies, having regard to the nature of the incident, the personnel and resources of the Managers
deployed, and all other relevant
circumstances including insurance recoveries.

 

7.10         On or prior to the Date of Commencement the
Owners shall provide to the
Managers a sum equivalent to one twelfth of the annual budget from time to time which shall be available to the Managers in their sole discretion for payment
of any sum due under the terms of
this Agreement (“the Float”). At the end of each calendar month the Managers shall notify the Owners in the event that they have utilized the Float,
specifying the amount by which
the Float has been reduced and requesting payment of such sum as may be necessary to maintain the Float. The Owners undertake to pay forthwith
on request of the Managers such
sum as may be necessary to ensure that the Float remains equivalent to one twelfth of the annual budget from time to time. The Owners agree that on
termination of this Agreement the
Managers shall be entitled to retain all or part of the Float in payment of any sums then
outstanding under the terms of
this Agreement and, subject thereto, the Managers shall reimburse the Float to the Owners.

 

9

 

8.             Payments and Management of
Funds

 

8.1           All sums paid to the Managers by or on behalf
of the Owners and all moneys
collected by the Managers under the terms of this Agreement (other than fees payable by the Owners to the Managers and the float referred to in Clause
8.4) shall be held to the credit
of the Owners in a separate interest bearing bank account or accounts, which shall be operated
by the Managers in trust for the
Owners.

 

8.2           Where any sums howsoever arising and whether
in respect of fees, budgeted
expenditure, non-budgeted expenditure, other liabilities (present, future, liquidated or unliquidated) or expenses are owed to the Managers in
connection with the Fleet the
Managers shall be entitled but not obliged at any time or times to apply any sums standing to the
credit of the accounts referred
to in Clause 8.1 to settle such sums.

 

8.3           The Managers shall each month request (by
letter, telex, fax or e-mail)
from the Owners the funds required to run the Vessel for the ensuing month. Such request will be
for the total of the anticipated
monthly expenditure, including, without prejudice to the generality of the foregoing, any sums due to be paid to suppliers and other third parties
in the ensuing month (as
conclusively evidenced, in the absence of manifest error, by an accounts payable listing produced
by the Managers). In addition,
the Owners shall provide the Managers
upon request with any funds which the Managers may request to cover any unexpected, occasional or extraordinary item of expenditure. All such
funds shall be received by the
Managers within ten (10) days after the receipt of such requests and shall be held to the credit of the Owners in the account(s) referred to in Clause 8.1.
The Managers shall be entitled to
allocate such funds in such manner as the Managers determine, and it shall not be open to the Owners to direct the Managers otherwise and under no
circumstances shall any funds
received be held on trust by the Managers for any specific purpose.

 

8.4           Notwithstanding anything contained herein, the
Managers shall in no
circumstances be required to use or commit their own funds to finance the provision of the
Management Services and all
payments due shall be made punctually to the Managers (and not any third party) in accordance with
the terms of this Agreement in
full without any deduction whatsoever. To cover travel and other incidental and out of pocket expenses, the Owners will provide the Managers with a float
of US$5,000, which sum will be
held in the Managers’ bank account.

 

8.5           Where the Owners delay settling fees due to
the Managers the Owners shall pay
interest thereon from the due date until the date of payment at 3% per cent over one month LIBOR.

 

8.6           In addition to the funds referred to above the
Owners shall pay and/or reimburse
the Managers in respect of all expenses incurred prior to the Date of Commencement including, but not limited to, riding crew wages, initial crew
movements, crew standby expenses,
communication and liaison expenses and ITF welfare contributions.

 

9.             Managers’ Right to
Sub-Contract

 

9.1           The Managers shall be entitled to procure
performance of the Managers’
obligations hereunder with the Owners prior written consent which shall not be unreasonably
withheld or delayed by their
parent, subsidiary or associated companies or (in the case of Other Services) third parties (hereinafter
collectively called the “Sub-Managers”)
in accordance with the following provisions
of this Clause 9.1:-

 

	
  (i)

  	
   

  	
  any such performance of all or any of the
  Managers’ obligations by the Sub-Managers shall be and constitute full and
  sufficient performance by the Managers of their obligations hereunder;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  the Owners hereby agree with the Managers that insofar  as the Sub-Managers perform the obligations
  of the Managers the
  Sub-Managers shall be entitled to the benefits of the provisions of Clause 10; and

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  any performance of the Managers’ obligations by the Sub-Managers shall
  be without prejudice to the rights of the  Owners hereunder for any failure by the
  Managers in performance of the
  Managers’ duties and obligations hereunder
  and notwithstanding performance by the Sub-Managers the Managers shall remain
  solely responsible to the
  Owners for performance of their obligations hereunder.

  

 

9.2           The provisions of Clause 9.1 shall remain in
force notwithstanding termination
of this Agreement.

 

10.           Responsibilities

 

10.1         Force Majeure

 

Neither the Owners nor the
Managers shall be under any  liability
for any failure to perform any of their obligations hereunder by reason of any cause whatsoever of
any nature or kind beyond their
reasonable control.

 

10.2         Liability to Owners

 

	
  (i)

  	
   

  	
  Without prejudice to Clause 10.1, the Managers shall be  under no liability whatsoever to the Owners
  for any loss, damage, delay or
  expense of whatsoever nature, whether direct or indirect, (including but not limited to loss of profit
  arising out of or in connection with detention of or delay to the Vessel) and howsoever arising in the
  course of performance of the
  Management Services UNLESS same
  is proved to have resulted solely from the negligence, gross negligence or willful default of the Managers or their employees or agents, or
  sub-contractors employed by
  them in connection with the Vessel, in which case (save where loss, damage, delay or expense has resulted from the Managers’ personal act or
  omission committed with the
  intent to cause same or recklessly and with knowledge that such loss, damage, delay or expense would probably result) the Managers’
  liability for each incident or
  series of incidents giving rise to a claim or claims shall never exceed a total of ten times the annual management fee payable hereunder for Basic
  Services.

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  Notwithstanding anything that may appear to the contrary  in this Agreement, the Managers shall not be
  responsible for any of the
  actions of the Crew even if such actions are negligent, grossly negligent or willful, except only to the extent that they are shown to have resulted
  solely from a failure of the
  Managers to discharge their obligations under Clause 3.1 in which case their liability shall be limited in accordance with the terms of this Clause 10.

  

 

10.3         Indemnity - General

 

Except to the extent and
solely for the amount therein set out  that the Managers would be liable under Clause 10.2, the Owners hereby undertake to keep the Managers
and their employees, agents and
sub-contractors indemnified and to hold them harmless against all actions, proceedings, claims, demands or liabilities whatsoever or howsoever
arising out of or in connection
with the performance of this Agreement, and against and in respect of all costs, loss, damages and expenses (including legal costs and expenses on a full
indemnity basis) which the
Managers may suffer or incur (either directly or indirectly) in the course of the performance of this Agreement.

 

10.4         Indemnity - tax

 

Without prejudice to the general
indemnity set out in Clause  10.3,
the Owners hereby undertake to keep the Managers, their employees, agents and sub-contractors
indemnified and to hold them
harmless against all taxes, imposts and duties levied by any government as a result of the trading or
other activities of the Owners or
the Vessel or the Fleet and that whether or not such taxes, imposts and duties are levied on the Owners or the Managers.

 

10

 

10.5         “Himalaya”

 

It is hereby expressly agreed
that no employee or agent of the  Managers (including every sub-contractor from time to time employed by the Managers and the employees of
such subcontractors) shall in any
circumstances whatsoever be under any
liability whatsoever to the Owners for any loss, damage or delay of whatsoever kind arising or resulting
directly or indirectly from any
act neglect or default on his part while acting in the course of or in connection with his employment and, without prejudice to the generality of
the foregoing provisions in this
Clause, every exemption, limitation, condition and liberty herein contained and every right, exemption from liability defence and immunity of whatsoever
nature applicable to the Managers
or to which the Managers are entitled hereunder shall also be available and shall extend to protect every such employee or agent of the Managers
acting as aforesaid.

 

10.6         The provisions of Clause 10 shall remain in force notwithstanding
termination of this Agreement.

 

11.           Prosecution of Claims/Disputes
other than Insurance

 

11.1         If required the Managers shall handle and
settle all claims arising out of
the Management Services hereunder (other than insurance, average and salvage claims which shall be dealt with in accordance with Clause 3.4.) with the prior
written consent of the Owners and
keep the Owners informed regarding any incident of which the Managers become aware which gives or may give rise to claims or disputes involving
third parties.

 

11.2         The Managers shall, as instructed by the
Owners, bring or defend actions,
suits or proceedings in connection with matters entrusted to the Managers according to this Agreement.

 

11.3         The Managers shall also have power to obtain
legal or technical or other
outside expert advice in relation to the handling and settlement of claims and disputes or all other
matters affecting the interests
of the Owners in respect of the Vessel.

 

11.4         The Owners shall arrange for the provision of any necessary guarantee
bond or other security.

 

11.5         Subject to Owners prior approval, the Owners
shall pay to the Managers a fee
for time spent by the Managers in carrying out their obligations under Clause 11 and such fee shall be charged at the rate of US$650 per man per day of 8
hours. In addition any costs
incurred by the Managers in carrying out their obligations according to Clause 11 shall be reimbursed by the Owners.

 

12.           Auditing, Records

 

12.1         The Managers shall at all times maintain and
keep true and correct accounts
and shall make the same available for inspection and auditing by the Owners or Independent Auditors at such times as may be mutually agreed.

 

12.2         The Managers shall be entitled to microfilm or
archive all the Vessels’ records
and arrange safe storage of the same, the costs being included in the Vessel’s running costs.

 

12.3         All accounting and other records relating the
Vessel will be retained by the
Managers for a period of two years after the date of termination, for whatever reason, of this Agreement, and thereafter shall be destroyed unless the
Owners request the Managers to
deliver such records to them at the Owners’ expense.

 

13.           Inspection of Vessel

 

The Owners shall have the
right at any time to inspect the  Vessel for any reason they consider necessary. The Owners will, where practicable, give reasonable notice
to the Managers of their
intention to visit the Vessel. After such inspection should Owners advise Managers of reasonable
comments about the Vessel’s
condition and Crew’s performance, Managers undertake to take necessary
rectifying actions at the Owners expense.

 

14.           Compliance with Laws and
Regulations

 

The Managers will not do or
permit anything to be done which  might cause any breach or infringement of the laws and regulations of the country of registry of the
Vessel, and of the places where
she trades, provided always that the Managers’ obligations under this clause will only relate to matters which the Managers are in fact capable of fulfilling
and on the understanding that the
Managers receive all necessary cooperation, information and funding from the Owners.

 

15.           Duration of the Agreement

 

15.1         Termination by Notice

 

This Agreement shall come
into effect on the Date of  Commencement
(except that the Managers are authorised, prior to such date to do all such things in respect of which it shall be entitled to be paid or reimbursed
pursuant to clause 8.7) and shall
continue thereafter until terminated by either party giving to the other notice in writing, in which event this Agreement shall, subject as aftermentioned
terminate on the expiry of a period
of three months from the date upon which such notice was given. Where the Vessel is not at a safe port or anchorage on the expiry of such period,
this Agreement shall terminate on
the subsequent arrival of the Vessel at a safe port or anchorage.

 

15.2         Termination by default -
Owners

 

(i)            The Managers shall be entitled to terminate
the Agreement with immediate
effect by notice in writing if any
moneys requested by the Managers from the Owners or the owners of any vessel in the Fleet, shall not have been received in the Managers’ nominated
account within ten (10) days of
payment having been requested in writing
by the Managers or if the Owners fail to comply to the reasonable satisfaction of the Managers
with the requirements of clauses
6.3, 6.4 and 6.5.

 

(ii)           If the Owners

 

(a)           otherwise fail materially to meet their
obligations hereunder for reasons within their control, or

 

(b)           proceed with employment of or continue to
employ the Vessel in the carriage
of contraband, or in an unlawful
trade or in a manner which is, in the opinion of the Managers, is unduly hazardous or improper,

 

then the Managers may give
written notice to the Owners  specifying the default and requiring them to remedy it as soon as practically possible. In the event
that the Owners fail to remedy
such default (in the case of (a) above,
if remediable) within a reasonable time to the reasonable satisfaction of the Managers, the Managers shall be entitled to terminate this Agreement
with immediate effect by notice
in writing.

 

15.3         Termination by Default -
Managers

 

If the Managers fail
materially to meet their obligations under  this Agreement for reasons within the control
of the Managers, the Owners may
give written notice to the Managers specifying the default and requiring them to remedy it as soon as practically possible. In the event that the
Managers fail to remedy such
default, if remediable, within a reasonable time to the reasonable satisfaction of the Owners, the
Owners shall be entitled to
terminate this Agreement with immediate effect by notice in writing.

 

11

 

15.4         Liquidation

 

This Agreement shall
terminate forthwith in the event of an  order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of
either party (otherwise than for
the purpose of reconstruction or amalgamation) or if a receiver or similar officer is appointed, or
if it suspends payment, ceases to
carry on business or makes any special arrangement or composition with its creditors. The Managers shall be entitled to terminate this Agreement
forthwith in the event of an
order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of the owner of any vessel in the Fleet (otherwise than for
the purpose of reconstruction or
amalgamation) or if a receiver or similar officer is appointed to such owner, or if such owner suspends payment, ceases to carry on business or makes
any special arrangement or
composition with its creditors.

 

15.5         Extraordinary Termination

 

This Agreement shall be
deemed to be terminated in the case  of the sale of the Vessel or if the Vessel becomes a total loss or is declared
as a constructive or compromised or arranged total loss or is requisitioned. Notwithstanding such
deemed termination, fees shall be
paid in accordance with the provisions
of Clause 7.5.

 

15.6         For the purpose of sub-clause 15.5 hereof:

 

(i)            the date upon which the Vessel is to be
treated as having been sold or
otherwise disposed of shall be the date
on which the Owners cease to be registered as Owners of the Vessel;

 

(ii)           the Vessel shall not be deemed to be lost
until either she has become an
actual total loss or agreement has been reached with her Underwriters in respect of her constructive, compromised or arranged total
loss or if such agreement with
her Underwriters is not reached it is
adjudged by a competent tribunal that a constructive loss of the Vessel has occurred or Owners
issue a Notice of Abandonment to
underwriters.

 

15.7         The termination of this Agreement shall be
without prejudice to all rights
accrued due between the parties prior to the date of termination.

 

15.8         All outstanding fees and other sums payable by
the Owners require to be paid in
full on or prior to termination, for whatever reason, of this Agreement. Save where the Agreement is properly terminated by the Owners
in accordance with Clause 15.3,
the Managers shall be entitled to be paid fees in accordance with Clause 7.5.

 

16.           Confidentiality

 

16.1         Save for the purpose of enforcing or carrying
out as may be necessary their
respective rights or obligations, each party agrees to maintain and to use all reasonable endeavours to procure that their respective officers and
employees maintain confidentiality
and secrecy in respect of all information relating to the other’s business received by it
directly or indirectly pursuant
to this Agreement.

 

16.2         As between the Owners and the Managers, the
Owners hereby agree and
acknowledge that all title and property in and to the management manuals of the Managers and other
written material of the Managers
concerning management functions and
activities is vested in the Managers and the Owners agree not to disclose the same to any third party
and, on the termination of this
Agreement, to return all such manuals and other material to the Managers. For the purposes of this Clause reference to “the Managers” includes
the parent, subsidiary and
associated companies of the Managers and any third parties providing Management Services.

 

16.3         It is hereby acknowledged that the Owners’
Holding company, Omega Navigation
Enterprises Inc is publicly listed in the NASDAQ and the SGX and therefore this clause 16, as well as Clause 6.10 are applicable to the extent the
Owners and / or their Holding Company do not have to disclose or disseminatesuch information by being a public
company.

 

17.           Third Party Rights

 

17.1         Any person (other than parties to this
Agreement) who is given any
rights or benefits under Clauses 9 or 10 (a “Third Party”) shall be entitled to enforce those rights or
benefits against the parties in accordance with the Contracts (Rights of ThirdParties) Act 1999, including the Owners’
Holding Company.

 

17.2         Save as provided in Clause 17.1 above the
operation of the Contracts
(Rights of Third Parties) Act 1999 is hereby excluded.

 

17.3         The parties may amend vary or terminate this
Agreement in such a way as may
affect any rights or benefits of any Third Party which are directly enforceable against the parties under the Contracts (Rights of Third Parties) Act
1999 without the consent of any
such Third Party.

 

17.4         Any Third Party entitled pursuant to the
Contracts (Rights of Third
Parties) Act 1999 to enforce any rights or benefits conferred on it by this Agreement may not veto
any amendment, variation or
termination of this Agreement which is proposed by the parties and which may affect the rights or benefits of any such Third Party.

 

18.           Law and Arbitration

 

18.1         This Agreement shall be governed by English
law and any dispute arising out
of or in connection with this Agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory
modification or reenactment thereof
for the time being in force.

 

18.2         The arbitration shall be conducted in
accordance with the London Maritime
Arbitrators’ (LMAA) Terms current at the time when the arbitration is commenced.

 

18.3         Save as after mentioned, the reference shall
be to three arbitrators, one to
be appointed by each party and the third by the two so appointed. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and
send notice of such appointment
to the other party requiring the other party to appoint its arbitrator within 14 days of that notice and stating that it will appoint its arbitrator as sole
arbitrator unless the other party
appoints its own arbitrator and give notice that it has done so within the 14 days specified. If
the other party does not appoint
its own arbitrator and give notice that it has done so within the 14 days specified, the party referring the dispute to arbitration may, without the
requirement of any further prior
notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other
party accordingly. The award of a
sole arbitrator shall be as binding as if he had been appointed by agreement.

 

18.4         In cases where neither the claim nor any
counterclaim exceeds the sum of
US$ 50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the
time when the arbitration
proceedings are commenced.

 

19.           Amendments to Agreement

 

The Managers reserve the
right to make such changes to this  Agreement as they shall consider necessary to take account of regulatory changes which come into force after
the date hereof and which affect
the operation of the Vessel. Such changes will be intimated in writing to the Owners and will come into force on intimation or on the date on which such
regulatory or other changes come
into effect (whichever shall be the later).

 

20.           Time Limit for Claims

 

Any and all liabilities of
either party to the other arising under  this Agreement or otherwise in relation to the Vessel (except in the case of fraud) shall be deemed to be
waived and absolutely barred on
the relevant date unless prior to the relevant date written particulars of any claim (giving
details of the alleged breach in
respect of which such claim is made and a preliminary

 

12

 

statement of the amount claimed)
have been intimated in  writing
by the claimant by the relevant date, and any such claim shall be deemed (if it has not
previously been satisfied, settled
or withdrawn) to have been withdrawn unless arbitration proceedings have been commenced under Clause 18 prior to the expiry of six months after the
relevant date. For the purposes
of this Clause 20, the “relevant date” is one year after the date of termination, for whatever
reason, of this Agreement.

 

21.           Condition of Vessel

 

The Owners acknowledge that
they are aware that the  Managers
are unable to confirm that the Vessel, its systems, equipment and machinery are free from defects,
and agree that the Managers shall
not in any circumstances be liable for any losses, costs, claims, liabilities and expenses which the Owners may suffer or incur resulting from
pre-existing or latent deficiencies
in the Vessel, its systems, equipment and machinery.

 

22.           Use of Associated Companies

 

22.1         The Managers hereby disclose to the Owners
that they may, in the course of
performing Management Services, utilise the services of companies associated with the Managers. Without prejudice to the foregoing generality,
associated companies of the
Managers may be used in connection with inter  alia the following matters:

 

(i)            arranging travel to and from the Vessel for
the Managers’ personnel and the
Crew;

 

(ii)           placing insurance cover for the Vessel;

 

(iii)          undertaking loss/average adjustment and
dealing with insurance claims relating to the Vessel;

 

(iv)          providing legal advice in connection with
matters arising from the performance of Management Services;

 

(v)           providing consultancy services; and

 

(vi)          providing port agency services.

 

Where companies associated
with the Managers provide  services
in connection with the above or any other matters, such companies will be entitled to charge and
retain for their own benefit
usual remuneration for the provision of their services (whether in the form of commission or fees). The Managers will ensure that all such
remuneration is competitive

 

22.2         The Owners hereby consent to the arrangements set out in Clause 22.1.

 

23.           Notices

 

23.1         Any notice or other communication under or in
relation to this Agreement (a “Communication”)
may be sent by fax, telex, registered
or recorded mail or by personal delivery.

 

23.2         The addresses of the parties for service of a
Communication shall be as stated
in Boxes 5 and 6 respectively of Part I.

 

23.3         Subject to Clause 23.4, a Communication shall be deemed to have been delivered and shall take effect:

 

(i)            in the case of telex, when the recipient’s
answerback is received by the sender;

 

(ii)           in the case of a fax, when the sender receives
one or more transmission reports
showing the whole of the Communication
to have been transmitted to the correct fax number; and

 

(iii)          if delivered personally or sent by registered
or recorded mail at the time of
delivery.

 

23.4         If under Clause 23.3 a Communication would be
deemed to have been delivered on
a day which is not a business day in the place of receipt or after 18.00 (local time in the place of receipt) it will be deemed to have been
delivered, and shall take effect,
at 09.00 (local time in the place of receipt) on the next such business day.

 

24.           Staff Loyalty

 

The Owners shall not and
shall procure that their parent,  subsidiary and associates shall not, during the course of this Agreement or for a period of six months
following termination directly or
indirectly offer any employment to any employee of the Managers engaged in providing Management
Services or directly or
indirectly induce or solicit any such person to take up employment with the Owners or any associated
or affiliated company or use the
services of any such person either independently
or via a third party.

 

25.           Entire Agreement

 

25.1         This Agreement constitutes the entire
agreement and understanding
between the parties with respect to the subject matter of this Agreement; and (in relation to such subject matter) supersedes all prior discussions,
understandings and agreements
between the parties and all prior representations and expressions of opinion by the parties.

 

25.2         Each of the parties acknowledges that it is
not relying on any statements,
warranties, representations or understandings (whether negligently or innocently made) given or made by or on behalf of the other in relation to the
subject matter hereof and that it
shall have no rights or remedies with respect to such subject matter otherwise than under this Agreement. The only remedy available shall be for breach of
contract under the terms of this
Agreement. Nothing in this clause shall, however, operate to limit or exclude any liability for
fraud.

 

13

 

SHIP
MANAGEMENT AGREEMENT - PART III

 

OTHER
SERVICES

 

APPENDIX 1* - Chartering (only applicable if not deleted - fee specified
in Box 1 of the Fee Schedule)

 

The Managers shall, in accordance with the Owner’s instructions,  provide chartering services which term
includes but is not limited to seeking
and negotiating employment for the Vessel and the conclusion (including the execution thereof)
of charter parties or other contracts
relating to the employment of the Vessel. Consent thereto in writing (including telex or fax) shall be
obtained from the Owners before
any contract in respect of the Vessel’s employment is concluded.

 

The fee for the foregoing services shall be such sum as is set out in the
Fee Schedule.

 

APPENDIX 2* - Post Fixture Services (only applicable if not deleted - fee
specified in Box 2 of the Fee Schedule)

 

The Managers shall provide post fixture services which includes such of
the following functions as have been agreed with the Owners:-

 

(i)            liaising with Owners, brokers and charterers
in the negotiation of the fixture;

 

(ii)           provision of voyage and time charter estimates;

 

(iii)          checking the cargo specification with the
Master and cargo shippers to
ensure the Vessel is capable of the safe carriage of the cargo;

 

(iv)          instructing the master regarding the fixture and issuing voyage orders;

 

(v)           arranging on and off hire surveys;

 

(vi)          preparation of accounts and calculation of
hire and freights and/or
demurrage and despatch moneys due from or due to the charterers of the Vessel if required by the Owners; and

 

(vii)         arrangement of the proper payment to the
Owners of all hire and/or freight
revenues or other moneys of whatsoever kind to which Owners may be entitled arising out of the employment of or otherwise in connection with the Vessel.

 

The fee for the foregoing services shall be such sum as is set out in the
Fee Schedule.

 

APPENDIX 3* - Surveys or other Consultancy Services (only applicable if not deleted - fee specified in Box 3 of the Fee Schedule)

 

Any routine superficial inspections of ships afloat or other consultancy
services will be undertaken on the following terms:-

 

1.             Any report issued by the Managers is issued
solely to the person to whom it
is addressed and under no circumstances is any part of it to be issued or made available to any other party.

 

2.             Inspections are limited to those parts of the
ship, her machinery equipment or
records (if made available) which were actually exposed, uncovered or readily accessible and the Managers are unable to report on any other
part of the ship, her machinery
or equipment and shall have no responsibilities whatsoever in such respect.

 

3.             The Managers are unable to report on the ship’s
water tightness or integrity, the
operational efficiency of its machinery or equipment, its suitability for any business or trade, or its stability characteristics.

 

4.             The Managers shall in no circumstances be
liable for any indirect,
consequential or economic losses arising from any surveys of ships or other consultancy
services.

 

5.             The Managers’ maximum liability for any loss
arising from surveys or
consultancy services shall be 10 times the fee payable therefore.

 

6.             Fees in respect of routine superficial
inspections afloat shall be charged
at the rate of US$ 650 per day or part thereof. Fees for other consultancy services shall be agreed
before work is commenced and
unless otherwise agreed shall be payable on delivery of the report by the Managers.

 

APPENDIX 4* - Bunker Services (only applicable if not deleted - fee specified in Box 4 of the Fee Schedule)

 

The Managers shall arrange for the provision of bunker fuel of the
quality agreed with the Owners as
required for the Vessel’s trade.

 

The Managers shall be entitled to order bunker fuel through such  brokers or suppliers as the Managers deem
appropriate unless the Owners
instruct the Managers to utilise a particular supplier which the Managers will be obliged to do provided
that the Owners have made prior
credit arrangements with such supplier. The Owners shall comply with the terms of any credit
arrangements made by the Managers
on their behalf.

 

The Managers shall not in any circumstances have any liability for
any bunkers which do not meet the
required specification. The Managers
will, however, take such action, on behalf of the Owners, against the supplier of the bunkers, as is
agreed with the Owners

 

The fee for the foregoing services shall be such sum as is set out in
the Fee Schedule.

 

APPENDIX 5* - On Board Safety Audit and Safety Training (only applicable if not
deleted - fee specified in Box 5 of the  Fee Schedule)

 

1.             The Managers shall arrange on board safety
audit and training which will include the following functions:-

 

(i)            preparation and updating of specialist safety
manuals not already included in
the SMS;

 

(ii)           periodic on board safety audit and on board
safety training;

 

(iii)          reporting to the Vessel (via the Managers) on
information gained from visits to
other vessels and industry forums.

 

2.             The cost of the foregoing services shall be
such sum as is set out in the Fee
Schedule and shall be included in the budget agreed with the Owners.

 

3.             The Managers have entered into sub-contracts
with third parties to permit them
to supply this service.

 

14

 

APPENDIX 6* - Tax Compliance (only applicable if not deleted - fee
specified in Box 6 of the Fee Schedule)

 

United States of America

 

A federal income tax return (accompanied by such additional  information as prescribed under applicable
regulations) must be filed annually
by all ship owners or operators who have been in receipt of United States gross transportation income.

 

Filing is required whether or not tax is due and/or exemption is  claimed.

 

Foreign companies may claim exemption from United States Federal  tax on transportation income where (a) a
reciprocal agreement exists between
the United States and the country in which the foreign company is incorporated and (b) certain
further conditions are satisfied.

 

The Managers will engage the services of a suitably qualified firm of
accountants to make applications
for exemption (if available) and to file the necessary returns.

 

The Managers will liaise with the accountants as required and will
provide them with a schedule of
gross transportation income.

 

The Owners will forthwith provide the Managers with all information
required by them to enable them
to prepare and file the necessary returns.

 

The fee for the foregoing services shall be such sum as is set out in
the Fee Schedule (exclusive of
fees payable to the accountants).

 

Other Jurisdictions

 

(*insert appropriate details)

 

APPENDIX * 7- Cargo Superintendents (only applicable if not deleted - fee specified
in Box 7 of the Fee Schedule)

 

The Managers shall provide services in connection with the loading
and discharging of cargoes and
ballast from Vessels in accordance with
the following provisions:

 

Attendance at Port Prior to Arrival of Vessel

 

The Managers will procure that their Cargo Superintendent attends
the load or discharge port prior
to the Vessel’s arrival for the purposes
of having preliminary meetings with the port/terminal staff, and where applicable, the Vessel’s brokers,
receivers and charterers or their
respective representatives. The Cargo Superintendent will also meet the P & I Club representative,
if relevant, and, if required, meet
the US Coast Guard where the port is in USA. The Owners will give the Managers adequate notice of their
requirements for the attendance
of the Cargo Superintendent and the Vessel’s anticipated arrival at port to enable the Managers to
deploy the Cargo Superintendent.
Thereafter the Owners will liaise regularly with the representative nominated by the Managers for
this purpose.

 

Functions While Vessel in Port

 

The Cargo Superintendent will, on arrival of the Vessel, perform the following
functions:

 

(i)            consider the cargo and ballast operation with
the Master and thereafter review
the Vessel’s load and discharge plan with the Master and monitor the entire cargo operation;

 

(ii)           review the Owner’s procedures for cargo and
ballast operations and check
that, where applicable, these are being adhered to;

 

(iii)          assess the performance of the Master, Officers and crew of the Vessel for cargo and ballast operations only;
and

 

(iv)          assist with any Vessel inspection being carried out (e.g. by State, charterers etc).

 

The fee for the foregoing service will be such sum as is set out in the
Fee Schedule. Traveling expenses
and disbursements will be payable
in addition to such fee.

 

* delete if not applicable

 

15

 

SHIP MANAGEMENT AGREEMENT
- PART IV

 

FEE SCHEDULE

 

SHIP NAME:

 

	
   

  	
   

  	
  Amount

  	
   

  	
  Frequency

  
	
  BASIC SERVICES (Clause
  3 of Part II)

  	
   

  	
   

  	
   

  	
   

  
	
  Management Fee

  	
   

  	
   

  	
   

  	
  monthly

  
	
  Information System fees (Shipsure)

  	
   

  	
  USD 9,125

  	
   

  	
  Per year

  
	
  Planned
  maintenance - data base development fee (maximum of 42 chargeable days)

  	
   

  	
   

  	
   

  	
  30 days of invoice

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OTHER SERVICES (Clause 4 of Part II)
  (delete if not applicable)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Chartering

  	
   

  	
   

  	
   

  	
  monthly

  
	
  2. Post Fixture Services

  	
   

  	
   

  	
   

  	
  monthly

  
	
  3. Surveys Consultancy

  	
   

  	
   

  	
   

  	
  daily

  
	
  4. Fuel Services

  	
   

  	
   

  	
   

  	
  variable

  
	
  5. On board Safety Audit

  	
   

  	
   

  	
   

  	
  monthly

  
	
  6. Tax Compliance

  	
   

  	
   

  	
   

  	
  30 days of invoice

  
	
  7. Cargo Superintendents

  	
   

  	
   

  	
   

  	
  30 days of invoice

  

 

16

 

SHIP MANAGEMENT AGREEMENT
- PART V

 

FLEET DETAILS

 

17

 

SHIP MANAGEMENT AGREEMENT
- PART VI

 

INITIAL BUDGET

 

Crew

 

Crew Wages

Crew Travel

Crew Training/Medical

Manning Costs

Victualling

 

Insurance

 

Hull & Machinery Premiums

P&I Premiums

Deductibles

 

Technical

 

Spares

Lub Oils

Surveys & Services

Repairs

Safety & Risk

 

Administration / Overheads

 

Registration Expenses

Management Fees

Management Expenses

Other Costs

 

TOTAL CURRENT RUNNING COSTS

 

Drydocking

 

 

TOTAL RUNNING COSTS

 

18

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