Document:

Ex. 10.2 DROT 2015-1 Indenture

EXHIBIT 10.2

EXECUTION COPY
    
DIAMOND RESORTS OWNER TRUST 2015-1,
as Issuer
DIAMOND RESORTS FINANCIAL SERVICES, INC.
as Servicer
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Indenture Trustee and Back-Up Servicer
______________
INDENTURE
Dated as of July 29, 2015
______________

	
			
	 
	TABLE OF CONTENTS
	 

	 
	 
	Page

	ARTICLE I
	DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
	2

	Section 1.01
	General Definitions
	2

	Section 1.02
	Compliance Certificates and Opinions
	2

	Section 1.03
	Form of Documents Delivered to Indenture Trustee
	2

	Section 1.04
	Acts of Noteholders, etc
	3

	Section 1.05
	Notice to Noteholders; Waiver
	4

	Section 1.06
	Effect of Headings and Table of Contents
	5

	Section 1.07
	Successors and Assigns
	5

	Section 1.08
	GOVERNING LAW
	5

	Section 1.09
	Legal Holidays
	5

	Section 1.10
	Execution in Counterparts
	5

	Section 1.11
	Inspection
	6

	Section 1.12
	Survival of Representations and Warranties
	6

	ARTICLE II
	THE NOTES
	6

	Section 2.01
	General Provisions
	6

	Section 2.02
	Global Notes
	7

	Section 2.03
	Definitive Notes
	8

	Section 2.04
	Registration, Transfer and Exchange of Notes
	8

	Section 2.05
	Mutilated, Destroyed, Lost and Stolen Notes
	13

	Section 2.06
	Payment of Interest and Principal; Rights Preserved
	13

	Section 2.07
	Persons Deemed Owners
	14

	Section 2.08
	Cancellation
	14

	Section 2.09
	Noteholder Lists
	14

	Section 2.10
	Treasury Notes
	14

	Section 2.11
	Notice to Depository
	15

	ARTICLE III
	ACCOUNTS; COLLECTION AND APPLICATION OF MONEYS; REPORTS
	15

	Section 3.01
	Trust Accounts; Investments by Indenture Trustee
	15

	Section 3.02
	Establishment and Administration of the Trust Accounts
	18

	Section 3.03
	[Reserved]
	19

	Section 3.04
	Distributions
	19

	Section 3.05
	Reports to Noteholders
	21

	Section 3.06
	Withholding Taxes
	22

	Section 3.07
	Note Balance Write-Down Amounts
	22

	ARTICLE IV
	THE TRUST ESTATE
	23

	Section 4.01
	Acceptance by Indenture Trustee
	23

	Section 4.02
	Grant of Security Interest; Tax Treatment
	23

	Section 4.03
	Further Action Evidencing Assignments
	24

	Section 4.04
	Substitution and Repurchase of Timeshare Loans
	25

	Section 4.05
	Release of Lien
	26

	
			
	Section 4.06
	Appointment of Custodian
	26

	Section 4.07
	Sale of Timeshare Loans
	27

	ARTICLE V
	SERVICING OF TIMESHARE LOANS
	27

	Section 5.01
	Appointment of Servicer; Servicing Standard
	27

	Section 5.02
	Payments on the Timeshare Loans
	27

	Section 5.03
	Duties and Responsibilities of the Servicer
	28

	Section 5.04
	Servicer Events of Default
	32

	Section 5.05
	Accountings; Statements and Reports
	33

	Section 5.06
	Records
	35

	Section 5.07
	Fidelity Bond; Errors and Omissions Insurance
	35

	Section 5.08
	Merger or Consolidation of the Servicer
	35

	Section 5.09
	Sub-Servicing
	36

	Section 5.10
	Servicer Resignation
	36

	Section 5.11
	Fees and Expenses
	36

	Section 5.12
	Access to Certain Documentation
	37

	Section 5.13
	No Offset
	37

	Section 5.14
	Cooperation
	37

	Section 5.15
	Indemnification; Third Party Claim
	37

	Section 5.16
	Back-Up Servicer and Successor Servicer
	38

	Section 5.17
	Limitation on Liability
	41

	Section 5.18
	[Reserved]
	41

	Section 5.19
	St. Maarten Notice
	41

	ARTICLE VI
	EVENTS OF DEFAULT; REMEDIES
	41

	Section 6.01
	Events of Default.
	41

	Section 6.02
	Acceleration of Maturity; Rescission and Annulment
	43

	Section 6.03
	Remedies
	44

	Section 6.04
	Indenture Trustee May File Proofs of Claim
	45

	Section 6.05
	Indenture Trustee May Enforce Claims Without Possession of Notes
	46

	Section 6.06
	Application of Money Collected
	46

	Section 6.07
	Limitation on Suits
	47

	Section 6.08
	Unconditional Right of Noteholders to Receive Principal and Interest; Non-Recourse
	48

	Section 6.09
	Restoration of Rights and Remedies
	48

	Section 6.10
	Rights and Remedies Cumulative
	49

	Section 6.11
	Delay or Omission Not Waiver
	49

	Section 6.12
	Control by Noteholders
	49

	Section 6.13
	Waiver of Events of Default
	49

	Section 6.14
	Undertaking for Costs
	50

	Section 6.15
	Waiver of Stay or Extension Laws
	50

	Section 6.16
	Sale of Trust Estate
	50

	ARTICLE VII
	THE INDENTURE TRUSTEE
	51

	Section 7.01
	Certain Duties (a)
	51

	Section 7.02
	Notice of Events of Default and Rapid Amortization Period
	53

ii

	
			
	Section 7.03
	Certain Matters Affecting the Indenture Trustee
	53

	Section 7.04
	Indenture Trustee Not Liable for Notes or Timeshare Loans
	54

	Section 7.05
	Indenture Trustee May Own Notes
	55

	Section 7.06
	Indenture Trustee’s Fees and Expenses
	54

	Section 7.07
	Eligibility Requirements for Indenture Trustee
	55

	Section 7.08
	Resignation or Removal of Indenture Trustee
	55

	Section 7.09
	Successor Indenture Trustee
	56

	Section 7.10
	Merger or Consolidation of Indenture Trustee
	57

	Section 7.11
	Appointment of Co-Indenture Trustee or Separate Indenture Trustee
	57

	Section 7.12
	Note Registrar Rights
	58

	Section 7.13
	Authorization
	59

	ARTICLE VIII
	COVENANTS
	59

	Section 8.01
	Payment of Principal and Interest
	59

	Section 8.02
	Maintenance of Office or Agency; Chief Executive Office
	59

	Section 8.03
	Money for Payments to Noteholders to be Held in Trust
	59

	Section 8.04
	Existence; Merger; Consolidation, etc
	59

	Section 8.05
	Protection of Trust Estate; Further Assurances
	60

	Section 8.06
	Additional Covenants
	61

	Section 8.07
	Taxes
	62

	ARTICLE IX
	SUPPLEMENTAL INDENTURES
	62

	Section 9.01
	Supplemental Indentures without Consent of Noteholders
	62

	Section 9.02
	Supplemental Indentures with Consent of Noteholders
	63

	Section 9.03
	Execution of Supplemental Indentures
	64

	Section 9.04
	Effect of Supplemental Indentures
	65

	Section 9.05
	Reference in Notes to Supplemental Indentures
	65

	ARTICLE X
	REDEMPTION OF NOTES
	65

	Section 10.01
	Optional Redemption; Election to Redeem
	65

	Section 10.02
	Notice to Indenture Trustee
	65

	Section 10.03
	Notice of Redemption by the Issuer
	65

	Section 10.04
	Deposit of Redemption Price
	65

	Section 10.05
	Notes Payable on Redemption Date
	65

	ARTICLE XI
	SATISFACTION AND DISCHARGE
	66

	Section 11.01
	Satisfaction and Discharge of Indenture
	66

	Section 11.02
	Application of Trust Money
	67

	Section 11.03
	Trust Termination Date
	67

	ARTICLE XII
	REPRESENTATIONS AND WARRANTIES
	67

	Section 12.01
	Representations and Warranties of the Issuer
	67

	Section 12.02
	Representations and Warranties of the Initial Servicer
	71

	Section 12.03
	Representations and Warranties of the Indenture Trustee and the Back-Up Servicer
	74

	Section 12.04
	Multiple Roles
	75

	ARTICLE XIII
	MISCELLANEOUS
	75

iii

	
			
	Section 13.01
	Officer’s Certificate and Opinion of Counsel as to Conditions Precedent
	75

	Section 13.02
	Statements Required in Certificate or Opinion
	76

	Section 13.03
	Notices
	76

	Section 13.04
	No Proceedings
	78

	Section 13.05
	Limitation of Liability
	78

	Section 13.06
	Entire Agreement
	79

	Section 13.07
	Severability of Provisions
	79

	Section 13.08
	Indulgences; No Waivers
	79

	Section 13.09
	JURISDICTION; WAIVER OF TRIAL BY JURY
	79

	 
	EACH PARTY TO THIS INDENTURE HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY FEDERAL OR STATE COURT IN THE STATE OF NEW YORK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS INDENTURE OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND CONSENTS TO THE PLACING OF VENUE IN NEW YORK COUNTY OR OTHER COUNTY PERMITTED BY LAW.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THIS INDENTURE MAY NOT BE LITIGATED IN OR BY SUCH COURTS.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY AGREES NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT.  EXCEPT AS PROHIBITED BY LAW, EACH PARTY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS INDENTURE
	79

	Exhibit A
	Form of Notes
	 

	Exhibit B
	Form of Investor Representation Letter
	 

	Exhibit C
	Form of Transfer Certificate for Rule 144A Global Notes to Regulation S Global Notes during Restricted Period
	 

	Exhibit D
	Form of Transfer Certificate for Rule 144A Global Notes to Regulation S Global Notes after Restricted Period
	 

	Exhibit E
	Form of Transfer Certificate for Regulation S Global Notes to Rule 144A Global Note during Restricted Period
	 

	Exhibit F
	Form of Transfer Certificate for Regulation S Global Notes during Restricted Period
	 

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	Exhibit G
	Record Layout For Data Conversion
	 

	Exhibit H
	[Reserved]
	 

	Exhibit I
	Collection Policy
	 

	Exhibit J
	Form of Monthly Servicer Report
	 

	Exhibit K
	Servicing Officer’s Certificate
	 

	Exhibit L
	[Reserved]
	 

	Exhibit M
	[Reserved]
	 

	Exhibit N
	Form of St. Maarten Notice
	 

	Annex A
	Standard Definitions
	 

v

INDENTURE
This INDENTURE, dated as of July 29, 2015, is among DIAMOND RESORTS OWNER TRUST 2015-1, a statutory trust organized under the laws of the State of Delaware, as issuer (the “Issuer”), Diamond Resorts Financial Services, Inc. (“DRFS”), a Nevada corporation, as servicer (the “Servicer”) and Wells Fargo Bank, National Association, a national banking association, as indenture trustee (in such capacity, the “Indenture Trustee”) and as back-up servicer (in such capacity, the “Back-Up Servicer”).
RECITALS OF THE ISSUER
WHEREAS, the Issuer has duly authorized the execution and delivery of this Indenture to provide for the issuance of its $158,490,000 2.73% Timeshare Loan-Backed Notes, Series 2015-1, Class A (the “Class A Notes”) and its $11,510,000 3.17% Timeshare Loan-Backed Notes, Series 2015-1, Class B (the “Class B Notes” and together with the Class A Notes, the “Notes”);
WHEREAS, all things necessary to make the Notes, when executed by the Issuer and authenticated and delivered by the Indenture Trustee hereunder, the valid obligations of the Issuer, and to make this Indenture a valid agreement of the Issuer, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes by the holders thereof, it is mutually covenanted and agreed, for the benefit of the Noteholders, as follows:
GRANTING CLAUSE
To secure the payment of the principal of and interest on the Notes in accordance with their terms, the payment of all of the sums payable under this Indenture and the performance of the covenants contained in this Indenture, the Issuer hereby Grants to the Indenture Trustee, for the benefit of the Noteholders, all of the Issuer’s right, title and interest in and to the following whether now owned or hereafter acquired and any and all benefits accruing to the Issuer from, (i) the Initial Timeshare Loans, (ii) the Qualified Substitute Timeshare Loans, if any, (iii) the Receivables in respect of the Timeshare Loans due on and after the related Cut-Off Date, (iv) the related Timeshare Loan Files, (v) all Related Security in respect of each Timeshare Loan, (vi) all rights and remedies under the Sale Agreement, (vii) all rights and remedies under the Custodial Agreement, (viii) all rights and remedies under the Servicer Undertaking Agreement and the Seller Undertaking Agreement, (ix) all amounts in or to be deposited into each Trust Account, and (x) proceeds of the foregoing (including, without limitation, all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts, Insurance Proceeds, condemnation awards, rights to payment of any and every kind, and other forms of obligations and receivables which at any time constitute all or part or are included in the proceeds of any of the foregoing) (collectively, the “Trust Estate”).  Notwithstanding the foregoing, the Trust Estate shall not include any Miscellaneous Payments and Processing Charges made by an Obligor.

Such Grant is made in trust to secure (i) the payment of all amounts due on the Notes in accordance with their terms, equally and ratably except as otherwise may be provided in this Indenture, without prejudice, priority, or distinction between any Note of the same Class and any other Note of the same Class by reason of differences in time of issuance or otherwise, and (ii) the payment of all other sums payable under the Notes and this Indenture.  
The Indenture Trustee acknowledges such Grant, accepts the trusts hereunder in accordance with the provisions hereof, and agrees to perform the duties herein required to the best of its ability and to the end that the interests of the Noteholders may be adequately and effectively protected as hereinafter provided.
ARTICLE I 
 
DEFINITIONS AND OTHER PROVISIONS 
OF GENERAL APPLICATION
Section 1.01    General Definitions.
In addition to the terms defined elsewhere in this Indenture, capitalized terms shall have the meanings given them in the “Standard Definitions” attached hereto as Annex A.
Section 1.02    Compliance Certificates and Opinions.
Upon any written application or request (or oral application with prompt written or electronic confirmation) by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture, other than any request that (a) the Indenture Trustee authenticate the Notes specified in such request, (b) the Indenture Trustee invest moneys in any of the Trust Accounts pursuant to the written directions specified in such request, or (c) the Indenture Trustee pay moneys due and payable to the Issuer hereunder to the Issuer’s assignee specified in such request, the Indenture Trustee shall require the Issuer to furnish to the Indenture Trustee an Officer’s Certificate (executed by the Administrator on behalf of the Issuer) stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and that the request otherwise is in accordance with the terms of this Indenture, and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that, in the case of any such requested action as to which other evidence of satisfaction of the conditions precedent thereto is specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished.
Section 1.03    Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or covered by an opinion of any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

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Any certificate or opinion of an officer of the Issuer delivered to the Indenture Trustee may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless such officer knows that such Opinion of Counsel with respect to the matters upon which his certificate or opinion is based is erroneous.  Any such officer’s certificate or opinion and any Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Issuer as to such factual matters unless such officer or counsel knows that the certificate or opinion or representations with respect to such matters are erroneous.  Any Opinion of Counsel may be based on the written opinion of other counsel, in which event such Opinion of Counsel shall be accompanied by a copy of such other counsel’s opinion and shall include a statement to the effect that such counsel believes that such counsel and the Indenture Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
Wherever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Issuer to have such application granted or to the sufficiency of such certificate or report.  The foregoing shall not, however, be construed to affect the Indenture Trustee’s right to rely upon the truth and accuracy of any statement or opinion contained in any such document as provided in Section 7.01(b) hereof.
Whenever in this Indenture it is provided that the absence of the occurrence and continuation of a Default, Event of Default, Servicer Event of Default or a Rapid Amortization Period is a condition precedent to the taking of any action by the Indenture Trustee at the request or direction of the Issuer, then, notwithstanding that the satisfaction of such condition is a condition precedent to the Issuer’s right to make such request or direction, the Indenture Trustee shall be protected in acting in accordance with such request or direction if it does not have knowledge of the occurrence and continuation of such event.  For all purposes of this Indenture, the Indenture Trustee shall not be deemed to have knowledge of any Default, Event of Default, Servicer Event of Default or a Rapid Amortization Period nor shall the Indenture Trustee have any duty to monitor or investigate to determine whether a Default, an Event of Default (other than an Event of Default of the kind described in Section 6.01(a) hereof), a Servicer Event of Default or a Rapid Amortization Period has occurred unless a Responsible Officer of the Indenture Trustee shall have actual knowledge thereof or shall have been notified in writing thereof by the Issuer, the Servicer or any Noteholder.
Section 1.04    Acts of Noteholders, etc.
(a)    Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in 

3

person or by agents duly appointed in writing, including, but not limited to trust agents and administrative agents; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, where it is hereby expressly required, to the Issuer.  Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Noteholders signing such instrument or instruments.  Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 7.01 hereof) conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided in this Section 1.04.
(b)    The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him or her the execution thereof.  Where such execution is by a signer acting in a capacity other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his or her authority.  The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Indenture Trustee deems sufficient.
(c)    Any request, demand, authorization, direction, notice, consent, waiver or other Act of the holder of any Note shall bind every future holder of the same Note and the holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Note.
(d)    By accepting the Notes issued pursuant to this Indenture, each Noteholder irrevocably appoints the Indenture Trustee hereunder as the special attorney‐in‐fact for such Noteholder vested with full power on behalf of such Noteholder to effect and enforce the rights of such Noteholder for the benefit of such Noteholder; provided that nothing contained in this Section 1.04(d) shall be deemed to confer upon the Indenture Trustee any duty or power to vote on behalf of the Noteholders with respect to any matter on which the Noteholders have a right to vote pursuant to the terms of this Indenture.  
Section 1.05    Notice to Noteholders; Waiver.
(a)    Where this Indenture provides for notice to Noteholders of any event, or the mailing of any report to Noteholders, such notice or report shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, certified mail return receipt requested, or sent by private courier or by confirmable electronic means to each Noteholder affected by such event or to whom such report is required to be mailed, at its address as it appears in the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice or the mailing of such report.  In any case where a notice or report to Noteholders is mailed, neither the failure to mail such notice or report, nor any defect in any notice or report so mailed, to any particular Noteholder shall affect the sufficiency of such notice or report with respect to other Noteholders.  Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such 

4

waiver shall be the equivalent of such notice.  Waivers of notice by Noteholders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
(b)    In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to mail or send notice to Noteholders, in accordance with Section 1.05(a) hereof, of any event or any report to Noteholders when such notice or report is required to be delivered pursuant to any provision of this Indenture, then such notification or delivery as shall be made with the approval of the Indenture Trustee shall constitute a sufficient notification for every purpose hereunder.
Section 1.06    Effect of Headings and Table of Contents.
The Article and Section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof.
Section 1.07    Successors and Assigns.
All covenants and agreements in this Indenture by each of the parties hereto shall bind its respective successors and permitted assigns, whether so expressed or not.
Section 1.08    GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.  UNLESS MADE APPLICABLE IN A SUPPLEMENT HERETO, THIS INDENTURE IS NOT SUBJECT TO THE TRUST INDENTURE ACT OF 1939, AS AMENDED, AND SHALL NOT BE GOVERNED THEREBY AND CONSTRUED IN ACCORDANCE THEREWITH.
Section 1.09    Legal Holidays.
In any case where any Payment Date or the Stated Maturity or any other date on which principal of or interest on any Note is proposed to be paid shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Notes) such payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such Payment Date, Stated Maturity, or other date on which principal of or interest on any Note is proposed to be paid, provided that no penalty interest shall accrue for the period from and after such Payment Date, Stated Maturity, or any other date on which principal of or interest on any Note is proposed to be paid, as the case may be, until such next succeeding Business Day.
Section 1.10    Execution in Counterparts.
This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.  Delivery of an executed counterpart of this Indenture by facsimile 

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or other electronic transmission (i.e., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart hereof and deemed an original.
Section 1.11    Inspection.
The Issuer agrees that, on reasonable prior notice, it will permit the representatives of the Indenture Trustee or any Noteholder holding Notes evidencing at least 25% of the Aggregate Outstanding Note Balance, during the Issuer’s normal business hours, to examine all of the books of account, records, reports and other papers of the Issuer, to make copies thereof and extracts therefrom, and to discuss its affairs, finances and accounts with its designated officers, employees and independent accountants in the presence of such designated officers and employees (and by this provision the Issuer hereby authorizes its accountants to discuss with such representatives such affairs, finances and accounts), all at such reasonable times and as often as may be reasonably requested for the purpose of reviewing or evaluating the financial condition or affairs of the Issuer or the performance of and compliance with the covenants and undertakings of the Issuer and the Servicer in this Indenture or any of the other documents referred to herein or therein.  Any expense incident to the exercise by the Indenture Trustee at any time or any Noteholder during the continuance of any Default, Event of Default or Rapid Amortization Period, of any right under this Section 1.11 shall be borne by the Issuer.  Nothing contained herein shall be construed as a duty of the Indenture Trustee to perform such inspection.
Section 1.12    Survival of Representations and Warranties.
The representations, warranties and certifications of the Issuer made in this Indenture or in any certificate or other writing delivered by the Issuer pursuant hereto shall survive the authentication and delivery of the Notes hereunder.
ARTICLE II     
 
THE NOTES
Section 2.01    General Provisions.
(a)    Form of Notes.  The Notes, together with their certificates of authentication shall be in substantially the form set forth in Exhibit A hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or are permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon, as may consistently herewith be determined by the officer executing such Notes, as evidenced by such officer’s execution of such Notes.
(b)    Denominations.  The Outstanding Note Balance of the Class A Notes and the Class B Notes which may be authenticated and delivered under this Indenture is limited to $158,490,000 and $11,510,000, respectively.  The Notes shall be issuable only as registered Notes without interest coupons in denominations of at least $100,000 and in integral multiples of $1,000; provided, however, that the foregoing shall not restrict or prevent the transfer in accordance with Section 2.04 hereof of any Note with a remaining Outstanding Note Balance of less than $100,000.

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(c)    Execution, Authentication, Delivery and Dating.  The Notes shall be manually executed on behalf of the Issuer by an Authorized Officer of the Owner Trustee.  Any Note bearing the signature of an individual who was at the time of execution thereof an Authorized Officer of the Owner Trustee shall bind the Issuer, notwithstanding that such individual ceases to hold such office prior to the authentication and delivery of such Note or did not hold such office at the date of such Note.  No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form set forth in Exhibit A hereto, executed by the Indenture Trustee by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder.  Each Note shall be dated the date of its authentication.  The Notes may from time to time be executed by the Issuer and delivered to the Indenture Trustee for authentication together with an Issuer Order to the Indenture Trustee directing the authentication and delivery of such Notes and thereupon the same shall be authenticated and delivered by the Indenture Trustee in accordance with such Issuer Order.
Section 2.02    Global Notes.  Each of the Notes, upon original issuance, shall be issued in the form of one or more book-entry global certificates (the “Global Notes” and each, a “Global Note”) to be deposited with the Indenture Trustee, as custodian for The Depository Trust Company, the initial Depository, by or on behalf of the Issuer.  The Notes sold to non-U.S. persons (as defined in Regulation S) in offshore transactions in reliance on Regulation S will be represented by one or more temporary Global Notes (each, a “Temporary Regulation S Global Notes”).  Upon the expiration of the Restricted Period, interests in a Temporary Regulation S Global Note will be exchangeable for interests in permanent Global Notes of the same Class (together with a Temporary Regulation S Global Note, a “Regulation S Global Note”).  The Notes sold to U.S. Persons which are Qualified Institutional Buyers will be represented by one or more temporary Global Notes (each, a “Rule 144A Global Note”).  All Global Notes shall be initially registered on the Note Register in the name of Cede & Co., the nominee of The Depository Trust Company, and no Note Owner will receive a definitive note (a “Definitive Note”) representing such Note Owner’s interest in the related Class of Notes, except as provided in Section 2.03 hereof.  Unless and until Definitive Notes have been issued in respect of a Class of Notes pursuant to Section 2.03 hereof:
(a)    the provisions of this Section 2.02 shall be in full force and effect with respect to such Class of Notes;
(b)    the Issuer, the Servicer and the Indenture Trustee may deal with the Depository and the Depository Participants for all purposes with respect to such Notes (including the making of distributions on such Notes) as the authorized representatives of the respective Note Owners;
(c)    to the extent that the provisions of this Section 2.02 conflict with any other provisions of this Indenture, the provisions of this Section 2.02 shall control; and
(d)    the rights of the respective Note Owners of a Class of Notes shall be exercised only through the Depository and the Depository Participants and shall be limited to those established by law and agreements between the respective Note Owners and the Depository and/or the Depository Participants.   Pursuant to the Depository Agreement, unless and until Definitive Notes are issued in respect of the Notes pursuant to Section 2.03 hereof, the Depository will make book-

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entry transfers among the Depository Participants and receive and transmit distributions of principal of and interest on the Notes to the Depository Participants.
Section 2.03    Definitive Notes.  If (a) the Depository advises the Indenture Trustee in writing that the Depository is no longer willing or able to properly discharge its responsibilities as Depository with respect to the Global Notes and the Indenture Trustee or the Issuer is unable to locate a qualified successor or (b) after the occurrence and during the continuation of an Event of Default, Note Owners (other than DRII or an Affiliate thereof) evidencing not less than 51% of the Outstanding Note Balance of a Class of Global Notes, advise the Indenture Trustee and the Depository through the Depository Participants in writing that the continuation of a book-entry system with respect to such Class of Global Notes through the Depository is no longer in the best interest of such Note Owners, the Indenture Trustee shall use its best efforts to notify all affected Note Owners through the Depository of the occurrence of any such event and of the availability of Definitive Notes to such Note Owners.  Neither the Issuer nor the Indenture Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions.  Upon the issuance of Definitive Notes, the Issuer, the Indenture Trustee, the Note Registrar and the Servicer shall recognize holders of Definitive Notes as Noteholders hereunder.  Upon the issuance of Definitive Notes, all references herein to obligations imposed upon or to be performed by the Depository shall be deemed to be imposed upon and performed by the Indenture Trustee, to the extent applicable with respect to such Definitive Notes.
Section 2.04    Registration, Transfer and Exchange of Notes.
(a)    Note Register.  At all times during the term of this Indenture, the Issuer shall cause to be kept at the Corporate Trust Office a register (the “Note Register”) for the registration, transfer and exchange of Notes.  The Indenture Trustee is hereby appointed “Note Registrar” for purposes of registering Notes and transfers of Notes as herein provided.  The names and addresses of all Noteholders and the names and addresses of the transferees of any Notes shall be registered in the Note Register; provided, however, in no event shall the Note Registrar be required to maintain in the Note Register the names of the individual participants holding Notes through the Depository.  The Person in whose name any Note is so registered shall be deemed and treated as the sole owner and Noteholder thereof for all purposes of this Indenture and the Note Registrar, the Issuer, the Indenture Trustee, the Servicer and any agent of any of them shall not be affected by any notice or knowledge to the contrary.  A Definitive Note is transferable or exchangeable only upon the surrender of such Note to the Note Registrar at the Corporate Trust Office together with an assignment and transfer (executed by the Holder or his duly authorized attorney), subject to the applicable requirements of this Section 2.04. Upon request of the Indenture Trustee, the Note Registrar shall provide the Indenture Trustee with the names and addresses of the Noteholders.
(b)    Surrender.  Upon surrender for registration of transfer of any Definitive Note, subject to the applicable requirements of this Section 2.04, the Issuer shall execute and the Indenture Trustee shall duly authenticate in the name of the designated transferee or transferees, one or more new Notes in denominations of a like aggregate denomination as the Definitive Note being surrendered.  Each Note surrendered for registration of transfer shall be canceled and subsequently destroyed by the Note Registrar.  Each new Note issued pursuant to this Section 2.04 shall be 

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registered in the name of any Person as the transferring Holder may request, subject to the applicable provisions of this Section 2.04.  All Notes issued upon any registration of transfer or exchange of Notes shall be entitled to the same benefits under this Indenture as the Notes surrendered upon such registration of transfer or exchange.
(c)    Securities Laws Restrictions.  The issuance of the Notes will not be registered or qualified under the Securities Act or the securities laws of any state.  No resale or transfer of any Note or any interest therein may be made unless such resale or transfer is made pursuant to an effective registration statement under the Securities Act and an effective registration or a qualification under applicable state securities laws, or is made in a transaction that does not require such registration or qualification because such transfer satisfies one of the following:  (i) such resale or transfer is in compliance with Rule 144A under the Securities Act, to a person who the transferor reasonably believes is a Qualified Institutional Buyer (as defined in Rule 144A) that is purchasing for its own account or for the account of a Qualified Institutional Buyer and to whom notice is given that such  resale or transfer is being made in reliance upon Rule 144A under the Securities Act as certified by such transferee (other than the Initial Purchaser and its initial transferees) in a letter in the form of Exhibit B hereto; (ii) such resale or transfer is in compliance with Regulation S under the Securities Act as certified by such transferee (other than the Initial Purchaser and its initial transferees) in a letter in the form of Exhibit B hereto; or (iii) after the appropriate holding period, such resale or transfer is pursuant to an exemption from registration under the Securities Act provided by Rule 144 under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States and any other applicable jurisdiction.  None of the Issuer, the Servicer or the Indenture Trustee is obligated to register or qualify the Notes under the Securities Act or any other securities law or to take any action not otherwise required under this Indenture to permit the transfer of any Note without registration.
(d)    Global Notes Restrictions.  In addition to the applicable provisions of this Section 2.04 and the rules of the Depository, the exchange, transfer and registration of transfer of Global Notes or interests therein shall only be made in accordance with this Section 2.04(d).
(i)    Rule 144A Global Note to Temporary Regulation S Global Note During the Restricted Period.  If, during the Restricted Period, a Note Owner of an interest in a Rule 144A Global Note wishes at any time to transfer its beneficial interest in such Rule 144A Global Note to a Person who wishes to take delivery thereof in the form of a beneficial interest in a Temporary Regulation S Global Note, such Note Owner may, in addition to complying with all applicable rules and procedures of the Depository and Clearstream or Euroclear applicable to transfers by their respective participants (the “Applicable Procedures”), transfer or cause the transfer of such beneficial interest for an equivalent beneficial interest in the Temporary Regulation S Global Note only upon compliance with the provisions of this Section 2.04(d)(i). Upon receipt by the Note Registrar at its Corporate Trust Office of (A) written instructions given in accordance with the Applicable Procedures from a Depository Participant directing the Note Registrar to credit or cause to be credited to another specified Depository Participant’s account a beneficial interest in the Temporary Regulation S Global Note in an amount equal to the denomination of the beneficial interest in the Rule 144A Global Note to be transferred, (B) a written order given in accordance with 

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the Applicable Procedures containing information regarding the account of the Depository Participant (and the Euroclear or Clearstream account, as the case may be) to be credited with, and the account of the Depository Participant to be debited for, such beneficial interest, and (C) a certification in the form of Exhibit C hereto given by the Note Owner that is transferring such interest, the Note Registrar shall instruct the Depository, to reduce the denomination of the Rule 144A Global Note by the denomination of the beneficial interest in the Rule 144A Global Note to be so transferred and, concurrently with such reduction, to increase the denomination of the Temporary Regulation S Global Note by the denomination of the beneficial interest in the Rule 144A Global Note to be so transferred, and to credit or cause to be credited to the account of the Person specified in such instructions (who shall be a Depository Participant acting for or on behalf of Euroclear or Clearstream, or both, as the case may be) a beneficial interest in the Temporary Regulation S Global Note having a denomination equal to the amount by which the denomination of the Rule 144A Global Note was reduced upon such transfer.
(ii)    Rule 144A Global Note to Regulation S Global Note After the Restricted Period.  If, after the Restricted Period, a Note Owner of an interest in a Rule 144A Global Note wishes at any time to transfer its beneficial interest in such Rule 144A Global Note to a Person who wishes to take delivery thereof in the form of a beneficial interest in a Regulation S Global Note, such Note Owner may, in addition to complying with all Applicable Procedures, transfer or cause the transfer of such beneficial interest for an equivalent beneficial interest in a Regulation S Global Note only upon compliance with the provisions of this Section 2.04(d)(ii).  Upon receipt by the Note Registrar at its Corporate Trust Office of (A) written instructions given in accordance with the Applicable Procedures from a Depository Participant directing the Note Registrar to credit or cause to be credited to another specified Depository Participant’s account a beneficial interest in the Regulation S Global Note in an amount equal to the denomination of the beneficial interest in the Rule 144A Global Note to be transferred, (B) a written order given in accordance with the Applicable Procedures containing information regarding the account of the Depository Participant (and, in the case of a transfer pursuant to and in accordance with Regulation S, the Euroclear or Clearstream account, as the case may be) to be credited with, and the account of the Depository Participant to be debited for, such beneficial interest, and (C) a certification in the form of Exhibit D hereto given by the Note Owner that is transferring such interest, the Note Registrar shall instruct the Depository, to reduce the denomination of the Rule 144A Global Note by the aggregate denomination of the beneficial interest in the Rule 144A Global Note to be so transferred and, concurrently with such reduction, to increase the denomination of the Regulation S Global Note by the aggregate denomination of the beneficial interest in the Rule 144A Global Note to be so transferred, and to credit or cause to be credited to the account of the Person specified in such instructions (who shall be a Depository Participant acting for or on behalf of Euroclear or Clearstream, or both, as the case may be) a beneficial interest in the Regulation S Global Note having a denomination equal to the amount by which the denomination of the Rule 144A Global Note was reduced upon such transfer.

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(iii)    Regulation S Global Note to Rule 144A Global Note.  If the Note Owner of an interest in a Regulation S Global Note wishes at any time to transfer its beneficial interest in such Regulation S Global Note to a Person who wishes to take delivery thereof in the form of a beneficial interest in a Rule 144A Global Note, such holder may, in addition to complying with all Applicable Procedures, transfer or cause the transfer of such beneficial interest for an equivalent beneficial interest in a Rule 144A Global Note only upon compliance with the provisions of this Section 2.04(d)(iii).  Upon receipt by the Note Registrar at its Corporate Trust Office of (A) written instructions given in accordance with the Applicable Procedures from a Depository Participant directing the Note Registrar to credit or cause to be credited to another specified Depository Participant’s account a beneficial interest in the Rule 144A Global Note in an amount equal to the denomination of the beneficial interest in the Regulation S Global Note to be transferred, (B) a written order given in accordance with the Applicable Procedures containing information regarding the account of the Depository Participant to be credited with, and the account of the Depository Participant (or, if such account is held for Euroclear or Clearstream, the Euroclear or Clearstream account, as the case may be) to be debited for such beneficial interest, and (C) with respect to a transfer of a beneficial interest in the Regulation S Global Note for a beneficial interest in the related Rule 144A Global Note (x) during the Restricted Period, a certification in the form of Exhibit E hereto given by the Note Owner, or (y) after the Restricted Period, an Investment Representation Letter in the form of Exhibit B hereto from the transferee to the effect that such transferee is a Qualified Institutional Buyer, the Note Registrar shall instruct the Depository to reduce the denomination of the Regulation S Global Note by the denomination of the beneficial interest in the Regulation S Global Note to be transferred, and, concurrently with such reduction, to increase the denomination of the Rule 144A Global Note by the aggregate denomination of the beneficial interest in the Regulation S Global Note to be so transferred, and to credit or cause to be credited to the account of the Person specified in such instructions (who shall be a Depository Participant acting for or on behalf of Euroclear or Clearstream, or both, as the case may be) a beneficial interest in the Rule 144A Global Note having a denomination equal to the amount by which the denomination of the Regulation S Global Note was reduced upon such transfer.
(iv)    Transfers Within Regulation S Global Notes During Restricted Period.  If, during the Restricted Period, the Note Owner of an interest in a Regulation S Global Note wishes at any time to transfer its beneficial interest in such Note to a Person who wishes to take delivery thereof in the form of a Regulation S Global Note, such Note Owner may transfer or cause the transfer of such beneficial interest for an equivalent beneficial interest in such Regulation S Global Note only upon compliance with the provisions of this Section 2.04(d)(iv) and all Applicable Procedures.  Upon receipt by the Note Registrar at its Corporate Trust Office of (A) written instructions given in accordance with the Applicable Procedures from a Depository Participant directing the Note Registrar to credit or cause to be credited to another specified Depository Participant’s account a beneficial interest in such Regulation S Global Note in an amount equal to the denomination of the beneficial interest to be transferred, (B) a written order given in accordance with the Applicable Procedures containing information regarding the account of the Depository Participant to be credited with, and the account of the Depository Participant (or, if such account is held for Euroclear 

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or Clearstream, the Euroclear or Clearstream account, as the case may be) to be debited for, such beneficial interest and (C) a certification in the form of Exhibit F hereto given by the transferee, the Note Registrar shall instruct the Depository to credit or cause to be credited to the account of the Person specified in such instructions (who shall be a Depository Participant acting for or on behalf of Euroclear or Clearstream, or both, as the case may be) a beneficial interest in the Regulation S Global Note having a denomination equal to the amount specified in such instructions by which the account to be debited was reduced upon such transfer.
(e)    ERISA Considerations.  No resale or other transfer of any Note or any interest therein may be made to any purchaser or transferee unless (i) such purchaser or transferee is not, and will not acquire such Note or any interest therein on behalf of or with the assets of, any Benefit Plan or (ii) no “prohibited transaction” under ERISA or Section 4975 of the Code that is not subject to a statutory, regulatory or administrative exemption and no violation of Similar Law that, in either case, is not covered by a statutory, regulatory or administrative exemption will occur in connection with such purchaser’s or such transferee’s acquisition, holding or disposition of such Note or any interest therein.  In addition, neither the Notes nor any interest therein may be purchased by or transferred to any Benefit Plan, or person acting on behalf of or with assets of any Benefit Plan, unless it represents that it is not sponsored (within the meaning of Section 3(16)(B) of ERISA) by the Issuer, DRII, the Seller, the Servicer, the Indenture Trustee or the Initial Purchaser, or by any Affiliate of any such Person.
(f)    Transfer Fees, Charges and Taxes.  No fee or service charge shall be imposed by the Note Registrar for its services in respect of any registration of transfer or exchange referred to in this Section 2.04.  The Note Registrar may require payment by each transferor of a sum sufficient to cover any tax, expense or other governmental charge payable in connection with any such transfer.
(g)    No Obligation to Register.  None of the Issuer, the Indenture Trustee, the Servicer or the Note Registrar is obligated to register or qualify the Notes under the Securities Act or any other securities law or to take any action not otherwise required under this Indenture to permit the transfer of such Notes without registration or qualification.  Any such Noteholder desiring to effect such transfer shall, and does hereby agree to, indemnify the Issuer, the Indenture Trustee, the Servicer and the Note Registrar against any loss, liability or expense that may result if the transfer is not so exempt or is not made in accordance with such federal and state laws.
(h)    Rule 144A Information.  The Servicer agrees to cause the Issuer and the Issuer agrees to provide such information as required under Rule 144A(d)(4) under the Securities Act so as to allow resales of Notes to Qualified Institutional Buyers in accordance herewith.
(i)    Deemed Representation.  Each Note Owner, by its acceptance of its beneficial interest in a Note, will be deemed to have acknowledged, represented to and agreed with the Issuer and the Initial Purchaser, to each of the statements set forth in Exhibit B hereto.

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Section 2.05    Mutilated, Destroyed, Lost and Stolen Notes.
(a)    If any mutilated Note is surrendered to the Indenture Trustee, the Issuer shall execute and the Indenture Trustee shall authenticate and deliver in exchange therefor a replacement Note of like tenor and principal amount and bearing a number not contemporaneously outstanding.
(b)    If there shall be delivered to the Issuer and the Indenture Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Note and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless then, in the absence of actual notice to the Issuer or the Indenture Trustee that such Note has been acquired by a bona fide purchaser, the Issuer shall execute and upon its request the Indenture Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a replacement Note of like tenor and principal amount and bearing a number not contemporaneously outstanding.
(c)    In case the final installment of principal on any such mutilated, destroyed, lost or stolen Note has become or will at the next Payment Date become due and payable, the Issuer in its discretion may, instead of issuing a replacement Note, pay such Note.
(d)    Upon the issuance of any replacement Note under this Section 2.05, the Issuer or the Indenture Trustee may require the payment by the Noteholder of a sum sufficient to cover any tax or other governmental charge that may be imposed as a result of the issuance of such replacement Note.
(e)    Every replacement Note issued pursuant to this Section 2.05 in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.
(f)    The provisions of this Section 2.05 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.06    Payment of Interest and Principal; Rights Preserved.
(a)    Any installment of interest or principal, payable on any Note that is punctually paid or duly provided for by or on behalf of the Issuer on the applicable Payment Date shall be paid to the Person in whose name such Note was registered on the Record Date for such Payment Date by check mailed to the address specified in the Note Register, or upon the request of a Holder of more than $1,000,000 original principal amount of Notes, by wire transfer of federal funds to the account and number specified in the Note Register, in each case on such Record Date for such Person (which shall be, as to each original purchaser of the Notes, the account and number specified by such purchaser to the Indenture Trustee in writing, or, if no such account or number is so specified, then by check mailed to such Person’s address as it appears in the Note Register on such Record Date).

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(b)    All reductions in the principal amount of a Note effected by payments of installments of principal made on any Payment Date shall be binding upon all Holders of such Note and of any Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, whether or not such payment is noted on such Note.  All payments on the Notes shall be paid without any requirement of presentment, except that each Holder of any Note shall be deemed to agree, by its acceptance of the same, to surrender such Note at the Corporate Trust Office prior to receipt of payment of the final installment of principal of such Note.
(c)    All outstanding principal of each Note (unless sooner paid) will be due and payable on the Stated Maturity of such Note.
Section 2.07    Persons Deemed Owners.
Prior to due presentment of a Note for registration of transfer, the Issuer, the Indenture Trustee, and any agent of the Issuer or the Indenture Trustee may treat the registered Noteholder as the owner of such Note for the purpose of receiving payment of principal of and interest on such Note and for all other purposes whatsoever, whether or not payment on such Note is overdue, and neither the Issuer, the Indenture Trustee, nor any agent of the Issuer or the Indenture Trustee shall be affected by notice to the contrary.
Section 2.08    Cancellation.
All Notes surrendered for registration of transfer or exchange or following final payment shall, if surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly canceled by it.  The Issuer may at any time deliver to the Indenture Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Issuer may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Indenture Trustee.  No Notes shall be authenticated in lieu of or in exchange for any Notes canceled as provided in this Section 2.08, except as expressly permitted by this Indenture.  All canceled Notes held by the Indenture Trustee may be disposed of in the normal course of its business or as directed by an Issuer Order.
Section 2.09    Noteholder Lists.
The Indenture Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Noteholders.  In the event the Indenture Trustee no longer serves as the Note Registrar, the Issuer shall furnish to the Indenture Trustee at least five Business Days before each Payment Date (and in any event in intervals of not more than six months) and at such other times as the Indenture Trustee may request in writing a list in such form and as of such date as the Indenture Trustee may reasonably require of the names and addresses of Noteholders.  For so long as Wells Fargo Bank, National Association is acting in the capacity of Indenture Trustee, it shall also be the Note Registrar hereunder.  

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Section 2.10    Treasury Notes.
In determining whether the Noteholders of the requisite percentage of the Outstanding Note Balance have concurred in any direction, waiver or consent, Notes held or redeemed by the Issuer or held by an Affiliate of the Issuer shall be considered as though not Outstanding, except that for the purposes of determining whether the Indenture Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which a Responsible Officer of the Indenture Trustee knows are so owned shall be so disregarded.
Section 2.11    Notice to Depository.
Whenever notice or other communication to the Holders of Global Notes is required under this Indenture, unless and until Definitive Notes have been issued to the related Note Owners pursuant to Section 2.03 hereof, the Indenture Trustee shall give all such notices and communications specified herein to be given to such Note Owners to the Depository.
ARTICLE III     
 
ACCOUNTS; COLLECTION AND 
APPLICATION OF MONEYS; REPORTS
Section 3.01    Trust Accounts; Investments by Indenture Trustee.
(a)    On or before the Closing Date, the Indenture Trustee shall establish in the name of the Indenture Trustee for the benefit of the Noteholders as provided in this Indenture, the Trust Accounts, which accounts shall be Eligible Bank Accounts maintained at the Corporate Trust Office.  From time to time, the Indenture Trustee shall establish, to the extent necessary or required under this Indenture, accounts in the name of the Indenture Trustee for the benefit of the Noteholders, which accounts shall be Eligible Bank Accounts.
Subject to the further provisions of this Section 3.01(a), the Indenture Trustee shall, upon receipt or upon transfer from another account, as the case may be, deposit into such Trust Accounts all amounts received by it which are required to be deposited therein in accordance with the provisions of this Indenture.  All such amounts and all investments made with such amounts, including all income and other gain from such investments, shall be held by the Indenture Trustee in such accounts as part of the Trust Estate as herein provided, subject to withdrawal by the Indenture Trustee in accordance with, and for the purposes specified in the provisions of, this Indenture.
(b)    The Indenture Trustee shall assume that any amount remitted to it in respect of the Trust Estate is to be deposited into the Collection Account pursuant to Section 3.02(a) hereof.
(c)    None of the parties hereto shall have any right of set-off with respect to any Trust Account, or any investment therein.
(d)    So long as no Event of Default shall have occurred and be continuing, all or a portion of the amounts in any Trust Account shall be invested and reinvested by the Indenture Trustee pursuant to an Issuer Order in one or more Eligible Investments.  Subject to the restrictions 

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on the maturity of investments set forth in Section 3.01(f) hereof, each such Issuer Order may authorize the Indenture Trustee to make the specific Eligible Investments set forth therein, to make Eligible Investments from time to time consistent with the general instructions set forth therein, or to make specific Eligible Investments pursuant to instructions received in writing (including by confirmable electronic means) from the employees or agents of the Issuer, as the case may be, identified therein, in each case in such amounts as such Issuer Order shall specify.
(e)    In the event that either (i) the Issuer shall have failed to give investment directions to the Indenture Trustee by 9:30 A.M., New York City time, on any Business Day on which there may be uninvested cash in any of the Trust Accounts or (ii) an Event of Default shall be continuing, the Indenture Trustee shall promptly invest and reinvest the funds then in the designated Trust Account to the fullest extent practicable in Wells Fargo Advantage Funds Heritage Money Market Fund (or successor money market funds thereto).  All investments made by the Indenture Trustee shall mature no later than the maturity date therefor permitted by Section 3.01(f) hereof.
(f)    No investment of any amount held in any Trust Account shall mature later than the Business Day immediately preceding the Payment Date which is scheduled to occur immediately following the date of investment.  All income or other gains (net of losses) from the investment of moneys deposited in any Trust Account shall be deposited by the Indenture Trustee in such account immediately upon receipt.
(g)    Any investment of any funds in any Trust Account and any sale of any investment held in such accounts, shall be made under the following terms and conditions:
(i)    each such investment shall be made in the name of the Indenture Trustee, in each case in such manner as shall be necessary to maintain the identity of such investments as assets of the Trust Estate;
(ii)    any certificate or other instrument evidencing such investment shall be delivered directly to the Indenture Trustee and the Indenture Trustee shall have sole possession of such instrument, and all income on such investment; 
(iii)    the proceeds of any sale of an investment shall be remitted by the purchaser thereof directly to the Indenture Trustee for deposit in the account in which such investment was held; provided that no such sale may occur on any day other than the Business Day immediately preceding a Payment Date (for the avoidance of doubt, any full or partial liquidation of an investment in a money market fund is not subject to the foregoing date restriction); and
(iv)    neither the Issuer nor any of its Affiliates may exercise any voting rights with respect to an investment.
(h)    If any amounts are needed for disbursement from any Trust Account and sufficient uninvested funds are not collected and available therein to make such disbursement, in the absence of an Issuer Order for the liquidation of investments held therein in an amount sufficient 

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to provide the required funds, the Indenture Trustee shall select and cause to be sold or otherwise converted to cash a sufficient amount of the investments in such account.
(i)    The Indenture Trustee shall not in any way be held liable by reason of any insufficiency in any Trust Account resulting from losses on investments made in accordance with the provisions of this Section 3.01 including, but not limited to, losses resulting from the sale or depreciation in the market value of such investments (but the institution serving as Indenture Trustee shall at all times remain liable for its own obligations, if any, constituting part of such investments).  The Indenture Trustee shall not be liable for any investment made by it in accordance with this Section 3.01 on the grounds that it could have made a more favorable investment or a more favorable selection for sale of an investment.
(j)    Each party hereto agrees that each of the Trust Accounts constitutes a “securities account” within the meaning of Article 8 of the UCC and in such capacity Wells Fargo Bank, National Association shall be acting as a “securities intermediary” within the meaning of 8-102 of the UCC and that, regardless of any provision in any other agreement, for purposes of the UCC, the State of New York shall be deemed to be the “securities intermediary’s jurisdiction” under Section 8-110 of the UCC.  The Indenture Trustee shall be the “entitlement holder” within the meaning of Section 8-102(a)(7) of the UCC with respect to the Trust Accounts.  In furtherance of the foregoing, Wells Fargo Bank, National Association, acting as a “securities intermediary,” shall comply with “entitlement orders” within the meaning of Section 8-102(a)(8) of the UCC originated by the Indenture Trustee with respect to the Trust Accounts, without further consent by the Issuer.  Each item of property (whether investment property, financial asset, security, instrument or cash) credited to each Trust Account shall be treated as a “financial asset” within the meaning of Section 8-102(a)(9) of the UCC.  All securities or other property underlying any financial assets credited to each Trust Account shall be registered in the name of the Indenture Trustee or indorsed to the Indenture Trustee or in blank and in no case will any financial asset credited to any Trust Account be registered in the name of the Issuer, payable to the order of the Issuer or specially indorsed to the Issuer.  The Trust Accounts shall be under the sole dominion and control (as defined in Section 8-106 of the UCC) of the Indenture Trustee and the Issuer shall have no right to close, make withdrawals from, or give disbursement directions with respect to, or receive distributions from, the Collection Account except in accordance with Section 3.04 hereof. 
(k)    In the event that Wells Fargo Bank, National Association, as securities intermediary, has or subsequently obtains by agreement, by operation of law or otherwise a security interest in the Trust Accounts or any security entitlement credited thereto, it hereby agrees that such security interest shall be subordinate to the security interest created by this Indenture and that the Indenture Trustee’s rights to the funds on deposit therein shall be subject to Section 3.04 hereof.  The financial assets credited to, and other items deposited to the Trust Accounts will not be subject to deduction, set-off, banker’s lien, or any other right in favor of any Person other than as created pursuant to this Indenture.
(l)    If at any time a Trust Account shall cease to be an Eligible Bank Account, the Indenture Trustee shall, within 30 days, establish a new Trust Account that is an Eligible Bank 

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Account.  The 30-day period may be extended an additional 30 days if the Indenture Trustee provides to the Rating Agencies an action plan prior to expiration of the entire 30-day period.
Section 3.02    Establishment and Administration of the Trust Accounts.
(a)    Collection Account.  The Indenture Trustee shall cause to be established and maintained an account (the “Collection Account”) for the benefit of the Noteholders.  The Collection Account shall be an Eligible Bank Account initially established at the Corporate Trust Office of the Indenture Trustee, bearing the following designation “Diamond Resorts Owner Trust 2015-1 -- Collection Account, Wells Fargo Bank, National Association, as Indenture Trustee for the benefit of the Noteholders”.  The Indenture Trustee on behalf of the Noteholders shall possess all right, title and interest in all funds on deposit from time to time in the Collection Account and in all proceeds thereof.  The Collection Account shall be under the sole dominion and control of the Indenture Trustee for the benefit of the Noteholders as their interests appear in the Trust Estate.  If, at any time, the Collection Account ceases to be an Eligible Bank Account, the Indenture Trustee shall, in accordance with Section 3.01(l) hereof, establish a new Collection Account (which if not maintained by the Indenture Trustee is subject to an account control agreement satisfactory to the Indenture Trustee) which shall be an Eligible Bank Account, transfer any cash and/or any investments to such new Collection Account and from the date such new Collection Account is established, it shall be the “Collection Account”.  The Indenture Trustee agrees to immediately deposit any amounts received by it into the Collection Account.  Amounts on deposit in the Collection Account shall be invested in accordance with Section 3.01 hereof.  Withdrawals and payments from the Collection Account will be made on each Payment Date as provided in Section 3.04 hereof.  All investment earnings on the Collection Account shall be distributed to the owners of the beneficial interests in the Issuer on each Payment Date.
(b)    Reserve Account.  The Indenture Trustee shall cause to be established and maintained an account (the “Reserve Account”) for the benefit of the Noteholders.  On the Closing Date, the Issuer shall cause to be deposited in the Reserve Account an amount equal to the Reserve Account Initial Deposit from the proceeds of the sale of the Notes.  The Reserve Account shall be an Eligible Bank Account initially established at the Corporate Trust Office of the Indenture Trustee, bearing the following designation “Diamond Resorts Owner Trust 2015-1 -- Reserve Account, Wells Fargo Bank, National Association, as Indenture Trustee for the benefit of the Noteholders”.  The Indenture Trustee on behalf of the Noteholders shall possess all right, title and interest in all funds on deposit from time to time in the Reserve Account and in all proceeds thereof.  The Reserve Account shall be under the sole dominion and control of the Indenture Trustee for the benefit of the Noteholders as their interests appear in the Trust Estate.  If, at any time, the Reserve Account ceases to be an Eligible Bank Account, the Indenture Trustee shall, in accordance with Section 3.01(l) hereof, establish a new Reserve Account (which if not maintained by the Indenture Trustee is subject to an account control agreement satisfactory to the Indenture Trustee) which shall be an Eligible Bank Account, transfer any cash and/or any investments to such new Reserve Account and from the date such new Reserve Account is established, it shall be the “Reserve Account.”  Amounts on deposit in the Reserve Account shall be invested in accordance with Section 3.01 hereof.  Deposits into the Reserve Account shall be made in accordance with Section 3.04 hereof.  Withdrawals and payments from the Reserve Account shall be made in the following manner:

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(i)    Withdrawals.  If, on any Determination Date, Available Funds on deposit in the Collection Account are insufficient to pay on any Payment Date prior to the Stated Maturity, all amounts required to be distributed on such Payment Date pursuant clauses (i) through (viii), inclusive, of Section 3.04(a) hereof for the related Payment Date, on such Payment Date, the Indenture Trustee shall, based on the Monthly Servicer Report and to the extent of funds available in the Reserve Account, on the related Payment Date withdraw from the Reserve Account and deposit into the Collection Account an amount equal to the lesser of such insufficiency and the amount on deposit in the Reserve Account; provided that on any Payment Date prior to the Stated Maturity, the amount withdrawn by the Indenture Trustee shall not cause the amount on deposit in the Reserve Account to be less than the Reserve Account Floor Amount unless (x) Available Funds on deposit in the Collection Account are insufficient to pay all amounts required to be distributed on such Payment Date pursuant to clauses (i) through (vii), inclusive, of Section 3.04(a) hereof or (y) the sum of Available Funds in the Collection Account plus the amount on deposit in the Reserve Account is greater than or equal to the sum of (a) the payments and distributions required under clauses (i) through (vii), inclusive, of Section 3.04(a) hereof and (b) the Outstanding Note Balance as of such Payment Date prior to any distributions made on such Payment Date (the amount withdrawn, the “Reserve Account Draw Amount”).
(ii)    Stated Maturity or Payment in Full.  On the earlier to occur of the Stated Maturity and the Payment Date on which the Aggregate Outstanding Note Balance will be reduced to zero, the Indenture Trustee shall withdraw all amounts on deposit in the Reserve Account and shall deposit such amounts into the Collection Account.
(iii)    Acceleration Event.  Upon the occurrence of an Acceleration Event, the Indenture Trustee shall withdraw all amounts on deposit in the Reserve Account and shall deposit such amounts into the Collection Account for distribution in accordance with Section 6.06 hereof.
(iv)    Amounts in Excess of Reserve Account Required Balance.  On each Payment Date, the Indenture Trustee shall withdraw all cash on deposit in the Reserve Account in excess of the Reserve Account Required Balance (as determined on the related Determination Date) from the Reserve Account and deposit the same into the Collection Account to be part of Available Funds on such Payment Date for application in accordance with Section 3.04 hereof.
Section 3.03     [Reserved].
Section 3.04    Distributions.
(a)    So long as no Acceleration Event has occurred, to the extent of Available Funds and Reserve Account Draw Amounts on deposit in the Collection Account, on each Payment Date, the Indenture Trustee shall, based on the Monthly Servicer Report, make the following disbursements and distributions to the following parties, in the following order of priority:

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	(i)
	(A) to the Indenture Trustee and the Custodian, ratably based on their respective entitlements, the Indenture Trustee Fee and the Custodial Fee, respectively, plus any accrued and unpaid Indenture Trustee Fees and the Custodial Fees with respect to prior Payment Dates, and (B) to the Indenture Trustee, the Custodian and the Back-Up Servicer, ratably based on their respective entitlements, the Indenture Trustee Expenses, the Custodial Expenses and the Back-Up Servicer Expenses incurred and charged, respectively, by the Indenture Trustee, the Custodian and the Back-Up Servicer during the related Due Period (limited with respect to this sub-clause (B) up to an aggregate total of $25,000, including all expenses reimbursed on prior Payment Dates pursuant to this sub-clause (B), per twelve month period);

		
	(ii)
	to the Back-Up Servicer, (A) the Back-Up Servicing Fee, plus any accrued and unpaid Back-Up Servicing Fees with respect to prior Payment Dates and (B) any Transition Expenses incurred during the related Due Period (up to an aggregate cumulative total of $100,000);

		
	(iii)
	(A) on the Payment Date occurring in July of each year only, to the Owner Trustee, the Owner Trustee Fee, plus any accrued and unpaid Owner Trustee Fees, and (B) on each Payment Date, the Owner Trustee Expenses incurred and charged by the Owner Trustee during the related Due Period (limited with respect to this sub-clause (B) up to an aggregate cumulative total of $40,000);

		
	(iv)
	on the Payment Date occurring in January of each year only, to the Administrator, the Administrator Fee, and on each Payment Date, any Administrator Expenses incurred and charged by the Administrator during the related Due Period with respect to taxes owed pursuant to Section 8.07 hereof;

		
	(v)
	to the Servicer, the Servicing Fee, plus any accrued and unpaid Servicing Fees with respect to prior Payment Dates;

		
	(vi)
	to the Class A Noteholders, the Interest Distribution Amount for the Class A Notes for such Payment Date;

		
	(vii)
	to the Class B Noteholders, the Interest Distribution Amount for the Class B Notes for such Payment Date;

		
	(viii)
	(a) during a Non-Rapid Amortization Period, to the Class A Noteholders and Class B Noteholders, the Principal Distribution Amount, pro rata based on their Percentage Interests and (b) during a Rapid Amortization Period, (1) first, to the Class A Noteholders, the Principal Distribution Amount until the Outstanding Note Balance of the Class A Notes is reduced to zero and (2) second, to the Class B Noteholders, the Principal 

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Distribution Amount until the Outstanding Note Balance of the Class B Notes is reduced to zero;
		
	(ix)
	during a Non-Rapid Amortization Period, to the Class A Noteholders and the Class B Noteholders, the Extra Principal Distribution Amount, pro-rata based on their Percentage Interests;

		
	(x)
	to the Reserve Account, all remaining amounts until the amounts on deposit in the Reserve Account shall equal the Reserve Account Required Balance;  

		
	(xi)
	to the Class A Noteholders and Class B Noteholders, in that order, reimbursement of any unreimbursed Note Balance Write-Down Amounts applied to such Class on prior Payment Dates, plus the Deferred Interest Amount for such Class, if any;

		
	(xii)
	to the Indenture Trustee and the Custodian, any expenses and indemnities of the Indenture Trustee and the Custodian not paid pursuant to clause (i) above;

		
	(xiii)
	to the Back-Up Servicer, any indemnities and expenses not paid pursuant to clause (i) or (ii) above; 

		
	(xiv)
	to the Owner Trustee, any fees, indemnities and expenses not paid pursuant to clause (iii) above;

		
	(xv)
	to the Administrator, any expenses not paid pursuant to clause (iv) above; and 

		
	(xvi)
	to the Owner or any subsequent owners of the beneficial interests in the Issuer, any remaining amounts.

(b)    If an Acceleration Event shall have occurred, distributions shall be made in accordance with Section 6.06 hereof.
Section 3.05    Reports to Noteholders.
On each Payment Date the Indenture Trustee shall account to the Initial Purchaser, each Noteholder and to the Rating Agencies (i) the portion of payments then being made which represents principal and the amount which represents interest, and shall contemporaneously advise the Issuer of all such payments, and (ii) the amounts on deposit in each Trust Account and identifying the investments included therein.  The Indenture Trustee may satisfy its obligations under this Section 3.05 by making available electronically the Monthly Servicer Report to the Initial Purchaser, the Noteholders, the Rating Agencies and the Issuer; provided, however, the Indenture Trustee shall have no obligation to provide such information described in this Section 3.05 until it has received the requisite information from the Issuer or the Servicer.  On or before the fifth day prior to the final Payment Date with respect to any Class of Notes, the Indenture Trustee shall send notice of such 

21

Payment Date to the Rating Agencies, the Initial Purchaser and the Noteholders of such Class.  Such notice shall include a statement that if such Notes are paid in full on the final Payment Date, interest shall cease to accrue as of the day immediately preceding such final Payment Date.
The Indenture Trustee shall make available to the Noteholders and the Rating Agencies, via the Indenture Trustee’s internet website, the Monthly Servicer Report available each month and, with the consent or at the direction of the Issuer, such other information regarding the Notes and/or the Timeshare Loans as the Indenture Trustee may have in its possession, but only with the use of a password provided by the Indenture Trustee.  The Indenture Trustee will make no representation or warranties as to the accuracy or completeness of such documents and will assume no responsibility therefor.
The Indenture Trustee’s internet website shall be initially located at “www.CTSLink.com” and subsequently may be located at such other address as shall be specified by the Indenture Trustee from time to time in writing to the Issuer, the Servicer, the Noteholders and the Rating Agencies.  In connection with providing access to the Indenture Trustee’s Internet Website, the Indenture Trustee may require registration and the acceptance of a disclaimer.  The Indenture Trustee shall not be liable for the dissemination of information in accordance with this Indenture.
The Indenture Trustee shall have the right to change the way Monthly Servicer Reports are distributed in order to make such distribution more convenient and/or more accessible to the above parties after providing timely and adequate notification to all above parties regarding any such changes.
Annually (and more often if required by applicable law), the Indenture Trustee shall distribute to Noteholders and any holder of a beneficial interest in the Issuer any Form 1099 or similar information returns required by applicable tax law to be distributed to the Noteholders or holders of beneficial interests in the Issuer.  The Servicer shall prepare or cause to be prepared all such forms and returns for distribution by the Indenture Trustee to the Noteholders or holders of beneficial interests in the Issuer.
Section 3.06    Withholding Taxes.  The Indenture Trustee, on behalf of the Issuer, shall comply with all requirements of the Code and applicable Treasury Regulations promulgated thereunder and applicable state and local law with respect to the withholding (including U.S. federal withholding taxes under FATCA) from any payments or distributions made by it to any Noteholder or any holder of a beneficial interest in the Issuer of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith.  Each Noteholder, by acceptance of a Note, hereby agrees that (i) it will provide it’s Noteholder Tax Identification Information and to the extent FATCA Withholding Tax is applicable, Noteholder FATCA Information to the Indenture Trustee and (ii) it agrees that the Indenture Trustee has the right to withhold any amount of interest, principal and other payment (properly withholdable under law and without any corresponding gross-up) payable to a Noteholder that fails to comply with the requirements of Section 12.01(p)(ii) hereof.
Section 3.07    Note Balance Write-Down Amounts.

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The Note Balance Write-Down Amount, if any, on each Payment Date shall be applied first to the Class B Notes until the Outstanding Note Balance thereof is reduced to zero and second to the Class A Notes until the Outstanding Note Balance thereof is reduced to zero.  The application of any Note Balance Write-Down Amount shall not affect the right of each Noteholder to receive all payments of principal and interest to be made with respect to the Notes.  

       ARTICLE IV
THE TRUST ESTATE
Section 4.01    Acceptance by Indenture Trustee.
(a)    Concurrently with the execution and delivery of this Indenture, the Indenture Trustee does hereby acknowledge and accept the conveyance by the Issuer of the assets constituting the Trust Estate.  The Indenture Trustee shall hold the Trust Estate in trust for the benefit of the Noteholders, subject to the terms and provisions hereof.  In connection with the conveyance of the Trust Estate to the Indenture Trustee, the Issuer has delivered or has caused the Seller to deliver (i) to the Custodian, the Timeshare Loan Files, and (ii) to the Servicer, the Timeshare Loan Servicing Files for each Timeshare Loan conveyed on the Closing Date.  On or prior to each Transfer Date, the Issuer will deliver or cause the Seller to deliver (i) to the Custodian, the Timeshare Loan Files, and (ii) to the Servicer, the Timeshare Loan Servicing Files, for each Qualified Substitute Timeshare Loan to be conveyed on such Transfer Date.
(b)    The Indenture Trustee shall perform its duties under this Section 4.01 and hereunder with respect to the Trust Estate and for the benefit of the Noteholders in accordance with the terms of this Indenture and applicable law and, in each case, taking into account its other obligations hereunder, but without regard to:
(i)    any relationship that the Indenture Trustee or any Affiliate of the Indenture Trustee may have with an Obligor;
(ii)    the ownership of any Note by the Indenture Trustee or any Affiliate of the Indenture Trustee;
(iii)    the Indenture Trustee’s right to receive compensation for its services hereunder or with respect to any particular transaction; or
(iv)    the ownership, or holding in trust for others, by the Indenture Trustee of any other assets or property.
Section 4.02    Grant of Security Interest; Tax Treatment.
(a)    The conveyance by the Issuer of the Timeshare Loans to the Indenture Trustee shall not constitute and is not intended to result in an assumption by the Indenture Trustee or any 

23

Noteholder of any obligation of the Issuer or the Servicer to the Obligors, the insurers under any insurance policies, or any other Person in connection with the Timeshare Loans.
(b)    It is the intention of the parties hereto that, with respect to all taxes, the Notes will be treated as indebtedness (the “Intended Tax Characterization”).  The provisions of this Indenture shall be construed in furtherance of the Intended Tax Characterization.  The Issuer, the Servicer, the Back-Up Servicer and the Indenture Trustee, by entering into this Indenture, and each Noteholder, by the purchase of a Note, agree to treat the Notes in accordance with the Intended Tax Characterization and to report all payments and transactions with respect to the Notes for purposes of all taxes (including U.S. federal withholding taxes under FATCA) in a manner consistent with the Intended Tax Characterization, unless otherwise required by applicable law.  If the Notes are not properly treated as indebtedness with respect to all taxes, then the parties intend (as provided in the Trust Agreement) that they shall constitute interests in a partnership for such purposes and, in that regard, agree that no election to treat the Issuer in any part as a corporation under Treasury Regulation section 301.7701-3 shall be made by any Person.
(c)    The Issuer and the Servicer shall take no action inconsistent with the Indenture Trustee’s interest in the Timeshare Loans and shall indicate or shall cause to be indicated in its books and records held on its behalf that each Timeshare Loan constituting the Trust Estate has been pledged to the Indenture Trustee on behalf of the Noteholders.
Section 4.03    Further Action Evidencing Assignments.
(a)    The Issuer and the Servicer each agrees that, from time to time, at its respective expense, it will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or appropriate, or that the Servicer, the Indenture Trustee or the Holders representing at least 66-2/3% of the then Outstanding Note Balance of each Class of Notes may reasonably request, in order to perfect, protect or more fully evidence the security interest in the Timeshare Loans or to enable the Indenture Trustee to exercise or enforce any of its rights hereunder.  Without limiting the generality of the foregoing, the Issuer will, without the necessity of a request and upon the request of the Servicer or the Indenture Trustee, execute and file or record (or cause to be executed and filed or recorded) such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate to create and maintain in the Indenture Trustee a first priority perfected security interest, at all times, in the Trust Estate, including, without limitation, recording and filing UCC-1 financing statements, amendments or continuation statements prior to the effective date of any change of the name, identity or structure or relocation of its chief executive office or its jurisdiction of formation or any change that would or could affect the perfection pursuant to any financing statement or continuation statement or assignment previously filed or make any UCC-1 financing statement or continuation statement previously filed pursuant to this Indenture seriously misleading within the meaning of applicable provisions of the UCC (and the Issuer shall give the Indenture Trustee at least 30 Business Days prior notice of the expected occurrence of any such circumstance).  The Issuer shall promptly deliver to the Indenture Trustee file-stamped copies of any such filing.

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(b)    (i) The Issuer hereby grants to each of the Servicer and the Indenture Trustee a power of attorney to execute, file and record all documents including, but not limited to UCC financing statements, amendments or continuation statements, on behalf of the Issuer as may be necessary or desirable to effectuate the foregoing and any recordation pursuant to Section 5.18 hereof and (ii) the Servicer hereby grants to the Indenture Trustee a power of attorney to execute, file and record all documents on behalf of the Servicer as may be necessary or desirable to effectuate the foregoing; provided, however, that such grant shall not create a duty on the part of the Indenture Trustee or the Servicer to file, prepare, record or monitor, or any responsibility for the contents or adequacy of, any such documents.
Section 4.04    Substitution and Repurchase of Timeshare Loans.
(a)        Mandatory Substitution and Repurchase of Timeshare Loans for Breach of Representation or Warranty.  If at any time, any party hereto obtains knowledge, discovers, or is notified by any other party hereto, that any of the representations and warranties of the Seller in the Sale Agreement were incorrect at the time such representations and warranties were made, then the party discovering such defect, omission, or circumstance shall promptly notify the other parties to this Indenture and the Seller.  In the event any such representation or warranty of the Seller is incorrect and materially and adversely affects the value of a Timeshare Loan or the interests of the Noteholders therein, then the Issuer and the Indenture Trustee shall require the Seller, within 60 days after the date it is first notified of, or otherwise discovers such breach, to eliminate or otherwise cure in all material respects the circumstance or condition which has caused such representation or warranty to be incorrect or if the breach relates to a particular Timeshare Loan and is not cured in all material respects (such Timeshare Loan, a “Defective Timeshare Loan”), either (a) repurchase such Defective Timeshare Loan at the Repurchase Price or (b) provide one or more Qualified Substitute Timeshare Loans and pay the Substitution Shortfall Amounts, if any.  The Indenture Trustee is hereby appointed attorney-in-fact, which appointment is coupled with an interest and is therefore irrevocable, to act on behalf and in the name of the Issuer to enforce the Seller’s repurchase or substitution obligations if the Seller has not complied with its repurchase or substitution obligations under the Sale Agreement within 30 days of the end of the aforementioned 60 day period.
(b)        Optional Repurchase and Substitution of Timeshare Loans.  On any date, pursuant to the Sale Agreement, the Seller shall have the option, but not the obligation, to either (i) repurchase a Defaulted Timeshare Loan from the Issuer for a price equal to the related Repurchase Price, or (ii) substitute one or more Qualified Substitute Timeshare Loans for a Defaulted Timeshare Loan and pay the related Substitution Shortfall Amount, if any; provided, however, the aggregate Cut-Off Date Loan Balance of Defaulted Timeshare Loans that may be repurchased or substituted pursuant to this Section 4.04(b) shall be limited on any date to 15% and 20%, respectively, of the Aggregate Loan Balance as of the Initial Cut-Off Date less the sum of the Loan Balances of all Defaulted Timeshare Loans (as of the date they became Defaulted Timeshare Loans) previously repurchased or substituted, as applicable, pursuant this Section 4.04(b).
(c)        Repurchase Prices and Substitution Shortfall Amounts.  The Issuer and the Indenture Trustee shall direct that the Seller remit all amounts in respect of Repurchase Prices and Substitution Shortfall Amounts to the Indenture Trustee for deposit into the Collection Account.  In 

25

the event that more than one Timeshare Loan is substituted pursuant to Section 4.04(a) or Section 4.04(b) hereof on any Transfer Date, the Substitution Shortfall Amounts and the Loan Balances of Qualified Substitute Timeshare Loans shall be calculated on an aggregate basis for all substitutions made on such Transfer Date.
(d)        Schedule of Timeshare Loans.  The Issuer shall cause the Seller to provide the Indenture Trustee on any date on which a Timeshare Loan is repurchased or substituted, with a revised Schedule of Timeshare Loans to the Sale Agreement reflecting the removal of Timeshare Loans and subjecting any Qualified Substitute Timeshare Loans to the provisions thereof.
(e)        Officer’s Certificate.  No substitution of a Timeshare Loan shall be effective unless the Issuer and the Indenture Trustee shall have received an Officer’s Certificate from the Seller indicating that (i) the new Timeshare Loan meets all the criteria of the definition of “Qualified Substitute Timeshare Loan”, (ii) the Timeshare Loan Files for such Qualified Substitute Timeshare Loan have been delivered to the Custodian, and (iii) the Timeshare Loan Servicing Files for such Qualified Substitute Timeshare Loan have been delivered to the Servicer.
(f)    Qualified Substitute Timeshare Loans.  On or prior to the related Transfer Date, the Issuer shall direct the Seller to deliver or cause the delivery of the Timeshare Loan Files of the related Qualified Substitute Timeshare Loans to the Custodian on or prior to the related Transfer Date in accordance with the provisions of this Indenture and the Custodial Agreement.
Section 4.05    Release of Lien.
(a)    The Issuer shall be entitled to obtain a release from the Lien of this Indenture for any Timeshare Loan repurchased or substituted pursuant to Section 4.04 hereof, (i) in the case of any repurchase, after a payment by the Seller of the Repurchase Price of the Timeshare Loan, or (ii) in the case of any substitution, after payment of any applicable Substitution Shortfall Amount and the delivery of the Timeshare Loan Files for the related Qualified Substitute Timeshare Loan to the Custodian.
(b)    The Issuer shall be entitled to obtain a release from the Lien of the Indenture for any Timeshare Loan which has been paid in full.
(c)    In connection with (a) and (b) above, the Indenture Trustee will execute and deliver such endorsements and assignments as are provided to it by the Seller, in each case without recourse, representation or warranty, as shall be necessary to vest in the Seller, the legal and beneficial ownership of each repurchased or substituted Timeshare Loan being released pursuant to this Section 4.05.  The Servicer shall direct the Custodian to release the related Timeshare Loan Files upon receipt of a Request for Release from the Servicer, as provided for in the Custodial Agreement.
Section 4.06    Appointment of Custodian.
The Indenture Trustee may appoint a Custodian to hold all of the Timeshare Loan Files as agent for the Indenture Trustee.  Each Custodian shall be a depository institution supervised and regulated by a federal or state banking authority, shall have combined capital and surplus of at 

26

least $10,000,000, shall be qualified to do business in the jurisdiction in which it holds any Timeshare Loan File and shall not be the Issuer or an Affiliate of the Issuer.  The initial Custodian shall be Wells Fargo Bank, National Association pursuant to the terms of the Custodial Agreement.  The Indenture Trustee shall not be responsible for paying the Custodial Fee or any other amounts owed to the Custodian. 
Section 4.07    Sale of Timeshare Loans.
The parties hereto agree that none of the Timeshare Loans in the Trust Estate may be sold or disposed of in any manner except as expressly provided for herein.
ARTICLE V     
 
SERVICING OF TIMESHARE LOANS
Section 5.01    Appointment of Servicer; Servicing Standard.
Subject to the terms and conditions herein, the Issuer hereby appoints DRFS as the initial Servicer hereunder.  The Servicer shall service and administer the Timeshare Loans and perform all of its duties hereunder in accordance with applicable law, the Collection Policy, the terms of the respective Timeshare Loans and, to the extent consistent with the foregoing, in accordance with the customary and usual procedures employed by institutions servicing timeshare loans secured by timeshare estates, or if a higher standard, the highest degree of skill and attention that the Servicer exercises with respect to comparable assets that the Servicer services for itself or its Affiliates (the “Servicing Standard”).
Section 5.02    Payments on the Timeshare Loans.
(a)    The Servicer shall in a manner consistent with the Collection Policy (with respect to the initial Servicer, the Collection Policy attached hereto as Exhibit I), direct or otherwise cause the Obligors as to all Timeshare Loans (other than Obligors paying by means of credit cards) to mail or deposit by electronic means all Receivables and other payments due thereunder, or to make or credit such payments pursuant to automated clearing house debit and credit payments or credit card processing payment, remittance and collection agreements, directly to the Servicer’s existing centralized lockbox account (the “Centralized Lockbox Account”), which Centralized Lockbox Account shall consist of one or more accounts maintained by the Servicer at an Approved Financial Institution (each, a “Lockbox Bank”), acting with the consent or at the direction of the Indenture Trustee to a Lockbox Bank maintained by the Indenture Trustee for the benefit of the Noteholders.  At all times, the Centralized Lockbox Account shall be subject to the Deposit Account Control Agreement and the Intercreditor Agreement.  The Centralized Lockbox Account shall initially be maintained at Wells Fargo Bank, N.A.
(b)    Within one Business Day after receipt of any Receivables or other payments due under the Timeshare Loans in the Centralized Lockbox Account, the Servicer shall determine and segregate such Receivables and other payments from any monies or other items in the Centralized Lockbox Account that do not relate to Receivables or other payments made on the Timeshare Loans, 

27

and within one Business Day thereafter the Servicer shall remit such Receivables and other payments into the Collection Account.  The Servicer is not required to remit any Miscellaneous Payments or Processing Charges, to the extent received, into the Collection Account. 
(c)    If, notwithstanding such instructions as provided in Section 5.02(a) hereof, any such Receivables or other payments are delivered to the Seller, the Servicer or to any Affiliate thereof, the Servicer shall (or, as applicable, shall cause the Seller or such Affiliate to) deposit such Receivables or other payments into the Collection Account within two Business Days following the receipt. 
(d)    All interest earned on funds received with respect to Timeshare Loans and any Processing Charges deposited in accounts of the Servicer or in the Centralized Lockbox Account prior to deposit into the Collection Account pursuant to Section 5.02(b) hereof shall be deemed to be additional compensation to the Servicer for the performance of its duties and obligations hereunder.
(e)    On the Closing Date and each Transfer Date, the Servicer shall deposit into the Collection Account all Receivables and other payments collected and received in respect of the Timeshare Loans (other than the amounts described in Section 5.02(d) hereof) after the related Cut-Off Date.
(f)    Subject to Sections 5.02(b), (c), (d) and (g) hereof, within two Business Days of receipt, the Servicer shall segregate all Receivables and other payments in respect of the Timeshare Loans and shall remit such amounts into the Collection Account.  In the event that Miscellaneous Payments or Processing Charges are erroneously deposited into the Collection Account, the Indenture Trustee shall pay such funds to the Servicer prior to any distributions under Section 3.04 hereof on the next Payment Date as instructed by the Servicer.
(g)    The Servicer shall net out Liquidation Expenses from any Liquidation Proceeds on Defaulted Timeshare Loans prior to deposit of the net Liquidation Proceeds into the Collection Account pursuant to Section 5.02(f) hereof.  To the extent that the Servicer shall subsequently recover any portion of such Liquidation Expenses from the related Obligor, the Servicer shall deposit such amounts into the Collection Account in accordance with Section 5.02(f) hereof.
Section 5.03    Duties and Responsibilities of the Servicer.
(a)  In addition to any other customary services which the Servicer may perform or may be required to perform hereunder, the Servicer shall perform or cause to be performed through sub-servicers, the following servicing and collection activities in accordance with the Servicing Standard:
(i)    perform standard accounting services and general record keeping services with respect to the Timeshare Loans;
(ii)    respond to telephone or written inquiries of Obligors concerning the Timeshare Loans;

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(iii)    keep Obligors informed of the proper place and method for making payment with respect to the Timeshare Loans;
(iv)    contact Obligors to effect collection and to discourage delinquencies in the payment of amounts owed under the Timeshare Loans and doing so by any lawful means, including but not limited to (A) mailing of routine past due notices, (B) preparing and mailing collection letters, (C) contacting delinquent Obligors by telephone to encourage payment, and (D) mailing of reminder notices to delinquent Obligors;
(v)    report tax information to Obligors and taxing authorities to the extent required by law;
(vi)    take such other action as may be necessary or appropriate in the discretion of the Servicer for the purpose of collecting and transferring to the Indenture Trustee for deposit into the Collection Account all payments received by the Servicer or remitted to any of the Servicer’s accounts in respect of the Timeshare Loans (except as otherwise expressly provided herein), and to carry out the duties and obligations imposed upon the Servicer pursuant to the terms of this Indenture;
(vii)    remarket Timeshare Property;
(viii)    arrange for Liquidations of Timeshare Properties related to Defaulted Timeshare Loans;
(ix)    dispose of Timeshare Property related to the Timeshare Loans whether following repossession, foreclosure or otherwise;
(x)    to the extent requested by the Indenture Trustee, use reasonable best efforts to enforce the purchase and substitution obligation of the Seller under the Sale Agreement;
(xi)    not modify, waive or amend the terms of any Timeshare Loan; provided, however, the Servicer may modify, waive or amend a Timeshare Loan for which a default has occurred or is imminent and such modification, amendment or waiver does not (i) materially alter the interest rate on or the principal balance of such Timeshare Loan, (ii) shorten the final maturity of, lengthen the timing of payments of either principal or interest, or any other terms of, such Timeshare Loan in any manner which would have a material adverse effect on Noteholders, (iii) adversely affect the Timeshare Property underlying such Timeshare Loan or (iv) reduce materially the likelihood that payments of interest and principal on such Timeshare Loan shall be made when due; provided, further, the Servicer may grant an extension of the final maturity of a Timeshare Loan if the Servicer, in its reasonable discretion, determines that (A) such Timeshare Loan is in default or default on such Timeshare Loan is likely to occur in the foreseeable future, and (B) the value of such Timeshare Loan will be enhanced by such extension; provided, further, that the Servicer shall not (1) grant more than one extension per calendar year with respect to a Timeshare Loan or (2) grant an extension for more than one calendar month with respect to a Timeshare Loan in any calendar year;

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(xii)    work with Obligors in connection with any transfer of ownership of a Timeshare Property by an Obligor to another Person, whereby the Servicer may consent to the assumption by such Person of the Timeshare Loan related to such Timeshare Property; provided, however, in connection with any such assumption, the rate of interest borne by, the maturity date of, the principal amount of, the timing of payments of principal and interest in respect of, and all other material terms of, the related Timeshare Loan shall not be changed other than as permitted in (xi) above; 
(xiii)    [Reserved];
(xiv)    deliver such information and data to the Back-Up Servicer as is required pursuant to Section 5.16 hereof; and 
(xv)    (A) use commercially reasonable best efforts to cause all the timeshare or fractional interest resorts operated by DRFS or its Affiliates to have property damage insurance coverage for the full replacement value thereof or, if not available on commercially reasonable terms, the maximum amount available on commercially reasonable terms, as determined in accordance with the Servicing Standard and (B) to the extent that there is any reduction in the policy limits of such coverage or the Servicer has determined, in accordance with the Servicing Standard, that such coverage is not available on commercially reasonable terms, provide written notice to the Issuer and each of the Rating Agencies within five Business Days of such determination.
(b)  For so long as an Affiliate of the Servicer controls the Resorts, the Servicer shall use commercially reasonable best efforts to maintain our cause to maintain each Resort in good repair, working order and condition (ordinary wear and tear excepted).
(c)  For so long as an Affiliate of the Servicer controls the Resort Association for a Resort, and an Affiliate of the Servicer is the manager, (i) if an amendment or modification to the related management contract and master marketing and sale contract materially and adversely affects the Noteholders, then it may only be amended or modified with the written consent of Holders representing at least 51% of the then Outstanding Note Balance of each Class of Notes and (ii) if an amendment or modification to the related management contract and master marketing and sale contract does not materially and adversely affect the Noteholders, the Servicer shall send a copy of such amendment or modification (i) to the Rating Agencies and (ii) to the Indenture Trustee as part of the Monthly Report to be delivered subsequent to the effective date of such amendment or modification.
(d)     In the event any Lien attaches to any Timeshare Loan or related collateral from any Person claiming from and through an Affiliate of the Servicer which materially adversely affects the Issuer’s interest in such Timeshare Loan, the Servicer shall, within the earlier to occur of ten Business Days after receiving notice of such attachment or the respective lienholders’ action to foreclose on such lien, either (i) cause such Lien to be released of record, (ii) provide the Indenture Trustee with a bond in accordance with the applicable laws of the state in which the Timeshare Property is located, issued by a corporate surety acceptable to the Indenture Trustee, in an amount 

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and in form reasonably acceptable to the Indenture Trustee or (iii) provide the Indenture Trustee with such other security as the Indenture Trustee may reasonably require.
(e)     The Servicer shall: (i) promptly notify the Indenture Trustee and the Rating Agencies of (A) receiving notice of any claim, action or proceeding which may be reasonably expected to have a material adverse effect on the Trust Estate, or any material part thereof, and (B) any action, suit, proceeding, order or injunction of which Servicer becomes aware after the date hereof pending or threatened against or affecting Servicer or any Affiliate which may be reasonably expected to have a material adverse effect on the Trust Estate or the Servicer’s ability to service the same; (ii) at the request of Indenture Trustee with respect to a claim or action or proceeding which arises from or through the Servicer or one of its Affiliates, appear in and defend, at Servicer’s expense, any such claim, action or proceeding which would have a material adverse effect on the Timeshare Loans or the Servicer’s ability to service the same; and (iii) comply in all respects, and shall cause all Affiliates to comply in all respects, with the terms of any orders imposed on such Person by any governmental authority the failure to comply with which would have a material adverse effect on the Timeshare Loans or the Servicer’s ability to service the same.
(f)    The Servicer shall not, and shall not permit any Person to, encumber, pledge or otherwise grant a Lien (other than in the normal course of business) or security interest in and to the Reservation System (including, without limitation, all hardware, software and data in respect thereof) and furthermore agrees, and shall use commercially reasonable efforts to keep the Reservation System operational, not to dispose of the same and to allow the Collections the use of, and access to, the Reservation System.
(g) The Servicer shall notify the Indenture Trustee ten days prior to any material amendment or change to the Collection Policy and shall provide written notice of such amendment to the Rating Agencies.  The Servicer shall deliver a copy of any non-material amendments or changes to the Collection Policy (i) to the Rating Agencies and (ii) to the Indenture Trustee as part of the Monthly Report to be delivered subsequent to the effective date of such amendments or changes.
(h) In connection with the Servicer’s duties under (vii), (viii) and (ix) in subsection (a) above, the Servicer will, as soon as practical, undertake such duties in the ordinary course in a manner similar and consistent with (or better than) the manner in which the Servicer sells or markets other Timeshare Property it or its Affiliates owns.  In addition, in connection with the Servicer’s duties under (vii), (viii) and (ix) of subsection (a) above, the Servicer agrees that it shall remarket and sell the Timeshare Property related to Timeshare Loans owned by the Issuer before it remarkets and sells Timeshare Property of the same type owned by the Servicer or any of the Servicer’s Affiliates (other than Affiliates engaged primarily in receivables securitizations).
(i)  To the extent that any Timeshare Property related to a Defaulted Timeshare Loan is remarketed, the Servicer agrees that it shall require that any Liquidation Proceeds be in the form of cash only. 

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(j)  The Servicer shall provide written notice to the Rating Agencies of any material modification, waiver or amendment of the terms of any Timeshare Loan effected pursuant to Section 5.03(a)(xi) hereof.  
(k)  The Servicer shall, on behalf of the Issuer, maintain the perfection and priority of the security interest Granted hereunder and, to the extent transfers under the Sale Agreement are characterized as a loan, the security interest Granted therein.
(l)    The Issuer shall provide written notice to the Indenture Trustee of any change in the owner of the beneficial interests in the Issuer.
Section 5.04    Servicer Events of Default.
(a)    A “Servicer Event of Default” means the occurrence and continuance of any of the following events:
(i)    failure by the Servicer to make any required payment, transfer or deposit when due hereunder and the continuance of such default for a period of three Business Days;
(ii)    failure by the Servicer to provide any required report within five Business Days of when such report is required to be delivered hereunder;
(iii)    any failure by the Servicer to observe or perform in any material respect any covenant or agreement which has a material adverse effect on the Noteholders;
(iv)    any representation or warranty made by the Servicer in this Indenture shall prove to be incorrect in any material respect as of the time when the same shall have been made, and such breach is not remedied within 30 days (or, if the Servicer shall provide evidence satisfactory to the Indenture Trustee that such covenant cannot be cured in the 30 day period and that it is diligently pursuing a cure, 60 days) after the earlier of (x) the Servicer first acquiring knowledge thereof, and (y) the Indenture Trustee’s giving written notice thereof to the Servicer;
(v)    the entry by a court having jurisdiction in respect of the Servicer of (A) a decree or order for relief in respect of the Servicer in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization, or other similar law or (B) a decree or order adjudging the Servicer a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment, or composition of or in respect of the Servicer under any applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator, or other similar official of the Servicer, or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or
(vi)    the commencement by the Servicer of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization, or other similar law 

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or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by either to the entry of a decree or order for relief in respect of the Servicer in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization, or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator, or similar official of the Servicer or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the Servicer’s failure to pay its debts generally as they become due, or the taking of corporate action by the Servicer in furtherance of any such action.
(b)    If any Servicer Event of Default shall have occurred and not been waived hereunder, the Indenture Trustee may, and upon notice from Holders representing at least 51% of the then Outstanding Note Balance of each Class of Notes shall, terminate, on behalf of the Noteholders, by notice in writing to the Servicer, all of the rights and obligations of the Servicer, as Servicer under this Indenture.
(c)    If any Authorized Officer of the Servicer shall have knowledge of the occurrence of a default by the Servicer hereunder, the Servicer shall promptly notify the Indenture Trustee, the Back-Up Servicer, the Issuer, the Rating Agencies and the Initial Purchaser, and shall specify in such notice the action, if any, the Servicer is taking in respect of such default.  Unless consented to by the Holders representing at least 66-2/3% of the then Aggregate Outstanding Note Balance, the Issuer may not waive any Servicer Event of Default.
(d)    If any Servicer Event of Default shall have occurred and not been waived hereunder, the Indenture Trustee shall direct and the Servicer shall cause to be delivered, notices to the Obligors related to the Timeshare Loans, instructing such Obligors to remit payments in respect thereof to a lockbox account specified by the Indenture Trustee, such lockbox to be maintained as an Eligible Bank Account for the benefit of the Noteholders.  The Indenture Trustee shall cause to be established a lockbox account in accordance with Section 3.01 hereof.  
Section 5.05    Accountings; Statements and Reports.
(a)    Monthly Servicer Report.  Not later than each Determination Date, the Servicer shall deliver to the Issuer, the Indenture Trustee, the Rating Agencies and the Initial Purchaser, a report (the “Monthly Servicer Report”) substantially in the form of Exhibit J hereto.  Delivery of the Monthly Servicer Report to the Rating Agencies shall be made by electronically mailing the same to each of the Rating Agencies at its electronic mailing address provided in Section 13.01 hereof.  The Monthly Servicer Report shall be completed with the information specified therein for the related Due Period and shall contain such other information as may be reasonably requested by the Issuer, the Indenture Trustee or the Initial Purchaser in writing at least five Business Days prior to such Determination Date.  Each such Monthly Servicer Report shall be accompanied by an Officer’s Certificate of the Servicer in the form of Exhibit K hereto, certifying the accuracy of the computations reflected in such Monthly Servicer Report.

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(b)    Certification as to Compliance. The Servicer shall deliver to the Issuer, the Indenture Trustee, the Rating Agencies and the Initial Purchaser, an Officer’s Certificate on or before December 31 of each year commencing in 2015: (i) to the effect that a review of the activities of the Servicer during the preceding calendar year, and of its performance under this Indenture during such period has been made under the supervision of the officers executing such Officer’s Certificate with a view to determining whether during such period the Servicer had performed and observed all of its obligations under this Indenture, and either (A) stating that based on such review no Servicer Event of Default is known to have occurred and is continuing, or (B) if such a Servicer Event of Default is known to have occurred and is continuing, specifying such Servicer Event of Default and the nature and status thereof; and (ii) describing in reasonable detail to his/her knowledge any occurrence in respect of any Timeshare Loan which would be of adverse significance to a Person owning such Timeshare Loan.
(c)    Annual Accountants’ Reports.  On or before each April 30 of each year commencing in 2016, the Servicer shall (i) cause a firm of independent public accountants to furnish a certificate or statement (and the Servicer shall provide a copy of such certificate or statement to the Issuer, the Owner Trustee, the Indenture Trustee, the Rating Agencies and the Initial Purchaser), to the effect that such firm has performed certain procedures with respect to the Servicer’s servicing controls and procedures for the previous calendar year and that, on the basis of such firms’ procedures, conducted substantially in compliance with standards established by the American Institute of Certified Public Accountants, nothing has come to the attention of such firm indicating that the Servicer has not complied with the minimum servicing standards identified in the Uniform Single Attestation Program for Mortgage Bankers established by the Mortgage Bankers Association of America (“USAP”), except for such significant exceptions or errors that, in the opinion of such firm, it is required to report; and (ii) cause its internal auditors to furnish a certificate or statement to the Issuer, the Indenture Trustee and the Initial Purchaser, to the effect that such internal auditors have (x) read this Indenture, (y) have performed certain procedures, in accordance with USAP, with respect to the records and calculations set forth in the Monthly Servicer Reports delivered by the Servicer during the reporting period and certain specified documents and records relating to the servicing of the Timeshare Loans and the reporting requirements with respect thereto and (z) on the basis of such internal auditor’s procedures, certifies that except for such exceptions as such internal auditors shall believe immaterial and such other exceptions as shall be set forth in such statement, (A) the information set forth in such Monthly Servicer Reports was correct; and (B) the servicing and reporting requirements have been conducted in compliance with this Indenture.  In the event such independent public accountants require the Indenture Trustee to agree to the procedures to be performed by such firm in any of the reports required to be prepared pursuant to this Section 5.05(c), the Servicer shall direct the Indenture Trustee in writing to so agree; it being understood and agreed that the Indenture Trustee will deliver such letter of agreement in conclusive reliance upon the direction of the Servicer, and the Indenture Trustee has not made any independent inquiry or investigation as to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures.
(d)    Report on Proceedings and Servicer Event of Default. (i) Promptly upon the Servicer’s becoming aware of any proposed or pending investigation of it by any Governmental Authority or any court or administrative proceeding which involves or may involve the possibility 

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of materially and adversely affecting the properties, business, prospects, profits or conditions (financial or otherwise) of the Servicer and subsidiaries, as a whole, or (ii) immediately upon becoming aware of the existence of any condition or event which constitutes a Servicer Event of Default, the Servicer shall deliver a written notice to the Issuer, the Indenture Trustee, the Rating Agencies and the Initial Purchaser describing its nature and period of existence and what action the Servicer is taking or proposes to take with respect thereto.
Section 5.06    Records.
The Servicer shall maintain all data for which it is responsible (including, without limitation, computerized tapes or disks) relating directly to or maintained in connection with the servicing of the Timeshare Loans (which data and records shall be clearly marked to reflect that the Timeshare Loans have been Granted to the Indenture Trustee on behalf of the Noteholders and constitute property of the Trust Estate) at the address specified in Section 13.03 hereof or, upon 15 days’ notice to the Issuer and the Indenture Trustee, at such other place where any Servicing Officer of the Servicer is located, and shall give the Issuer and the Indenture Trustee or their authorized agents access to all such information at all reasonable times, upon 72 hours’ written notice.
Section 5.07    Fidelity Bond; Errors and Omissions Insurance.
The Servicer shall maintain or cause to be maintained a fidelity bond and errors and omissions insurance with respect to the Servicer in such form and amount as is customary for institutions acting as custodian of funds in respect of timeshare loans or receivables on behalf of institutional investors.  Any such fidelity bond or errors and omissions insurance shall be maintained in a form and amount that would meet the requirements of prudent institutional loan servicers.  No provision of this Section 5.07 requiring such fidelity bond and errors and omissions insurance policy shall diminish or relieve the Servicer from its duties and obligations as set forth in this Indenture.  The Servicer shall be deemed to have complied with this provision if one of its respective Affiliates has such fidelity bond coverage and errors and omissions insurance policy which, by the terms of such fidelity bond and such errors and omissions insurance policy, the coverage afforded thereunder extends to the Servicer.  Upon a request of the Indenture Trustee, the Servicer shall deliver to the Indenture Trustee, a certification evidencing coverage under such fidelity bond or such errors and omission insurance policy.  Any such fidelity bond or such errors and omissions insurance policy shall not be canceled or modified in a materially adverse manner without ten days’ prior written notice to the Indenture Trustee.
Section 5.08    Merger or Consolidation of the Servicer.
(a)    The Servicer shall promptly provide written notice to the Indenture Trustee and the Rating Agencies of any merger or consolidation of the Servicer.  The Servicer shall keep in full effect its existence, rights and franchise as a corporation under the laws of the state of its incorporation except as permitted herein, and shall obtain and preserve its qualification to do business as a foreign corporation in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture or any of the Timeshare Loans and to perform its duties under this Indenture.

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(b)    Any Person into which the Servicer may be merged or consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Servicer shall be a party, or any Person succeeding to the business of the Servicer, shall be the successor of the Servicer hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided, however, that the successor or surviving Person (i) is a company whose business includes the servicing of assets similar to the Timeshare Loans and shall be authorized to transact business in the state or states in which the related Timeshare Properties it is to service are situated, (ii) is a U.S. Person, (iii) in the case of the initial Servicer, delivers to the Indenture Trustee (A) an agreement, in form and substance reasonably satisfactory to the Indenture Trustee and the Noteholders, which contains an assumption by such successor entity of the due and punctual performance and observance of each covenant and condition to be performed or observed by the Servicer under this Indenture and (B) an Opinion of Counsel as to the enforceability of such agreement, and (iv) provides written notice to the Rating Agencies of such merger, conversion or consolidation.
Section 5.09    Sub-Servicing.
(a)    The Servicer may enter into one or more subservicing agreements with a subservicer provided the Servicer provides prior written notice of any such subservicing agreement to the Rating Agencies.  References herein to actions taken or to be taken by the Servicer in servicing the Timeshare Loans include actions taken or to be taken by a subservicer on behalf of the Servicer.  Any subservicing agreement will be upon such terms and conditions as the Servicer may reasonably agree and as are not inconsistent with this Indenture.  The Servicer shall be solely responsible for any subservicing fees.
(b)    Notwithstanding any subservicing agreement, the Servicer (and the Successor Servicer if it is acting as such pursuant to Section 5.16 hereof) shall remain obligated and liable for the servicing and administering of the Timeshare Loans in accordance with this Indenture without diminution of such obligation or liability by virtue of such subservicing agreement and to the same extent and under the same terms and conditions as if the Servicer alone were servicing and administering the Timeshare Loans.
Section 5.10    Servicer Resignation.
The Servicer shall not resign from the duties and obligations hereby imposed on it under this Indenture unless and until (i) it determines that by reason of a change in legal or regulatory requirements the performance of its duties under this Indenture would cause it to be in violation of such requirements, (ii) the Successor Servicer shall have assumed the responsibilities and obligations of the Servicer hereunder, and (iii) the Indenture Trustee shall have provided written notice of such resignation to the Rating Agencies.  Upon such resignation, the Servicer shall comply with Section 5.16(f) hereof.
Section 5.11    Fees and Expenses.
As compensation for the performance of its obligations under this Indenture, the Servicer shall be entitled to receive on each Payment Date, from amounts on deposit in the Collection 

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Account and in the priorities described in Section 3.04 and Section 6.06 hereof, the Servicing Fee and as additional compensation, the amounts described in Section 5.02(b) hereof.  Other than Liquidation Expenses, the Servicer shall pay all expenses incurred by it in connection with its servicing activities hereunder.
Section 5.12    Access to Certain Documentation.
Upon five Business Days’ prior written notice (or without prior written notice following an Event of Default or a Servicer Event of Default), the Servicer will, from time to time during regular business hours, as requested by the Issuer, the Indenture Trustee or any Noteholder of at least 25% of the Aggregate Outstanding Note Balance of the most senior Class of Notes then Outstanding and, prior to the occurrence of a Servicer Event of Default, at the expense of the Issuer, the Indenture Trustee or such Noteholder and upon the occurrence and continuance of a Servicer Event of Default, at the expense of the Servicer, permit the Issuer, the Indenture Trustee, the Back-Up Servicer or any Noteholder of the most senior Class of Notes then Outstanding or its or their agents or representatives (i) to examine and make copies of and abstracts from all books, records and documents (including, without limitation, computer tapes and disks) in the possession or under the control of the Servicer relating to the servicing of the Timeshare Loans serviced by it and (ii) to visit the offices and properties of the Servicer for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to the Timeshare Loans with any of the officers, employees or accountants of the Servicer having knowledge of such matters.  Nothing in this Section 5.12 shall affect the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Obligors, and the failure of the Servicer to provide access to information as a result of such obligation shall not constitute a breach of this Section 5.12.
Section 5.13    No Offset.
Prior to the termination of this Indenture, the obligations of the Servicer under this Indenture shall not be subject to any defense, counterclaim or right of offset which the Servicer has or may have against the Issuer, the Indenture Trustee or any Noteholder, whether in respect of this Indenture, any Timeshare Loan or otherwise.
Section 5.14    Cooperation.
The Indenture Trustee agrees to cooperate with the Servicer in connection with the Servicer’s preparation of the Monthly Servicer Report, including without limitation, providing account balances of Trust Accounts and notification of the Events of Default or Rapid Amortization Period and other information of which the Indenture Trustee has knowledge which may affect the Monthly Servicer Report.
Section 5.15    Indemnification; Third Party Claim.
The Servicer agrees to indemnify the Issuer, the Indenture Trustee, the Owner Trustee, the Custodian, the Back-up Servicer and the Noteholders from and against any and all actual damages (excluding economic losses related to the collectability of any Timeshare Loan), 

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claims, reasonable attorneys’ fees and related costs, judgments, and any other costs, fees and expenses that each may sustain because of the failure of the Servicer to service the Timeshare Loans in accordance with the Servicing Standard or otherwise perform its obligations and duties hereunder in compliance with the terms of this Indenture, or because of any act or omission by the Servicer due to its negligence or willful misconduct in connection with its maintenance and custody of any funds, documents and records under this Indenture, or its release thereof except as contemplated by this Indenture.  The Servicer shall immediately notify the Issuer and the Indenture Trustee if it has knowledge or should have knowledge of a claim made by a third party with respect to the Timeshare Loans, and, if such claim relates to the servicing of the Timeshare Loans by the Servicer, assume, with the consent of the Indenture Trustee, the defense of any such claim and pay all expenses in connection therewith, including counsel fees, and promptly pay, discharge and satisfy any judgment or decree which may be entered against it.  This Section 5.15 shall survive the termination of this Indenture or the resignation or removal of the Servicer hereunder.
The Issuer agrees to indemnify, defend, and hold harmless the Indenture Trustee, the Owner Trustee, the Servicer, the Custodian and the Back-up Servicer and each of their respective officers, directors, employees and agents from and against all costs, expenses, losses, claims, damages and liabilities (including reasonable attorneys’ fees and expenses) arising out of or incurred in connection with the acceptance or performance of the trusts and duties herein contained, except, with respect to any such indemnified party, to the extent that such cost, expense, loss, claim, damage, or liability shall be due to the willful misconduct, bad faith or negligence of such indemnified party.  Indemnification under this paragraph of Section 5.15 by the Issuer shall survive the termination of this Indenture. The indemnified parties in this paragraph of Section 5.15 agree that any indemnification by the Issuer shall be subject to the Priority of Distributions and such obligations are limited recourse obligations of the Issuer payable solely from the Trust Estate.  
Section 5.16    Back-Up Servicer and Successor Servicer.
(a)    Subject to the terms and conditions herein, the Issuer hereby appoints Wells Fargo Bank, National Association as the initial Back-Up Servicer hereunder.  The Back-Up Servicer shall perform all of its duties hereunder in accordance with applicable law, the terms of this Indenture, the respective Timeshare Loans and, to the extent consistent with the foregoing, in accordance with the customary and usual procedures employed by the Back-Up Servicer with respect to comparable assets that the Back-Up Servicer services for itself or other Persons.  The Back-Up Servicer shall be compensated for its services hereunder by the Back-Up Servicing Fee.
(b)    Not later than the fourth Business Day preceding a Payment Date (unless otherwise requested more frequently by the Indenture Trustee), the Servicer shall prepare and deliver to the Back-Up Servicer: (i) a copy of the Monthly Servicer Report and all other reports and notices, if any, delivered to the Issuer and the Indenture Trustee (collectively, the “Monthly Reports”); (ii) a computer file or files stored on compact disc, magnetic tape or provided electronically, prepared in accordance with the record layout for data conversion attached hereto as Exhibit G and made a part hereof (the “Tape(s)”); and (iii) a computer file or files stored on compact disc, magnetic tape or provided electronically containing cumulative payment history for the Timeshare Loans, including servicing collection notes (the “Collection Reports”).  The Tape(s) shall contain (y) all 

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information with respect to the Timeshare Loans as of the close of business on the last day of the Due Period necessary to store the appropriate data in the Back-Up Servicer’s system from which the Back-Up Servicer will be capable of preparing a daily trial balance relating to the data and (z) an initial trial balance showing balances of the Timeshare Loans as of the last business day corresponding to the date of the Tape(s) (the “Initial Trial Balance”).  The Back-Up Servicer shall have no obligations as to the Collection Reports other than to insure that they are able to be opened and read (which it shall determine promptly upon receipt).  The Servicer shall give prompt written notice to the Indenture Trustee, the Back-Up Servicer and the Initial Purchaser of any modifications in the Servicer’s servicing systems.
(c)    The Back-Up Servicer shall use the Tape(s) and Initial Trial Balance to ensure that the Monthly Reports are complete on their face and the following items in such Monthly Reports have been accurately calculated, if applicable, and reported: (i) the Aggregate Loan Balance, (ii) the Aggregate Outstanding Note Balance, (iii) the payments to be made pursuant to Section 3.04 hereof, (iv) the Default Level and (v) the Delinquency Level.  The Back-Up Servicer shall give written notice on or prior to the Business Day immediately preceding the related Payment Date to the Indenture Trustee of any discrepancies discovered pursuant to its review of the items required by this Section 5.16(c) or if any of the items in Section 5.16(b) hereof cannot be open and read.
(d)    Other than the duties specifically set forth in this Indenture and those additional standard reports or services the Servicer or the Indenture Trustee may request of the Back-Up Servicer from time to time, the Back-Up Servicer shall have no obligation hereunder, including, without limitation, to supervise, verify, monitor or administer the performance of the Servicer.  The Back-Up Servicer shall have no liability for any action taken or omitted to be taken by the Servicer.
(e)    From and after the receipt by the Servicer of a written termination notice pursuant to Section 5.04 hereof or the resignation of the Servicer pursuant to Section 5.10 hereof, and upon written notice thereof to the Back-Up Servicer from the Indenture Trustee, all authority and power of the Servicer under this Indenture, whether with respect to the Timeshare Loans or otherwise, shall pass to and be vested in the Back-Up Servicer, as the Successor Servicer, on the Assumption Date (as defined in Section 5.16(f) hereof).
(f)    The Servicer shall perform such actions as are reasonably necessary to assist the Indenture Trustee and the Successor Servicer in such transfer of the Servicer’s duties and obligations pursuant to Section 5.16(e) hereof.  The Servicer agrees that it shall promptly (and in any event no later than five Business Days subsequent to its receipt of the notice of termination) provide the Successor Servicer (with costs being borne by the Servicer) with all documents and records (including, without limitation, those in electronic form) reasonably requested by it to enable the Successor Servicer to assume the Servicer’s duties and obligations hereunder, and shall cooperate with the Successor Servicer in effecting the assumption by the Successor Servicer of the Servicer’s obligations hereunder, including, without limitation, the transfer within two Business Days to the Successor Servicer for administration by it of all cash amounts which shall at the time or thereafter received by it with respect to the Timeshare Loans (provided, however, that the Servicer shall continue to be entitled to receive all amounts accrued or owing to it under this Indenture on or prior to the date of such termination).  If the Servicer fails to undertake such action as is reasonably 

39

necessary to effectuate such transfer of its duties and obligations, the Indenture Trustee, or the Successor Servicer if so directed by the Indenture Trustee, is hereby authorized and empowered to execute and deliver, on behalf of and at the expense of the Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things reasonably necessary to effect the purposes of such notice of termination.  Promptly after receipt by the Successor Servicer of such documents and records, the Successor Servicer will commence the performance of such servicing duties and obligations as successor Servicer in accordance with the terms and conditions of this Indenture (such date, the “Assumption Date”), and from and after the Assumption Date the Successor Servicer shall receive the Servicing Fee and agrees to and shall be bound by all of the provisions of this Article V and any other provisions of this Indenture relating to the duties and obligations of the Servicer, except as otherwise specifically provided herein.
(i)    Notwithstanding anything contained in this Indenture to the contrary, the Successor Servicer is authorized to accept and rely on all of the accounting, records (including computer records) and work of the Servicer relating to the Timeshare Loans (collectively, the “Predecessor Servicer Work Product”) without any audit or other examination thereof, and the Successor Servicer shall have no duty, responsibility, obligation or liability for the acts and omissions of the Servicer.  If any error, inaccuracy, omission or incorrect or non-standard practice or procedure (collectively, “Errors”) exist in any Predecessor Servicer Work Product and such Errors make it materially more difficult to service or should cause or materially contribute to the Successor Servicer making or continuing any Errors (collectively, “Continued Errors”), the Successor Servicer shall have no duty, responsibility, obligation or liability for such Continued Errors; provided, however, that the Successor Servicer agrees to use its best efforts to prevent further Continued Errors. In the event that the Successor Servicer becomes aware of Errors or Continued Errors, the Successor Servicer, with the prior consent of the Indenture Trustee (acting at the direction of Noteholders representing at least 51% of the then Outstanding Note Balance of each Class of Notes) shall use its best efforts to reconstruct and reconcile such data as is commercially reasonable to correct such Errors and Continued Errors and to prevent future Continued Errors and shall be entitled to recover its costs thereby.
(ii)    The Successor Servicer shall have: (A) no liability with respect to any obligation which was required to be performed by the terminated or resigned Servicer prior to the Assumption Date or any claim of a third party based on any alleged action or inaction of the terminated or resigned Servicer; (B) no obligation to perform any repurchase or advancing obligations, if any, of the Servicer; (C) no obligation to pay any taxes required to be paid by the Servicer; (D) no obligation to pay any of the fees and expenses of any other party involved in this transaction; and (E) no liability or obligation with respect to any Servicer indemnification obligations of any prior Servicer including the original Servicer.
(g)    In the event that Wells Fargo Bank, National Association as the initial Back-Up Servicer is terminated for any reason, or fails or is unable to act as Back-Up Servicer and/or as Successor Servicer, the Indenture Trustee may enter into a back-up servicing agreement with a back-up servicer, and may appoint a successor servicer to act under this Indenture, in either event, on such terms and conditions as are provided herein as to the Back-Up Servicer or the Successor 

40

Servicer, as applicable and provided that the Indenture Trustee provides prior written notice of entering into such an agreement or such appointment, as the case may be, to the Rating Agencies. 
Section 5.17    Limitation on Liability.
It is expressly understood and agreed by the parties hereto that DRFS is executing this Indenture solely as Servicer and DRFS undertakes to perform such duties and only such duties as are specifically set forth in this Indenture applicable to the Servicer.
Section 5.18    [Reserved]
Section 5.19    St. Maarten Notice.
Within 45 days of the Closing Date (with respect to the initial Timeshare Loans) or any Transfer Date (with respect to a Qualified Substitute Timeshare Loan), as the case may be, the Servicer shall give notice to each Obligor under a Timeshare Loan related to any Resort in the territory of St. Maarten that such Timeshare Loan has been transferred and assigned to the Indenture Trustee, in trust, for the benefit of the Noteholders.  Such notice may include any notice or notices that the Issuer’s predecessors in title to the Timeshare Loan may give to the same Obligor with respect to any transfers and assignments of the Timeshare Loan by such predecessors.  Such notice shall be in the form attached hereto as Exhibit N, as the same may be amended, revised or substituted by the Indenture Trustee and the Servicer from time to time.
ARTICLE VI     
 
EVENTS OF DEFAULT; REMEDIES
Section 6.01    Events of Default.
“Event of Default” wherever used herein with respect to Notes, means any one of the following:
(a)    default in the payment of the Interest Distribution Amount on any Class of Notes within two Business Days after the same becomes due and payable (determined irrespective of Available Funds); or
(b)    a failure to reduce the Aggregate Outstanding Note Balance to zero, reimburse all Note Balance Write-Down Amounts, if any, and reimburse all Deferred Interest Amounts, if any, at the Stated Maturity; or
(c)    a non-monetary default in the performance, or breach, of any covenant of the Issuer in this Indenture (other than a covenant dealing with a default in the performance of which or the breach of which is specifically dealt with elsewhere in this Section 6.01), the continuance of such default or breach for a period of 30 days (or, if the Issuer shall provide evidence satisfactory to the Indenture Trustee that such covenant cannot be cured in the 30 day period and that it is diligently pursuing a cure, 60 days) after the earlier of (x) the Issuer first acquiring knowledge thereof, and (y) the Indenture Trustee’s giving written notice thereof to the Issuer; provided, however, 

41

that if such default or breach is in respect of the additional covenants contained in Section 8.06(a)(i) or (ii), there shall be no grace period whatsoever; 
(d)    if any representation or warranty of the Issuer made in this Indenture shall prove to be incorrect in any material respect as of the time when the same shall have been made, and such breach is not remedied within 30 days (or, if the Issuer shall provide evidence satisfactory to the Indenture Trustee that such representation or warranty cannot be cured in the 30 day period and that it is diligently pursuing a cure, 60 days) after the earlier of (x) the Issuer first acquiring knowledge thereof, and (y) the Indenture Trustee’s giving written notice thereof to the Issuer; or
(e)    the entry by a court having jurisdiction in the premises of (i) a decree or order for relief in respect of the Issuer in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization, or other similar law or (ii) a decree or order adjudging the Issuer a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment, or composition of or in respect of the Issuer under any applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator, or other similar official of the Issuer, or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or
(f)    the commencement by the Issuer of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization, or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by either to the entry of a decree or order for relief in respect of the Issuer in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization, or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator, or similar official of the Issuer or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the Issuer’s failure to pay its debts generally as they become due, or the taking of corporate action by the Issuer in furtherance of any such action; or
(g)    any failure by the Seller (or the Performance Guarantors as required under the Seller Undertaking Agreement) to cure, repurchase or substitute a Defective Timeshare Loan as required under the Sale Agreement;
(h)    the Issuer becoming subject to registration as an “investment company” under the 1940 Act; 
(i)    the impairment of the validity of any security interest of the Indenture Trustee in the Trust Estate in any material respect, except as expressly permitted hereunder, or the creation of any material encumbrance on all or any portion of the Trust Estate not otherwise permitted which is not stayed or released within 10 days of the Issuer having knowledge of its creation; or

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(j)    the Issuer is classified as an association, a publicly traded partnership or a taxable mortgage pool within the meaning of Section 7701(i) of the Code that is, in each case, taxable as a corporation for U.S. federal income tax purposes.
A Servicer Event of Default shall not constitute an Event of Default hereunder.
Section 6.02    Acceleration of Maturity; Rescission and Annulment.
(a)    If an Event of Default of the kind specified in Section 6.01(e) or Section 6.01(f) hereof occurs, each Class of Notes shall automatically become due and payable at the sum of its Outstanding Note Balance and unreimbursed Note Balance Write-Down Amounts, if any, together with all accrued and unpaid interest thereon.  If an Event of Default (other than an Event of Default of the kind described in the preceding sentence) is related to the failure to pay interest or principal in respect of a Class of Notes, the Indenture Trustee shall, upon notice from Holders (other than DRII or an affiliate thereof) representing at least 66-2/3% of the Outstanding Note Balance of the most senior Class of Notes then Outstanding (plus, if the payment of interest and principal on the most senior Class of Notes is current, the consent of holders (other than DRII or an affiliate thereof) representing at least a majority of the Outstanding Note Balance of each Class of Notes which has failed to receive one or more payments of interest or principal), declare each Class of Notes to be immediately due and payable at the sum of its Outstanding Note Balance and unreimbursed Note Balance Write-Down Amounts, if any, together with all accrued and unpaid interest thereon.  If an Event of Default (other than an Event of Default described in the preceding two sentences) shall occur and is continuing, the Indenture Trustee shall, upon notice from Holders representing at least 66-2/3% of the then Outstanding Note Balance of each Class of Notes, declare each Class of Notes to be immediately due and payable at the sum of its Outstanding Note Balance and unreimbursed Note Balance Write-Down Amounts, if any, together with all accrued and unpaid interest thereon.  Upon any such declaration or automatic acceleration, the sum of the Outstanding Note Balance and unreimbursed Note Balance Write-Down Amounts, if any, of the applicable Class or Classes of Notes together with all accrued and unpaid interest thereon shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Issuer.  The Indenture Trustee shall promptly send a notice of any declaration or automatic acceleration to the Rating Agencies.
(b)    At any time after such a declaration of acceleration has been made, or after such acceleration has automatically become effective and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee as hereinafter in this Article provided, the Holders (other than DRII or an Affiliate thereof) representing at least 66-2/3% of the then Outstanding Note Balance of each Class of Notes by written notice to the Issuer and the Indenture Trustee, may rescind and annul such declaration and its consequences if:
(i)    The amounts on deposit in the Trust Accounts and other funds from collections with respect to the Timeshare Loans in the possession of the Servicer but not yet deposited in the Trust Accounts, is a sum sufficient to pay:
(A)    all principal due on each Class of Notes which has become due otherwise than by such declaration of acceleration and interest thereon 

43

from the date when the same first became due until the date of payment or deposit at the applicable Note Rate,
(B)    all interest due with respect to each Class of Notes and, to the extent that payment of such interest is lawful, interest upon overdue interest from the date when the same first became due until the date of payment or deposit at a rate per annum equal to the applicable Note Rate, and
(C)    all sums paid or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements, and advances of each of the Indenture Trustee and the Servicer, its agents and counsel;
and
(ii)    all Events of Default with respect to the Notes, other than the non‐payment of the Outstanding Note Balance of each Class of Notes which became due solely by such declaration of acceleration, have been cured or waived as provided in Section 6.13 hereof.
(c)    No such rescission shall affect any subsequent Event of Default or impair any right consequent thereon.
(d)    An automatic acceleration of the Notes may be rescinded by holders (other than DRII or an Affiliate thereof) representing a majority of the then Aggregate Outstanding Note Balance.
Section 6.03    Remedies.
(a)    If an Event of Default with respect to the Notes occurs and is continuing of which a Responsible Officer of the Indenture Trustee has actual knowledge, the Indenture Trustee shall immediately give notice to each Noteholder as set forth in Section 7.02 hereof and shall solicit such Noteholders for advice.  The Indenture Trustee shall then take such action as so directed by the Holders representing at least 66-2/3% of the then Outstanding Note Balance of each Class of Notes subject to the provisions of this Indenture.
(b)    Following any acceleration of the Notes, the Indenture Trustee shall have all of the rights, powers and remedies with respect to the Trust Estate as are available to secured parties under the UCC or other applicable law, subject to Section 6.03(d) hereof.  Such rights, powers and remedies may be exercised by the Indenture Trustee in its own name as trustee of an express trust.
(c)    If an Event of Default specified in Section 6.01(a) hereof occurs and is continuing, the Indenture Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Issuer for the Aggregate Outstanding Note Balance and interest remaining unpaid with respect to the Notes.
(d)  If an Event of Default occurs and is continuing, the Indenture Trustee may in its discretion, and at the instruction of the Holders representing at least 66-2/3% of the then Outstanding Note Balance of each Class of Notes shall proceed to protect and enforce its rights and 

44

the rights of the Noteholders by such appropriate judicial or other proceedings as the Indenture Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.  The Indenture Trustee shall notify the Issuer, the Rating Agencies, the Servicer and the Noteholders of any such action.
(e)  If (i) the Indenture Trustee shall have received instructions within 45 days from the date notice pursuant to Section 6.03(a) hereof is first given from Holders representing at least 66-2/3% of the then Outstanding Note Balance of each Class of Notes to the effect that such Persons approve of or request the liquidation of the Timeshare Loans or (ii) upon an Event of Default set forth in Section 6.01(e) or (f) hereof, the Indenture Trustee shall to the extent lawful, promptly sell, dispose of or otherwise liquidate the Timeshare Loans in a commercially reasonable manner and on commercially reasonable terms, which shall include the solicitation of competitive bids; provided, however, that, upon an Event of Default set forth in Section 6.01(e) or (f) hereof, Holders representing at least 51% of the then Outstanding Note Balance of each Class of Notes may notify the Indenture Trustee that such liquidation shall not occur.  The Indenture Trustee may obtain a prior determination from any conservator, receiver or liquidator of the Issuer that the terms and manner of any proposed sale, disposition or liquidation are commercially reasonable.
Section 6.04    Indenture Trustee May File Proofs of Claim.  (a) In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Issuer, or the property of the Issuer, the Indenture Trustee (irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand on the Issuer for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(i)    to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee and any predecessor Indenture Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and any predecessor Indenture Trustee, their agents and counsel) and of the Noteholders allowed in such judicial proceeding;
(ii)    to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and
(iii)    to participate as a member, voting or otherwise, of any official committee of creditors appointed in such matter;
and any custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Noteholder to make such payments to the Indenture Trustee and to pay to the Indenture Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and any predecessor 

45

Indenture Trustee, their agents and counsel, and any other amounts due the Indenture Trustee and any predecessor Indenture Trustee under Section 7.06 hereof.
(b)    Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or accept or adopt on behalf of any Noteholder any plan of reorganization, agreement, adjustment or composition affecting the Notes or the rights of any Noteholder thereof or affecting the Timeshare Loans or the other assets constituting the Trust Estate or to authorize the Indenture Trustee to vote in respect of the claim of any Noteholder in any such proceeding.
Section 6.05    Indenture Trustee May Enforce Claims Without Possession of Notes.
All rights of action and claims under this Indenture, the Notes, the Timeshare Loans or the other assets constituting the Trust Estate may be prosecuted and enforced by the Indenture Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provisions for the payment of reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and any predecessor Indenture Trustee, their agents and counsel, be for the benefit of the Noteholders in respect of which such judgment has been recovered, and pursuant to the priorities contemplated by Section 3.04 hereof.
Section 6.06    Application of Money Collected.
If the Notes have been declared, have automatically become or otherwise become due and payable following an Event of Default (an “Acceleration Event”) and such Acceleration Event has not been rescinded or annulled, any money collected by the Indenture Trustee in respect of the Trust Estate and any other money that may be held thereafter by the Indenture Trustee as security for the Notes, including without limitation the amounts on deposit in the Reserve Account, shall be applied in the following order on each Payment Date:
		
	(i)
	to the Indenture Trustee and the Custodian, ratably based on their respective entitlements, any unpaid Indenture Trustee Fees, Indenture Trustee Expenses, Custodial Fees or Custodial Expenses incurred and charged as of such date;

		
	(ii)
	to the Back-Up Servicer, any unpaid Back-Up Servicing Fees, Back-Up Servicer Expenses and Transition Expenses;    

		
	(iii)
	to the Owner Trustee, any unpaid Owner Trustee Fees and Owner Trustee Expenses;

		
	(iv)
	to the Administrator, any unpaid Administrator Fees;

		
	(v)
	to the Servicer, any unpaid Servicing Fees; provided, however, that immediately after receipt of such Servicing Fees, the Servicer shall remit 

46

the Issuer’s portion of any then due and owing Lockbox Bank Fees to each Lockbox Bank;
		
	(vi)
	to the Class A Noteholders, the Interest Distribution Amount for the Class A Notes and for such Payment Date;

		
	(vii)
	to the Class A Noteholders, all remaining amounts until the Outstanding Note Balance of the Class A Notes is reduced to zero and all Note Balance Write-Down Amounts applied to the Class A Notes have been reimbursed plus the Deferred Interest Amount for such Class A Notes;

		
	(viii)
	to the Class B Noteholders, the Interest Distribution Amount for the Class B Notes and for such Payment Date;

		
	(ix)
	to the Class B Noteholders, all remaining amounts until the Outstanding Note Balance of the Class B Notes is reduced to zero and all Note Balance Write-Down Amounts applied to the Class B Notes have been reimbursed plus the Deferred Interest Amount for such Class B Notes; and 

		
	(viii)
	to the Owner or any subsequent owners of the beneficial interests in the Issuer, any remaining amounts.

Section 6.07    Limitation on Suits.
No Noteholder, solely by virtue of its status as Noteholder, shall have any right by virtue or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture, unless an Event of Default shall have occurred and is continuing and the Holders of Notes evidencing not less than 25% of the then Outstanding Note Balance of each Class of Notes shall have made written request upon the Indenture Trustee to institute such action, suit or proceeding in its own name as Indenture Trustee hereunder and shall have offered to the Indenture Trustee such reasonable indemnity as it may require against the cost, expenses and liabilities to be incurred therein or thereby, and the Indenture Trustee, for 60 days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding and no direction inconsistent with such written request has been given such Indenture Trustee during such 60-day period by such Noteholders; it being understood and intended, and being expressly covenanted by each Noteholder with every other Noteholder and the Indenture Trustee, that no one or more Noteholders shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of the Holders of any other of such Notes, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under this Indenture, except in the manner herein provided and for the benefit of all Noteholders.  For the protection and enforcement of the provisions of this Section 6.07, each and every Noteholder and the Indenture Trustee shall be entitled to such relief as can be given either at law or in equity.

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Section 6.08    Unconditional Right of Noteholders to Receive Principal and Interest; Non-Recourse.
Notwithstanding any other provision in this Indenture, other than the provisions hereof limiting the right to recover amounts due on the Notes to recoveries from the property comprising the Trust Estate, the Holder of any Note shall have the absolute and unconditional right to receive payment of the principal of and interest on such Note as such payments of principal and interest become due, including on the Stated Maturity, and such right shall not be impaired without the consent of such Noteholder.  Notwithstanding any other provision of this Indenture to the contrary, the obligation to pay principal and interest on the Notes or any other amount payable to any Noteholder will be without recourse to the Seller, the Servicer, the Back-Up Servicer, the Indenture Trustee, the Owner Trustee or any Affiliate (other than the Issuer), officer employee or director of any of them, and the obligation of the Issuer to pay principal of or interest on the Notes or any other amount payable to any Noteholder will be subject to the allocation and payment provisions of this Indenture and limited to amounts available from the Trust Estate.  Notwithstanding any other terms of this Indenture, the Notes, any Transaction Documents or otherwise, the obligations of the Issuer under the Notes, this Indenture and each other Transaction Document to which it is a party are limited recourse obligations of the Issuer, payable solely from the Trust Estate, and following realization of the Trust Estate and application of the proceeds thereof in accordance with the terms of this Indenture, none of the Noteholders, the Indenture Trustee, the Owner Trustee or any of the other parties to the Transaction Documents shall be entitled to take any further steps to recover any sums due but still unpaid hereunder or thereunder, all claims in respect of which shall be extinguished and shall not thereafter revive.  It is understood that the foregoing provisions of this paragraph shall not (i) prevent recourse to the Trust Estate for sums due or to become due under any security, instrument or agreement which is part of the Trust Estate, (ii) save as specifically provided therein, constitute a waiver, release or discharge of any indebtedness or obligation evidenced by the Notes or secured by this Indenture.  It is further understood that the foregoing provisions of this paragraph shall not limit the right of any Person, to name the Issuer as a party defendant in any proceeding or in the exercise of any other remedy under the Notes or this Indenture, so long as no judgment in the nature of a deficiency judgment or seeking personal liability shall be asked for or (if obtained) enforced against the Issuer.
Section 6.09    Restoration of Rights and Remedies.
If the Indenture Trustee or any Noteholder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Indenture Trustee or to such Noteholder, then and in every such case, subject to any determination in such proceeding, the Issuer, the Indenture Trustee and the Noteholders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Indenture Trustee and the Noteholders continue as though no such proceeding had been instituted.
Section 6.10    Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost, or stolen Notes in Section 2.05(f) hereof, no right or remedy herein 

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conferred upon or reserved to the Indenture Trustee or to the Noteholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
Section 6.11    Delay or Omission Not Waiver.
No delay or omission of the Indenture Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article or by law to the Indenture Trustee or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by the Noteholders, as the case may be.
Section 6.12    Control by Noteholders.
Except as may otherwise be provided in this Indenture, until such time as the conditions specified in Sections 11.01(a)(i) and (ii) hereof have been satisfied in full, the Holders representing at least 66‐2/3% of the then Outstanding Note Balance of the most senior Class of Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee, or exercising any trust or power conferred on the Indenture Trustee, with respect to the Notes.  Notwithstanding the foregoing:
(i)    no such direction shall be in conflict with any rule of law or with this Indenture;
(ii)    the Indenture Trustee shall not be required to follow any such direction which the Indenture Trustee reasonably believes might result in any personal liability on the part of the Indenture Trustee for which the Indenture Trustee is not adequately indemnified; and
(iii)    the Indenture Trustee may take any other action deemed proper by the Indenture Trustee which is not inconsistent with any such direction; provided that the Indenture Trustee shall give notice of any such action to each Noteholder.
Section 6.13    Waiver of Events of Default.
(a)    The Holders representing at least 66‐2/3% of the then Outstanding Note Balance of each Class of Notes may, by one or more instruments in writing, waive any Event of Default on behalf of all Noteholders hereunder and its consequences, except a continuing Event of Default:
(i)    in respect of the payment of the principal of or interest on any Note (which may only be waived by the Holder of such Note), or

49

(ii)    in respect of a covenant or provision hereof which under Article 9 hereof cannot be modified or amended without the consent of the Holder of each Outstanding Note affected (which only may be waived by the Holders of all Outstanding Notes affected).
(b)    A copy of each waiver pursuant to Section 6.13(a) hereof shall be furnished by the Issuer to the Indenture Trustee and each Noteholder.  Upon any such waiver, such Event of Default shall cease to exist and shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.
Section 6.14    Undertaking for Costs.
All parties to this Indenture agree (and each Holder of any Note by its acceptance thereof shall be deemed to have agreed) that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 6.14 shall not apply to any suit instituted by the Indenture Trustee, to any suit instituted by any Noteholder, or group of Noteholders representing at least 51% of the then Outstanding Note Balance of each Class of Notes, or to any suit instituted by any Noteholder for the enforcement of the payment of the principal of or interest on any Note on or after the maturities for such payments, including the Stated Maturity as applicable.
Section 6.15    Waiver of Stay or Extension Laws.
The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Indenture Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
Section 6.16    Sale of Trust Estate.
(a)    The power to effect any sale of any portion of the Trust Estate pursuant to Section 6.03 hereof shall not be exhausted by any one or more sales as to any portion of the Trust Estate remaining unsold, but shall continue unimpaired until the entire Trust Estate so allocated shall have been sold or all amounts payable on the Notes shall have been paid.  The Indenture Trustee may from time to time, upon directions in accordance with Section 6.12 hereof, postpone any public sale by public announcement made at the time and place of such sale.
(b)    To the extent permitted by applicable law, the Indenture Trustee shall not sell to a third party the Trust Estate, or any portion thereof except as permitted under Section 6.03(e) hereof.

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(c)    In connection with a sale of all or any portion of the Trust Estate:
(i)    any one or more Noteholders or the Owner may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain, and possess and dispose of such property, without further accountability, and any Noteholder may, in paying the purchase money therefor, deliver in lieu of cash any Outstanding Notes or claims for interest thereon for credit in the amount that shall, upon distribution of the net proceeds of such sale, be payable thereon, and the Notes, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the Noteholders after being appropriately stamped to show such partial payment; provided, however, that the Owner may irrevocably waive its option to bid for and purchase the property offered for sale by delivering a waiver letter to the Indenture Trustee;
(ii)    the Indenture Trustee shall execute and deliver an appropriate instrument of conveyance prepared by the Servicer transferring the Issuer’s interest without representation or warranty and without recourse in any portion of the Trust Estate in connection with a sale thereof;
(iii)    the Indenture Trustee is hereby irrevocably appointed the agent and attorney‐in‐fact of the Issuer to transfer and convey the Issuer’s interest in any portion of the Trust Estate in connection with a sale thereof, and to take all action necessary to effect such sale;
(iv)    no purchaser or transferee at such a sale shall be bound to ascertain the Indenture Trustee’s authority, inquire into the satisfaction of any conditions precedent or see to the application of any moneys; and
(v)    The method, manner, time, place and terms of any sale of all or any portion of the Trust Estate shall be commercially reasonable.
ARTICLE VII 
 
THE INDENTURE TRUSTEE
Section 7.01    Certain Duties.  (a)  The Indenture Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Indenture Trustee (including, without limitation, the duties referred to in Section 5.04 hereof during the continuance of a Servicer Event of Default, or a Servicer Event of Default resulting in the appointment of the Back-Up Servicer as Successor Servicer pursuant to Section 5.16 hereof).
(b)    In the absence of bad faith on its part, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Indenture Trustee, the Indenture Trustee shall be 

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under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture, provided however, the Indenture Trustee shall not be required to verify or recalculate the contents thereof.
(c)    In case an Event of Default or a Servicer Event of Default (resulting in the appointment of the Back-Up Servicer as Successor Servicer) has occurred and is continuing, the Indenture Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs; provided, however, that no provision in this Indenture shall be construed to limit the obligations of the Indenture Trustee to provide notices under Section 7.02 hereof.
(d)    The Indenture Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Noteholders pursuant to this Indenture, unless such Noteholders shall have offered to the Indenture Trustee reasonable security or indemnity (which may be in the form of written assurances) against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
(e)    No provision of this Indenture shall be construed to relieve the Indenture Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:
(i)    this Section 7.01(e) shall not be construed to limit the effect of Section 7.01(a) and (b) hereof;
(ii)    the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it shall be proved that the Indenture Trustee shall have been negligent in ascertaining the pertinent facts; and
(iii)    the Indenture Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the written direction of the holders of the requisite principal amount of the outstanding Notes, or in accordance with any written direction delivered to it under Section 6.02(a) hereof, relating to the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee, or exercising any trust or power conferred upon the Indenture Trustee, under this Indenture.
(f)    Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Indenture Trustee shall be subject to the provisions of this Section 7.01.
(g)    The Indenture Trustee makes no representations or warranties with respect to the Timeshare Loans.
(h)    Notwithstanding anything to the contrary herein, the Indenture Trustee is not required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable 

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grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
Section 7.02    Notice of Events of Default and Rapid Amortization Period.
The Indenture Trustee shall promptly (but in any event within three Business Days) notify the Issuer, the Servicer, the Rating Agencies and the Noteholders upon a Responsible Officer obtaining actual knowledge of any event which constitutes an Event of Default or a Servicer Event of Default, or would trigger a Rapid Amortization Period or would constitute an Event of Default or a Servicer Event of Default but for the requirement that notice be given or time elapse or both, provided, further, that this Section 7.02 shall not limit the obligations of the Indenture Trustee to provide notices expressly required by this Indenture.
Section 7.03    Certain Matters Affecting the Indenture Trustee.  Subject to the provisions of Section 7.01 hereof:
(a)    The Indenture Trustee may rely and shall be protected in acting or refraining from acting upon (and shall not be required to substantively review) any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
(b)    Any request or direction of any Noteholders, the Issuer, or the Servicer mentioned herein shall be in writing;
(c)    Whenever in the performance of its duties hereunder the Indenture Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Indenture Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer’s Certificate or an Opinion of Counsel;
(d)    The Indenture Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be deemed authorization in respect of any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon;
(e)    Prior to the occurrence of an Event of Default or after the curing of all Events of Default which may have occurred, the Indenture Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other paper document, unless requested in writing so to do by Noteholders representing at least 51% of the then Outstanding Note Balance of each Class of Notes; provided, however, that if the payment within a reasonable time to the Indenture Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the reasonable opinion of the Indenture Trustee, not reasonably assured to the Indenture Trustee by the security afforded to it by the terms of this Indenture, the Indenture Trustee may require reasonable indemnity against such cost, expense or liability as a condition to 

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so proceeding.  The reasonable expense of every such examination shall be paid by the Servicer or, if paid by the Indenture Trustee, shall be reimbursed by the Servicer upon demand;
(f)    The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys, co-trustee or a custodian (which may be Affiliates of the Indenture Trustee) and the Indenture Trustee shall not be liable for any acts or omissions of such agents, attorneys, co-trustee or custodians appointed with due care by it hereunder; and
(g)    Delivery of any reports, information and documents to the Indenture Trustee provided for herein is for informational purposes only (unless otherwise expressly stated) and the Indenture Trustee’s receipt of such shall not constitute constructive knowledge of any information contained therein or determinable from information contained therein, including the Servicer’s or the Issuer’s compliance with any of its representations, warranties or covenants hereunder (as to which the Indenture Trustee is entitled to rely exclusively on Officer’s Certificates).
Section 7.04    Indenture Trustee Not Liable for Notes or Timeshare Loans.  The Indenture Trustee makes no representations as to the validity or sufficiency of this Indenture or any Transaction Document, the Notes (other than the authentication thereof) or of any Timeshare Loan.  The Indenture Trustee shall not be accountable for the use or application by the Issuer of funds paid to the Issuer in consideration of conveyance of the Timeshare Loans to the Trust Estate.
(b)    The Indenture Trustee shall have no responsibility or liability for or with respect to the validity of any security interest in any property securing a Timeshare Loan; the existence or validity of any Timeshare Loan, the validity of the assignment of any Timeshare Loan to the Trust Estate or of any intervening assignment; the review of any Timeshare Loan, any Timeshare Loan File, the completeness of any Timeshare Loan File, the receipt by the Custodian of any Timeshare Loan or Timeshare Loan File (it being understood that the Indenture Trustee has not reviewed and does not intend to review such matters); the performance or enforcement of any Timeshare Loan; the compliance by the Issuer or the Servicer with any covenant or the breach by the Servicer or the Issuer of any warranty or representation made hereunder or in any Transaction Document or the accuracy of any such warranty or representation; the acts or omissions of the Issuer, the Servicer or any Obligor; or any action of the Servicer or the Servicer taken in the name of the Indenture Trustee.
(c)    If the Back-Up Servicer acts as Successor Servicer hereunder, it shall be entitled to the protections of Section 7.04(b) hereof.
Section 7.05    Indenture Trustee May Own Notes.
The Indenture Trustee in its individual or any other capacity may become the owner or pledgee of Notes with the same rights as it would have if it were not Indenture Trustee.

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Section 7.06    Indenture Trustee’s Fees and Expenses.
On each Payment Date, the Indenture Trustee shall be entitled to the Indenture Trustee Fee and reimbursement of Indenture Trustee Expenses in the priority provided in Section 3.04 and Section 6.06 hereof.
Section 7.07    Eligibility Requirements for Indenture Trustee.
The Indenture Trustee hereunder shall at all times (a) be a corporation, depository institution, national banking association or trust company organized and doing business under the laws of the United States of America or any state thereof authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, (b) be subject to supervision or examination by federal or state authority, (c) be capable of maintaining an Eligible Bank Account, (d) have a long-term unsecured debt rating of not less than “BBB” from S&P and (e) shall be acceptable to Noteholders representing at least 51% of the then Outstanding Note Balance of each Class of Notes.  If such institution publishes reports of condition at least annually, pursuant to the requirements of the aforesaid supervising or examining authority, then for the purpose of this Section 7.07, the combined capital and surplus of such institution shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  In case at any time the Indenture Trustee shall cease to be eligible in accordance with the provisions of this Section 7.07, the Indenture Trustee shall resign immediately in the manner and with the effect specified in Section 7.08 hereof.
Section 7.08    Resignation or Removal of Indenture Trustee.  The Indenture Trustee may at any time resign and be discharged with respect to the Notes by giving 60 days’ written notice thereof to the Servicer, the Issuer and the Noteholders.  Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor Indenture Trustee not objected to by Noteholders representing more than 51% of the then Aggregate Outstanding Note Balance within 30 days of such notice, by written instrument, in quintuplicate, one counterpart of which instrument shall be delivered to each of the Issuer, the Servicer, the successor Indenture Trustee and the predecessor Indenture Trustee.  If no successor Indenture Trustee shall have been so appointed and have accepted appointment within 60 days after the giving of such notice of resignation, the resigning Indenture Trustee may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee.
(b)    If at any time the Indenture Trustee shall cease to be eligible in accordance with the provisions of Section 7.07 hereof and shall fail to resign after written request therefor by the Issuer, or if at any time the Indenture Trustee shall be legally unable to act, fails to perform in any material respect its obligations under this Indenture, or shall be adjudged a bankrupt or insolvent, or a receiver of the Indenture Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Indenture Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then the Issuer or Holders representing more than 51% of the then Outstanding Note Balance of each Class of Notes may direct, and the Servicer shall follow such direction and remove the Indenture Trustee.  If it removes the Indenture Trustee under the authority of the immediately preceding sentence, the Issuer shall promptly appoint a successor Indenture Trustee not objected to by Holders representing more than 51% of the then Aggregate 

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Outstanding Note Balance, within 30 days after prior written notice, by written instrument, one counterpart of which instrument shall be delivered to each of the Issuer, the Servicer, the Noteholders, the Rating Agencies, the successor Indenture Trustee and the predecessor Indenture Trustee.
(c)    Any resignation or removal of the Indenture Trustee and appointment of a successor Indenture Trustee pursuant to any of the provisions of this Section 7.08 shall not become effective until acceptance of appointment by the successor Indenture Trustee as provided in Section 7.09 hereof.
Section 7.09    Successor Indenture Trustee.  Any successor Indenture Trustee appointed as provided in Section 7.08 hereof shall execute, acknowledge and deliver to each of the Servicer, the Issuer, the Noteholders and to its predecessor Indenture Trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor Indenture Trustee shall become effective and such successor Indenture Trustee, without any further act, deed or conveyance, shall become fully vested with all the rights, powers, duties and obligations of its predecessor hereunder with like effect as if originally named a Indenture Trustee.  The predecessor Indenture Trustee shall deliver or cause to be delivered to the successor Indenture Trustee or its custodian any Transaction Documents and statements held by it or its custodian hereunder; and the Servicer and the Issuer and the predecessor Indenture Trustee shall execute and deliver such instruments and do such other things as may reasonably be required for the full and certain vesting and confirmation in the successor Indenture Trustee of all such rights, powers, duties and obligations.
(b)    In case of the appointment hereunder of a successor Indenture Trustee with respect to the Notes, the Issuer, the retiring Indenture Trustee and each successor Indenture Trustee with respect to the Notes shall execute and deliver an indenture supplemental hereto wherein each successor Indenture Trustee shall accept such appointment and which (i) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Indenture Trustee all the rights, powers, trusts and duties of the retiring Indenture Trustee with respect to the Notes to which the appointment of such successor Indenture Trustee relates, (ii) if the retiring Indenture Trustee is not retiring with respect to all Notes, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Indenture Trustee with respect to the Notes as to which the retiring Indenture Trustee is not retiring shall continue to be vested in the retiring Indenture Trustee, and (iii) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the Trust Estate hereunder by more than one Indenture Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Indenture Trustees co-trustees of the same allocated trust and that each such Indenture Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Indenture Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Indenture Trustee shall become effective to the extent provided therein and each such successor Indenture Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Indenture Trustee with respect to the Notes to which the appointment of such successor Indenture Trustee relates; but, on request of the Issuer or any successor Indenture Trustee, such retiring Indenture Trustee shall duly assign, transfer and deliver to such successor Indenture Trustee all property and money held 

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by such retiring Indenture Trustee hereunder with respect to the Notes of that or those to which the appointment of such successor Indenture Trustee relates.
Upon request of any such successor Indenture Trustee, the Issuer shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor trustee all such rights, powers and trusts referred to in the preceding paragraph.
(c)    No successor Indenture Trustee shall accept appointment as provided in this Section 7.09 unless at the time of such acceptance such successor Indenture Trustee shall be eligible under the provisions of Section 7.07 hereof.
(d)    Upon acceptance of appointment by a successor Indenture Trustee as provided in this Section 7.09, the Servicer shall mail notice of the succession of such Indenture Trustee hereunder to each Noteholder at its address as shown in the Note Register.  If the Servicer fails to mail such notice within ten days after acceptance of appointment by the successor Indenture Trustee, the successor Indenture Trustee shall cause such notice to be mailed at the expense of the Issuer and the Servicer.
Section 7.10    Merger or Consolidation of Indenture Trustee.
Any corporation into which the Indenture Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Indenture Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Indenture Trustee, shall be the successor of the Indenture Trustee hereunder, provided such corporation shall be eligible under the provisions of Section 7.07 hereof, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.
Section 7.11    Appointment of Co-Indenture Trustee or Separate Indenture Trustee.  At any time or times for the purpose of meeting any legal requirement of any jurisdiction in which any part of the Trust Estate may at the time be located or in which any action of the Indenture Trustee may be required to be performed or taken, the Indenture Trustee, the Servicer or the Holders representing at least 51% of the then Outstanding Note Balance of each Class of Notes, by an instrument in writing signed by it or them, may appoint, at the reasonable expense of the Issuer (as an Indenture Trustee Expense) and the Servicer, one or more individuals or corporations to act as separate trustee or separate trustees or co-trustee, acting jointly with the Indenture Trustee, of all or any part of the Trust Estate, to the full extent that local law makes it necessary for such separate trustee or separate trustees or co-trustee acting jointly with the Indenture Trustee to act.  Notwithstanding the appointment of any separate or co-trustee, the Indenture Trustee shall remain obligated and liable for the obligations of the Indenture Trustee under this Indenture.  The Indenture Trustee shall promptly send a notice of any such appointment to the Rating Agencies.  
(b)    The Indenture Trustee and, at the request of the Indenture Trustee, the Issuer shall execute, acknowledge and deliver all such instruments as may be required by the legal requirements of any jurisdiction or by any such separate trustee or separate trustees or co-trustee for the purpose of more fully confirming such title, rights, or duties to such separate trustee or 

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separate trustees or co-trustee.  Upon the acceptance in writing of such appointment by any such separate trustee or separate trustees or co-trustee, it, he, she or they shall be vested with such title to the Trust Estate or any part thereof, and with such rights, powers, duties and obligations as shall be specified in the instrument of appointment, and such rights, powers, duties and obligations shall be conferred or imposed upon and exercised or performed by the Indenture Trustee, or the Indenture Trustee and such separate trustee or separate trustees or co-trustees jointly with the Indenture Trustee subject to all the terms of this Indenture, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such separate trustee or separate trustees or co-trustee, as the case may be.  Any separate trustee or separate trustees or co-trustee may, at any time by an instrument in writing, constitute the Indenture Trustee its attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its behalf and in its name.  In any case, if any such separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, the title to the Trust Estate and all assets, property, rights, power duties and obligations and duties of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Indenture Trustee, without the appointment of a successor to such separate trustee or co-trustee unless and until a successor is appointed.
(c)    All provisions of this Indenture which are for the benefit of the Indenture Trustee shall extend to and apply to each separate trustee or co-trustee appointed pursuant to the foregoing provisions of this Section 7.11.
(d)    Every additional trustee and separate trustee hereunder shall, to the extent permitted by law, be appointed and act and the Indenture Trustee shall act, subject to the following provisions and conditions:  (i) all powers, duties and obligations and rights conferred upon the Indenture Trustee in respect of the receipt, custody, investment and payment of monies shall be exercised solely by the Indenture Trustee; (ii) all other rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed and exercised or performed by the Indenture Trustee and such additional trustee or trustees and separate trustee or trustees jointly except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Timeshare Properties in any such jurisdiction) shall be exercised and performed by such additional trustee or trustees or separate trustee or trustees; (iii) no power hereby given to, or exercisable by, any such additional trustee or separate trustee shall be exercised hereunder by such trustee except jointly with, or with the consent of, the Indenture Trustee; and (iv) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder.
If at any time, the Indenture Trustee shall deem it no longer necessary or prudent in order to conform to such law, the Indenture Trustee shall execute and deliver all instruments and agreements necessary or proper to remove any additional trustee or separate trustee.

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(e)    Any request, approval or consent in writing by the Indenture Trustee to any additional trustee or separate trustee shall be sufficient warrant to such additional trustee or separate trustee, as the case may be, to take such action as may be so requested, approved or consented to.
(f)    Notwithstanding any other provision of this Section 7.11, the powers of any additional trustee or separate trustee shall not exceed those of the Indenture Trustee hereunder.
Section 7.12    Note Registrar Rights.
So long as the Indenture Trustee is the Note Registrar, the Note Registrar shall be entitled to the rights, benefits and immunities of the Indenture Trustee as set forth in this Article VII to the same extent and as fully as though named in place of the Indenture Trustee.
Section 7.13    Authorization.
The Indenture Trustee is hereby authorized to enter into and perform each of the Transaction Documents and the Depository Agreement.
    ARTICLE VIII    
COVENANTS
Section 8.01    Payment of Principal and Interest.
The Issuer will cause the due and punctual payment of the principal of and interest on the Notes in accordance with the terms of the Notes and this Indenture.
Section 8.02    Maintenance of Office or Agency; Chief Executive Office.
The Issuer will maintain an office or agency in the State of Delaware at the Corporate Trust Office of the Owner Trustee, where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served.
Section 8.03    Money for Payments to Noteholders to be Held in Trust.
(a)    All payments of amounts due and payable with respect to any Notes that are to be made from amounts withdrawn from the Trust Accounts pursuant to Section 3.04 or Section 6.06 hereof shall be made on behalf of the Issuer by the Indenture Trustee, and no amounts so withdrawn from the Collection Account for payments of Notes shall be paid over to the Issuer under any circumstances except as provided in this Section 8.03, in Section 3.04 hereof or Section 6.06 hereof.
(b)    In making payments hereunder, the Indenture Trustee will hold all sums held by it for the payment of amounts due with respect to the Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided.

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(c)    Except as required by applicable law, any money held by the Indenture Trustee in trust for the payment of any amount due with respect to any Note and remaining unclaimed for three years after such amount has become due and payable to the Noteholder shall be discharged from such trust and, subject to applicable escheat laws, and so long as no Event of Default has occurred and is continuing, paid to the Issuer upon request; otherwise, such amounts shall be redeposited into the Collection Account as Available Funds, and such Noteholder shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof (but only to the extent of the amounts so paid to the Issuer), and all liability of the Indenture Trustee with respect to such trust money shall thereupon cease.
Section 8.04    Existence; Merger; Consolidation, etc.
(a)    The Issuer will keep in full effect its existence, rights and franchises as a statutory trust under the laws of the State of Delaware, and will obtain and preserve its qualification to do business as a foreign statutory trust in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the Notes or any of the Timeshare Loans.
(b)    The Issuer shall at all times observe and comply in all material respects with (i) all laws applicable to it, (ii) all requirements of law in the declaration and payment of distributions, (iii) all requisite and appropriate formalities (including without limitation all appropriate authorizations required by the Trust Agreement) in the management of its business and affairs and the conduct of the transactions contemplated hereby, and (iv) the provisions of the Trust Agreement.
(c)    The Issuer shall not (i) consolidate or merge with or into any other Person or convey or transfer its properties and assets substantially as an entirety to any other Person or (ii) commingle its assets with those of any other Person.
(d)  The Issuer shall not become an “investment company” or under the “control” of an “investment company” as such terms are defined in the 1940 Act, (or any successor or amendatory statute), and the rules and regulations thereunder (taking into account not only the general definition of the term “investment company” but also any available exceptions to such general definition); provided, however, that the Issuer shall be in compliance with this Section 8.04(d) if it shall have obtained an order exempting it from regulation as an “investment company” so long as it is in compliance with the conditions imposed in such order.
Section 8.05    Protection of Trust Estate; Further Assurances.
The Issuer will from time to time execute and deliver all such supplements and amendments hereto and all such financing statements, continuation statements, instruments of further assurance, and other instruments, and will take such other action as may be necessary or advisable to:
(i)    Grant more effectively the assets comprising all or any portion of the Trust Estate;

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(ii)    maintain or preserve the lien of this Indenture or carry out more effectively the purposes hereof;
(iii)    publish notice of, or protect the validity of, any Grant made or to be made by this Indenture and perfect the security interest contemplated hereby in favor of the Indenture Trustee in each of the Timeshare Loans and all other property included in the Trust Estate; provided, that the Issuer shall not be required to cause the recordation of the Indenture Trustee’s name as lienholder on the related title documents for the Timeshare Properties so long as no Event of Default has occurred and is continuing;
(iv)    enforce or cause the Servicer to enforce any of the Timeshare Loans in accordance with the Servicing Standard, provided, however, the Issuer will not cause the Servicer to obtain on behalf of the Indenture Trustee or the Noteholders, any Timeshare Property or to take any actions with respect to any property the result of which would adversely affect the interests of the Indenture Trustee or the Noteholders (including, but not limited to actions which would cause the Indenture Trustee or the related Noteholders to be considered a holder of title or otherwise, or an “owner” or “operator” of Timeshare Property not in compliance with applicable environmental statutes); and
(v)    preserve and defend title to the Timeshare Loans (including the right to receive all payments due or to become due thereunder), the interests in the Timeshare Properties, or other property included in the Trust Estate and preserve and defend the rights of the Indenture Trustee in the Trust Estate (including the right to receive all payments due or to become due thereunder) against the claims of all Persons and parties other than as permitted hereunder.
The Issuer, upon the Issuer’s failure to do so, hereby irrevocably designates the Indenture Trustee and the Servicer, severally, its agents and attorneys‐in‐fact to execute any financing statement or continuation statement required pursuant to this Section 8.05; provided, however, that such designation shall not be deemed to create a duty in the Indenture Trustee to monitor the compliance of the Issuer with the foregoing covenants, and provided, further, that the duty of the Indenture Trustee to execute any instrument required pursuant to this Section 8.05 shall arise only if a Responsible Officer of the Indenture Trustee has actual knowledge of any failure of the Issuer to comply with the provisions of this Section 8.05.  Such financing statements may describe the Trust Estate in the same manner as described herein or may contain an indication or description of collateral that describes such property in any other manner as any of them may determine, in its sole discretion, is necessary, advisable or prudent to ensure the perfection of the security interest in the Trust Estate granted to the Indenture Trustee herein, including, without limitation, describing such property as “all assets” or “all personal property, whether now owned or hereafter acquired.”
Section 8.06    Additional Covenants.
(a)    The Issuer will not:
(i)    sell, transfer, exchange or otherwise dispose of any portion of the Trust Estate except as expressly permitted by this Indenture;

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(ii)    claim any credit on, or make any deduction from, the principal of, or interest on, any of the Notes by reason of the payment of any taxes levied or assessed upon any portion of the Trust Estate (other than amounts properly withheld from payments made to Noteholders in accordance with applicable law); 
(iii)    (A) permit the validity or effectiveness of this Indenture or any Grant hereby to be impaired, or permit the lien of this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations under this Indenture, except as may be expressly permitted hereby, (B) permit any lien, charge, security interest, mortgage or other encumbrance to be created on or to extend to or otherwise arise upon or burden the Trust Estate or any part thereof or any interest therein or the proceeds thereof other than the lien of this Indenture, or (C) except as otherwise contemplated in this Indenture, permit the lien of this Indenture not to constitute a valid first priority security interest in the Trust Estate; or
(iv)    take any other action or fail to take any actions which may cause the Issuer to be classified as (A) an association that is taxable as a corporation pursuant to Section 7701 of the Code, (B) a publicly traded partnership that is taxable as a corporation pursuant to Section 7704 of the Code or (C) a taxable mortgage pool that is taxable as a corporation pursuant to Section 7701(i) of the Code.
(b)    Notice of Events of Default and Rapid Amortization Period.  Immediately, but in no event more than one Business Day upon becoming aware of the existence of any condition or event which constitutes a Default or an Event of Default or a Servicer Event of Default or triggers a Rapid Amortization Period, the Issuer shall deliver to the Indenture Trustee a written notice describing its nature and period of existence and what action the Issuer is taking or proposes to take with respect thereto.
(c)    Report on Proceedings.  Promptly upon the Issuer’s becoming aware of (i) any proposed or pending investigation of it by any governmental authority or agency; or (ii) any pending or proposed court or administrative proceeding which involves or may involve the possibility of materially and adversely affecting the properties, business, prospects, profits or condition (financial or otherwise) of the Issuer, the Issuer shall deliver to the Indenture Trustee and the Rating Agencies a written notice specifying the nature of such investigation or proceeding and what action the Issuer is taking or proposes to take with respect thereto and evaluating its merits.
(d)    17g-5.  The Issuer will comply and will cause DRII to comply with the representations, certifications and covenants made by it in each engagement letter with the Rating Agencies, including any representation, certification or covenant provided by it to the Rating Agencies in connection with Rule 17g-5(a)(iii) of the Exchange Act (“Rule 17g-5”), and will make accessible to any non-hired nationally recognized statistical rating organization all information provided by it to the Rating Agencies in connection with the issuance and monitoring of the credit ratings on each Class of Notes in accordance with Rule 17g-5.
Section 8.07    Taxes.  The Issuer shall timely file all required tax returns and pay, as an Administrator Expense in accordance with Section 3.04 hereof, all taxes when due and payable 

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or levied against its assets, properties or income, including any property that is part of the Trust Estate, except to the extent the Issuer is contesting the same in good faith and has set aside adequate reserves in accordance with generally accepted accounting principles for the payment thereof.  
ARTICLE IX     
 
SUPPLEMENTAL INDENTURES
Section 9.01    Supplemental Indentures without Consent of Noteholders. 
(a)    The Issuer, by an Issuer Order, and the Indenture Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Indenture Trustee without the consent of any Noteholder, for any of the following purposes:
(i)    to correct or amplify the description of any property at any time subject to the lien of this Indenture, or to better assure, convey and confirm unto the Indenture Trustee any property subject or required to be subjected to the lien of this Indenture; provided such action pursuant to this clause (i) shall not adversely affect the interests of the Noteholders in any respect (as evidenced by an Officer's Certificate of the Issuer delivered to the Indenture Trustee (upon which the Indenture Trustee shall be entitled to conclusively rely));
(ii)    to evidence and provide for the acceptance of appointment hereunder by a successor Indenture Trustee with respect to the Notes and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Indenture Trustee, pursuant to the requirements of Section 7.09 and Section 7.11 hereof; or
(iii)    to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, to conform this Indenture to the offering circular related to the Notes, or to make any other provisions with respect to matters or questions arising under this Indenture; provided that such action pursuant to this clause (iii) shall not adversely affect the interests of the Holders of Notes (as evidenced by an Officer's Certificate of the Issuer delivered to the Indenture Trustee (upon which the Indenture Trustee shall be entitled to conclusively rely)).
(b)    The Indenture Trustee shall promptly deliver, at least five Business Days prior to the effectiveness thereof, to each Noteholder and the Rating Agencies a copy of any supplemental indenture entered into pursuant to this Section 9.01 hereof.
(c)    Provided that all other conditions precedent have been satisfied, the Indenture Trustee shall approve any supplemental indenture and may expressly rely on any Opinion of Counsel requested by the Indenture Trustee in connection with any such supplemental indenture as the basis therefor.  In determining whether or not an amendment materially adversely affects the interests of the Holders of the Notes, such Opinion of Counsel may conclusively rely on an Officer’s Certificate of the Issuer or the Servicer.

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Section 9.02    Supplemental Indentures with Consent of Noteholders.
(a)    With the consent of the Holders representing not less than 51% of the then Outstanding Note Balance of each Class of Notes and by Act of said Noteholders delivered to the Issuer and the Indenture Trustee, the Issuer, by an Issuer Order, and the Indenture Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Noteholders under this Indenture; provided, that no supplemental indenture shall, without the consent of the Noteholder of each Outstanding Note affected thereby:
(i)    change the Stated Maturity of any Note or the amount of principal payments or interest payments due or to become due on any Payment Date with respect to any Note, or change the priority of payment thereof as set forth herein, or reduce the principal amount thereof or the Note Rate thereon, or change the place of payment where, or the coin or currency in which, any Note or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Maturity thereof;
(ii)    reduce the required percentage of the Outstanding Note Balance that must be represented by voting on whether to enter into any supplemental indenture or to waive of compliance with certain provisions of this Indenture or Events of Default and their consequences;
(iii)    modify any of the provisions of this Section 9.02 or Section 6.13 hereof except to increase any percentage of Noteholders required for any modification or waiver or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holders of each Outstanding Note affected thereby;
(iv)    modify or alter the provisions of the proviso to the definition of the term “Outstanding”; or
(v)    permit the creation of any lien ranking prior to or on a parity with the lien of this Indenture with respect to any part of the Trust Estate or terminate the lien of this Indenture on any property at any time subject hereto or deprive any Noteholder of the security afforded by the lien of this Indenture;
provided, no such supplemental indenture may modify or change any terms whatsoever of the Indenture that could be construed as increasing the Issuer’s or the Servicer’s discretion hereunder; provided further, that no such supplemental indenture shall be entered into unless the Indenture Trustee shall have provided prior written notice of such supplemental indenture to the Rating Agencies; provided, further, that no supplemental indenture may modify Section 3.04 in a manner that would materially and adversely affect the interests of the Owner Trustee without the prior consent of the Owner Trustee.
(b)    The Indenture Trustee shall promptly deliver to each Noteholder and the Rating Agencies a copy of any supplemental indenture entered into pursuant to Section 9.02(a) hereof.

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Section 9.03    Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any supplemental indenture (a) pursuant to Section 9.01 hereof or (b) pursuant to Section 9.02 hereof without the consent of each holder of the Notes to the execution of the same, or the modifications thereby of the trusts created by this Indenture, the Indenture Trustee shall be entitled to receive, and (subject to Section 7.01 hereof) shall be, fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture.  The Indenture Trustee may, but shall not be obligated to, enter into any supplemental indenture which affects the Indenture Trustee’s own rights, duties, obligations, or immunities under this Indenture or otherwise. 
Section 9.04    Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
Section 9.05    Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Indenture Trustee, bear a notation in form approved by the Indenture Trustee as to any matter provided for in such supplemental indenture.  New Notes so modified as to conform, in the opinion of the Indenture Trustee and the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and authenticated and delivered by the Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X     
 
REDEMPTION OF NOTES
Section 10.01    Optional Redemption; Election to Redeem.  The Issuer will have the option to redeem all, but not less than all of the Notes and thereby cause the early repayment of the Notes on any Payment Date on or after the Optional Redemption Date.
Section 10.02    Notice to Indenture Trustee.  The Issuer shall give written notice of its intention to redeem the Notes to the Indenture Trustee at least 30 days prior to the Redemption Date (unless a shorter period shall be satisfactory to the Indenture Trustee).
Section 10.03    Notice of Redemption by the Issuer.  Notices of redemption shall be given by first class mail, postage prepaid, mailed not less than 30 days prior to the Redemption Date, to each Noteholder, at its address in the Note Register, and to the Rating Agencies.  All notices of redemption shall state (a) the Redemption Date, (b) the Redemption Price, (c) that on the Redemption Date, the Redemption Price will become due and payable upon each Note, and that interest thereon shall cease to accrue if payment is made on the Redemption Date, and (d) the office 

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of the Indenture Trustee or other place where the Notes are to be surrendered for payment of the Redemption Price.  Failure to give notice of redemption, or any defect therein, to any Noteholder shall not impair or affect the validity of the redemption of any other Note.
Section 10.04    Deposit of Redemption Price.  On or before the Business Day immediately preceding the Redemption Date, the Issuer shall deposit with the Indenture Trustee an amount equal to the Redemption Price (less any portion of such payment to be made from monies in the Collection Account).
Section 10.05    Notes Payable on Redemption Date.  Notice of redemption having been given as provided in Section 10.03 hereof and deposit of the Redemption Price with the Indenture Trustee having been done as provided in Section 10.04 hereof, the Notes shall on the Redemption Date, become due and payable in an amount equal to the Redemption Price and on such Redemption Date such Notes shall cease to bear interest.  The Noteholders shall be paid the Redemption Price by the Indenture Trustee on behalf of the Issuer upon presentment and surrender of their Notes as provided in the notices of redemption.  If the Issuer shall have failed to deposit the Redemption Price with the Indenture Trustee, the principal and interest with respect to each Class of Notes shall, until paid, bear interest at their respective Note Rate.  The failure to deposit the Redemption Price shall not constitute an Event of Default hereunder.
ARTICLE XI     
 
SATISFACTION AND DISCHARGE
Section 11.01    Satisfaction and Discharge of Indenture.
(a)    This Indenture shall cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Notes herein expressly provided for), and the Indenture Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when:
(i)    either:
(A)    all Notes theretofore authenticated and delivered to Noteholders (other than (1) Notes which have been destroyed, lost or stolen and which have been paid as provided in Section 2.05 hereof and (2) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 8.03(c) hereof) have been delivered to the Indenture Trustee for cancellation upon payment and discharge of the entire indebtedness on such Notes; or
(B)    the final installments of principal on all such Notes not theretofore delivered to the Indenture Trustee for cancellation (1) have become due and payable, or (2) will become due and payable at their Stated Maturity, as applicable within one year, and the Issuer has irrevocably deposited or caused to be deposited with the Indenture Trustee as trust funds in trust for the purpose an amount sufficient to pay 

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and discharge the entire indebtedness on such Notes to the date of such deposit (in the case of Notes which have become due and payable) or to the Stated Maturity thereof upon the delivery of such Notes to the Indenture Trustee for cancellation; or
(C)    in the event of an Optional Redemption pursuant to Article X, the Issuer has irrevocably deposited or caused to be deposited with the Indenture Trustee as trust funds in trust for the purpose of early repayment of the Notes, an amount sufficient to pay and discharge the entire indebtedness on such Notes upon the delivery of such Notes to the Indenture Trustee for cancellation;
(ii)    the Issuer and the Servicer have paid or caused to be paid all other sums payable hereunder by the Issuer and the Servicer to the Indenture Trustee for the benefit of the Noteholders and the Indenture Trustee, including proceeds of the Timeshare Loans pursuant to Section 3.04 or 6.06 hereof; 
(iii)    the funds held in trust by the Indenture Trustee pursuant to Sections 11.01(a)(i) and (ii) hereof for the purpose of paying and discharging the entire indebtedness on the Notes have been applied to such purpose and the rights of all of the Noteholders to receive payments from the Issuer have terminated;
(iv)    following the completion of the actions provided in Sections 11.01(a)(i), (ii) and (iii) hereof, the Indenture Trustee has delivered to the Issuer all cash, securities and other property held by it as part of the Trust Estate; and
(v)    the Issuer has delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
(b)    Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Issuer to the Indenture Trustee under Section 7.06 hereof and, if money shall have been deposited with the Indenture Trustee pursuant to Section 11.01(a)(i) hereof, the obligations of the Indenture Trustee under Section 11.02 hereof and Section 8.03(c) hereof shall survive.
Section 11.02    Application of Trust Money.
Subject to the provisions of Section 8.03(c) hereof, all money deposited with the Indenture Trustee pursuant to Sections 11.01 and 8.03 hereof shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment to the Persons entitled thereto, of the principal and interest for whose payment such money has been deposited with the Indenture Trustee.
Section 11.03    Trust Termination Date.
The Trust Estate created by this Indenture shall be deemed to have terminated on the date that the Indenture Trustee executes and delivers to the Issuer and the Owner Trustee an instrument acknowledging satisfaction and discharge of the Indenture.

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ARTICLE XII 
 
REPRESENTATIONS AND WARRANTIES
Section 12.01    Representations and Warranties of the Issuer.
The Issuer represents and warrants to the Indenture Trustee, the Servicer and the Noteholders, as of the Closing Date, as follows:
(a)    Organization and Good Standing.  The Issuer has been duly formed and is validly existing and in good standing under the laws of the State of Delaware, with power and authority to own its properties and to conduct its business as such properties shall be currently owned and such business is presently conducted and has the power and authority to own and convey all of its properties and to execute and deliver this Indenture and the Transaction Documents and to perform the transactions contemplated hereby and thereby.
(b)    Binding Obligation.  This Indenture and the Transaction Documents to which it is a party have each been duly executed and delivered on behalf of the Issuer and this Indenture and each Transaction Document to which it is a party constitutes a legal, valid and binding obligation of the Issuer enforceable in accordance with its terms except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting creditors’ rights and by general principles of equity.
(c)    No Consents Required.  No consent of, or other action by, and no notice to or filing with, any Governmental Authority or any other party, is required for the due execution, delivery and performance by the Issuer of this Indenture or any of the Transaction Documents or for the perfection of or the exercise by the Indenture Trustee or the Noteholders of any of their rights or remedies thereunder which have not been duly obtained.
(d)    No Violation.  The consummation of the transaction contemplated by this Indenture and the fulfillment of the terms hereof shall not conflict with, result in any material breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time) a default under, the certificate of trust, the trust agreement of the Issuer, or any indenture, agreement or other instrument to which the Issuer is a party or by which it is bound; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than this Indenture).
(e)    No Proceedings.  There is no pending or threatened action, suit or proceeding, nor any injunction, writ, restraining order or other order of any nature against or affecting the Issuer, its officers or directors, or the property of the Issuer, in any court or tribunal, or before any arbitrator of any kind or before or by any Governmental Authority (i) asserting the invalidity of this Indenture or any of the other Transaction Documents, (ii) seeking to prevent the sale and assignment of any Timeshare Loan or the consummation of any of the transactions contemplated thereby, (iii) seeking any determination or ruling that might materially and adversely affect (A) the performance by the Issuer of this Indenture or any of the other Transaction Documents or the interests of the Noteholders, (B) the validity or enforceability of this Indenture or any of the other Transaction Documents, (C) 

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any Timeshare Loan, or (D) the Intended Tax Characterization, or (iv) asserting a claim for payment of money adverse to the Issuer or the conduct of its business or which is inconsistent with the due consummation of the transactions contemplated by this Indenture or any of the other Transaction Documents.
(f)    Issuer Not Insolvent.  The Issuer is solvent and will not become insolvent after giving effect to the transactions contemplated by this Indenture and each of the other Transaction Documents.
(g)    Notes Authorized, Executed, Authenticated, Validly Issued and Outstanding.  The Notes have been duly and validly authorized, and when duly and validly executed by the Issuer and authenticated by the Indenture Trustee in accordance with the terms of this Indenture and delivered to and paid for by each Holder as provided herein, will be validly issued and outstanding and entitled to the benefits hereof.
(h)    Location of Chief Executive Office and Records.  The principal place of business and chief executive office of the Issuer, and the office where the Issuer maintains all of its records is located at 10600 West Charleston Boulevard, Las Vegas, Nevada 89135.
(i)    Enforceability of Transaction Documents.  Each of the Transaction Documents to which it is a party has been duly authorized, executed and delivered by the Issuer and constitutes the legal, valid and binding obligations of the Issuer, enforceable against it in accordance with its terms.   
(j)    Name.  The legal name of the Issuer is as set forth on the signature page of this Indenture and the Issuer does not have any trade names, fictitious names, assumed names or “doing business as” names.
(k)    Accuracy of Information.  The representations and warranties of the Issuer in the Transaction Documents are true and correct in all material respects as of the Closing Date and, except for representations and warranties expressly made as of a different date, each Transfer Date.
(l)    Special Purpose.  The Issuer shall engage in no business, and take no actions with respect to any other transaction than the transactions contemplated by the Transaction Documents and will otherwise maintain its existence separate from the Seller and all other entities as provided in its organizational documents.
(m)    Securities Laws.  The Issuer (i) is not required to register as an “investment company” or a company “controlled” by an “investment company” within the meaning of the 1940 Act, (ii) will be relying on an exclusion or exemption from the definition of “investment company” contained in Rule 3a-7 under the 1940 Act, although there may be additional exclusions or exemptions available to the Issuer, and (iii) is not a “covered fund” under Section 13 of the Bank Holding Company Act of 1956, as amended.
(n)    17g-5.  Each of the Issuer and DRII has complied with the representations, certifications and covenants made by each of them to the Rating Agencies in connection with the 

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engagement of the Rating Agencies to issue and monitor a credit rating on each Class of Notes, including any certification provided to the Rating Agencies in connection with Rule 17g-5.  The Issuer and DRII are the parties responsible for compliance with Rule 17g-5 in connection with the issuance and monitoring of the credit ratings on each Class of Notes.
(o)     Representations and Warranties Regarding Security Interest and Loan Files.  
(i)    Payment of principal and interest on the Notes in accordance with their terms and the performance by the Issuer of all of its obligations under this Indenture are secured by the Trust Estate.  The Grant contained in the “Granting Clause” of this Indenture creates a valid and continuing security interest (as defined in the applicable UCC) in the Trust Estate in favor of the Indenture Trustee, which security interest is prior to all other Liens arising under the UCC, and is enforceable as such against creditors of the Issuer, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affected creditors’ rights and remedies generally, and to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
(ii)    The Timeshare Loans and the documents evidencing such Timeshare Loans constitute either “accounts”, “chattel paper”, “instruments” or “general intangibles” within the meaning of the applicable UCC.
(iii)    The Issuer owns and has good and marketable title to the Trust Estate free and clear of any Lien, claim or encumbrance of any Person.
(iv)    The Issuer has caused or will have caused, within ten days of the Closing Date, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Trust Estate granted to the Indenture Trustee hereunder.
(v)    All original executed copies of each Obligor Note that constitute or evidence the Trust Estate have been delivered to the Custodian and the Issuer has received a Trust Receipt therefor, which acknowledges that the Custodian is holding the Obligor Notes that constitute or evidence the Trust Estate solely on behalf and for the benefit of the Indenture Trustee.
(vi)    Other than the security interest granted to the Indenture Trustee pursuant to this Indenture, the Issuer has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Trust Estate.  The Issuer has not authorized the filing of and is not aware of any financing statements against the Issuer that include a description of collateral covering the Trust Estate other than any financing statement relating to the security interest granted to the Indenture Trustee hereunder or that has been terminated.
(vii)    All financing statements filed or to be filed against the Issuer in favor of the Indenture Trustee in connection herewith describing the Trust Estate contain a statement to the following effect: “A purchase of or security interest in any collateral described in this financing statement will violate the rights of the Secured Party.”

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(viii)    None of the Obligor Notes that constitute or evidence the Trust Estate has any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Indenture Trustee.
The foregoing representations and warranties in Section 12.01(o)(i) – (viii) shall remain in full force and effect and shall not be waived or amended until the Notes are paid in full or otherwise released or discharged.
(p)    Representations and Warranties Regarding Foreign Account Tax Compliance Act:
(i)    to the Issuer’s knowledge, without investigation, the Indenture Trustee is not obligated, in respect of any payments to be made by it pursuant to this Indenture, to make any withholding or deduction of FATCA Withholding Tax.
(ii) the Issuer will require the Noteholders to provide the Noteholder Tax Identification Information and, to the extent FATCA Withholding Tax is applicable, Noteholder FATCA Information to the Indenture Trustee; and 
(iii) the Issuer will require each Noteholder to agree that the Indenture Trustee has the right to withhold any amount of interest, principal and other payment (properly withholdable under law and without any corresponding gross-up) payable to a Noteholder that fails to comply with the requirements of Section 12.01(p)(ii).
(q)    Rule 15Ga-2 and Rule 17g-10.  The Issuer has complied with the obligations of Rule 15Ga-2 of the Exchange Act and in connection therewith has furnished to the Securities Exchange Commission Form ABS-15G, which contained the findings and conclusions of each third-party due diligence report obtained by the Issuer or its affiliates (or their respective representatives) or the Initial Purchaser (or their respective representatives) or its affiliates in connection with the issuance of the Notes.  The Issuer represents and warrants that any Form ABS-15G so furnished complied with the requirements of Rule 15Ga-2 and Form ABS-15G.  The Issuer has caused any person engaged to provide “third-party due diligence services” (as such term is used in Rule 17g-10 of the Exchange Act) in connection with the issuance of the Notes to comply with the requirements of Rule 17g-10.
Section 12.02    Representations and Warranties of the Initial Servicer.
The initial Servicer hereby represents and warrants as of the Closing Date, the following:
(a)    Organization and Authority.  The Servicer:
(i)    is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada;
(ii)    has all requisite power and authority to own and operate its properties and to conduct its business as currently conducted and as proposed to be conducted as 

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contemplated by the Transaction Documents to which it is a party, to enter into the Transaction Documents to which it is a party and to perform its obligations under the Transaction Documents to which it is a party; and
(iii)    has made all filings and holds all material franchises, licenses, permits and registrations which are required under the laws of each jurisdiction in which the properties owned (or held under lease) by it or the nature of its activities makes such filings, franchises, licenses, permits or registrations necessary.
(b)    Place of Business.  The address of the principal place of business and chief executive office of the Servicer is 10600 West Charleston Boulevard, Las Vegas, Nevada 89135 and there have been no other such locations during the immediately preceding four months.
(c)    Compliance with Other Instruments, etc.  The Servicer is not in violation of any term of its certificate of incorporation and bylaws.  The execution, delivery and performance by the Servicer of the Transaction Documents to which it is a party do not and will not (i) conflict with or violate the certificate of incorporation or bylaws of the Servicer, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of, or constitute a default under, or result in the creation of any Lien on any of the properties or assets of the Servicer pursuant to the terms of any instrument or agreement to which the Servicer is a party or by which it is bound, or (iii) require any consent of or other action by any trustee or any creditor of, any lessor to or any investor in the Servicer.
(d)    Compliance with Law.  The Servicer is in compliance with all statutes, laws and ordinances and all governmental rules and regulations to which it is subject, the violation of which, either individually or in the aggregate, could materially adversely affect its business, earnings, properties or condition (financial or other).  The policies and procedures set forth in the Collection Policy on the Closing Date are in material compliance with all applicable statutes, laws and ordinances and all governmental rules and regulations.  The execution, delivery and performance of the Transaction Documents to which it is a party do not and will not cause the Servicer to be in violation of any law or ordinance, or any order, rule or regulation, of any federal, state, municipal or other governmental or public authority or agency.
(e)    Pending Litigation or Other Proceedings.  There is no pending or, to the best of the Servicer’s knowledge, threatened action, suit, proceeding or investigation before any court, administrative agency, arbitrator or governmental body against or affecting the Servicer which, if decided adversely, would materially and adversely affect (i) the condition (financial or otherwise), business or operations of the Servicer, (ii) the ability of the Servicer to perform its obligations under, or the validity or enforceability of this Indenture or any other documents or transactions contemplated under this Indenture, (iii) any property or title of any Obligor to any Timeshare Property or (iv) the Indenture Trustee’s ability to foreclose or otherwise enforce the Liens of the Timeshare Loans.
(f)    Taxes.  The Servicer has timely filed all tax returns (federal, state and local) which are required to be filed and has paid all taxes that have become due and payable, other than 

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those which the Servicer is contesting in good faith and has set aside adequate resources in accordance with generally accepted accounting principles for the payment thereof.
(g)    Transactions in Ordinary Course.  The transactions contemplated by this Indenture are in the ordinary course of business of the Servicer.
(h)    Securities Laws.  The Servicer is not an “investment company” or a company “controlled” by an “investment company” within the meaning of the 1940 Act.
(i)    Proceedings.  The Servicer has taken all action necessary to authorize the execution and delivery by it of the Transaction Documents to which it is a party and the performance of all obligations to be performed by it under the Transaction Documents.
(j)    Defaults.  The Servicer is not in default under any material agreement, contract, instrument or indenture to which it is a party or by which it or its properties is or are bound, or with respect to any order of any court, administrative agency, arbitrator or governmental body which default would have a material adverse effect on the transactions contemplated hereunder; and to the Servicer’s knowledge, as applicable, no event has occurred which with notice or lapse of time or both would constitute such a default with respect to any such agreement, contract, instrument or indenture, or with respect to any such order of any court, administrative agency, arbitrator or governmental body.
(k)    Insolvency.  The Servicer is solvent.  Prior to the date hereof, the Servicer did not, and is not about to, engage in any business or transaction for which any property remaining with the Servicer would constitute an unreasonably small amount of capital.  In addition, the Servicer has not incurred debts that would be beyond the Servicer’s ability to pay as such debts matured.
(l)    No Consents.  No prior consent, approval or authorization of, registration, qualification, designation, declaration or filing with, or notice to any federal, state or local governmental or public authority or agency, is, was or will be required for the valid execution, delivery and performance by the Servicer of the Transaction Documents to which it is a party.  The Servicer has obtained all consents, approvals or authorizations of, made all declarations or filings with, or given all notices to, all federal, state or local governmental or public authorities or agencies which are necessary for the continued conduct by the Servicer of its respective businesses as now conducted, other than such consents, approvals, authorizations, declarations, filings and notices which, neither individually nor in the aggregate, materially and adversely affect, or in the future will materially and adversely affect, the business, earnings, prospects, properties or condition (financial or other) of the Servicer.
(m)     Name.  The legal name of the Servicer is as set forth in the signature page of this Indenture and the Servicer does not have any tradenames, fictitious names, assumed names or “doing business as” names.
(n)    Information.  No document, certificate or report furnished by the Servicer, in writing, pursuant to this Indenture or in connection with the transactions contemplated hereby, contains or will contain when furnished any untrue statement of a material fact or fails or will fail 

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to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading.  There are no facts relating to the Servicer as of the Closing Date which when taken as a whole, materially adversely affect the financial condition or assets or business of the Servicer, or which may impair the ability of the Servicer to perform its obligations under this Indenture, which have not been disclosed herein or in the certificates and other documents furnished by or on behalf of the Servicer pursuant hereto or thereto specifically for use in connection with the transactions contemplated hereby or thereby.
Section 12.03    Representations and Warranties of the Indenture Trustee and the Back-Up Servicer.
The Indenture Trustee and the Back-Up Servicer hereby represent and warrant as of the Closing Date, the following:
(a)    The Indenture Trustee and the Back-Up Servicer is each a national banking association duly organized, validly existing and in good standing under the laws of the United States.
(b)    The execution and delivery of this Indenture and the other Transaction Documents to which the Indenture Trustee or the Back-Up Servicer is a party, and the performance and compliance with the terms of this Indenture and the other Transaction Documents to which the Indenture Trustee or the Back-Up Servicer is a party by the Indenture Trustee or the Back-Up Servicer, as applicable, will not violate the Indenture Trustee’s or the Back-Up Servicer’s organizational documents or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in a breach of, any material agreement or other material instrument to which it is a party or by which it is bound.
(c)    Except to the extent that the laws of certain jurisdictions in which any part of the Trust Estate may be located require that a co-trustee or separate trustee be appointed to act with respect to such property as contemplated herein, the Indenture Trustee has the full power and authority to carry on its business as now being conducted and to enter into and consummate all transactions contemplated by this Indenture and the other Transaction Documents, has duly authorized the execution, delivery and performance of this Indenture and the other Transaction Documents to which it is a party, and has duly executed and delivered this Indenture and the other Transaction Documents to which it is a party.
(d)    The Back-Up Servicer has the full power and authority to carry on its business as now being conducted and to enter into and consummate all transactions contemplated by this Indenture and the other Transaction Documents, has duly authorized the execution, delivery and performance of this Indenture and the other Transaction Documents to which it is a party, and has duly executed and delivered this Indenture and the other Transaction Documents to which it is a party.
(e)    This Indenture, assuming due authorization, execution and delivery by the other parties hereto, constitutes a valid and binding obligation of each of the Indenture Trustee and the Back-Up Servicer, enforceable against the Indenture Trustee and the Back-Up Servicer in accordance with the terms hereof, subject to (i) applicable bankruptcy, insolvency, reorganization, 

74

moratorium and other laws affecting the enforcement of creditors’ rights generally and the rights of creditors of banks, and (ii) general principles of equity, regardless of whether such enforcement is considered in a proceeding in equity or at law.
(f)    Neither the Indenture Trustee nor the Back-Up Servicer is in violation of, and its execution and delivery of this Indenture and the other Transaction Documents to which it is a party and its performance and compliance with the terms of this Indenture and the other Transaction Documents to which it is a party will not constitute a violation of, any law, any order or decree of any court or arbiter, or any order, regulation or demand of any federal, state or local governmental or regulatory authority, which violation, in the Indenture Trustee’s and the Back-Up Servicer’s good faith and reasonable judgment, is likely to affect materially and adversely the ability of the Indenture Trustee or the Back-Up Servicer, as applicable, to perform its obligations under any Transaction Document to which it is a party.
(g)    No litigation is pending or, to the best of the Indenture Trustee’s and the Back-Up Servicer’s knowledge, threatened against the Indenture Trustee or the Back-Up Servicer that, if determined adversely to the Indenture Trustee or the Back-Up Servicer, would prohibit the Indenture Trustee or the Back-Up Servicer, as applicable, from entering into any Transaction Document to which it is a party or, in the Indenture Trustee’s and the Back-Up Servicer’s good faith and reasonable judgment, is likely to materially and adversely affect the ability of the Indenture Trustee or the Back-Up Servicer to perform its obligations under any Transaction Document to which it is a party.
(h)    Any consent, approval, authorization or order of any court or governmental agency or body required for the execution, delivery and performance by the Indenture Trustee or the Back-Up Servicer of or compliance by the Indenture Trustee or the Back-Up Servicer with the Transaction Documents to which it is a party or the consummation of the transactions contemplated by the Transaction Documents has been obtained and is effective.
Section 12.04    Multiple Roles.
The parties expressly acknowledge and consent to Wells Fargo Bank, National Association, acting in the multiple roles of the Indenture Trustee, the Custodian, the Back-Up Servicer and the Successor Servicer.  Wells Fargo Bank, National Association may, in such capacities, discharge its separate functions fully, without hindrance or regard to conflict of interest principles, duty of loyalty principles or other breach of fiduciary duties to the extent that any such conflict or breach arises from the performance by Wells Fargo Bank, National Association of express duties set forth in this Indenture in any of such capacities, all of which defenses, claims or assertions are hereby expressly waived by the other parties hereto except in the case of negligence (other than errors in judgment) and willful misconduct by Wells Fargo Bank, National Association.
ARTICLE XIII     
 
MISCELLANEOUS

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Section 13.01    Officer’s Certificate and Opinion of Counsel as to Conditions Precedent.
Upon any request or application by the Issuer to the Indenture Trustee to take any action under this Indenture, the Issuer shall furnish to the Indenture Trustee:
(a)    an Officer’s Certificate (which shall include the statements set forth in Section 12.03 hereof) stating that all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been complied with; and
(b)    an Opinion of Counsel (which shall include the statements set forth in Section 12.03 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been complied with.
Section 13.02    Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:
(a)    a statement that the Person making such certificate or opinion has read such covenant or condition;
(b)    a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(c)    a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him/her to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(d)    a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.
Section 13.03    Notices.  (a) All communications, instructions, directions and notices to the parties thereto shall be (i) in writing (which may be by facsimile transmission (or if permitted hereunder, via electronic mail), followed by delivery of original documentation within one Business Day), (ii) effective when received and (iii) delivered or mailed first class mail, postage prepaid to it at the following address:
If to the Issuer:
Diamond Resorts Owner Trust 2015-1
c/o U.S Bank Trust National Association
300 Delaware Avenue, 9th Floor
Wilmington, Delaware 19801

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With a copy to: 

U.S. Bank National Association
60 Livingston Avenue
EP-MN-WS3D
St. Paul, Minnesota 55107
Attn: Andrea Friesen, Diamond Resorts Owner Trust 2015-1

and a copy to:

Diamond Resorts International, Inc.
10600 West Charleston Boulevard
Las Vegas, Nevada 89135
Attention:  Chief Administrative Officer
If to the Servicer:
Diamond Resorts Financial Services, Inc.
10600 West Charleston Boulevard
Las Vegas, Nevada 89135
Attention:  David Womer
With a copy to:
Diamond Resorts Corporation
10600 West Charleston Boulevard
Las Vegas, Nevada 89135
Attention:  Treasurer

If to the Indenture Trustee:
Wells Fargo Bank, National Association
MAC N9311-161
Sixth Street & Marquette Avenue
Minneapolis, Minnesota 55479
Attention:    Corporate Trust 
    Services/Asset-Backed Administration
Facsimile Number:    (612) 667-3539
Telephone Number:    (612) 667-8058
If to the Administrator:
Diamond Resorts Financial Services, Inc.
10600 West Charleston Boulevard
Las Vegas, Nevada 89135
Attention:  David Womer

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If to the Rating Agencies:
Standard & Poor’s Ratings Services, 
a Standard & Poor’s Financial Services LLC business
55 Water Street, 41st Floor
New York, New York 10041-0003
Attention: ABS Surveillance
Email Address:  structuredcreditreports@sandp.com
 
        Kroll Bond Rating Agency, Inc.
845 Third Avenue, 4th Floor
New York, NY 10022
Attention:  ABS Surveillance
Email:  abssurveillance@kbra.com

The parties hereto agree that all communications, reports, notices and any other item sent to the Rating Agencies pursuant to this Indenture shall simultaneously be emailed to DROT20151@structuredfn.com.
or at such other address as the party may designate by notice to the other parties hereto, which shall be effective when received.
(b)    All communications and notices pursuant hereto to a Noteholder shall be in writing and delivered or mailed first class mail, postage prepaid or overnight courier at the address shown in the Note Register.  The Indenture Trustee agrees to deliver or mail to each Noteholder upon receipt, all notices and reports that the Indenture Trustee may receive hereunder and under any Transaction Documents.  Unless otherwise provided herein, the Indenture Trustee may consent to any requests received under such documents or, at its option, follow the directions of Holders representing at least 66-2/3% of the then Outstanding Note Balance of each Class of Notes within 30 days after prior written notice to the Noteholders.  All notices to Noteholders (or any Class thereof) shall be sent simultaneously.  Expenses for such communications and notices shall be borne by the Servicer.
Section 13.04    No Proceedings.
The Noteholders, the Servicer and the Indenture Trustee each hereby agrees that it will not, directly or indirectly institute, or cause to be instituted, against the Issuer or the Trust Estate any proceeding of the type referred to in Section 6.01(e) hereof so long as there shall not have elapsed one year plus one day since the last maturity of the Notes.
Section 13.05    Limitation of Liability.
(a)    It is expressly understood and agreed by the parties hereto that (a) this Indenture is executed and delivered by U.S. Bank Trust National Association, not individually or personally but solely as Owner Trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part 

78

of the Issuer is made and intended not as personal representations, undertakings and agreements by U.S. Bank Trust National Association but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on U.S. Bank Trust National Association, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) U.S. Bank Trust National Association has made no investigation as to the accuracy or completeness of any representations or warranties made by the Issuer in this Indenture, and (e) under no circumstances shall U.S. Bank Trust National Association be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Indenture, the Notes or any other related document.
(b)    It is expressly understood and agreed by the parties hereto that DRFS is executing this Indenture solely as Servicer and DRFS undertakes to perform such duties and only such duties as are specifically set forth in this Indenture applicable to the Servicer.
Section 13.06    Entire Agreement.
This Indenture contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof.  The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof.
Section 13.07    Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of this Indenture shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Indenture and shall in no way affect the validity or enforceability of the other provisions of this Indenture or of the Notes or the rights of the Holders thereof.
Section 13.08    Indulgences; No Waivers.
Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Indenture shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence.  No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
Section 13.09    JURISDICTION; WAIVER OF TRIAL BY JURY.

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EACH PARTY TO THIS INDENTURE HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY FEDERAL OR STATE COURT IN THE STATE OF NEW YORK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS INDENTURE OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND CONSENTS TO THE PLACING OF VENUE IN NEW YORK COUNTY OR OTHER COUNTY PERMITTED BY LAW.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THIS INDENTURE MAY NOT BE LITIGATED IN OR BY SUCH COURTS.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY AGREES NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT.  EXCEPT AS PROHIBITED BY LAW, EACH PARTY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS INDENTURE.
[Signature pages to follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.

DIAMOND RESORTS OWNER TRUST 2015-1,
as Issuer 
 
                By:    U.S. BANK TRUST NATIONAL ASSOCIATION, 
                    not in its individual capacity but solely as Owner Trustee
By:    _/s/ Andrea J/ Friesen___________
Name: Andrea J. Friesen
Title:    Vice President

DIAMOND RESORTS FINANCIAL SERVICES, INC.,
as Servicer 
By:        _/s/ David Womer____________________
Name:    David Womer
Title:     President

WELLS FARGO BANK, NATIONAL ASSOCIATION,  
as Indenture Trustee and Back-Up Servicer
By:    _/s/ Tara H. Anderson_________________
Name:    Tara H. Anderson
Title:     Vice President

FINAL

EXHIBIT A
FORM OF NOTES

KL2 2907084.5
A-1

CLASS A NOTE
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF THIS NOTE OR ANY INTEREST HEREIN IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE OR ANY INTEREST HEREIN MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE OR ANY INTEREST HEREIN AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE AND ANY INTEREST HEREIN MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IN MINIMUM DENOMINATIONS OF $100,000 AND IN INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF, AND ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE OR ANY INTEREST HEREIN FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. 
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE NOTE REGISTRAR OR ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
NO RESALE OR OTHER TRANSFER OF THIS NOTE OR ANY INTEREST HEREIN SHALL BE MADE TO ANY TRANSFEREE UNLESS (A) SUCH TRANSFEREE IS 

KL2 2907084.5
A-2

NOT, AND WILL NOT ACQUIRE THIS NOTE OR ANY INTEREST HEREIN ON BEHALF OR WITH THE ASSETS OF, (I) ANY “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), THAT IS SUBJECT TO TITLE I OF ERISA; (II) ANY “PLAN” AS DEFINED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), THAT IS SUBJECT TO SECTION 4975 OF THE CODE; (III) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF AN EMPLOYEE BENEFIT PLAN’S OR PLAN’S INVESTMENT IN SUCH ENTITY; OR (IV) ANY OTHER ARRANGEMENT THAT IS SUBJECT TO ANY FEDERAL, STATE, LOCAL, OR NON-U.S. LAW THAT IS SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAW”) OR (B) NO “PROHIBITED TRANSACTION” UNDER ERISA OR SECTION 4975 OF THE CODE AND NO VIOLATION OF SIMILAR LAW THAT, IN EITHER CASE, IS NOT COVERED BY A STATUTORY, REGULATORY OR ADMINISTRATIVE EXEMPTION WILL OCCUR IN CONNECTION WITH THE PURCHASER’S OR SUCH TRANSFEREE’S ACQUISITION, HOLDING OR DISPOSITION OF THIS NOTE OR ANY INTEREST HEREIN.  
DIAMOND RESORTS OWNER TRUST 2015-1
TIMESHARE LOAN-BACKED NOTES, SERIES 2015-1, CLASS A

RULE 144A GLOBAL NOTE
Note Rate: 2.73%
Initial Payment Date: August 20, 2015
Stated Maturity: July 20, 2027
Initial Note Balance: Up to $158,490,000
Note No: 1
CUSIP No: 25272V AA7
ISIN No: US25272VAA70

FOR VALUE RECEIVED, Diamond Resorts Owner Trust 2015-1, a Delaware statutory trust (the “Issuer”) hereby promises to pay to Cede & Co. (the “Holder”) or its assigns, the principal sum of up to One Hundred Fifty Eight Million Four Hundred Ninety Thousand Dollars ($158,490,000) in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Indenture, dated as of July 29, 2015 (the “Indenture”), by and among the Issuer, Diamond Resorts Financial Services, Inc., as servicer and Wells Fargo Bank, National Association, as indenture trustee (the “Indenture Trustee”), and to pay interest at the Note Rate on the Outstanding Note Balance of this Timeshare Loan-Backed Note, Series 2015-1, Class A (this “Class A Note”) until paid in full, at the rates per annum and on the dates provided in the Indenture.  Capitalized terms used but not defined herein shall have the meanings given them in “Standard Definitions” attached as Annex A to the Indenture.
By its holding of this Class A Note, the Holder shall be deemed to accept the terms of the Indenture and agree to be bound thereby.

KL2 2907084.5
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Unless the certificate of authentication hereon has been executed by the Indenture Trustee referred to herein by manual signature, this Class A Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
This Class A Note is one of a duly authorized issue of notes of the Issuer designated as its “Class A Notes” and issued under the Indenture.
This Class A Note is secured by the pledge to the Indenture Trustee under the Indenture of the Trust Estate and recourse is limited to the extent set forth in the Indenture.  The amounts owed under this Class A Note shall not include any recourse to the Indenture Trustee or any affiliates thereof.
If certain Events of Default under the Indenture have been declared or occur, the Outstanding Note Balance of the Class A Notes may be declared immediately due and payable or payments of principal may be accelerated in the manner and with the effect provided in the Indenture.  Notice of such declaration will be given by mail to holders of the Class A Notes, as their names and addresses appear in the Note Register, as provided in the Indenture.  Subject to the terms of the Indenture, upon payment of such principal amount together with all accrued interest, the obligations of the Issuer with respect to the payment of principal and interest on this Class A Note shall terminate.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the holders of the Class A Notes under the Indenture at any time by the Issuer and the Indenture Trustee with the consent of such holders of the percentages specified in the Indenture at the time Outstanding.  The Indenture also contains provisions permitting such holders of specified percentages in Outstanding Note Balance of the Class A Notes, at the time Outstanding, on behalf of all the holders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the holder of this Class A Note shall be conclusive and binding upon such holder and upon all future holders of this Class A Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Class A Note.
Each Class A Note may be issued only in registered form and only in minimum denominations of at least $100,000 and integral multiples of $1,000 in excess thereof; provided that the foregoing shall not restrict or prevent the transfer in accordance with Section 2.04 of the Indenture of any Class A Note having a remaining Outstanding Note Balance of other than an integral multiple of $1,000, or the issuance of a single Class A Note with a denomination less than $100,000.  The holder of this Class A Note is deemed to acknowledge that the Class A Notes may be purchased and transferred only in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof and that this Class A Note (or any beneficial interests herein) may not be transferred in an amount less than such authorized denominations or which would result in the holder of this Class A Note having a beneficial interest below such authorized denominations.
The Issuer has structured the transaction contemplated by the Indenture and the Notes with the intention that the Notes will qualify under applicable tax law as indebtedness.  The Issuer, the Indenture Trustee and each Noteholder, by acceptance of this Note, agree to the treat the Notes 

KL2 2907084.5
A-4

as indebtedness for all income tax purposes, unless otherwise required by applicable law.  The Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Class A Note is registered as the owner hereof for all purposes, whether or not this Class A Note may be overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall be affected by notice to the contrary.
No transfer of this Class A Note or any interest herein may be made unless that transfer is made pursuant to an effective registration statement under the Securities Act and an effective registration or a qualification under applicable state securities laws, or is made in a transaction that does not require such registration or qualification because the transfer satisfies one of the following:  (i) such transfer is in compliance with Rule 144A under the Securities Act, to a person who the transferor reasonably believes is a Qualified Institutional Buyer (as defined in Rule 144A) that is purchasing for its own account or for the account of a Qualified Institutional Buyer and to whom notice is given that such transfer is being made in reliance upon Rule 144A under the Securities Act as certified by such transferee in a letter in the form of Exhibit B attached to the Indenture; (ii) such transfer is in compliance with Regulation S under the Securities Act as certified by such transferee in a letter in the form of Exhibit B attached to the Indenture; or (iii) after the appropriate holding period, such transfer is pursuant to an exemption from registration under the Securities Act provided by Rule 144 under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States.  None of the Issuer, the Servicer or the Indenture Trustee is obligated to register or qualify the Notes under the Securities Act or any other securities law or to take any action not otherwise required under the Indenture to permit the transfer of any Note without registration.
Interests in this Class A Note may be exchanged for an interest in the corresponding Temporary Regulation S Global Note or Regulation S Global Note, in each case subject to the restrictions specified in the Indenture.
Notwithstanding the foregoing, for so long as this Class A Note is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC, transfers of interests in this Class A Note shall be made through the book-entry facilities of DTC.
The Indenture and this Class A Note shall be deemed to be contracts made under the laws of the State of New York and shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York.
Section 13.05 of the Indenture is incorporated herein by reference.  

KL2 2907084.5
A-5

IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed by the manual signature of its duly Authorized Officer.
Dated:                      , 2015
DIAMOND RESORTS OWNER TRUST 2015-1
		
	By:
	U.S. BANK TRUST NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee

		
	By:
	___________________________

Name: 
Title:    
                            
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Notes referred to in the within mentioned Indenture.
Dated:                      , 2015
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Indenture Trustee
By:    ___________________________
Name: 
Title:    
    

KL2 2907084.5
A-6

CLASS B NOTE
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF THIS NOTE OR ANY INTEREST HEREIN IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE OR ANY INTEREST HEREIN MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE OR ANY INTEREST HEREIN AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE AND ANY INTEREST HEREIN MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IN MINIMUM DENOMINATIONS OF $100,000 AND IN INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF, AND ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE OR ANY INTEREST HEREIN FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. 
 UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE NOTE REGISTRAR OR ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
NO RESALE OR OTHER TRANSFER OF THIS NOTE OR ANY INTEREST HEREIN SHALL BE MADE TO ANY TRANSFEREE UNLESS (A) SUCH TRANSFEREE IS NOT, AND WILL NOT ACQUIRE THIS NOTE OR ANY INTEREST HEREIN ON BEHALF 

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OR WITH THE ASSETS OF, (I) ANY “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), THAT IS SUBJECT TO TITLE I OF ERISA; (II) ANY “PLAN” AS DEFINED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), THAT IS SUBJECT TO SECTION 4975 OF THE CODE; (III) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF AN EMPLOYEE BENEFIT PLAN’S OR PLAN’S INVESTMENT IN SUCH ENTITY; OR (IV) ANY OTHER ARRANGEMENT THAT IS SUBJECT TO ANY FEDERAL, STATE, LOCAL, OR NON-U.S. LAW THAT IS SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAW”) OR (B) NO “PROHIBITED TRANSACTION” UNDER ERISA OR SECTION 4975 OF THE CODE AND NO VIOLATION OF SIMILAR LAW THAT, IN EITHER CASE, IS NOT COVERED BY A STATUTORY, REGULATORY OR ADMINISTRATIVE EXEMPTION WILL OCCUR IN CONNECTION WITH THE PURCHASER’S OR SUCH TRANSFEREE’S ACQUISITION, HOLDING OR DISPOSITION OF THIS NOTE OR ANY INTEREST HEREIN.  
DIAMOND RESORTS OWNER TRUST 2015-1
TIMESHARE LOAN-BACKED NOTES, SERIES 2015-1, CLASS B

RULE 144A GLOBAL NOTE
Note Rate: 3.17%
Initial Payment Date: August 20, 2015
Stated Maturity: July 20, 2027
Initial Note Balance: Up to 11,510,000
Note No: 1
CUSIP No: 25272V AB5
ISIN No: US25272VAB53

FOR VALUE RECEIVED, Diamond Resorts Owner Trust 2015-1, a Delaware statutory trust (the “Issuer”) hereby promises to pay to Cede & Co. (the “Holder”) or its assigns, the principal sum of up to Eleven Million Five Hundred Ten Thousand Dollars ($11,510,000) in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Indenture, dated as of July 29, 2015 (the “Indenture”), by and among the Issuer, Diamond Resorts Financial Services, Inc., as servicer and Wells Fargo Bank, National Association, as indenture trustee (the “Indenture Trustee”), and to pay interest at the Note Rate on the Outstanding Note Balance of this Timeshare Loan-Backed Note, Series 2015-1, Class B (this “Class B Note”) until paid in full, at the rates per annum and on the dates provided in the Indenture.  Capitalized terms used but not defined herein shall have the meanings given them in “Standard Definitions” attached as Annex A to the Indenture.
By its holding of this Class B Note, the Holder shall be deemed to accept the terms of the Indenture and agree to be bound thereby.

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Unless the certificate of authentication hereon has been executed by the Indenture Trustee referred to herein by manual signature, this Class B Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
This Class B Note is one of a duly authorized issue of notes of the Issuer designated as its “Class B Notes” and issued under the Indenture.
This Class B Note is secured by the pledge to the Indenture Trustee under the Indenture of the Trust Estate and recourse is limited to the extent set forth in the Indenture.  The amounts owed under this Class B Note shall not include any recourse to the Indenture Trustee or any affiliates thereof.
If certain Events of Default under the Indenture have been declared or occur, the Outstanding Note Balance of the Class B Notes may be declared immediately due and payable or payments of principal may be accelerated in the manner and with the effect provided in the Indenture.  Notice of such declaration will be given by mail to holders of the Class B Notes, as their names and addresses appear in the Note Register, as provided in the Indenture.  Subject to the terms of the Indenture, upon payment of such principal amount together with all accrued interest, the obligations of the Issuer with respect to the payment of principal and interest on this Class B Note shall terminate.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the holders of the Class B Notes under the Indenture at any time by the Issuer and the Indenture Trustee with the consent of such holders of the percentages specified in the Indenture at the time Outstanding.  The Indenture also contains provisions permitting such holders of specified percentages in Outstanding Note Balance of the Class B Notes, at the time Outstanding, on behalf of all the holders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the holder of this Class B Note shall be conclusive and binding upon such holder and upon all future holders of this Class B Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Class B Note.
Each Class B Note may be issued only in registered form and only in minimum denominations of at least $100,000 and integral multiples of $1,000 in excess thereof; provided that the foregoing shall not restrict or prevent the transfer in accordance with Section 2.04 of the Indenture of any Class B Note having a remaining Outstanding Note Balance of other than an integral multiple of $1,000, or the issuance of a single Class B Note with a denomination less than $100,000.  The holder of this Class B Note is deemed to acknowledge that the Class B Notes may be purchased and transferred only in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof and that this Class B Note (or any beneficial interests herein) may not be transferred in an amount less than such authorized denominations or which would result in the holder of this Class B Note having a beneficial interest below such authorized denominations.
The Issuer has structured the transaction contemplated by the Indenture and the Notes with the intention that the Notes will qualify under applicable tax law as indebtedness.  The Issuer, the Indenture Trustee and each Noteholder, by acceptance of this Note, agree to the treat the Notes 

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as indebtedness for all income tax purposes, unless otherwise required by applicable law.  The Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Class B Note is registered as the owner hereof for all purposes, whether or not this Class B Note may be overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall be affected by notice to the contrary.
No transfer of this Class B Note or any interest herein may be made unless that transfer is made pursuant to an effective registration statement under the Securities Act and an effective registration or a qualification under applicable state securities laws, or is made in a transaction that does not require such registration or qualification because the transfer satisfies one of the following:  (i) such transfer is in compliance with Rule 144A under the Securities Act, to a person who the transferor reasonably believes is a Qualified Institutional Buyer (as defined in Rule 144A) that is purchasing for its own account or for the account of a Qualified Institutional Buyer and to whom notice is given that such transfer is being made in reliance upon Rule 144A under the Securities Act as certified by such transferee in a letter in the form of Exhibit B attached to the Indenture; (ii) such transfer is in compliance with Regulation S under the Securities Act as certified by such transferee in a letter in the form of Exhibit B attached to the Indenture; or (iii) after the appropriate holding period, such transfer is pursuant to an exemption from registration under the Securities Act provided by Rule 144 under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States.  None of the Issuer, the Servicer or the Indenture Trustee is obligated to register or qualify the Notes under the Securities Act or any other securities law or to take any action not otherwise required under the Indenture to permit the transfer of any Note without registration.
Interests in this Class B Note may be exchanged for an interest in the corresponding Temporary Regulation S Global Note or Regulation S Global Note, in each case subject to the restrictions specified in the Indenture.
Notwithstanding the foregoing, for so long as this Class B Note is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC, transfers of interests in this Class B Note shall be made through the book-entry facilities of DTC.
The Indenture and this Class B Note shall be deemed to be contracts made under the laws of the State of New York and shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York.

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Section 13.05 of the Indenture is incorporated herein by reference.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed by the manual signature of its duly Authorized Officer.
Dated:                      , 2015
DIAMOND RESORTS OWNER TRUST 2015-1
		
	By:
	U.S. BANK TRUST NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee

		
	By:
	___________________________

Name: 
Title:    
                            
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Notes referred to in the within mentioned Indenture.
Dated:                      , 2015
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Indenture Trustee
By:    ___________________________
Name: 
Title:    
    

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CLASS A NOTE
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF THIS NOTE OR ANY INTEREST HEREIN IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE OR ANY INTEREST HEREIN MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE OR ANY INTEREST HEREIN AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE AND ANY INTEREST HEREIN MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IN MINIMUM DENOMINATIONS OF $100,000 AND IN INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF, AND ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE OR ANY INTEREST HEREIN FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
THIS NOTE IS A TEMPORARY GLOBAL NOTE FOR PURPOSES OF REGULATION S UNDER THE SECURITIES ACT WHICH IS EXCHANGEABLE FOR A PERMANENT REGULATION S GLOBAL NOTE SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE INDENTURE.
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF THE OFFERING AND THE ORIGINAL ISSUE DATE OF THE NOTES, THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE NOTE REGISTRAR OR ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS 

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REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 
NO RESALE OR OTHER TRANSFER OF THIS NOTE OR ANY INTEREST HEREIN SHALL BE MADE TO ANY TRANSFEREE UNLESS (A) SUCH TRANSFEREE IS NOT, AND WILL NOT ACQUIRE THIS NOTE OR ANY INTEREST HEREIN ON BEHALF OR WITH THE ASSETS OF, (I) ANY “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), THAT IS SUBJECT TO TITLE I OF ERISA; (II) ANY “PLAN” AS DEFINED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), THAT IS SUBJECT TO SECTION 4975 OF THE CODE; (III) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF AN EMPLOYEE BENEFIT PLAN’S OR PLAN’S INVESTMENT IN SUCH ENTITY; OR (IV) ANY OTHER ARRANGEMENT THAT IS SUBJECT TO ANY FEDERAL, STATE, LOCAL, OR NON-U.S. LAW THAT IS SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAW”) OR (B) NO “PROHIBITED TRANSACTION” UNDER ERISA OR SECTION 4975 OF THE CODE AND NO VIOLATION OF SIMILAR LAW THAT, IN EITHER CASE, IS NOT COVERED BY A STATUTORY, REGULATORY OR ADMINISTRATIVE EXEMPTION WILL OCCUR IN CONNECTION WITH THE PURCHASER’S OR SUCH TRANSFEREE’S ACQUISITION, HOLDING OR DISPOSITION OF THIS NOTE OR ANY INTEREST HEREIN.  
DIAMOND RESORTS OWNER TRUST 2015-1
TIMESHARE LOAN-BACKED NOTES, SERIES 2015-1, CLASS A

TEMPORARY REGULATION S GLOBAL NOTE
Note Rate: 2.73%
Initial Payment Date: August 20, 2015
Stated Maturity: July 20, 2027
Initial Note Balance: Up to $158,490,000
Note No: 1
CUSIP No: U2528B AA9
ISIN No: USU2528BAA99

FOR VALUE RECEIVED, Diamond Resorts Owner Trust 2015-1, a Delaware statutory trust (the “Issuer”) hereby promises to pay to Cede & Co. (the “Holder”) or its assigns, the principal sum of up to One Hundred Fifty Eight Million Four Hundred Ninety Thousand Dollars ($158,490,000) in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Indenture, dated as of July 29, 2015 (the “Indenture”), by and among the Issuer, Diamond Resorts Financial Services, Inc., as servicer and 

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Wells Fargo Bank, National Association, as indenture trustee (the “Indenture Trustee”), and to pay interest at the Note Rate on the Outstanding Note Balance of this Timeshare Loan-Backed Note, Series 2015-1, Class A (this “Class A Note”) until paid in full, at the rates per annum and on the dates provided in the Indenture.  Capitalized terms used but not defined herein shall have the meanings given them in “Standard Definitions” attached as Annex A to the Indenture.
By its holding of this Class A Note, the Holder shall be deemed to accept the terms of the Indenture and agree to be bound thereby.
Unless the certificate of authentication hereon has been executed by the Indenture Trustee referred to herein by manual signature, this Class A Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
This Class A Note is one of a duly authorized issue of notes of the Issuer designated as its “Class A Notes” and issued under the Indenture.
This Class A Note is secured by the pledge to the Indenture Trustee under the Indenture of the Trust Estate and recourse is limited to the extent set forth in the Indenture.  The amounts owed under this Class A Note shall not include any recourse to the Indenture Trustee or any affiliates thereof.
If certain Events of Default under the Indenture have been declared or occur, the Outstanding Note Balance of the Class A Notes may be declared immediately due and payable or payments of principal may be accelerated in the manner and with the effect provided in the Indenture.  Notice of such declaration will be given by mail to holders of the Class A Notes, as their names and addresses appear in the Note Register, as provided in the Indenture.  Subject to the terms of the Indenture, upon payment of such principal amount together with all accrued interest, the obligations of the Issuer with respect to the payment of principal and interest on this Class A Note shall terminate.
The Indenture permits with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the holders of the Class A Notes under the Indenture at any time by the Issuer and the Indenture Trustee with the consent of such holders of the percentages specified in the Indenture at the time Outstanding.  The Indenture also contains provisions permitting such holders of specified percentages in Outstanding Note Balance of the Class A Notes, at the time Outstanding, on behalf of all the holders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the holder of this Class A Note shall be conclusive and binding upon such holder and upon all future holders of this Class A Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Class A Note.
Each Class A Note may be issued only in registered form and only in minimum denominations of at least $100,000 and integral multiples of $1,000 in excess thereof; provided that the foregoing shall not restrict or prevent the transfer in accordance with Section 2.04 of the Indenture of any Class A Note having a remaining Outstanding Note Balance of other than an integral multiple of $1,000, or the issuance of a single Class A Note with a denomination less than $100,000.  The 

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holder of this Class A Note is deemed to acknowledge that the Class A Notes may be purchased and transferred only in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof and that this Class A Note (or any beneficial interests herein) may not be transferred in an amount less than such authorized denominations or which would result in the holder of this Class A Note having a beneficial interest below such authorized denominations.
The Issuer has structured the transaction contemplated by the Indenture and the Notes with the intention that the Notes will qualify under applicable tax law as indebtedness.  The Issuer, the Indenture Trustee and each Noteholder, by acceptance of this Note, agree to the treat the Notes as indebtedness for all income tax purposes, unless otherwise required by applicable law.  The Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Class A Note is registered as the owner hereof for all purposes, whether or not this Class A Note may be overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall be affected by notice to the contrary.
No transfer of this Class A Note or any interest herein may be made unless that transfer is made pursuant to an effective registration statement under the Securities Act and an effective registration or a qualification under applicable state securities laws, or is made in a transaction that does not require such registration or qualification because the transfer satisfies one of the following:  (i) such transfer is in compliance with Rule 144A under the Securities Act, to a person who the transferor reasonably believes is a Qualified Institutional Buyer (as defined in Rule 144A) that is purchasing for its own account or for the account of a Qualified Institutional Buyer and to whom notice is given that such transfer is being made in reliance upon Rule 144A under the Securities Act as certified by such transferee in a letter in the form of Exhibit B attached to the Indenture; (ii) such transfer is in compliance with Regulation S under the Securities Act as certified by such transferee in a letter in the form of Exhibit B attached to the Indenture; or (iii) after the appropriate holding period, such transfer is pursuant to an exemption from registration under the Securities Act provided by Rule 144 under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States.  None of the Issuer, the Servicer or the Indenture Trustee is obligated to register or qualify the Notes under the Securities Act or any other securities law or to take any action not otherwise required under the Indenture to permit the transfer of any Note without registration.
Interests in this Class A Note may be exchanged for an interest in the corresponding Rule 144A Global Note, subject to the restrictions specified in the Indenture.
On or after the 40th day after the later of the Closing Date and the commencement of the offering of the Notes, interests in this Temporary Regulation S Global Note may be exchanged (free of charge) for interests in a permanent Regulation S Global Note of the same Class.  The permanent Regulation S Global Note shall be so issued and delivered in exchange for only that portion of this Temporary Regulation S Global Note in respect of which there shall have been presented to DTC by Euroclear or Clearstream, Luxembourg a certification to the effect that it has received from or in respect of a person entitled to an interest (as shown by its records) a certification that the beneficial interests in such Temporary Regulation S Global Note are owned by persons who are not U.S. persons (as defined in Regulation S).

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Notwithstanding the foregoing, for so long as this Class A Note is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC, transfers of interests in this Class A Note shall be made through the book-entry facilities of DTC.
The Indenture and this Class A Note shall be deemed to be contracts made under the laws of the State of New York and shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York.
Section 13.05 of the Indenture is incorporated herein by reference.  

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IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed by the manual signature of its duly Authorized Officer.
Dated:                      , 2015
DIAMOND RESORTS OWNER TRUST 2015-1
		
	By:
	U.S. BANK TRUST NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee

		
	By:
	___________________________

Name: 
Title:    
                            
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Notes referred to in the within mentioned Indenture.
Dated:                      , 2015
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Indenture Trustee
By:    ___________________________
Name: 
Title:   

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CLASS B NOTE
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF THIS NOTE OR ANY INTEREST HEREIN IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE OR ANY INTEREST HEREIN MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE OR ANY INTEREST HEREIN AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE AND ANY INTEREST HEREIN MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IN MINIMUM DENOMINATIONS OF $100,000 AND IN INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF, AND ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE OR ANY INTEREST HEREIN FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
THIS NOTE IS A TEMPORARY GLOBAL NOTE FOR PURPOSES OF REGULATION S UNDER THE SECURITIES ACT WHICH IS EXCHANGEABLE FOR A PERMANENT REGULATION S GLOBAL NOTE SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE INDENTURE.
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF THE OFFERING AND THE ORIGINAL ISSUE DATE OF THE NOTES, THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE NOTE REGISTRAR OR ANY AGENT THEREOF FOR 

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REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 
NO RESALE OR OTHER TRANSFER OF THIS NOTE OR ANY INTEREST HEREIN SHALL BE MADE TO ANY TRANSFEREE UNLESS (A) SUCH TRANSFEREE IS NOT, AND WILL NOT ACQUIRE THIS NOTE OR ANY INTEREST HEREIN ON BEHALF OR WITH THE ASSETS OF, (I) ANY “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), THAT IS SUBJECT TO TITLE I OF ERISA; (II) ANY “PLAN” AS DEFINED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), THAT IS SUBJECT TO SECTION 4975 OF THE CODE; (III) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF AN EMPLOYEE BENEFIT PLAN’S OR PLAN’S INVESTMENT IN SUCH ENTITY; OR (IV) ANY OTHER ARRANGEMENT THAT IS SUBJECT TO ANY FEDERAL, STATE, LOCAL, OR NON-U.S. LAW THAT IS SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAW”) OR (B) NO “PROHIBITED TRANSACTION” UNDER ERISA OR SECTION 4975 OF THE CODE AND NO VIOLATION OF SIMILAR LAW THAT, IN EITHER CASE, IS NOT COVERED BY A STATUTORY, REGULATORY OR ADMINISTRATIVE EXEMPTION WILL OCCUR IN CONNECTION WITH THE PURCHASER’S OR SUCH TRANSFEREE’S ACQUISITION, HOLDING OR DISPOSITION OF THIS NOTE OR ANY INTEREST HEREIN.  
DIAMOND RESORTS OWNER TRUST 2015-1
TIMESHARE LOAN-BACKED NOTES, SERIES 2015-1, CLASS B

TEMPORARY REGULATION S GLOBAL NOTE
Note Rate: 3.17%
Initial Payment Date: August 20, 2015
Stated Maturity: July 20, 2027
Initial Note Balance: $11,510,000
Note No: 1
CUSIP No: U2528B AB7
ISIN No: USU2528BAB72

FOR VALUE RECEIVED, Diamond Resorts Owner Trust 2015-1, a Delaware statutory trust (the “Issuer”) hereby promises to pay to Cede & Co. (the “Holder”) or its assigns, the principal sum of up to Eleven Million Five Hundred Ten Thousand Dollars ($11,510,000) in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Indenture, dated as of July 29, 2015 (the “Indenture”), by 

KL2 2907084.5
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and among the Issuer, Diamond Resorts Financial Services, Inc., as servicer and Wells Fargo Bank, National Association, as indenture trustee (the “Indenture Trustee”), and to pay interest at the Note Rate on the Outstanding Note Balance of this Timeshare Loan-Backed Note, Series 2015-1, Class B (this “Class B Note”) until paid in full, at the rates per annum and on the dates provided in the Indenture.  Capitalized terms used but not defined herein shall have the meanings given them in “Standard Definitions” attached as Annex A to the Indenture.
By its holding of this Class B Note, the Holder shall be deemed to accept the terms of the Indenture and agree to be bound thereby.
Unless the certificate of authentication hereon has been executed by the Indenture Trustee referred to herein by manual signature, this Class B Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
This Class B Note is one of a duly authorized issue of notes of the Issuer designated as its “Class B Notes” and issued under the Indenture.
This Class B Note is secured by the pledge to the Indenture Trustee under the Indenture of the Trust Estate and recourse is limited to the extent set forth in the Indenture.  The amounts owed under this Class B Note shall not include any recourse to the Indenture Trustee or any affiliates thereof.
If certain Events of Default under the Indenture have been declared or occur, the Outstanding Note Balance of the Class B Notes may be declared immediately due and payable or payments of principal may be accelerated in the manner and with the effect provided in the Indenture.  Notice of such declaration will be given by mail to holders of the Class B Notes, as their names and addresses appear in the Note Register, as provided in the Indenture.  Subject to the terms of the Indenture, upon payment of such principal amount together with all accrued interest, the obligations of the Issuer with respect to the payment of principal and interest on this Class B Note shall terminate.
The Indenture permits with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the holders of the Class B Notes under the Indenture at any time by the Issuer and the Indenture Trustee with the consent of such holders of the percentages specified in the Indenture at the time Outstanding.  The Indenture also contains provisions permitting such holders of specified percentages in Outstanding Note Balance of the Class B Notes, at the time Outstanding, on behalf of all the holders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the holder of this Class B Note shall be conclusive and binding upon such holder and upon all future holders of this Class B Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Class B Note.
Each Class B Note may be issued only in registered form and only in minimum denominations of at least $100,000 and integral multiples of $1,000 in excess thereof; provided that the foregoing shall not restrict or prevent the transfer in accordance with Section 2.04 of the Indenture of any Class B Note having a remaining Outstanding Note Balance of other than an integral multiple 

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of $1,000, or the issuance of a single Class B Note with a denomination less than $100,000.  The holder of this Class B Note is deemed to acknowledge that the Class B Notes may be purchased and transferred only in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof and that this Class B Note (or any beneficial interests herein) may not be transferred in an amount less than such authorized denominations or which would result in the holder of this Class B Note having a beneficial interest below such authorized denominations.
The Issuer has structured the transaction contemplated by the Indenture and the Notes with the intention that the Notes will qualify under applicable tax law as indebtedness.  The Issuer, the Indenture Trustee and each Noteholder, by acceptance of this Note, agree to the treat the Notes as indebtedness for all income tax purposes, unless otherwise required by applicable law.  The Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Class B Note is registered as the owner hereof for all purposes, whether or not this Class B Note may be overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall be affected by notice to the contrary.
No transfer of this Class B Note or any interest herein may be made unless that transfer is made pursuant to an effective registration statement under the Securities Act and an effective registration or a qualification under applicable state securities laws, or is made in a transaction that does not require such registration or qualification because the transfer satisfies one of the following:  (i) such transfer is in compliance with Rule 144A under the Securities Act, to a person who the transferor reasonably believes is a Qualified Institutional Buyer (as defined in Rule 144A) that is purchasing for its own account or for the account of a Qualified Institutional Buyer and to whom notice is given that such transfer is being made in reliance upon Rule 144A under the Securities Act as certified by such transferee in a letter in the form of Exhibit B attached to the Indenture; (ii) such transfer is in compliance with Regulation S under the Securities Act as certified by such transferee in a letter in the form of Exhibit B attached to the Indenture; or (iii) after the appropriate holding period, such transfer is pursuant to an exemption from registration under the Securities Act provided by Rule 144 under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States.  None of the Issuer, the Servicer or the Indenture Trustee is obligated to register or qualify the Notes under the Securities Act or any other securities law or to take any action not otherwise required under the Indenture to permit the transfer of any Note without registration.
Interests in this Class B Note may be exchanged for an interest in the corresponding Rule 144A Global Note, subject to the restrictions specified in the Indenture.
On or after the 40th day after the later of the Closing Date and the commencement of the offering of the Notes, interests in this Temporary Regulation S Global Note may be exchanged (free of charge) for interests in a permanent Regulation S Global Note of the same Class.  The permanent Regulation S Global Note shall be so issued and delivered in exchange for only that portion of this Temporary Regulation S Global Note in respect of which there shall have been presented to DTC by Euroclear or Clearstream, Luxembourg a certification to the effect that it has received from or in respect of a person entitled to an interest (as shown by its records) a certification 

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that the beneficial interests in such Temporary Regulation S Global Note are owned by persons who are not U.S. persons (as defined in Regulation S).
Notwithstanding the foregoing, for so long as this Class B Note is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC, transfers of interests in this Class B Note shall be made through the book-entry facilities of DTC.
The Indenture and this Class B Note shall be deemed to be contracts made under the laws of the State of New York and shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York.
Section 13.05 of the Indenture is incorporated herein by reference.  

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IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed by the manual signature of its duly Authorized Officer.
Dated:                      , 2015
DIAMOND RESORTS OWNER TRUST 2015-1
		
	By:
	U.S. BANK TRUST NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee

		
	By:
	___________________________

Name: 
Title:    
                            
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Notes referred to in the within mentioned Indenture.
Dated:                      , 2015
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Indenture Trustee
By:    ___________________________
Name: 
Title:   

KL2 2907084.5
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EXHIBIT B
FORM OF INVESTOR REPRESENTATION LETTER

KL2 2907084.5
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INVESTOR REPRESENTATION LETTER

DIAMOND RESORTS OWNER TRUST 2015-1
Timeshare Loan-Backed Notes, Series 2015-1
Diamond Resorts Owner Trust 2015-1
c/o U.S. Bank Trust National Association, as Owner Trustee
300 Delaware Avenue, 9th Floor
Wilmington, DE 19801

Wells Fargo Bank, National Association, as Indenture Trustee
MAC N9311-161
Sixth Street & Marquette Avenue
Minneapolis, Minnesota 55479

Ladies and Gentlemen:
______________________ (the “Purchaser”) hereby represents and warrants to you in connection with its purchase of $_________ in principal amount of the above-captioned notes (the “Notes”) as follows:
1.  The Purchaser (A)(i) is a qualified institutional buyer, and has delivered to you the certificate substantially in the form attached hereto as Annex I or Annex II, as applicable, (ii) is aware that the sale to it is being made in reliance on Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”), and (iii) is acquiring the Notes for its own account or for the account of a qualified institutional buyer, or (B) is not a U.S. person (as defined under Regulation S) and is purchasing the Notes in an offshore transaction pursuant to Regulation S.  The Purchaser is purchasing the Notes for investment purposes and not with a view to, or for, offer or sale in connection with a public distribution or in any other manner that would violate the Securities Act or applicable state securities laws.
2.  The Purchaser understands that the Notes or interests therein are being offered in a transaction not involving any public offering in the United States within the meaning of the Securities Act, that the Notes have not been and will not be registered under the Securities Act and that (A) if in the future it decides to offer, resell, pledge or otherwise transfer any of the Notes or any interest therein, such Notes or the interests therein may be offered, resold, pledged or otherwise transferred in minimum denominations of $100,000 and in integral multiples of $1,000 in excess thereof, and only (i) in the United States to a person whom the seller reasonably believes is a qualified institutional buyer in a transaction meeting the requirements of Rule 144A of the Securities Act, (ii) outside the United States in a transaction complying with the provisions of Rule 903 or 904 under the Securities Act, (iii) pursuant to an exemption from registration under the Securities Act provided by Rule 144 (if available), or (iv) pursuant to an effective registration statement under the Securities Act, in each of cases (i) through (iv) in accordance with any applicable securities laws of any State of the United States, and that (B) the Purchaser will, and each subsequent holder is required to, notify any subsequent purchaser of such Notes or interests therein from it of the resale restrictions referred to in (A) above.
3.  The Purchaser understands that the Notes will, until the Notes may be resold pursuant to Rule 144(b)(1) of the Securities Act, unless otherwise agreed by the Issuer and the Holder thereof, bear a legend substantially to the following effect.
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF THIS NOTE OR ANY INTEREST HEREIN IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE OR ANY INTEREST HEREIN MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE AND ANY INTEREST HEREIN MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IN MINIMUM DENOMINATIONS OF $100,000 AND IN INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF, AND ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN 

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ACCORDANCE WITH RULE 904 OF REGULATION S, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE OR ANY INTEREST HEREIN FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
4.   If the Purchaser is purchasing any Notes as a fiduciary or agent for one or more investor accounts, it has sole investment discretion with respect to each such account and has full power to make acknowledgments, representations and agreements contained herein on behalf of such account(s).
5.  Reference is made to the Offering Circular, dated July 23, 2015 (the “Offering Circular”), related to the Notes.  Capitalized terms used herein that are not otherwise defined shall have the meanings ascribed thereto in the Offering Circular.  The Purchaser has received a copy of the Offering Circular and such other information, if any, requested by the Purchaser, has had full opportunity to review such information and has received information necessary to verify such information.  The Purchaser represents that in making its investment decision to acquire the Notes, the Purchaser has not relied on representations, warranties, opinions, projections, financial or other information or analysis, if any, supplied to it by any person, including the addressees of this letter, except as expressly contained in the Offering Circular and in the other written information, if any, referred to in the preceding sentence.  The Purchaser acknowledges that it has read and agreed to the matters stated on pages (iv) through (viii) of the Offering Circular and information therein, including the restrictions on duplication and circulation of the Offering Circular.
6.  The Purchaser (i) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Notes, and (ii) has the ability to bear the economic risks of its prospective investment and can afford the complete loss of such investment.
7.  The Purchaser understands that the Issuer, the Initial Purchaser and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements contained in this letter and agrees that if any of the acknowledgments, representations or agreements deemed to have been made by it are no longer accurate, it will promptly notify the Issuer and the Initial Purchaser.  If it is acquiring any Notes as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to each such account and it has full power to make the foregoing acknowledgments, representations and agreements contained in this letter on behalf of such account.
8.  The Notes and any interest therein, may not be sold or transferred to, and each Purchaser by its purchase of the Notes or interests therein shall be deemed to have represented and covenanted that it is not acquiring the Notes or interests therein for or on behalf of or with the assets of, and will not transfer the Notes or interests therein to, any employee benefit plan as defined in Section 3 (3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is subject to Title I of ERISA or any other “plan” as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the “Code”), that is subject to Section 4975 of the Code or any entity whose underlying assets include plan assets by reason of an employee benefit plan’s or plan’s investment in such entity or any plan that is subject to any substantially similar provision of federal, state or local law (“Similar Law”), except that such purchase for or on behalf of or with assets of a plan shall be permitted:
(i)    to the extent such purchase is made by or on behalf of a bank collective investment fund maintained by the Purchaser in which no plan (together with any other plans maintained by the same employer or employee organization) has an interest in excess of 10% of the total assets in such collective investment fund, and the other applicable conditions of Prohibited Transaction Class Exemption 91‐38 issued by the Department of Labor are satisfied as of the date of acquisition of the Notes or interests therein and all such conditions will continue to be satisfied thereafter;
(ii)    to the extent such purchase is made by or on behalf of an insurance company pooled separate account maintained by the Purchaser in which no plan (together with any other plans maintained by the same employer or employee organization) has an interest in excess of 10% of the total of all assets in such pooled separate account, and the other applicable conditions of Prohibited Transaction Class Exemption 90-1 issued by the Department of Labor are satisfied as of the date of acquisition of the Notes or interests therein and all such conditions will continue to be satisfied thereafter;
(iii)    to the extent such purchase is made on behalf of a plan by a “qualified professional asset manager”, as such term is described and used in Prohibited Transaction Class Exemption 84-14 issued by the Department of Labor, and the assets of such plan when combined with the assets of other plans established or maintained by the same employer (or affiliate thereof) or employee organization and managed by such qualified professional asset manager do not represent more than 20% of the total client assets managed by such qualified professional asset manager at the time of the transaction, and the other applicable conditions 

KL2 2907084.5
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of such exemption are otherwise satisfied as of the date of acquisition of the Notes or interests therein and all such conditions will continue to be satisfied thereafter;
(iv)    to the extent such plan is a governmental plan (as defined in Section 3(32) of ERISA) which is not subject to the provisions of Title I of ERISA or Sections 401 and 501 of the Code and such purchase is not a violation of Similar Laws;
(v)    to the extent such purchase is made by or on behalf of an insurance company general account in which the reserves and liabilities for the general account contracts held by or on behalf of any plan, together with any other plans maintained by the same employer (or its affiliates) or employee organization, do not exceed 10% of the total reserves and liabilities of the insurance company general account (exclusive of separate account liabilities), plus surplus as set forth in the National Association of Insurance Commissioners Annual Statement filed with the state of domicile of the insurer, in accordance with Prohibited Transaction Class Exemption 95-60, and the other applicable conditions of such exemption are otherwise satisfied as of the date of acquisition of the Notes or interests therein and all such conditions will continue to be satisfied thereafter;
(vi)    to the extent such purchase is made by an in-house asset manager within the meaning of Part IV(a) of Prohibited Transaction Class Exemption 96-23 and such manager has made or properly authorized the decision for such plan to purchase Notes or interests therein, under circumstances such that Prohibited Transaction Class Exemption 96‐23 is applicable to the purchase, holding and disposition of such Notes or interests therein and all of the other applicable conditions of such exemption are otherwise satisfied as of the date of acquisition of such Notes or interests therein and all such conditions will continue to be satisfied thereafter; or
(vii)    to the extent such purchase will not otherwise give rise to a transaction described in Section 406 of ERISA or Section 4975(c)(1) of the Code for which a statutory, regulatory or administrative exemption is unavailable or be a violation of Similar Law.
The Purchaser, if described in the preceding clauses, further represents and agrees that it is not sponsored (within the meaning of Section 3(16)(B) of ERISA) by the Issuer, DRC, the Seller, the Servicer, the Indenture Trustee or the Initial Purchaser, or by any affiliate of any such person.
9.  The Purchaser acknowledges that, under the Indenture, Notes (or beneficial interests therein) may be purchased and transferred only in authorized denominations -- i.e., a minimum denomination of $100,000 and integral multiplies of $1,000 in excess thereof.  The Purchaser covenants that the Purchaser will neither (i) transfer Notes (or beneficial interests therein) in less than the authorized denominations nor (ii) transfer Notes (or beneficial interests therein) where the result would be to reduce the Purchaser's remaining holdings of Notes (or beneficial interests therein) below the authorized denominations.
10. By execution hereof, the Purchaser agrees to be bound, as Noteholder, by all of the terms, covenants and conditions of the Indenture and the Notes.
The representations and warranties contained herein shall be binding upon the heirs, executors, administrators and other successors of the undersigned.  If there is more than one signatory hereto, the obligations, representations, warranties and agreements of the undersigned are made jointly and severally.
Executed at _________________________, _________________________, this ___ day of _____________________, 20__.
_________________________________
Purchaser's Signature

_________________________________
Purchaser’s Name and Title (Print)    

_________________________________
Address of Purchaser

_________________________________
Purchaser’s Taxpayer Identification or
Social Security Number

KL2 2907084.5
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ANNEX 1 TO EXHIBIT B
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor] (the “Transferor”), Diamond Resorts Owner Trust 2015-1 and Wells Fargo Bank, National Association, as Note Registrar, with respect to the Note being transferred (the “Transferred Note”) as described in the Investor Representation Letter to which this certification relates and to which this certification is an Annex:
1.    As indicated below, the undersigned is the chief financial officer, a person fulfilling an equivalent function, or other executive officer of the entity purchasing the Transferred Note (the “Purchaser”).
2.    The Purchaser is a “qualified institutional buyer” as that term is defined in Rule 144A under the Securities Act of 1933 (“Rule 144A”) because (i) the Purchaser owned and/or invested on a discretionary basis $                      in securities (other than the excluded securities referred to below) as of the end of the Purchaser's most recent fiscal year (such amount being calculated in accordance with Rule 144A) and (ii) the Purchaser satisfies the criteria in the category marked below. 
		
	o
	Corporation, etc.  The Purchaser is a corporation (other than a bank, savings and loan association or similar institution), business trust, partnership, or any organization described in Section 501(c)(3) of the Internal Revenue Code of 1986.

		
	o
	Bank.  The Purchaser (a) is a national bank or a banking institution organized under the laws of any State, U.S. territory or the District of Columbia, the business of which is substantially confined to banking and is supervised by the State or territorial banking commission or similar official or is a foreign bank or equivalent institution, and (b) has an audited net worth of at least $25,000,000 as demonstrated in its latest annual financial statements, a copy of which is attached hereto, as of a date not more than 16 months preceding the date of sale of the Certificate in the case of a U.S. bank, and not more than 18 months preceding such date of sale for a foreign bank or equivalent institution.

		
	o
	Savings and Loan.  The Purchaser (a) is a savings and loan association, building and loan association, cooperative bank, homestead association or similar institution, which is supervised and examined by a State or Federal authority having supervision over any such institutions or is a foreign savings and loan association or equivalent institution and (b) has an audited net worth of at least $25,000,000 as demonstrated in its latest annual financial statements, a copy of which is attached hereto, as of a date not more than 16 months preceding the date of sale of the Certificate in the case of a U.S. savings and loan association, and not more than 18 months preceding such date of sale for a foreign savings and loan association or equivalent institution.

		
	o
	Broker-dealer.  The Purchaser is a dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934.

		
	o
	Insurance Company.  The Purchaser is an insurance company whose primary and predominant business activity is the writing of insurance or the reinsuring of risks underwritten by insurance companies and which is subject to supervision by the insurance commissioner or a similar official or agency of a State, U.S. territory or the District of Columbia.

		
	o
	State or Local Plan.  The Purchaser is a plan established and maintained by a State, its political subdivisions, or any agency or instrumentality of the State or its political subdivisions, for the benefit of its employees.

		
	o
	ERISA Plan.  The Purchaser is an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974.

__________________
2Purchaser must own and/or invest on a discretionary basis at least $100,000,000 in securities unless Purchaser is a dealer, and, in that case, Purchaser must own and/or invest on, a discretionary basis at least $10,000,000 in securities.

KL2 2907084.5
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	o
	Investment Advisor.  The Purchaser is an investment advisor registered under the Investment Advisers Act of 1940.

		
	o
	Other.  (Please supply a brief description of the entity and a cross-reference to the paragraph and subparagraph under subsection (a)(1) of Rule 144A pursuant to which it qualifies.  Note that registered investment companies should complete Annex 2 rather than this Annex 1.)     

3.    The term “securities” as used herein does not include (i) securities of issuers that are affiliated with the Purchaser, (ii) securities that are part of an unsold allotment to or subscription by the Purchaser, if the Purchaser is a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan participations, (v) repurchase agreements, (vi) securities owned but subject to a repurchase agreement and (vii) currency, interest rate and commodity swaps.  For purposes of determining the aggregate amount of securities owned and/or invested on a discretionary basis by the Purchaser, the Purchaser did not include any of the securities referred to in this paragraph.
4.    For purposes of determining the aggregate amount of securities owned and/or invested on a discretionary basis by the Purchaser, the Purchaser used the cost of such securities to the Purchaser, unless the Purchaser reports its securities holdings in its financial statements on the basis of their market value, and no current information with respect to the cost of those securities has been published, in which case the securities were valued at market.  Further, in determining such aggregate amount, the Purchaser may have included securities owned by subsidiaries of the Purchaser, but only if such subsidiaries are consolidated with the Purchaser in its financial statements prepared in accordance with generally accepted accounting principles and if the investments of such subsidiaries are managed under the Purchaser's direction.  However, such securities were not included if the Purchaser is a majority-owned, consolidated subsidiary of another enterprise and the Purchaser is not itself a reporting company under the Securities Exchange Act of 1934.
5.    The Purchaser acknowledges that it is familiar with Rule 144A and understands that the parties to which this certification is being made are relying and will continue to rely on the statements made herein because one or more sales to the Purchaser may be in reliance on Rule 144A.
	
			
	Will the Purchaser be purchasing the Transferred Note only for the Purchaser's own account?
	

o
Yes
	

o
No

6.If the answer to the foregoing question is “no”, then in each case where the Purchaser is purchasing for an account other than its own, such account belongs to a third party that is itself a “qualified institutional buyer” within the meaning of Rule 144A, and the “qualified institutional buyer” status of such third party has been established by the Purchaser through one or more of the appropriate methods contemplated by Rule 144A.
7.    The Purchaser will notify each of the parties to which this certification is made of any changes in the information and conclusions herein.  Until such notice is given, the Purchaser's purchase of the Transferred Note will constitute a reaffirmation of this certification as of the date of such purchase.  In addition, if the Purchaser is a bank or savings and loan as provided above, the Purchaser agrees that it will furnish to such parties any updated annual financial statements that become available on or before the date of such purchase, promptly after they become available.
___________________________________________    
Print Name of Purchaser
By:___________________________
Name:_________________________
Title:________________________

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ANNEX 2 TO EXHIBIT B
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Purchasers That Are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor] (the “Transferor”), Diamond Resorts Owner Trust 2015-1 and Wells Fargo Bank, National Association, as Note Registrar, with respect to the Note being transferred (the “Transferred Note”) as described in the Investor Representation Letter to which this certification relates and to which this certification is an Annex:
1.    As indicated below, the undersigned is the chief financial officer, a person fulfilling an equivalent function, or other executive officer of the entity purchasing the Transferred Note (the “Purchaser”) or, if the Purchaser is a “qualified institutional buyer” as that term is defined in Rule 144A under the Securities Act of 1933 (“Rule 144A”) because the Purchaser is part of a Family of Investment Companies (as defined below), is an executive officer of the investment adviser (the “Adviser”).
2.    The Purchaser is a “qualified institutional buyer” as defined in Rule 144A because (i) the Purchaser is an investment company registered under the Investment Company Act of 1940, and (ii) as marked below, the Purchaser alone owned and/or invested on a discretionary basis, or the Purchaser's Family of Investment Companies owned, at least $100,000,000 in securities (other than the excluded securities referred to below) as of the end of the Purchaser's most recent fiscal year.  For purposes of determining the amount of securities owned by the Purchaser or the Purchaser's Family of Investment Companies, the cost of such securities was used, unless the Purchaser or any member of the Purchaser's Family of Investment Companies, as the case may be, reports its securities holdings in its financial statements on the basis of their market value, and no current information with respect to the cost of those securities has been published, in which case the securities of such entity were valued at market.
		
	o
	The Purchaser owned and/or invested on a discretionary basis $              in securities (other than the excluded securities referred to below) as of the end of the Purchaser's most recent fiscal year (such amount being calculated in accordance with Rule 144A).

		
	o
	The Purchaser is part of a Family of Investment Companies which owned in the aggregate $              in securities (other than the excluded securities referred to below) as of the end of the Purchaser's most recent fiscal year (such amount being calculated in accordance with Rule 144A).

3.    The term “Family of Investment Companies” as used herein means two or more registered investment companies (or series thereof) that have the same investment adviser or investment advisers that are affiliated (by virtue of being majority owned subsidiaries of the same parent or because one investment adviser is a majority owned subsidiary of the other).
4.    The term “securities” as used herein does not include (i) securities of issuers that are affiliated with the Purchaser or are part of the Purchaser's Family of Investment Companies, (ii) bank deposit notes and certificates of deposit, (iii) loan participations, (iv) repurchase agreements, (v) securities owned but subject to a repurchase agreement and (vi) currency, interest rate and commodity swaps.  For purposes of determining the aggregate amount of securities owned and/or invested on a discretionary basis by the Purchaser, or owned by the Purchaser's Family of Investment Companies, the securities referred to in this paragraph were excluded.
5.    The Purchaser is familiar with Rule 144A and understands that the parties to which this certification is being made are relying and will continue to rely on the statements made herein because one or more sales to the Purchaser will be in reliance on Rule 144A.
	
			
	Will the Purchaser be purchasing the Transferred Note only for the Purchaser's own account?
	

o
Yes
	

o
No

6.If the answer to the foregoing question is “no”, then in each case where the Purchaser is purchasing for an account other than its own, such account belongs to a third party that is itself a “qualified institutional buyer” within the meaning of Rule 144A, 

KL2 2907084.5
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and the “qualified institutional buyer” status of such third party has been established by the Purchaser through one or more of the appropriate methods contemplated by Rule 144A.
7.    The undersigned will notify the parties to which this certification is made of any changes in the information and conclusions herein.  Until such notice, the Purchaser's purchase of the Transferred Note will constitute a reaffirmation of this certification by the undersigned as of the date of such purchase.
__________________________________________________    
Print Name of Purchaser or Adviser
__________________________________________________    
By:_____________________________________________________    
Name:__________________________________________________    
Title:___________________________________________________    
IF AN ADVISER:
__________________________________________________    
Print Name of Purchaser
Date:______________            

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EXHIBIT C
FORM OF TRANSFER CERTIFICATE FOR RULE 144A GLOBAL NOTES TO
REGULATION S GLOBAL NOTES DURING THE RESTRICTED PERIOD

KL2 2907084.5
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FORM OF TRANSFER CERTIFICATE FOR EXCHANGE OR TRANSFER 
FROM RULE 144A GLOBAL NOTE TO REGULATION S 
GLOBAL NOTE DURING THE RESTRICTED PERIOD
Wells Fargo Bank, National Association
MAC# N9303-121
608 2nd Ave. S 
Minneapolis, Minnesota 55402
Attention:  Corporate Trust Services
		
	Re:
	Diamond Resorts Owner Trust 2015-1; Transfer of Class [__] Note

Ladies and Gentlemen:
Reference is hereby made to the Indenture, dated as of July 29, 2015 (the “Indenture”), by and among Diamond Resorts Owner Trust 2015-1 (the “Issuer”), Diamond Resorts Financial Services, Inc. (the “Servicer”) and Wells Fargo Bank, National Association, as indenture trustee (the “Indenture Trustee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
This letter relates to US $[__] aggregate Outstanding Note Balance of Notes (the “Notes”) which are held in the form of the Rule 144A Global Note (CUSIP No. __________) with the Depository in the name of [insert name of transferor] (the “Transferor”).  The Transferor has requested a transfer of such beneficial interest for an interest in the Regulation S Global Note (CUSIP No. __________) to be held with [Euroclear] [Clearstream]* (Common Code No. ___________) through the Depository.
In connection with such request and in respect of such Notes, the Transferor does hereby certify that such transfer has been effected in accordance with the transfer restrictions set forth in the Indenture and pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended (the “Securities Act”), and accordingly the Transferor does hereby certify that:
(1)    the offer of the Notes was not made to a person in the United States,
		
	(2)
	[at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed that the transferee was outside the United States] (the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the transferor nor any person acting on its behalf knows that the transaction was pre-arranged with a buyer in the United States],* 

		
	(3)
	the transferee is not a U.S. Person within the meaning of Rule 902(k) of Regulation S nor a Person acting for the account or benefit of a U.S. Person,

		
	(4)
	no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable,

(5)    the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act, and
		
	(6)
	upon completion of the transaction, the beneficial interest being transferred as described above will be held with the Depository through [Euroclear] [Clearstream].* 

_____________________________________________ 
*     Select appropriate depository.
		
	** 
	Insert one of these two provisions, which come from the definition of “offshore transaction” in Regulation S.* 

		
	*** 
	Select appropriate depository.** 

KL2 2907084.5
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This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer, the Indenture Trustee and the Servicer.
[Insert Name of Transferor]
		
	By:
	______________________________________________    

Name:
Title:
Dated:

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EXHIBIT D
FORM OF TRANSFER CERTIFICATE FOR RULE 144A GLOBAL 
NOTES TO REGULATION S GLOBAL NOTES AFTER RESTRICTED PERIOD

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FORM OF TRANSFER CERTIFICATE FOR EXCHANGE OR TRANSFER 
FROM RULE 144A GLOBAL NOTE TO REGULATION S 
GLOBAL NOTE AFTER THE RESTRICTED PERIOD
Wells Fargo Bank, National Association
MAC# N9303-121
608 2nd Ave. S 
Minneapolis, Minnesota 55402
Attention:  Corporate Trust Services

		
	Re:
	Diamond Resorts Owner Trust 2015-1; Transfer of Class [__] Note

Ladies and Gentlemen:
Reference is hereby made to the Indenture, dated as of July 29, 2015 (the “Indenture”), by and among Diamond Resorts Owner Trust 2015-1 (the “Issuer”), Diamond Resorts Financial Services, Inc. (the “Servicer”) and Wells Fargo Bank, National Association, as indenture trustee (the “Indenture Trustee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
This letter relates to US $[__] aggregate Outstanding Note Balance of Notes (the “Notes”) which are held in the form of the Rule 144A Global Note (CUSIP No. __________) with the Depository in the name of [insert name of transferor] (the “Transferor”).  The Transferor has requested a transfer of such beneficial interest for an interest in the Regulation S Global Note (CUSIP No. __________) to be held with [Euroclear] [Clearstream]* (Common Code No. ___________) through the Depository.
In connection with such request, and in respect of such Certificates, the Transferor does hereby certify that such transfer has been effected in accordance with the transfer restrictions set forth in the Indenture and, (i) with respect to transfers made in reliance on Regulation S under the Securities Act of 1933, as amended (the “Securities Act”), the Transferor does hereby certify that:
(1)    the offer of the Certificates was not made to a person in the United States,
(2)    [at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed that the transferee was outside the United States] [the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the Transferor nor any person acting on its behalf knows that the transaction was pre-arranged with a buyer in the United States];* ** 
(3)    no directed selling efforts have been made in contravention of the requirements of Rule 903(a) or Rule 904(a) of Regulation S, as applicable; and
(4)    the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act,
or (ii) with respect to transfers made in reliance on Rule 144 under the Securities Act, the Transferor does hereby certify that the Certificates that are being transferred are not “restricted securities” as defined in Rule 144 under the Securities Act.
____________________________
*     Select appropriate depository.
*    Insert one of these two provisions, which come from the definition of “offshore transaction” in Regulation S. ** 

KL2 2907084.5
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This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer, the Indenture Trustee and the Servicer.
[Insert Name of Transferor]
		
	By:
	______________________________________________

Name:
Title:
Dated:

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EXHIBIT E
FORM OF TRANSFER CERTIFICATE FOR REGULATION S GLOBAL 
NOTES TO 144A GLOBAL NOTES DURING RESTRICTED PERIOD

KL2 2907084.5
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FORM OF TRANSFER CERTIFICATE FOR EXCHANGE OR TRANSFER
FROM REGULATION S GLOBAL NOTE
TO RULE 144A GLOBAL NOTE
Wells Fargo Bank, National Association
MAC# N9303-121
608 2nd Ave. S 
Minneapolis, Minnesota 55402
Attention:  Corporate Trust Services
		
	Re:
	Diamond Resorts Owner Trust 2015-1; Transfer of Class [__] Note

Ladies and Gentlemen:
Reference is hereby made to the Indenture, dated as of July 29, 2015 (the “Indenture”), by and among Diamond Resorts Owner Trust 2015-1 (the “Issuer”), Diamond Resorts Financial Services, Inc. (the “Servicer”) and Wells Fargo Bank, National Association, as indenture trustee (the “Indenture Trustee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
This letter relates to US $[___] aggregate Outstanding Note Balance of Notes (the “Notes”) which are held in the form of the Regulation S Global Note (CUSIP No. __________) with [Euroclear] [Clearstream]* (Common Code No. __________) through the Depository in the name of [insert name of transferor] (the “Transferor”).  The Transferor has requested a transfer of such beneficial interest in the Notes for an interest in the Regulation 144A Global Note (CUSIP No. __________).
In connection with such request, and in respect of such Notes. the Transferor does hereby certify that such Notes are being transferred in accordance with (i) the transfer restrictions set forth in the Indenture, and (ii) Rule 144A under the Securities Act to a transferee that the Transferor reasonably believes is purchasing the Notes for its own account with respect to which the transferee exercises sole investment discretion and the transferee and any such account is a “qualified institutional buyer” within the meaning of Rule 144A, in each case in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the United States or any jurisdiction.
This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer, the Indenture Trustee and the Servicer.
[Insert Name of Transferor]
By:______________________________________________    
Name:
Title:
Dated:

______________________________

*    Select appropriate depository.

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EXHIBIT F
FORM OF TRANSFER CERTIFICATE FOR 
REGULATION S GLOBAL NOTES DURING RESTRICTED PERIOD

KL2 2907084.5
F - 1

FORM OF TRANSFER CERTIFICATE FOR REGULATION S
GLOBAL CERTIFICATE DURING RESTRICTED PERIOD
Wells Fargo Bank, National Association
MAC# N9303-121
Sixth Street and Marquette Avenue 
Minneapolis, Minnesota 55479
Attention:  Corporate Trust Services
		
	Re:
	Diamond Resorts Owner Trust 2015-1; Transfer of Class [__] Note

Ladies and Gentlemen:
This certificate is delivered pursuant to Section 2.04 of the Indenture, dated as of July 29, 2015 (the “Indenture”), by and among Diamond Resorts Owner Trust 2015-1 (the “Issuer”), Diamond Resorts Financial Services, Inc. (the “Servicer”) and Wells Fargo Bank, National Association, as indenture trustee (the “Indenture Trustee”) in connection with the transfer by _______________ of a beneficial interest of $__________ Outstanding Note Balance in a Regulation S Global Note during the Restricted Period to the undersigned (the “Transferee”).  The Transferee desires to beneficially own such transferred interest in the form of the Regulation S Global Certificate.   Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
In connection with such transfer, the Transferee does hereby certify that it is not a “U.S. Person” (within the meaning of Rule 902(A) of Regulation S under the Securities Act of 1933, as amended), nor a Person acting for the account or benefit of a U.S. Person.   This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer, the Indenture Trustee and the Servicer.
[Insert Name of Transferee]
		
	By:
	______________________________________________    

Name:
Title:
Dated:

KL2 2907084.5
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EXHIBIT G
FORM OF RECORD LAYOUT FOR DATA CONVERSION
File Date
Lender Code
Account Number
Account Code
Account Code Date
Resort
Obligor Name
Obligor Address
Obligor City
Obligor Zip Code
Obligor State Code
Obligor State Description
Obligor Country Code
Obligor Country Description
Credit Score 
Days Delinquent
Purchase Price
Down Payment
Original Balance
Original Term
Interest Rate
Principal and Interest Monthly Payment
Monthly Impound
Late Charge Balance
Current Balance
Remaining Term
Contract Date
First Payment Date
Last Payment Date
Last Payment Amount
Next Payment Date
Payments Made
Default
Default Date

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EXHIBIT H
[RESERVED]

KL2 2907084.5
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EXHIBIT I
COLLECTION POLICY
Collections and delinquencies are managed utilizing technology to minimize account delinquencies by promoting satisfactory customer relations. Servicer’s collection policy is designed to maximize cash flow into the organization and assist each Obligor with the management of his or her account while enjoying the vacation ownership experience. Technological capabilities include predictive dialer, integrated software modules, automated lock box processing, and automated credit card processing. 
Servicer’s collection department manages loan delinquencies by both phone and mail contact with the Obligor initiated at 10 days from the time an Assigned Account becomes delinquent. At 30 days delinquent, Servicer typically sends another letter advising the Obligor to bring the Assigned Account current while collection calls continue. Once the Assigned Account reaches 60 days delinquent, the Obligor is notified by mail that his/her loan balance has accelerated.
Summary of collection timeline: 

10 Days Past Due             A past due notice is generated and mailed.
                                             Collection calls commence. 
		
	30 Days Past Due        
	A letter is sent advising that 2 payments are now due and payable within 7 days. Continue collection calls.

		
	60 Days Past Due                 
	A letter is sent advising the Obligor that the loan balance has been accelerated and that legal action will commence within 30 days if delinquency is not resolved. 

		
	90 Days Past Due                 
	Account is transferred to loss mitigation for workout and/or recovery efforts. 

		
	90 - 180 Days Past Due     
	Telegram like letter is sent / Last chance.  Deed in lieu of foreclosure or foreclosure process begins. 

		
	180 Days +                       
	At 180 days past due a loan becomes a defaulted account.  Default recovery process started on all accounts on or before it reaches 180 days past due.  

		
	270 Days Past Due               
	Default recovery completion date.  

Please note that consumer bankruptcies, loans that fall under the soldiers and sailors act, hardship forbearances, and accounts needing legal research are exceptions to the timeline in the above table.  

KL2 2907084.5
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EXHIBIT J
FORM OF MONTHLY SERVICER REPORT
[TO COME]

KL2 2907084.5
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EXHIBIT K
FORM OF SERVICER’S OFFICER CERTIFICATE

KL2 2907084.5
K - 1

OFFICER’S CERTIFICATE
The undersigned, an officer of Diamond Resorts Financial Services, Inc. (the “Servicer”), based on the information available on the date of this Certificate, does hereby certify as follows:
1.    I am an officer of the Servicer who has been authorized to issue this officer’s certificate on behalf of the Servicer.
2.    I have reviewed the data contained in the Monthly Servicer Report and the computations reflected in the Monthly Servicer Report attached hereto as Schedule A are true, correct and complete.
DIAMOND RESORTS FINANCIAL SERVICES, INC.
By:    ___________________________________
Name:
Title:

KL2 2907084.5
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Schedule A

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EXHIBIT L
[RESERVED]

KL2 2907084.5
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EXHIBIT M

[RESERVED]

 

KL2 2907084.5
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EXHIBIT N

FORM OF ST. MAARTEN NOTICE

KL2 2907084.5
N - 1

<Date>
<Name>
<Address>
<City, State, Zip>
<Country>

Re: Your St. Maarten Timeshare - Loan # <Contract Number>

Dear <Name>:

As one of Diamond Resorts’ valued Owners, you are very important to us and we are committed to keeping you informed about any business that affects you.  In keeping our promise, we wish to inform you of a recent change that affects the loan for your timeshare ownership, but does not affect the way it will be serviced.

The Diamond Resorts company that has been the creditor of your loan has transferred and assigned all of its right, title, and interest to your loan.  Effective as of ___________, 2015, your loan has been assigned to Diamond Resorts Owner Trust 2015-1 and pledged to Wells Fargo Bank, National Association, as indenture trustee for the benefit of note holders pursuant to an indenture.*

We want to assure you that Diamond Resorts Financial Services, Inc. will continue to provide service for all aspects of your loan.  The transfer in no way affects you membership in you owners’ association, if any, or the usage of your timeshare.  Also, the transfer does not affect how you will make your payments, and we appreciate your continuing to make them as usual.

The transfer of loans to other lenders is a routine procedure in our industry, and will not affect our business relationship.  If you wish to speak to a Diamond Resorts Financial Services representative, please call our offices toll-free at 877-DRI-CLUB.  Our hours are Monday through Friday, 8 a.m. to 6 p.m., Pacific Time.  We welcome any questions you may have.

Thank you for being a member of our family at Diamond Resorts.  It is always our pleasure to assist you in any way we can.

Sincerely,

Diamond Resorts Financial Services, Inc.
On behalf of AKGI St. Maarten NV, Diamond Resorts Corporation, Diamond Resorts Finance Holding Company, Diamond Resorts Seller 2015-1, LLC and the Issuer

* This transfer was made in a sequential manner as follows: AKGI St. Maarten N.V., the creditor of your loan, pursuant to an instrument of transfer, transferred and assigned all of its right, title, and interest to the loan to Diamond Resorts Corporation, a Maryland corporation.  Diamond Resorts Corporation, pursuant to an instrument of transfer, transferred and assigned all of its right, title and interest to the loan to Diamond Resorts Finance Holding Company, a Delaware corporation.  Diamond Resorts Finance Holding Company pursuant to a purchase agreement sold all of its right, title, and interest to the loan to Diamond Resorts Seller 2015-1, LLC, a Delaware limited liability company.  After these transfers, Diamond Resorts Seller 2015-1, LLC, pursuant to a sale agreement, transferred and assigned all of its right, title and interest to the loan to Diamond Resorts Owner Trust 2015-1 (the “Issuer”), and the Issuer, pursuant to an indenture, pledged all of its right, title and interest to the loan to Wells Fargo Bank, National Association, as indenture trustee for the benefit of the Noteholders, as security for its obligations under the indenture.

KL2 2907084.5
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KL2 2907084.5
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ANNEX A
Standard Definitions

FINAL

STANDARD DEFINITIONS
“1940 Act” shall mean the Investment Company Act of 1940, as amended.
“17g-5” shall have the meaning set forth in Section 8.06(d) of the Indenture. 
“2008 Indenture” shall have the meaning specified in Section 2(a) of the 2008 Issuer Purchase Agreement.
“2008 Issuer” shall mean Diamond Resorts Issuer 2008, LLC, a Delaware limited liability company.
“2008 Issuer Purchase Agreement” shall mean that certain purchase agreement, dated as of the Closing Date, by and between the 2008 Issuer and the Seller.
“2008 Timeshare Loans” shall have the meaning specified in Section 2(b) of the 2008 Issuer Purchase Agreement. 
“2008 Timeshare Property” shall have the meaning specified in Section 2(b) of the 2008 Issuer Purchase Agreement.
“Acceleration Event” shall have the meaning specified in Section 6.06 of the Indenture.
“Acceptable Attorney” shall have the meaning specified in Section 1.2(b) of the Custodial Agreement.
“Act” shall have the meaning specified in Section 1.04 of the Indenture.
“Administration Agreement” shall mean that certain administration agreement, dated as of the Closing Date, by and among the Issuer, the Indenture Trustee and the Administrator.
“Administrator” shall mean Diamond Resorts Financial Services, Inc.
“Administrator Expenses” shall mean the reasonable out-of-pocket expenses of the Administrator in connection with its duties under the Administration Agreement and any taxes owed pursuant to Section 8.07 of the Indenture.  
“Administrator Fee” shall equal $1,000 paid annually.
“Adverse Claim” shall mean any claim of ownership or any lien, security interest, title retention, trust or other charge or encumbrance, or other type of preferential arrangement having the effect or purpose of creating a lien or security interest, other than the interests created under the Indenture in favor of the Indenture Trustee and the Noteholders.

KL2 2904196.6
--1-

“Affiliate” shall mean any Person: (a) which directly or indirectly controls, or is controlled by, or is under common control with such Person; (b) which directly or indirectly beneficially owns or holds ten percent (10%) or more of the voting stock of such Person; or (c) for which ten percent (10%) or more of the voting stock of which is directly or indirectly beneficially owned or held by such Person.  The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.  
“Aggregate Loan Balance” shall mean the sum of the Loan Balances for all Timeshare Loans (except Defaulted Timeshare Loans).
“Aggregate Outstanding Note Balance” shall mean the sum of the Outstanding Note Balances for all Classes of Notes.
“Applicable Procedures” shall have the meaning specified in Section 2.04(d)(i) of the Indenture.
 “Approved Financial Institution” shall mean a federal or state-chartered depository institution or trust company having a combined surplus and capital of at least $100,000,000 and further having (a) commercial paper, short-term debt obligations, or other short-term deposits that are rated at least “A-1” by S&P, if the deposits are to be held in the account for 30 days or less, or (b) having long-term unsecured debt obligations that are rated at least “AA” by S&P, if the deposits are to be held in the account more than 30 days.  Notwithstanding the foregoing, if an account is held by an Approved Financial Institution, following a downgrade, withdrawal, qualification, or suspension of such institution’s rating, each account must promptly (and in any case within not more than 30 calendar days) be moved with written notice to the Indenture Trustee, to an Approved Financial Institution.
“Assumption Date” shall have the meaning specified in Section 5.16(f) of the Indenture.
“Attorney’s Bailee Letter” shall have the meaning specified in Section 1.2(b) of the Custodial Agreement.
“Authorized Officer” shall mean, with respect to any corporation, limited liability company or partnership, the Chairman of the Board, the President, any Vice President, the Secretary, the Treasurer, any Assistant Secretary, any Assistant Treasurer, Managing Member and each other officer of such corporation or limited liability company or the general partner of such partnership customarily performing functions similar to those performed by any of the above designated officers, and with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge and familiarity with the particular subject or such officer specifically authorized in resolutions of the Board of Directors of such corporation or managing member of such limited liability company to sign agreements, instruments or other documents in connection with this Indenture on behalf of such corporation, limited liability company or partnership, as the case may be.

KL2 2904196.6
--2-

“Available Funds” shall mean for any Payment Date, (A) all funds on deposit in the Collection Account after making all transfers and deposits required from or by (i) the Servicer pursuant to the Indenture, (ii) the Reserve Account pursuant to Section 3.02(b) of the Indenture (other than any Reserve Account Draw Amounts), and (iii) the Seller or the Issuer pursuant to Section 4.04 of the Indenture, less (B) amounts on deposit in the Collection Account related to collections related to any Due Periods subsequent to the Due Period related to such Payment Date.
“Back-Up Servicer” shall mean Wells Fargo Bank, National Association and its permitted successors and assigns, as provided in the Indenture.
“Back-Up Servicer Expenses” shall mean any indemnities due to the Back-Up Servicer and any other reasonable out-of-pocket expenses (including attorneys’ fees and expenses) of the Back-Up Servicer in connection with performance of the Back-Up Servicer obligations under the Indenture.
“Back-Up Servicing Fee” shall mean for any Payment Date, an amount equal to the product of (i) one-twelfth of 0.045% and (ii) the Aggregate Loan Balance as of the first day of the related Due Period.
“Bankruptcy Code” shall mean the federal Bankruptcy Code, as amended (Title 11 of the United States Code).
“Benefit Plan” shall mean an “employee benefit plan” as defined in Section 3(3) of ERISA that is subject to Title I of ERISA; any “plan” as defined in Section 4975(e)(1) of the Code that is subject to Section 4975 of the Code; any entity whose underlying assets include plan assets by reason of an employee benefit plan’s or plan’s investment in such entity; or any other arrangement that is subject to Similar Law.
“Business Day” shall mean any day other than (i) a Saturday or a Sunday, or (ii) a day on which banking institutions in New York City, Minneapolis, Minnesota, the city in which the Servicer is located or the city in which the Corporate Trust Office is located, are authorized or obligated by law or executive order to be closed.
“Cabo Developer” shall mean DPM Acquisition Mexico S. de R.L. de C.V.
 “Cash Accumulation Event” shall commence on any Determination Date if the average of the Delinquency Levels for the last three Due Periods is greater than or equal to 7.00% and shall continue until the Determination Date where the average of the Delinquency Levels for the last three Due Periods is less than 7.00%.
“Cede & Co.” shall mean the initial registered holder of the Notes, acting as nominee of The Depository Trust Company.
“Centralized Lockbox Account” shall have the meaning specified in Section 5.02(a) of the Indenture. 

KL2 2904196.6
--3-

“Certificate of Trust” shall mean the Certificate of Trust in the form attached as Exhibit A to the Trust Agreement.
“Certification of Original Document” shall mean an affidavit and certification, in substantially the form attached to the Custodial Agreement as Exhibit E, executed by a designated officer of the Servicer having such authority identified on Exhibit C to the Custodial Agreement, attesting that the attached Obligor Note, Points Purchase Contract, any amendment or addendum thereto and other related documents are the sole, unique, identifiable and authentic original documents evidencing the transactions set forth therein, as well as a document history report describing all user interaction with the related Timeshare Loan prior to its conversion to paper media.
“Certified Translation Document” shall have the meaning specified in Section 1.2(c) of the Custodial Agreement.
“Class” shall mean, as the context may require, any of the Class A Notes or Class B Notes.
“Class A Notes” shall have the meaning specified in the Recitals of the Issuer in the Indenture.
“Class B Notes” shall have the meaning specified in the Recitals of the Issuer in the Indenture.
“Class A Percentage Interest” shall mean for any Payment Date, a percentage equal to (i) the Outstanding Note Balance of the Class A Notes divided by (ii) the Aggregate Outstanding Note Balance.
“Class B Percentage Interest” shall mean for any Payment Date, a percentage equal to (i) the Outstanding Note Balance of the Class B Notes divided by (ii) the Aggregate Outstanding Note Balance.
“Clearstream” shall mean Clearstream Banking, société anonyme, a limited liability company organized under the laws of Luxembourg.
“Closing Date” shall mean July 29, 2015.
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time and any successor statute.
“Collection” shall mean a vehicle holding real estate underlying a Timeshare Property, evidenced by a trust agreement by which a Collection Developer transfers legal title to deeded fee simple or leasehold interests in Units at a Resort to either (a) a Collection Trustee or Collection Association pursuant to a Collection Trust Agreement or (b) in the case of the Diamond Resorts Latin America Collection, a Mexican land trust.  For purposes of the Transaction Documents and Timeshare Loans, each of Diamond Resorts U.S. Collection, Diamond Resorts Hawaii 

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Collection, Diamond Resorts California Collection, Premiere Vacation Collection, Monarch Grande Collection, and Diamond Resorts Latin America Collection is a Collection.
“Collection Account” shall mean the account established and maintained by the Indenture Trustee pursuant to Section 3.02(a) of the Indenture.
“Collection Association” shall mean any of Diamond Resorts U.S. Collection Members Association, Inc., Diamond Resorts Hawaii Collection Members Association, Inc., Diamond Resorts California Members Association, Inc., Premiere Vacation Collection Members Association, Inc., Monarch Grande Collection Members Association, Inc., or Latin America Collection Members Association, Inc. 
“Collection Developer” shall mean Diamond Resorts U.S. Collection Development, LLC, Diamond Resorts Hawaii Collection Development, LLC, Diamond Resorts California Collection Development, LLC, Diamond Resorts Premiere Vacation Collection Development, LLC, Monarch Grande Collection Development, LLC, or the Cabo Developer.
“Collection Policy” shall mean those collection policies and practices of the initial Servicer in effect as of a specified date; and for any successor Servicer shall mean the collection policies and practices of such successor in effect on the date which it commences servicing.  The Collection Policy of the initial Servicer in effect on the Closing Date is attached as Exhibit I to the Indenture.
“Collection Reports” shall have the meaning set forth in Section 5.16(b) of the Indenture.
“Collection Trust Agreement” shall mean each trust agreement by and among the Collection Trustee and the related Collection Developer and Collection Association.
“Collection Trustee” shall mean First American Trust, FSB, a federal savings bank.
“Continued Errors” shall have the meaning specified in Section 5.16(f)(i) of the Indenture.
“Conveyed DRFHC Timeshare Property” shall have the meaning specified in Section 2(b) of the DRFHC Purchase Agreement.
“Conveyed Timeshare Property” shall have the meaning specified in Section 2(c) of the Sale Agreement.
“Corporate Trust Office” shall mean (i) the office of the Indenture Trustee, which office is at the address set forth in Section 13.03 of the Indenture, or (ii) the office of the Owner Trustee, which is at the address set forth in Section 2.2 of the Trust Agreement, as applicable.
“Cumulative Default Level” shall mean, for any Determination Date, (i)(A) the sum of the Loan Balances of all Timeshare Loans that became Defaulted Timeshare Loans since the Closing Date (other than Defaulted Timeshare Loans for which the Seller has exercised its option 

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to repurchase or substitute pursuant to Section 6(b) of the Sale Agreement) minus (B) all recoveries or remarketing proceeds received in respect of Defaulted Timeshare Loans for which the Seller did not exercise its option to repurchase or substitute pursuant to Section 6(b) of the Sale Agreement since the Closing Date, divided by (ii) the Aggregate Loan Balance as of the Initial Cut-Off Date (expressed as a percentage).
“Custodial Agreement” shall mean that certain custodial agreement, dated as of the Closing Date, by and among, the Custodian, the Indenture Trustee, the Servicer and the Issuer.
“Custodial Delivery Failure” shall have the meaning specified in Section 2.5 of the Custodial Agreement.  
“Custodial Expenses” shall mean reasonable out-of-pocket expenses and indemnities of the Custodian (including attorneys’ fees and expenses) incurred in connection with performance of the Custodian’s obligations and duties under the Custodial Agreement.
“Custodial Fees” shall mean such fees as the Custodian shall charge from time to time for access to Timeshare Loan Files, as specified in the Custodial Agreement.
“Custodian” shall mean Wells Fargo Bank, National Association or its permitted successors and assigns.
“Custodian Certification” shall mean a certification delivered by the Custodian in accordance with Section 1.2(a) of the Custodial Agreement.
“Cut-Off Date” shall mean, with respect to (i) the Initial Timeshare Loans, the Initial Cut-Off Date and (ii) any Qualified Substitute Timeshare Loan, the Substitution Cut-Off Date.
“Cut-Off Date Loan Balance” shall mean the Loan Balance of a Timeshare Loan as of its related Cut-Off Date.
“Declaration” shall mean the declaration in furtherance of a plan for subjecting a Resort or a Collection to a timeshare form of ownership, which declaration contains covenants, restrictions, easements, charges, liens and including, without limitation, provisions regarding the identification of Timeshare Property and the common areas and the regulation and governance of the real property comprising such Resort or such Collection as a timeshare regime.
“Default” shall mean an event which, but for the passage of time, would constitute an Event of Default under the Indenture.
“Default Level” shall mean, for any Due Period, (i) (A) the sum of the Loan Balances of all Timeshare Loans that became Defaulted Timeshare Loans during such Due Period (other than Defaulted Timeshare Loans for which the Seller has exercised its option to repurchase or substitute pursuant to Section 6(b) of the Sale Agreement) minus (B) any recoveries or remarketing proceeds received during such Due Period in respect of any Defaulted Timeshare Loans for which the Seller did not exercise its option to repurchase or substitute pursuant to Section 6(b) of the Sale Agreement, 

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divided by (ii) the Aggregate Loan Balance on the first day of such Due Period (expressed as a percentage).
“Defaulted Timeshare Loan” shall mean any Timeshare Loan for which any of the earliest following events may have occurred: (i) any payment or part thereof has been delinquent more than 180 days as of the end of the related Due Period (as determined by the Servicer in accordance with the Servicing Standard); (ii) the Servicer has initiated cancellation or foreclosure or similar proceedings with respect to the related Timeshare Property or has received the related mutual release agreement or assignment; or (iii) provided that such Timeshare Loan is at least one day delinquent, the Servicer has determined that such Timeshare Loan should be fully written off in accordance with the Credit and Collection Policy.
“Deferred Interest Amount” shall mean an amount equal to sum of (i) interest accrued during the related Interest Accrual Period at the applicable Note Rate on such unreimbursed Note Balance Write-Down Amounts applied to such Class prior to such Payment Date and (ii) any unpaid Deferred Interest Amounts from prior Payment Dates, plus interest thereon at the applicable Note Rate, to the extent permitted by law.
“Definitive Note” shall have the meaning specified in Section 2.02 of the Indenture.
“Delinquency Level” shall mean, for any Due Period, the sum of the Loan Balances of all Timeshare Loans (other than Defaulted Timeshare) that are 61 days or more delinquent on the last day of such Due Period (as determined by the Servicer in accordance with the Servicing Standard) divided by the Aggregate Loan Balance on the last day of such Due Period (expressed as a percentage).
“Delivery Date” shall have the meaning specified in Section 1.1(b) of the Custodial Agreement. 
“Deposit Account Control Agreement” shall mean a deposit account control agreement for a lockbox account (including the Centralized Lockbox Account), as it may be amended, supplemented or otherwise modified from time to time.
“Depository” shall mean an organization registered as a “clearing agency” pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.  The initial Depository shall be The Depository Trust Company.
“Depository Agreement” shall mean the letter of representations, between the Issuer, the Indenture Trustee and the Depository.
“Depository Participant” shall mean a broker, dealer, bank, other financial institution or other Person for whom from time to time a Depository effects book-entry transfers and pledges securities deposited with the Depository.

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“Determination Date” shall mean, with respect to any Payment Date, the 15th day of the month in which such Payment Date occurs or, if such date is not a Business Day, then the next succeeding Business Day.
“DRFHC” shall mean Diamond Resorts Finance Holding Company, a Delaware corporation.
“DRFHC Purchase Agreement” shall mean that certain purchase agreement, dated as of the Closing Date, by and between DRFHC and the Seller. 
“DRFHC Timeshare Loans” shall have the meaning specified in Section 2(b) of the DRFHC Purchase Agreement.
 “DRFS” shall mean Diamond Resorts Financial Services, Inc., a Nevada corporation.
“Diamond Resorts Entity” shall mean the Issuer, the Seller, the Servicer, each Performance Guarantor, each Collection Developer and their respective Affiliates. 
“Diamond Resorts Marketing and Sales Percentage” shall equal the average of the selling and marketing expenses as a percentage of total Timeshare Property sales as reported by DRII, over the last four quarters; provided that if such quarter is a quarter ending on December 31, the Diamond Resorts Marketing and Sales Percentage will be based on the selling and marketing expenses for the most recent year.
“DRC” shall mean Diamond Resorts Corporation, a Maryland corporation.
“DRII” shall mean Diamond Resorts International, Inc., a Delaware corporation.
“Due Period” shall mean with respect to any Payment Date is the immediately preceding calendar month.
“Eligible Bank Account” shall mean a segregated account, which may be an account maintained with the Indenture Trustee, which is either (a) maintained with a depository institution or trust company whose long‐term unsecured debt obligations are rated at least BBB by S&P and whose short‐term unsecured obligations are rated at least A‐2 by S&P or (b) a trust account or similar account maintained at the corporate trust department of the Indenture Trustee, acting in a fiduciary capacity, and the account is governed by Title 12 section 9.10(b) of the U.S. Code of Federal Regulations (Title 12 Regulations) or a similar U.S. state law.
“Eligible Investments” shall mean one or more of the following obligations or securities:
(1)    direct obligations of, and obligations fully guaranteed as to timely payment of principal and interest by, the United States of America or any agency or instrumentality of the United States of America the obligations of which 

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are backed by the full faith and credit of the United States of America (“Direct Obligations”);
(2)    federal funds, or demand and time deposits in, certificates of deposit of, or bankers’ acceptances issued by, any depository institution or trust company (including U.S. subsidiaries of foreign depositories and the Indenture Trustee or any agent of the Indenture Trustee, acting in its respective commercial capacity) incorporated under the laws of the United States of America or any state thereof and subject to supervision and examination by federal or state banking authorities, so long as at the time of investment, the commercial paper or other short-term unsecured debt obligations or long‐term unsecured debt obligations of such depository institution or trust company have been rated by S&P in its highest short-term rating category or one of its two highest long-term rating categories (and no such rating shall include a subscript of “f”, “r”, “p”, “pi”, “q” or “t”);
(3)    securities bearing interest or sold at a discount issued by any corporation incorporated under the laws of the United States of America or any state thereof which has a short-term unsecured debt rating from S&P, at the time of investment at least equal to the highest short-term unsecured debt ratings of S&P (and no such rating shall include a subscript of “f”, “r”, “p”, “pi”, “q” or “t”), provided, however, that securities issued by any particular corporation will not be Eligible Investments to the extent that investment therein will cause the then outstanding principal amount of securities issued by such corporation and held as part of the Trust Estate to exceed 20% of the sum of the Outstanding Note Balance and the aggregate principal amount of all Eligible Investments in the Collection Account, provided, further, that such securities will not be Eligible Investments if they are published as being under review with negative implications from S&P;
(4)    commercial paper (including both non interest-bearing discount obligations and interest-bearing obligations payable on demand or on a specified date not more than 180 days after the date of issuance thereof) rated by S&P in its highest short-term ratings (and no such rating shall include a subscript of “f”, “r”, “p”, “pi”, “q” or “t”); and
(5)    any other demand, money market fund, common trust estate or time deposit or obligation, or interest-bearing or other security or investment (including those managed or advised by the Indenture Trustee or an Affiliate thereof), (A) rated in the highest rating category by S&P (and no such rating shall include a subscript of “f”, “r”, “p”, “pi”, “q” or “t”) or (B) that would not adversely affect the then current rating by S&P of any of the Notes (as evidenced in writing to the Indenture Trustee by S&P).  Such investments in this subsection (5) may include money market mutual funds rated either “AAAm” or “AAAm-G” by S&P or common trust estates, including any other fund for which the Indenture Trustee or an Affiliate thereof serves as an investment advisor, administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (x) the Indenture Trustee or 

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an Affiliate thereof charges and collects fees and expenses from such funds for services rendered, (y) the Indenture Trustee or an Affiliate thereof charges and collects fees and expenses for services rendered pursuant to the Indenture, and (z) services performed for such funds and pursuant to this Indenture may converge at any time;
provided, however, that (a) any Eligible Investment must be money-market or other relatively risk-free instruments without options and with maturities no later than the Business Day prior to the expected Payment Date, and (b) no such instrument shall be an Eligible Investment if such instrument (1) evidences either (x) a right to receive only interest payments with respect to the obligations underlying such instrument or (y) both principal and interest payments derived from obligations underlying such instrument and the principal and interest payments with respect to such instrument provide a yield to maturity of greater than 120% of the yield to maturity at par of such underlying obligations, and (2) is purchased at a price in excess of par. Any Eligible Investment may be made by or through the Indenture Trustee or an affiliate of the Indenture Trustee.
“Eligible Timeshare Loan” shall mean a Timeshare Loan conforming to each of the representations and warranties set forth in Schedule I to the Sale Agreement and which is related to a Resort conforming to each of the representations and warranties in Schedule II to the Sale Agreement as of the Closing Date or applicable Substitution Date, as the case may be.
“Embargoed Person” shall mean any Person subject to trade restrictions under U.S. law, including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. I et seq., and any executive orders or regulations promulgated thereunder with the result that the investment in Diamond Resorts or any affiliate thereof (whether directly or indirectly) is prohibited by law or the Notes issued by the Issuer are in violation of law.
“Employee Plan” shall mean a Benefit Plan (other than a Multiemployer Plan) presently maintained (or maintained at any time during the six (6) calendar years preceding the date of any borrowing hereunder) for employees of DRII or any of its ERISA Affiliates.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time and any successor statute, together with the rules and regulations thereunder. 
“ERISA Affiliate” shall mean, with respect to any Person, any trade or business (whether or not incorporated) which is a member of a group of which such Person is a member and which would be deemed to be a “controlled group” within the meaning of Sections 414(b), (c), (m) or (o) of the Code or solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.
“ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to an Employee Plan (other than an event for which the 30-day notice period is waived), (b) the existence with respect to any Employee Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 

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of ERISA), whether or not waived, with respect to any plan year beginning prior to January 1, 2008, or with respect to any plan year beginning after December 31, 2007, the existence with respect to any Employee Plan of any unpaid “minimum required contributions” as defined in Section 430 of the Code or Section 303 of ERISA), whether or not waived, (c) the filing pursuant to Section 412 of the Code or Section 302 of ERISA of an application for a waiver of the minimum funding standard with respect to any Employee Plan, (d) the incurrence by the Performance Guarantors or any of their ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Employee Plan or the withdrawal or partial withdrawal of the Performance Guarantors or any of their ERISA Affiliates from any Employee Plan or Multiemployer Plan, (e) the receipt by the Performance Guarantors or any of their ERISA Affiliates from the PBGC or a plan administrator of any notice relating to the intention to terminate any Employee Plan or Employee Plans or to appoint a trustee to administer any Employee Plan, (f) any failure to comply with Section 401(a)(29) of the Code or Section 303(i) of ERISA, (g) the receipt by the Performance Guarantors or any of their ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan from the Performance Guarantors or any of their ERISA Affiliates of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA, (h) the occurrence of a “prohibited transaction” with respect to which the Performance Guarantors or any of its Affiliates is a “disqualified person” (within the meaning of Section 4975 of the Code) or a “party in interest” (within the meaning of Section 3(14) of ERISA) or with respect to which the Performance Guarantors or any such Affiliates could otherwise be liable, (i) any Foreign Benefit Event or (j) any other event or condition with respect to a Employee Plan or Multiemployer Plan that could result in liability of the Performance Guarantors or any other Affiliate.
“Errors” shall have the meaning specified in Section 5.16(f)(i) of the Indenture.
“Euroclear” shall mean Euroclear Bank SA/NV, as operator of The Euroclear System, or its successor in such capacity.
“Event of Default” shall have the meaning specified in Section 6.01 of the Indenture.
“Extra Principal Distribution Amount” shall mean the lesser of (i) the amount by which Available Funds in the Collection Account exceeds the amount required to be distributed on such Payment Date pursuant to clauses (i) through (viii), inclusive, of Section 3.04(a) of the Indenture and (ii) the Overcollateralization Deficiency Amount on such Payment Date. 
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not significantly and materially more onerous to comply with), and any regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(i) of the Code, and any intergovernmental agreements entered into in connection with any of the foregoing and any fiscal or regulatory legislation, rules or practices adopted pursuant to any such intergovernmental agreement.
“FATCA Withholding Tax” shall mean any withholding or deduction made in respect of any payment pursuant to FATCA.

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“Force Majeure Event” shall have the meaning specified in Section 2.4(n) of the Custodial Agreement.  
“Foreign Benefit Event” shall mean, with respect to any Foreign Pension Plan, (a) the existence of unfunded liabilities in excess of the amount permitted under any applicable law, or in excess of the amount that would be permitted absent a waiver from a Governmental Authority, (b) the failure to make the required contributions or payments, under any applicable law, on or before the due date for such contributions or payments, (c) the receipt of a notice by a Governmental Authority relating to the intention to terminate any such Foreign Pension Plan or to appoint a trustee or similar official to administer any such Foreign Pension Plan, or alleging the insolvency of any such Foreign Pension Plan, (d) the incurrence of any liability in excess of $5,000,000 by DRII or any Affiliate under applicable law on account of the complete or partial termination of such Foreign Pension Plan or the complete or partial withdrawal of any participating employer therein, or (e) the occurrence of any transaction that is prohibited under any applicable law and that could reasonably be expected to result in the incurrence of any liability by DRII or any of its Affiliates, or the imposition on DRII or any of its Affiliates of any fine, excise tax or penalty resulting from any noncompliance with any applicable law, in each case in excess of $5,000,000.
“Foreign Language Template” shall have the meaning specified in Section 1.2(c) of the Custodial Agreement.  
“Foreign Obligor” shall mean an Obligor that is not a citizen or resident of, and making payments from, the “United States” (as defined in Section 7701(a)(9) of the Code), Canada, Puerto Rico, the U.S. Virgin Islands and U.S. military bases. 
“Foreign Pension Plan” shall mean any benefit plan that under applicable law is required to be funded through a trust or other funding vehicle other than a trust or funding vehicle maintained exclusively by a Governmental Authority.
“GAAP” shall mean United States generally accepted accounting principles applied on a consistent basis.
“Global Note” shall have the meaning specified in Section 2.02 of the Indenture.
“Governmental Authority” shall mean any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
“Grant” shall mean to grant, bargain, convey, assign, transfer, mortgage, pledge, create and grant a security interest in and right of set-off against, deposit, set over and confirm.
“Highest Lawful Rate” shall have the meaning specified in Section 3 of the Sale Agreement.
“HOA” shall mean each homeowner’s association related to a Resort.
“Holder” or “Noteholder” shall mean a holder of any Note.

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“Indenture” shall mean the indenture, dated as of the Closing Date, by and among the Issuer, the Servicer and the Indenture Trustee.
“Indenture Trustee” shall mean Wells Fargo Bank, National Association, or such successor as set forth in Section 7.09 of the Indenture.
“Indenture Trustee Expenses” shall mean any indemnities due to the Indenture Trustee and any other reasonable out-of-pocket expenses  (including attorneys’ fees and expenses) of the Indenture Trustee incurred in connection with performance of the Indenture Trustee’s obligations and duties under the Indenture.
“Indenture Trustee Fee” shall mean a monthly fee equal to $1,000.
“Initial 2008 Timeshare Loans” shall have the meaning specified in Section 2(a) of the 2008 Issuer Purchase Agreement.
“Initial 2008 Timeshare Property” shall have the meaning specified in Section 2(a) of the 2008 Issuer Purchase Agreement.
“Initial Conveyed DRFHC Timeshare Property” shall have the meaning specified in Section 2(a) of the DRFHC Purchase Agreement.
“Initial Conveyed Timeshare Property” shall have the meaning specified in Section 2(a) of the Sale Agreement.
“Initial Cut-Off Date” shall mean the close of business on June 30, 2015.
 “Initial DRFHC Timeshare Loans” shall have the meaning specified in Section 2(a) of the DRFHC Purchase Agreement.
“Initial Note Balance” shall mean with respect to the Class A Notes and the Class B Notes, $158,490,000 and $11,510,000, respectively.
“Initial Overcollateralization Percentage” shall mean an amount equal to (i) the excess of (a) the Aggregate Loan Balance as of the Initial Cut-Off Date over (b) the aggregate Initial Note Balances of the Notes, divided by (ii) the Aggregate Loan Balance as of the Initial Cut-Off Date (expressed as a percentage). 
“Initial Purchaser” shall mean Credit Suisse Securities (USA) LLC.
“Initial Timeshare Loans” shall mean the Timeshare Loans listed on the Schedule of Timeshare Loans as sold by the Seller to the Issuer and simultaneously assigned to the Indenture Trustee on the Closing Date.
“Initial Trial Balance” shall have the meaning set forth in Section 5.16(b) of the Indenture.

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“Insurance Proceeds” shall mean (i) proceeds of any insurance policy, including property insurance policies, casualty insurance policies and title insurance policies, and (ii) any condemnation proceeds, in each case which relate to the Timeshare Loans or the Timeshare Property and are paid or required to be paid to, and may be retained by, the Issuer, any of its Affiliates or to any mortgagee of record.
“Intended Tax Characterization” shall have the meaning specified in Section 4.02(b) of the Indenture.
“Interest Accrual Period” shall be deemed to be a period of 30 days, except that the initial Interest Accrual Period shall be the period from and including the Closing Date through, but not including, the initial Payment Date and consisting of 21 days.
“Interest Distribution Amount” shall equal, for a Class of Notes and any Payment Date, the sum of (i) interest accrued during the related Interest Accrual Period at the applicable Note Rate on the Outstanding Note Balance of such Class of Notes immediately prior to such Payment Date and (ii) the amount of unpaid Interest Distribution Amounts from prior Payment Dates for such Class of Notes plus, to the extent permitted by law, interest thereon at the applicable Note Rate.  The Interest Distribution Amount for the Notes will be calculated on the basis of a 360-day year consisting of twelve 30-day months.
“Issuer” shall mean Diamond Resorts Owner Trust 2015-1, a Delaware statutory trust.
“Issuer Order” shall mean a written order or request delivered to the Indenture Trustee and signed in the name of the Issuer by an Authorized Officer of the Administrator or the Owner Trustee, as applicable.
“KBRA” shall mean Kroll Bond Rating Agency, Inc.
“Last Endorsee” shall mean the last endorsee of an original Obligor Note.
“Licenses” shall mean all material certifications, permits, licenses and approvals, including without limitation, certifications of completion and occupancy permits required for the legal use, occupancy and operation of each Resort as a timeshare resort or hotel.
“Lien” shall mean any mortgage, pledge, hypothecation, assignment for security, security interest, claim, participation, encumbrance, levy, lien or charge.
“Liquidation” shall mean with respect to any Defaulted Timeshare Loan, the sale or compulsory disposition of the related Timeshare Property, following foreclosure or other enforcement action, to a Person other than the Servicer or the Issuer and the delivery of a bill of sale with respect thereto.
“Liquidation Expenses” shall mean, with respect to a Defaulted Timeshare Loan, the out-of-pocket expenses (exclusive of overhead expenses) incurred by the Servicer in connection with the performance of its obligations under Sections 5.03(a)(vii) through (ix) in the Indenture, 

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including (i) any foreclosure and other repossession expenses incurred with respect to such Timeshare Loan, (ii) (a) if Diamond Resorts Financial Services, Inc. or an Affiliate thereof (a “Diamond Servicer”) is the Servicer, commissions and marketing and sales expenses incurred with respect to the sale of the related Timeshare Property (calculated as the Diamond Resorts Marketing and Sales Percentage of the total liquidation or resale price of such Timeshare Property (expressed as a dollar figure)), or (b) if a Diamond Servicer is no longer the Servicer, actual commissions and actual marketing and sales expenses incurred with respect to the sale of the related Timeshare Property, and (iii) any other fees and expenses reasonably applied or allocated in the ordinary course of business with respect to the Liquidation of such Defaulted Timeshare Loan (including any property taxes, dues, maintenance fees, assessed timeshare association fees and like expenses).
“Liquidation Proceeds” shall mean with respect to the Liquidation of any Defaulted Timeshare Loan, the amounts actually received by the Servicer in connection with such Liquidation, including any rental income.
“Loan Balance” shall mean, for any date of determination, the outstanding principal balance due under or in respect of a Timeshare Loan (including a Defaulted Timeshare Loan).
“Loan/Contract Number” shall mean, with respect to any Timeshare Loan, the number assigned to such Timeshare Loan by the Servicer, which number is set forth in the Schedule of Timeshare Loans, as amended from time to time.
“Lockbox Bank” shall have the meaning specified in Section 5.02(a) of the Indenture.
“Lockbox Bank Fees” shall mean all fees and expenses payable to any Lockbox Bank as compensation for services rendered by such Lockbox Bank in maintaining a lockbox account in accordance with the Indenture and the provisions of a deposit account control agreement or similar document. 
“Lost Note Affidavit” shall mean the affidavit to be executed in connection with any delivery of a copy of an original Obligor Note in lieu of such original, in the form of Exhibit C attached to the Purchase Agreement and the Sale Agreement. 
“Management Agreement” shall have the meaning specified in Schedule II of the Sale Agreement.
“Material Exception” shall have the meaning specified in Section 1.1(c) of the Custodial Agreement.
“Material Exception Report” shall mean a report delivered by the Custodian with a Trust Receipt and with a Custodian Certification setting forth any Material Exceptions.
“Miscellaneous Payments” shall mean, with respect to any Timeshare Loan, any amounts received from or on behalf of the related Obligor representing assessments, payments relating to real property taxes, insurance premiums, maintenance fees and charges and condominium association fees and any other payments not owed under the related Obligor Note.

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“Monthly Principal Amount” shall equal for any Payment Date, the total amount of principal collected (including from prepayments and repurchases) in respect of the Timeshare Loans during the related Due Period.
“Monthly Reports” shall have the meaning specified in Section 5.16(b) of the Indenture.
“Monthly Servicer Report” shall have the meaning specified in Section 5.05(a) of the Indenture.
“Moody’s” shall mean Moody’s Investors Service, Inc.
 “Multiemployer Plan” shall mean each “multiemployer plan” as such term is defined in Section 3(37) of ERISA to which DRII or any of its Affiliates is obligated to contribute. 
“Non-Rapid Amortization Period” shall mean any period which is not a Rapid Amortization Period.
“Note Balance Write-Down Amount” shall mean an amount equal to the excess, if any, of (i) the Aggregate Outstanding Note Balance after taking into account all distributions of principal on such Payment Date over (ii) the Aggregate Loan Balance as of the end of the related Due Period. The Note Balance Write-Down Amount will be applied in the following order of priority: (i) to the Class B Notes until the Outstanding Note Balance of the Class B Notes is reduced to zero and (ii) to the Class A Notes until the Outstanding Note Balance of the Class A Notes is reduced to zero. The application of the Note Balance Write-Down Amount to a Class of Notes will not reduce such Class’ entitlement to unpaid principal and interest.
“Note Owner” shall mean, with respect to a Global Note, the Person who is the beneficial owner of such Global Note, as reflected on the books of the Depository or on the books of a Person maintaining an account with such Depository (directly or as an indirect participant, in accordance with the rules of such Depository).
“Note Purchase Agreement” shall mean that note purchase agreement, dated July 23, 2015, by and among the Issuer, DRII and the Initial Purchaser.
“Note Rate” shall mean with respect to the Class A Notes and the Class B Notes, 2.73% and 3.17%, respectively
“Note Register” shall have the meaning specified in Section 2.04(a) of the Indenture.
“Note Registrar” shall have the meaning specified in Section 2.04(a) of the Indenture.
“Noteholder FATCA Information” shall mean information sufficient to eliminate the imposition of, or determine the amount of, U.S. withholding tax under FATCA.
“Noteholder Tax Identification Information” shall mean properly completed and signed tax certifications (generally, in the case of U.S. federal income tax, IRS Form W-9 (or 

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applicable successor form) in the case of a person that is a "United States Person" within the meaning of Section 7701(a)(30) of the Code, or the appropriate IRS Form W-8 (or applicable successor form) in the case of a person that is not a "United States Person" within the meaning of Section 7701(a)(30) of the Code).
“Notes” shall have the meaning specified in the Recitals of the Issuer in the Indenture.
“Obligor” shall mean a Person obligated to make payments under a Timeshare Loan.
“Obligor Note” shall mean the executed promissory note or other instrument of indebtedness evidencing the indebtedness of an Obligor under a Timeshare Loan, together with any rider, addendum or amendment thereto, or any renewal, substitution or replacement of such note or instrument.
“Officer’s Certificate” shall mean a certificate executed by a Responsible Officer of the related party.
“Opinion of Counsel” shall mean a written opinion of counsel, in each case acceptable to the addressees thereof.
“Optional Redemption Date” shall mean the first date on or after the Payment Date in which the Aggregate Outstanding Note Balance is less than or equal to 15% of the aggregate Initial Note Balances of both Classes of Notes.
“Outstanding” shall mean, with respect to the Notes, as of any date of determination, all Notes theretofore authenticated and delivered under the Indenture except:
(a)    Notes theretofore canceled by the Indenture Trustee or delivered to the Indenture Trustee for cancellation;
(b)    Notes or portions thereof for whose payment money in the necessary amount has been theretofore irrevocably deposited with the Indenture Trustee in trust for the holders of such Notes for the payment of principal; and
(c)    Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to the Indenture unless proof satisfactory to the Indenture Trustee is presented that any such Notes are held by a Person in whose hands the Note is a valid obligation; provided, however, that in determining whether the holders of the requisite percentage of the Outstanding Note Balance have given any request, demand, authorization, direction, notice, consent, or waiver hereunder, Notes owned by the Issuer, DRII or any Affiliate of either of them shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Indenture Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, or waiver, only Notes that a Responsible Officer of the Indenture Trustee actually has notice are so owned shall be so disregarded.
“Outstanding Note Balance” shall mean as of any date of determination and Class of Notes, the Initial Note Balance of such Class of Notes less the sum of (a) all principal payments 

KL2 2904196.6
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actually distributed in respect of such Class (other than in respect of reimbursed Note Balance Write-Down Amounts, if any) as of such date, and (b) all Note Balance Write-Down Amounts applied to such Class as of such date, provided, however, to the extent that for purposes of consents, approvals, voting or other similar act of the Noteholders under any of the Transaction Documents, “Outstanding Note Balance” shall exclude Notes which are held by the Issuer or any Affiliate of the Issuer or any entity consolidated in DRII’s consolidated financial statements; provided, further, that “Outstanding Note Balance” as used in Section 6.02 and 6.03 of the Indenture shall be calculated without regard to any Note Balance Write-Down Amounts applied to such Class as of such date. 
“Overcollateralization Amount” shall mean, for any Payment Date, the excess, if any, of (i) the Aggregate Loan Balance as of the last day of the related Due Period over (ii) the sum of (a) the Aggregate Outstanding Note Balance after taking into account all distributions of principal on such Payment Date and (b) all unreimbursed Note Balance Write-Down Amounts applied to the Notes as of such Payment Date.
“Overcollateralization Deficiency Amount” shall mean on any Payment Date, an amount equal to the excess, if any, of (i) the Required Overcollateralization Amount on such Payment Date over (ii) the Pro Forma Overcollateralization Amount on such Payment Date.
“Overcollateralization Release Amount” shall mean during a Non-Rapid Amortization Period, (i) on any Payment Date on or after the Stepdown Date, if no Cash Accumulation Event has occurred and is then continuing, an amount equal to the excess, if any, of (a) the Pro Forma Overcollateralization Amount on such Payment Date over (b) the Required Overcollateralization Amount on such Payment Date; provided that such amount will not exceed the Monthly Principal Amount for such Payment Date, and (ii) for any other Payment Date, zero.
“Owner” shall mean Diamond Resorts Seller 2015-1, LLC, as sole owner of the beneficial interests in the Issuer, or any subsequent owners of the beneficial interests in the Issuer.  
“Owner Trustee” shall mean U.S. Bank Trust National Association or any successor thereof, acting not in its individual capacity but solely as owner trustee under the Trust Agreement.
“Owner Trustee Expenses” shall mean reasonable out-of-pocket expenses (including attorney’s fees and expenses) and indemnities of the Owner Trustee incurred in connection with performance of the Owner Trustee’s obligations and duties under the Trust Agreement.
“Owner Trustee Fee” shall equal $4,500 a year.
“Payment Date” shall mean the 20th day of each calendar month, or, if such date is not a Business Day, then the next succeeding Business Day, commencing in August 2015.
“PBGC” shall mean the Pension Benefit Guaranty Corporation or any successor thereto.
“Performance Guarantors” shall mean DRC, Diamond Resorts Holdings, LLC and DRII.

KL2 2904196.6
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 “Person” shall mean an individual, general partnership, limited partnership, limited liability partnership, corporation, business trust, joint stock company, limited liability company, trust, unincorporated association, joint venture, Governmental Authority, or other entity of whatever nature.
“Points” shall mean a form of currency, the redemption of which entitles the holders thereof to reserve the use and occupancy of a Unit at a Resort.
“Points Purchase Contract” shall mean with respect to a Timeshare Property, collectively (i) the related Purchase Contract and (ii) the various other documents and instruments that among other things: (a) in consideration of the payment of a purchase price, including payment of the related Obligor Note, if any, grants the Obligor the license or right-to-use and occupy one or more Units in one or more Resorts, (b) imposes certain obligations on the Obligor regarding payment of the related Obligor Note, the Obligor’s use or occupancy of one or more Units in one or more Resorts, and the payment of a maintenance fee, and (c) grants the holder thereof certain rights, including the rights to payment of the related Obligor Note, if any, and to terminate the Points Purchase Contract or revoke the Obligor’s rights under it, and thereafter to resell the Timeshare Property to another Person.
“Principal Distribution Amount” shall mean with respect to any Payment Date, (i) if such Payment Date occurs during a Non-Rapid Amortization Period, the excess, if any, of (a) the sum of (1) the Monthly Principal Amount, plus (2) the aggregate Loan Balance of all Timeshare Loans which became Defaulted Timeshare Loans during the related Due Period (other than Defaulted Timeshare Loans for which the Seller has exercised its option to repurchase or substitute pursuant to Section 6(b) of the Sale Agreement) over (b) the Overcollateralization Release Amount for such Payment Date, or (ii) if such Payment Date occurs during a Rapid Amortization Period, the excess, if any, of (a) the entire amount of remaining Available Funds after making provisions for payments and distributions required under clauses (i) through (vii) of Section 3.04(a) of the Indenture over (b) the amount, if any, by which the Reserve Account Required Balance on such Payment Date is greater than the amount on deposit in the Reserve Account; provided, however, in each case, the Principal Distribution Amount shall not exceed the Aggregate Outstanding Note Balance as of such Payment Date prior to any distributions made on such Payment Date; provided, further, if the sum of Available Funds in the Collection Account plus the amount on deposit in the Reserve Account is greater than or equal to the sum of (a) the payments and distributions required under clauses (i) through (vii) of Section 3.04(a) of the Indenture and (b) the Aggregate Outstanding Note Balance as of such Payment Date prior to any distributions made on such Payment Date, then the Principal Distribution Amount shall equal the Aggregate Outstanding Note Balance as of such Payment Date prior to any distributions made on such Payment Date. 
“Predecessor Servicer Work Product” shall have the meaning specified in Section 5.16(f)(i) of the Indenture.
“Processing Charges” shall mean any amounts due under an Obligor Note in respect of processing fees, service fees, impound fees or late fees.

KL2 2904196.6
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“Pro Forma Overcollateralization Amount” shall mean, on any Payment Date, an amount equal to the excess, if any, of (i) the Aggregate Loan Balance as of the last day of the related Due Period over (ii) (a) the Aggregate Outstanding Note Balance on such Payment Date before taking into account any distributions of principal to the Noteholders on such Payment Date, plus (b) all unreimbursed Note Balance Write-Down Amounts applied to the Notes prior to such Payment Date, minus (c) an amount equal to the sum of (1) the Monthly Principal Amount for such Payment Date and, without duplication, (2) the aggregate Loan Balance of all Timeshare Loans which became Defaulted Timeshare Loans during the related Due Period (other than Defaulted Timeshare Loans for which the Seller has exercised its option to repurchase or substitute pursuant to Section 6(b) of the Sale Agreement).
“Purchase Agreements” shall mean each purchase agreement, dated as of the Closing Date, by and between the Seller and a Transferor pursuant to which such Transferor sells Timeshare Loans to the Seller.
“Purchase Contract” shall mean the purchase contract for a Timeshare Property executed and delivered by an Obligor and pursuant to which such Obligor purchased a Timeshare Property.
“Purchase Price” shall mean the original price of the Timeshare Property purchased by an Obligor.
“Qualified Substitute 2008 Timeshare Loans” shall have the meaning specified in Section 2(b) of the 2008 Issuer Purchase Agreement.
“Qualified Substitute DRFHC Timeshare Loans” shall have the meaning specified in Section 2(b) of the DRFHC Purchase Agreement.
“Qualified Substitute Timeshare Loan” shall mean a Timeshare Loan which must, on the related Substitution Date: (i) have a coupon rate not less than the coupon rate of the substituted Timeshare Loan; (ii) does not have a stated maturity later than 12 months prior to the Stated Maturity; (iii) comply as of the related Substitution Date with each of the representations and warranties set forth in the Sale Agreement and (iv) be related to a Timeshare Property at a Resort. 
“Rapid Amortization Period” shall mean the period which commences on the Rapid Amortization Period Commencement Date and ends on the Rapid Amortization Period End Date.
“Rapid Amortization Period Commencement Date” shall be the Determination Date on which (i) the average of the Default Levels for the last three Due Periods (or if fewer than three Due Periods have elapsed since the Closing Date, the average of the Default Levels for the actual number of Due Periods which have elapsed since the Closing Date) is greater than or equal to 0.75%, (ii) the Recovery Ratio for such Determination Date is less than 25.00%, (iii) the Cumulative Default Level exceeds 20.00%, or (iv) the Overcollateralization Amount is less than the Required Overcollateralization Amount for the two immediately preceding Payment Dates.

KL2 2904196.6
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“Rapid Amortization Period End Date” shall be (a) with respect to a Rapid Amortization Period triggered by clause (i) of the definition of Rapid Amortization Period Commencement Date, the Determination Date on which the average of the Default Levels for the requisite number of Due Periods is less than 0.75%; (b) with respect to a Rapid Amortization Period triggered by clause (ii) of the definition of Rapid Amortization Period Commencement Date, the date on which the Recovery Ratio is greater than or equal to 25.00% for three consecutive Determination Dates, (c) with respect to a Rapid Amortization Period triggered by clause (iii) of the definition of Rapid Amortization Period Commencement Date, the date on which the Notes have been paid in full; and (d) with respect to a Rapid Amortization Period triggered by clause (iv) of the definition of Rapid Amortization Period Commencement Date, the Determination Date on which the Overcollateralization Amount for the immediately preceding Payment Date is equal to or greater than the Required Overcollateralization Amount for such Payment Date.
“Rating Agency” shall mean each of S&P, KBRA or their permitted successors and assigns.
“Receivables” shall mean the payments required to be made pursuant to an Obligor Note.
“Record Date” shall mean, with respect to any Payment Date, (i) for Notes in book-entry form, the close of business on the Business day immediately preceding such Payment Date and (ii) for Definitive Notes, the close of business on the last Business Day of the calendar month immediately preceding the month in which such Payment Date occurs.
“Recovery Ratio” shall mean for any Determination Date, an amount equal to: (i) if any Timeshare Loans became Defaulted Timeshare Loans during the three immediately preceding Due Periods (or if fewer than three Due Periods have elapsed, the actual number of Due Periods which have elapsed), the percentage equivalent of a fraction (a) the numerator of which is equal to the sum of (x) the aggregate Loan Balances of all Timeshare Loans that became Defaulted Timeshare Loans during the three immediately preceding Due Periods (or if fewer than three Due Periods have elapsed, the actual number of Due Periods which have elapsed) that were substituted for or repurchased by the Seller prior to such Determination Date (with the principal balance of each Timeshare  Loan determined as of the day immediately preceding the date on which such Timeshare Loan became a Defaulted Timeshare Loan) and (y) all recoveries or remarketing proceeds received during the three immediately preceding Due Periods (or if fewer than three Due Periods have elapsed, the actual number of Due Periods which have elapsed) in respect of Defaulted Timeshare Loans for which the Seller did not exercise its option to repurchase or substitute prior to such Determination Date and (b) the denominator of which is the aggregate Loan Balances of all Timeshare Loans that became Defaulted Timeshare Loans during the three immediately preceding Due Periods (or if fewer than three Due Periods have elapsed, the actual number of Due Periods which have elapsed); and (ii) otherwise, 100%.
“Redemption Date” shall mean with respect to the redemption of the Notes on or after the Optional Redemption Date, the date fixed pursuant to Section 10.01 of the Indenture.

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“Redemption Price” shall be equal to the sum of the Aggregate Outstanding Note Balance and unreimbursed Note Balance Write-Down Amounts, if any, plus accrued and unpaid interest to the Redemption Date (calculated for each Class of Notes as the product of (x) 1/12 of the related Note Rate and (y) (i) the days elapsed since the prior Payment Date (calculated on the basis of a 360-day year consisting of twelve 30-day months) divided by (ii) 30). 
“Regulation S Global Note” shall have the meaning specified in Section 2.02 of the Indenture.
“Related Security” shall mean with respect to any Timeshare Loan owned by a Person, (i) all of such Person’s interest in the Timeshare Property arising under or in connection with the related Points Purchase Contract, including, without limitation, all Liquidation Proceeds and Insurance Proceeds received with respect thereto on or after the related Cut-Off Date, and the Timeshare Loan Documents relating to such Timeshare Loan, (ii) all other security interests or liens and property subject thereto from time to time purporting to secure payment of such Timeshare Loan, together with all assignments and financing statements signed by an Obligor describing any collateral securing such Timeshare Loan, (iii) all guarantees, insurance and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Timeshare Loan, (iv) all other security and books, records and computer tapes relating to the foregoing and (v) all of such Person’s right, title and interest in and to any other account into which collections in respect of such Timeshare Loans may be deposited from time to time.
“Relevant UCC” shall mean the Uniform Commercial Code as in effect in the applicable jurisdiction.
“Request” shall have the meaning specified in Section 1.2(b) of the Custodial Agreement.
“Repurchase Price” shall mean with respect to any Timeshare Loan to be purchased by the Seller pursuant to the Sale Agreement, a cash price equal to the Loan Balance of such Timeshare Loan as of the date of such repurchase, together with all accrued and unpaid interest on such Timeshare Loan at the related coupon rate to but not including the due date in the then current Due Period.
“Request for Release” shall be a request signed by the Servicer in the form attached as Exhibit B to the Custodial Agreement.
“Required Overcollateralization Amount” shall mean, on any Payment Date, an amount equal to (i) prior to the Stepdown Date, the product of (a) the Initial Overcollateralization Percentage and (b) the Aggregate Loan Balance as of the Initial Cut-Off Date; and (ii) on or after the Stepdown Date, (a) if no Cash Accumulation Event has occurred and is continuing, the greater of (1) 1.00% of the Aggregate Loan Balance as of the Initial Cut-Off Date and (2) the product of (x) the Target Overcollateralization Percentage and (y) the Aggregate Loan Balance as of the last day of the related Due Period and (b) if a Cash Accumulation Event has occurred and is continuing, the Required Overcollateralization Amount as determined on the immediately preceding Payment Date. 

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“Reservation System” shall mean the reservation system operated by Diamond Resorts International Club, Inc. (d/b/a THE Club®), a Florida corporation, and any other system(s) pursuant to which reservations for particular locations, times,lengths of stay and unit types at Resorts with respect to Timeshare Property are received, accepted, modified or canceled.
“Reserve Account” shall mean the account maintained by the Indenture Trustee pursuant to Section 3.02(b) of the Indenture.
“Reserve Account Draw Amount” shall have the meaning specified in Section 3.02(b)(i) of the Indenture.
“Reserve Account Floor Amount” shall mean, for any Payment Date, an amount equal to the lesser of (i) 0.25% of the aggregate Initial Note Balance of each Class of Notes and (ii) 50% of the Aggregate Outstanding Note Balance on such Payment Date prior to taking into account any distributions of principal on such Payment Date.
“Reserve Account Initial Deposit” shall mean 1.00% of the Aggregate Loan Balance as of the Initial Cut-Off Date.
“Reserve Account Required Balance” shall mean, for any Payment Date, (i) occurring during a Rapid Amortization Period, an amount equal to the Reserve Account Floor Amount, or (ii) occurring during a Non-Rapid Amortization Period, (a) if no Cash Accumulation Event has occurred and is continuing, an amount equal to 1.00% of the Aggregate Loan Balance as of the last day of the related Due Period, or (b) if a Cash Accumulation Event has occurred and is continuing, an amount equal to the product of (x) the Aggregate Loan  Balance as of the last day of the related Due Period and (y) the greater of (1) 15.0% and (2) the product of (A) two and (B) the Delinquency Level for such Due Period; provided, however, that in no event will the Reserve Account Required Balance be less than the Reserve Account Floor Amount.
“Resort” shall mean one or more resorts in a Collection at which holders of Timeshare Property are entitled to reserve the use and occupancy of Units.  
 “Responsible Officer” shall mean (a) when used with respect to the Indenture Trustee, any officer assigned to the Corporate Trust Office, including any Managing Director, Vice President, Assistant Vice President, Secretary, Treasurer, any trust officer or any other officer of the Indenture Trustee customarily performing functions similar to those performed by any of the above designated officers, and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject and, in each case, having direct responsibility for the administration of the Transaction Documents; (b) when used with respect to the Servicer, any officer responsible for the administration or management of the Servicer’s servicing department; (c) when used with respect to the Issuer, any officer of the Owner Trustee having direct responsibility for administration of the Trust Agreement and, for so long as the Administration Agreement is in effect, any officer of the Administrator; (d) when used with respect to the Owner Trustee, any officer of the Owner Trustee assigned to its corporate trust office having direct responsibility for administration of the Trust Agreement; and 

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(e) with respect to any other Person, the Chairman of the Board, the President, a Vice President, the Treasurer, the Secretary or the manager of such Person.
“Restricted Period” shall mean the 40-day period prescribed by Regulation S commencing on the later of (a) the date upon which Notes are first offered to Persons other than the Initial Purchaser and any other distributor (as such term is defined in Regulation S) of the Notes, and (b) the Closing Date.
“Rule 144A Global Note” shall have the meaning specified in Section 2.02 of the Indenture.
“S&P” shall mean Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business.
“Sale Agreement” shall mean the agreement, dated as of the Closing Date, by and between the Seller and the Issuer pursuant to which the Seller sells the Timeshare Loans to the Issuer.
“Schedule of Timeshare Loans” shall mean the list of Timeshare Loans attached to the Sale Agreement in electronic format as Exhibit A, as amended from time to time to reflect repurchases and substitutions pursuant to the terms of the Sale Agreement and the Indenture, which list shall set forth the following information with respect to each Timeshare Loans as of the related Cut-Off Date, in numbered columns:
1    Loan/Contract Number
2    Name of Obligor
		
	3
	Point(s)

4    Interest Rate Per Annum
5    Date of Origination
6    Original Loan Balance
7    Maturity Date
8    Monthly Payment Amount
9    Original Term (in months)
10    Outstanding Loan Balance
11    Name of Originator

“Scheduled Foreclosure Date” shall have the meaning specified in Section 1.2(b) of the Custodial Agreement.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Seller” shall mean Diamond Resorts Seller 2014-1, LLC, a Delaware limited liability company.

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“Seller Undertaking Agreement” shall mean that certain Seller Undertaking Agreement, dated as of the Closing Date by the Performance Guarantors in favor of the Issuer and the Indenture Trustee.
“Servicing Fee” shall mean for any Payment Date, an amount equal to the product of (i) one-twelfth of 1.50% and (ii) the Aggregate Loan Balance as of the first day of the related Due Period.
“Servicer” initially shall mean Diamond Resorts Financial Services, Inc. and its permitted successors and assigns or such other successor servicer as provided in the Indenture.
“Servicer Event of Default” shall have the meaning specified in Section 5.04 of the Indenture.
“Servicer Undertaking Agreement” shall mean that certain Servicer Undertaking Agreement, dated as of the Closing Date, by the Performance Guarantors in favor of the Issuer and the Indenture Trustee.
“Servicing Officer” shall mean those officers of the Servicer involved in, or responsible for, the administration and servicing of the Timeshare Loans, as identified on the list of Servicing Officers furnished by the Servicer to the Indenture Trustee and the Noteholders from time to time.
“Servicing Standard” shall have the meaning specified in Section 5.01 of the Indenture.
“Similar Law” shall mean any federal, state, local or non-U.S. law that is substantially similar to Title 1 of ERISA or Section 4975 of the Code.
“Stated Maturity” shall mean the Payment Date occurring in July 2027.
“Statutory Trust Statute” shall mean Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. § 3801, et seq., as the same may be amended from time to time.
“Stepdown Date” shall mean the Payment Date on which the Aggregate Loan Balance as of the end of the related Due Period is less than 50.0% of the Aggregate Loan Balance as of the Initial Cut-Off Date.
“Substitution Cut-Off Date” shall mean with respect to any Qualified Substitute Timeshare Loan (i) the close of business on the last day of the calendar month immediately preceding the related Transfer Date or (ii) such other date designated by the Servicer.
“Substitute 2008 Timeshare Property” shall have the meaning specified in Section 2(b) of the 2008 Issuer Purchase Agreement.
“Substitute Conveyed DRFHC Timeshare Property” shall have the meaning specified in Section 2(b) of the DRFHC Purchase Agreement.

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 “Substitute Conveyed Timeshare Property” shall have the meaning specified in Section 2(b) of the Sale Agreement.
“Substitution Shortfall Amount” shall mean with respect to a substitution pursuant to Section 4.04 of the Indenture, an amount equal to the excess, if any, of (a) the Loan Balance of the Timeshare Loan being replaced as of the Substitution Date, together with all accrued and unpaid interest on such Timeshare Loan at the related coupon rate to but not including the due date in the related Due Period over (b) the Loan Balance of the Qualified Substitute Timeshare Loan as of the Substitution Date.  If on any Substitution Date, one or more Qualified Substitute Timeshare Loans are substituted for one or more Timeshare Loans, the Substitution Shortfall Amount shall be determined as provided in the preceding sentence on an aggregate basis.
“Successor Servicer” shall mean the Back-Up Servicer and its permitted successors and assigns, as provided in the Indenture, upon succeeding to the responsibilities and obligations of the Servicer in accordance with Section 5.16 of the Indenture.
“Tape(s)” shall have the meaning specified in Section 5.16(b) of the Indenture.
“Target Overcollateralization Percentage” shall mean 8.0%
“Temporary Regulation S Global Note” shall have the meaning specified in Section 2.02 of the Indenture.
“Timeshare Laws” shall mean the provisions of any applicable laws, statutes or regulations and all amendments, modifications or replacements thereof and successors thereto, and all regulations and guidelines promulgated thereunder or with respect thereto, now or hereafter enacted.
“Timeshare Loan” shall mean a timeshare loan that is secured by Timeshare  Property and that is subject to the lien of the Indenture.  As used in the Transaction Documents, the term “Timeshare Loan” shall include the related Obligor Note, Points Purchase Contract and other security documents contained in the related Timeshare Loan File.
“Timeshare Loan Acquisition Price” shall mean on any date of determination, with respect to any Timeshare Loan, an amount equal to the Loan Balance of such Timeshare Loan plus accrued interest thereon.
“Timeshare Loan Documents” shall mean, with respect to a Timeshare Loan and each Obligor, the related (i) Timeshare Loan Files and (ii) Timeshare Loan Servicing Files.
“Timeshare Loan Files” shall mean with respect to any purchaser of a Timeshare Property for which the Obligor is a party to a Timeshare Loan, the following documents executed by such purchaser or delivered in connection with such Timeshare Loan: 
(a)an original Obligor Note bearing all intervening endorsements showing a complete chain of endorsements from the originator of such Timeshare Loan to the Last Endorsee, endorsed by the Last Endorsee, without recourse, in the following form: 

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“Pay to the order of _____________, without recourse” and signed in the name of the Last Endorsee by an authorized officer;
(b)the original power of attorney (or a certified copy), if applicable;
(c)(i) the original or a copy of the Purchase Contract that relates to each Obligor Note, including any addenda thereto or (ii) (A) the original or a copy of the Points Purchase Contract pursuant to which the applicable Timeshare Property was originally sold by the seller thereof, whether or not an originator (provided that if the seller of such Timeshare Property is not an originator, such Points Purchase Contract has been assigned to a transferor), including any addenda thereto and (B) an original or copy of any assumption or modification of such Points Purchase Contract (if applicable); and
(d)the original truth-in-lending disclosure statement (or a copy) that relates to each Timeshare Loan.
 “Timeshare Loan Servicing File” shall mean, with respect to each Timeshare Loan and each Obligor a copy of the related Timeshare Loan File and all other papers and computerized records customarily maintained by the Servicer in servicing timeshare loans comparable to the Timeshare Loans.
“Timeshare Property” shall mean a timeshare interest, other than a fee simple interest in real estate, regarding one or more Units in one or more Resorts, denominated in Points, the redemption of which entitles the holder thereof the right to use and occupy one or more Units within one or more Resorts and the common areas and common furnishing appurtenant to such Unit or Units for a specified period of time, on an annual or a biennial basis, as more specifically described in the Points Purchase Contract.  
“Transaction Documents” shall mean the Indenture, the Custodial Agreement, the Purchase Agreements, the Sale Agreement, the Trust Agreement, the Administration Agreement, the Seller Undertaking Agreement, the Servicer Undertaking Agreement, the Note Purchase Agreement and all other agreements, documents or instruments delivered in connection with the transactions contemplated thereby.
“Transfer Date” shall mean with respect to a Qualified Substitute Timeshare Loan, the date on which the Seller substitutes a Timeshare Loan in accordance with the Sale Agreement and Section 4.04 of the Indenture.
“Transferors” shall mean Issuer 2008 and DRFHC. 
“Transition Expenses” shall mean any indemnities due to the Back-Up Servicer and any documented costs and expenses (other than general overhead expenses) incurred by the Back-Up Servicer should it become the Successor Servicer as a direct consequence of the termination or resignation of the initial Servicer and the transition of the duties and obligations of the initial Servicer to the Successor Servicer.
“Trust Accounts” shall mean collectively, the Collection Account, the Reserve Account and such other accounts established by the Indenture Trustee pursuant to Section 3.02 of the Indenture.

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“Trust Agreement” shall mean that certain trust agreement, dated as of July 9, 2015 and amended and restated as of the Closing Date, by and between the Owner and the Owner Trustee.
“Trust Estate” shall have the meaning specified in the Granting Clause of the Indenture.
“Trust Receipt” shall mean a certification delivered by the Custodian in accordance with Section 1.1(c) of the Custodial Agreement.
“Unit” shall mean a residential unit or dwelling at a Resort.    
“USAP” shall have the meaning specified in Section 5.05(c) of the Indenture.
“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA. 

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			EXHIBIT 10.1
		

		
			 
		

		
			 
		

		
			 
		

		
			CREDIT AGREEMENT PROVIDING FOR A 
SENIOR SECURED TERM LOAN 
OF UP TO US$32,000,000
		

		
			EAST GULF SHIPHOLDING, INC., 
as Borrower,
		

		
			AND
		

		
			The Banks and Financial Institutions listed on Schedule I hereto,
		

		
			as Lenders,
		

		
			AND
		

		
			DVB BANK SE,
		

		
			as Mandated Lead Arranger, Facility Agent and Security Trustee,
		

		
			AND
		

		
			INTERNATIONAL SHIPHOLDING CORPORATION, 
as Guarantor
		

		
			April 20, 2015
		

		
			 
		

		

		

		 

 

		TABLE OF CONTENTS
		

		
			 
		

			
	
			
				 1.
			DEFINITIONS 1

		
			1.1Specific Definitions 1
		

		
			1.2Computation of Time Periods; Other Definitional Provisions 20
		

		
			1.3Accounting Terms 20
		

		
			1.4Certain Matters Regarding Materiality 20
		

			
	
			
				 2.
			REPRESENTATIONS AND WARRANTIES 20

		
			2.1Representations and Warranties 20
		

			
	
			
				 3.
			THE FACILITY 25

		
			3.1Purposes 25
		

		
			3.2Receipt of Funds 25
		

		
			3.3Drawdown Notice 25
		

		
			3.4Effect of Drawdown Notice 25
		

			
	
			
				 4.
			CONDITIONS PRECEDENT 26

		
			4.1Conditions Precedent to this Agreement 26
		

		
			4.2Breakfunding Costs 30
		

		
			4.3Satisfaction after Drawdown 30
		

			
	
			
				 5.
			REPAYMENT AND PREPAYMENT 30

		
			5.1 Repayment 30
		

		
			5.2Voluntary Prepayment; No Re-borrowing 30
		

		
			5.3Mandatory Prepayment 30
		

		
			5.4Interest and Costs with Prepayments/Application of Prepayments 31
		

		
			5.5Borrower's Obligation Absolute 31
		

			
	
			
				 6.
			INTEREST AND RATE 31

		
			6.1Payment of Interest; Interest Rate 31
		

		
			6.2Maximum Interest 31
		

			
	
			
				 7.
			PAYMENTS 31

		
			7.1Time and Place of Payments, No Set Off 31
		

		
			7.2Taxes 31
		

		
			7.3Sharing of Setoffs 33
		

		
			7.4Computations; Banking Days 33
		

			
	
			
				 8.
			EVENTS OF DEFAULT 33

		
			8.1Events of Default 33
		

		
			8.2Application of Moneys 36
		

			
	
			
				 9.
			COVENANTS 36

		
			9.1Affirmative Covenants 36
		

		
			9.2Negative Covenants 42
		

		
			9.3Financial Covenants 45
		

		
			9.4Asset Maintenance 46
		

		
			 
		

		

		

		 

 

		TABLE OF CONTENTS 
(continued)
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						10.

					
					
						Page

					
						9.5Borrower Restructuring 46

					
						ACCOUNTS 48

				
	
					
						 

					
10.1 
					
					
						General...................................................................................................................................................

					
					
						48

				
	
					
						 

					
10.2 
					
					
						Payment of Earnings.............................................................................................................................

					
48 
				
	
					
						 

					
10.3 
					
					
						Monthly Retentions...............................................................................................................................

					
49 
				
	
					
						 

					
10.4 
					
					
						Intentionally Omitted.............................................................................................................................

					
49 
				
	
					
						 

					
10.5 
					
					
						Shortfall in Earnings...............................................................................................................................

					
49 
				
	
					
						 

					
10.6 
					
					
						Transfers from Retention Account; Application of Retentions.

					
49 
				
	
					
						 

					
10.7 
					
					
						Location of Accounts.............................................................................................................................

					
49 
				
	
					
						 

					
10.8 
					
					
						Debits for Expenses...............................................................................................................................

					
49 
				
	
					
						 

					
10.9 
					
					
						Borrower’s Obligations Unaffected.........................................................................................................

					
50 
				
	
					
						11.

					
					
						GUARANTEE.....................................................................................................................................................

					
50 
				
	
					
						 

					
11.1 
					
					
						The Guarantee.....................................................................................................................................

					
50 
				
	
					
						 

					
11.2 
					
					
						Obligations Unconditional.......................................................................................................................

					
50 
				
	
					
						 

					
11.3 
					
					
						Reinstatement.......................................................................................................................................

					
51 
				
	
					
						 

					
11.4 
					
					
						Subrogation...........................................................................................................................................

					
51 
				
	
					
						 

					
11.5 
					
					
						Remedies.............................................................................................................................................

					
51 
				
	
					
						 

					
11.6 
					
					
						Joint, Several and Solidary Liability...........................................................................................................

					
51 
				
	
					
						 

					
11.7 
					
					
						Continuing Guarantee.............................................................................................................................

					
51 
				
	
					
						12.

					
					
						ASSIGNMENT.....................................................................................................................................................

					
51 
				
	
					
						 

					
12.1 
					
					
						Generally.................................................................................................................................................

					
51 
				
	
					
						 

					
12.2 
					
					
						Assignment by Security Parties...............................................................................................................

					
51 
				
	
					
						 

					
12.3 
					
					
						Assignment by Lender...........................................................................................................................

					
51 
				
	
					
						13.

					
					
						ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.

					
						.............................................................................................................................................................................52

					
					
						 

				
	
					
						 

					
13.1 
					
					
						Illegality.................................................................................................................................................

					
52 
				
	
					
						 

					
13.2 
					
					
						Increased Costs.....................................................................................................................................

					
53 
				
	
					
						 

					
13.3 
					
					
						Lender's Certificate Conclusive...............................................................................................................

					
53 
				
	
					
						 

					
13.4 
					
					
						Compensation for Losses.......................................................................................................................

					
54 
				
	
					
						14.

					
					
						CURRENCY INDEMNITY...................................................................................................................................

					
54 
				
	
					
						 

					
14.1 
					
					
						Currency Conversion.............................................................................................................................

					
54 
				
	
					
						 

					
14.2 
					
					
						Change in Exchange Rate.......................................................................................................................

					
54 
				
	
					
						 

					
14.3 
					
					
						Additional Debt Due...............................................................................................................................

					
54 
				
	
					
						 

					
14.4 
					
					
						Rate of Exchange.................................................................................................................................

					
54 
				
	
					
						15.

					
					
						FEES AND EXPENSES.......................................................................................................................................

					
54 
				
	
					
						 

					
15.1 
					
					
						Fees.......................................................................................................................................................

					
54 
				
	
					
						 

					
15.2 
					
					
						Expenses.................................................................................................................................................

					
54 
				
	
					
						16.

					
					
						APPLICABLE LAW, JURISDICTION AND WAIVER...........................................................................................

					
55 
				
	
					
						 

					
16.1 
					
					
						Applicable Law.....................................................................................................................................

					
55 
				
	
					
						 

					
16.2 
					
					
						Jurisdiction...........................................................................................................................................

					
55 
				

		
			 
		

		
			 
		

		
			-ii-
		

		
			 
		

		

		

		 

 

		TABLE OF CONTENTS
		

		
			(continued)
		

		
			Page
		

		
			16.3 WAIVER OF IMMUNITY 55
		

		
			16.4 WAIVER OF JURY TRIAL 55
		

			
	
			
				 17.
			THE AGENTS 55

		
			17.1 Appointment of Facility Agent 55
		

		
			17.2 Appointment of Security Trustee 56
		

		
			17.3 Distribution of Payments 56
		

		
			17.4 Holder of Interest in Note 56
		

		
			17.5 No Duty to Examine, Etc 56
		

		
			17.6 Agents as Lenders 56
		

		
			17.7 Acts of the Agents 57
		

		
			17.8 Certain Amendments 57
		

		
			17.9 Assumption regarding Event of Default 57
		

		
			17.10 Limitations of Liability 58
		

		
			17.11 Indemnification of the Facility Agent and Security Trustee 58
		

		
			17.12 Consultation with Counsel 58
		

		
			17.13 Resignation 58
		

		
			17.14 Representations of Lenders 58
		

		
			17.15 Notification of Event of Default 59
		

		
			17.16 Reversal of Redistribution 59
		

		
			17.17 Parallel Debt. 59
		

			
	
			
				 18.
			NOTICES AND DEMANDS 60

		
			18.1 Notices 60
		

			
	
			
				 19.
			MISCELLANEOUS 61

		
			19.1Right of Set-off 61
		

		
			19.2 Time of Essence 61
		

		
			19.3Unenforceable, etc., Provisions – Effect 61
		

		
			19.4 References 61
		

		
			19.5 Further Assurances 61
		

		
			19.6 Prior Agreements, Merger 61
		

		
			19.7 Entire Agreement; Amendments 62
		

		
			19.8 Indemnification 62
		

		
			19.9 USA PATRIOT Act Notice; OFAC and Bank Secrecy Act 62
		

		
			19.10 Remedies Cumulative and Not Exclusive; No Waiver 63
		

		
			19.11 Counterparts; Electronic Delivery 63
		

		
			19.12 Headings 63
		

		
			19.13 Disclosure 63
		

		
			19.14 Securitization 64
		

		
			19.15 Pari Passu Intercreditor Agreement. 64
		

		
			 
		

		
			-iii-
		

		
			 
		

		

		

		 

 

		TABLE OF CONTENTS (continued)
		

		
			SCHEDULES
		

		
			IThe Lenders and the Commitments
		

		
			IIApproved Ship Brokers
		

		
			IIILiens
		

		
			IVIndebtedness
		

		
			VInitial Charter Party Agreement
		

		
			EXHIBITS
		

		
			AForm of Promissory Note
		

		
			BForm of Drawdown Notice
		

		
			CForm of Compliance Certificate
		

		
			DForm of Assignment and Assumption Agreement
		

		
			EForm of Earnings and Charterparties Assignment
		

		
			FForm of Insurances Assignment
		

		
			G-1Form of Mortgage
		

		
			G-2Form of GREEN BAY Mortgage
		

		
			H-1Classification Society Instruction Letter
		

		
			H-2Classification Society Undertaking
		

		
			I-1Form of Earnings Account Pledge
		

		
			I-2Form of Retention Account Pledge
		

		
			JForm of Manager’s Undertaking
		

		
			KForm of Asset Maintenance Compliance Certificate
		

		
			LForm of Pari Passu Intercreditor Agreement
		

		
			MForm of Loan Administration Form
		

		
			-iv-
		

		
			 
		

		

		

		 

 

		 
		

		
			SENIOR SECURED TERM LOAN CREDIT AGREEMENT
		

		
			THIS SENIOR SECURED TERM LOAN CREDIT AGREEMENT (this “Agreement”) is made as of the 20th day of April, 2015, by and among (1) EAST GULF SHIPHOLDING, INC., a corporation organized and existing under the laws of the Marshall Islands (the “Borrower”), as borrower, (2) INTERNATIONAL SHIPHOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware, as guarantor (the “Guarantor”), (3) the banks and financial institutions listed on Schedule I, as lenders (together with any bank or financial institution which becomes a Lender pursuant to Section 12, the “Lenders” and each a “Lender”), (4) DVB BANK SE, as facility agent (in such capacity including any successor thereto, the “Facility Agent”), and as security trustee for the Lenders (in such capacity, the “Security Trustee” and, together with the Facility Agent, the “Agents”) and (5) DVB BANK SE, as mandated lead arranger (in such capacity, the “Mandated Lead Arranger”).
		

		
			WITNESSETH THAT:
		

		
			WHEREAS, at the request of the Borrower, each of the Agents has agreed to serve in such capacity under the terms of this Agreement and the Lenders have agreed to provide to the Borrower a senior secured term loan facility in the amount of up to Thirty Two Million Dollars ($32,000,000);
		

		
			NOW, THEREFORE, in consideration of the premises set forth above, the covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as set forth below:
		

		
			1.DEFINITIONS
		

		
			1.1Specific Definitions. In this Agreement the words and expressions specified below shall,
		

		
			except where the context otherwise requires, have the meanings attributed to them below:
		

		
			“Acceptable Accounting Firm”shall mean PricewaterhouseCoopers LLP, or such other Securities
		

		
			and Exchange Commission recognized accounting firm as shall be approved by the Facility Agent, such approval not to be unreasonably withheld;
		

		
			“Account Bank”shall mean DVB Bank SE (Frankfurt);
		

		
			“Account Pledge”shall mean the German law-governed pledge of the Earnings
		

		
			Account and the Retention Account to be executed by the Borrower in favor of the Security Trustee pursuant to Section 4.1(s)(iii) substantially in the form set out in Exhibit I-1 or I-2;
		

		
			“Advance”shall mean the amount of the Facility advanced to the Borrower
		

		
			pursuant to Section 3.1;
		

		
			“Affiliate”shall mean with respect to any Person, any other Person who
		

		
			directly or indirectly controls, is controlled by or under common control with such Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) as applied to any Person means the possession directly or indirectly of the power to direct or cause the direction of the management and policies of that Person whether through ownership of voting securities or by contract or otherwise;
		

		
			 
		

		

		

		 

 

		“Agents”shall have the meaning ascribed thereto in the preamble;
		

		
			“Agreement”shall mean this Agreement, as the same shall be amended,
		

		
			restated, modified or supplemented from time to time;
		

		
			“Amortization Reduction Conditions”shall mean (A) as certified by the Guarantor on the relevant
		

		
			Compliance Certificate, the Guarantor is in compliance with the Amortization Reduction Financial Covenants and (B) no Default or Event of Default has occurred and is continuing;
		

		
			“Amortization Reduction Financial  shall mean (A) a Consolidated Fixed Charge Coverage Ratio of at Covenants”              least 1.20:1.00, (B) a ratio of Consolidated EIBTDA to Consolidated
		

		
			               Interest Expense of not less than 2.50:1.00, (C) a Consolidated Tangible 
		

		
			  Net Worth $254,880,000, (D) a Consolidated Leverage Ratio of not  
		

		
			                Greater than 4.25: 1.00, (E) a ratio of current assets to current
		

		
			                liabilities of not less than 1.00:1.00 and (F) Liquidity of not less 
		

		
			   than $20,000,000, in each case measured in accordance with the 
		

		
			   the requirements set forth in Section 9.3;
		

		
			 
		

		
			“Amortization Reduction Period”shall mean the period (A) commencing on the first Payment Date
		

		
			following at least 90 days after the date that a Compliance Certificate is provided to the Facility Agent showing that the Amortization Reduction Conditions have been satisfied and (B) ending on the date that the Borrower is no longer in compliance with the Amortization Reduction Conditions;
		

		
			“Applicable Rate”shall mean the rate of interest applicable to the Facility per annum,
		

		
			which is equal to (i) from the Drawdown Date to January 31, 2020, Margin plus the rate agreed upon by the Facility Agent and the Borrower as the fixed rate plus Mandatory Costs (if applicable), and (ii) from February 1, 2020 until the Final Payment Date, Margin plus LIBOR plus Mandatory Costs (if applicable);
		

		
			“Approved Charter”shall mean the Initial Charter Party Agreement and any other
		

		
			charter party to be entered with an internationally recognized PCTC operator acceptable to the Facility Agent (such consent not to be unreasonably withheld); provided, that such other charter party has charter hire rates that are comparable to the then current market charter hire rates for similar vessels and having other prevailing market terms;
		

		
			“Approved Jurisdiction”shall mean the Republic of Marshall Islands or such other
		

		
			jurisdiction acceptable to the Facility Agent (such acceptance not to be unreasonably withheld);
		

		
			“Approved Ship Broker”shall mean any of the ship brokers listed on Schedule II;
		

		
			“Asset Maintenance Complianceshall mean a certificate certifying as of the last day of the second
		

		
			Certificate”and fourth quarter of the Borrower’s fiscal year the compliance by
		

		
			the Borrower with the covenants contained in Section 9.4 and showing the calculations thereof in reasonable detail, delivered by
		

		
			 
		

		

		

		 

 

		the chief financial officer of the Guarantor to the Facility Agent from time to time pursuant to Section 9.1(d)(iii) in the form set out in Exhibit K or in such other form as the Facility Agent may agree;
		

		
			“Assigned Moneys”shall mean any and all sums assigned to the Security Trustee
		

		
			pursuant to (i) in relation to the Vessel, the Earnings and Charterparties Assignment and the Insurances Assignment or (ii) in relation to the GREEN BAY, the GREEN BAY Earnings and Charterparties Assignment and the GREEN BAY Insurances Assignment;
		

		
			“Assignment and Assumptionshall mean any Assignment and Assumption Agreement(s)
		

		
			Agreement(s)”executed pursuant to Section 12.3 substantially in the form set out
		

		
			in Exhibit D;
		

		
			“Assignment Notices”shall mean (A) in relation to the Vessel, (a) the notice with respect
		

		
			to the Earnings and Charterparties Assignment substantially in the form set out in Exhibit 1 thereto, and (b) the notice with respect to the Insurances Assignment substantially in the form set out in Exhibit 3 thereto or (B) in relation to the GREEN BAY, (a) the notice with respect to the GREEN BAY Earnings and Charterparties Assignment substantially in the form set out in Exhibit 1 thereto, and (b) the notice with respect to the GREEN BAY Insurances Assignment substantially in the form set out in Exhibit 3 thereto;
		

		
			“Assignments”shall mean the Earnings and Charterparties Assignment and the
		

		
			Insurances Assignment;
		

		
			“Attributable Principal Amount”shall mean (a) in the case of Synthetic Leases, an amount
		

		
			determined by capitalization of the remaining lease payments thereunder as if it were a Capital Lease determined in accordance with GAAP, and (b) in the case of asset securitization programs, the outstanding principal amount of such financing, after taking into account reserve amounts and making appropriate adjustments, determined by the Facility Agent in its reasonable judgment;
		

		
			“Availability Period”shall mean the period of time beginning on the Closing Date and
		

		
			ending on the earlier of (a) the date on which the Advance is made pursuant to Section 3 and (b) April 30, 2015;
		

		
			“Banking Day(s)”shall mean any day that is not a Saturday, Sunday or other day on
		

		
			which (a) banks in London, England (in relation to LIBOR fixing only), Frankfurt, Germany or New York, New York (in relation to payments in Dollars only) are authorized or required by law to remain closed, or (b) banks are not generally open for dealing in dollar deposits in the London interbank market;
		

		
			“Blocked Person”shall mean any of the following currently or in the future: (i) an
		

		
			individual, entity or vessel named on a Blocked Persons List, or any entity owned or controlled by, directly or indirectly, such individual, entity or vessel, or (ii) (A) an agency or instrumentality
		

		
			 
		

		

		

		 

 

		of, or an entity owned or controlled by, or acting on behalf of or at the direction of, directly or indirectly, the government of any country or territory that is the subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran, Libya, North Korea, Sudan and Syria) (each, a “Sanctioned Country”), (B) an entity located, resident in or organized under the laws of a Sanctioned Country, or (C) a national or permanent resident of a Sanctioned Country, or a person located or residing in a Sanctioned Country, to the extent such agency, instrumentality, entity, or person is targeted by Sanctions, or (iii) without duplication of any Person set forth in clause (i) or (ii), any Person located or residing in, organized under the laws of, or operating in a Sanctioned Country;
		

		
			“Blocked Persons List”shall mean the “Specially Designated Nationals List and Blocked
		

		
			Persons List” maintained by OFAC and any other similar or equivalent published list of individuals or entities maintained by a Governmental Authority, as the same may be amended, supplemented or substituted from time to time;
		

		
			“Borrower”shall have the meaning ascribed thereto in the preamble;
		

		
			“Borrower Restructuring”shall mean, collectively, the transactions contemplated by Section
		

		
			9.5 hereof and Section 9.5 of the GREEN BAY Credit Facility;
		

		
			“Capital Expenditures”shall mean with respect to the Guarantor and the Subsidiaries, on a
		

		
			consolidated basis, for any period (without duplication), any expenditure for fixed assets or that is properly chargeable to capital account in accordance with GAAP;
		

		
			“Capital Lease”shall mean, as applied to any Person, any lease of any property
		

		
			(whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person;
		

		
			“Cash Equivalents”means, as at any date of determination, any of the following: (a)
		

		
			marketable securities (i) issued or directly and unconditionally guaranteed as to interest and principal by the United States government, or (ii) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one (1) year after such date; (b) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one (1) year after such date and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (c) commercial paper maturing no more than one (1) year from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-I from Moody’s; (d) certificates of deposit or bankers’ acceptances maturing within one (1) year after such date and issued or accepted by (x) any Lender, (y) any foreign lending institution so long as it holds Indebtedness of the Guarantor or its Subsidiaries or (z) by any commercial bank organized under the
		

		
			 
		

		

		

		 

 

		laws of the United States or any state thereof or the District of Columbia that (i) is at least “adequately capitalized” (as defined in the regulations of its primary federal or other applicable banking regulator), and (ii) has Tier 1 capital (as defined in such regulations, or the equivalent foreign regulations, if applicable) of not less than $100,000,000; (e) shares of any money market mutual fund that (i) has substantially all of its assets invested continuously in the types of investments referred to in clauses (a) and (b) above, (ii) has net assets of not less than $500,000,000, and (iii) has the highest rating obtainable from either S&P or Moody’s; (f) overnight repurchase investments and overnight Eurodollar sweep investments; and (g) corporate bonds maturing within one (1) year after such date and having a rating of at least A- from S&P or at least A3 from Moody’s; provided that, for purposes of this Agreement, such corporate bonds shall be valued at a margin of 90% thereof;
		

		
			“Change of Control”shall mean (a) any “person” (as such term is used in Sections 13(d)
		

		
			and 14(d) of the Exchange Act), other than the existing owners, becoming the beneficial owner (as defined in Rules 13d-3 under the Exchange Act), directly or indirectly, of more than 30% of the total voting power of the Guarantor or (b) the Guarantor ceases to own directly 100% of the Borrower or (c) the Board of Directors of the Guarantor ceases to consist of a majority of the directors existing on the date hereof or directors nominated by at least two-thirds (2/3) of the then existing directors;
		

		
			“Classification Society”shall mean American Bureau of Shipping or any other member of
		

		
			the International Association of Classification Societies reasonably acceptable to the Lenders (with whom the Vessel is entered and who conducts periodic physical surveys and/or inspections of the Vessel);
		

		
			“Closing Date”shall mean the day and year first written above;
		

		
			“Code”shall mean the Internal Revenue Code of 1986, as amended, and
		

		
			any successor statute and regulation promulgated thereunder;
		

		
			“Collateral”shall mean, all property or other assets, real or personal, tangible
		

		
			or intangible, whether now owned or hereafter acquired in which the Security Trustee or any Lender has been granted a security interest pursuant to any Transaction Document;
		

		
			“Commercial Manager”shall mean Borrower or such other manager acceptable to the
		

		
			Facility Agent;
		

		
			“Commodity Exchange Act”shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as
		

		
			amended from time to time, and any successor statute;
		

		
			“Commitment(s)”shall mean in relation to a Lender, the portion of the Facility set
		

		
			out opposite its name in Schedule I hereto or, as the case may be, in any relevant Assignment and Assumption Agreement, as changed from time to time pursuant to the terms of this
		

		
			 
		

		

		

		 

 

		Agreement;
		

		
			“Compliance Certificate”shall mean a certificate certifying the compliance by each of the
		

		
			Security Parties with all of its covenants contained herein and showing the calculations thereof in reasonable detail, delivered by the chief financial officer of the Guarantor to the Facility Agent from time to time pursuant to Section 9.1(d) in the form set out in Exhibit C or in such other form as the Facility Agent may agree;
		

		
			“Consolidated EBITDA”shall mean, for any period, with respect to the Guarantor and its
		

		
			Subsidiaries, the sum of (without duplication) (a) Consolidated Net Income; (b) all Consolidated Interest Expense of the Guarantor and its Subsidiaries; (c) income taxes of the Guarantor and its Subsidiaries; (d) depreciation and amortization of the Guarantor and its Subsidiaries determined on a consolidated basis in accordance with GAAP for such period; and (e) the unamortized balance of the gain with respect to the sale of the vessel GREEN BAY pursuant to the sale/leaseback transaction that occurred on February 22, 2012, for the four rolling quarters commencing with the quarter ending September 30, 2014 and ending with the quarter ending June 30, 2015; provided, that if any Subsidiary is not wholly-owned by the Guarantor, Consolidated EBITDA shall be reduced (to the extent not otherwise reduced in accordance with GAAP) by an amount equal to (i) the amount of Consolidated Net Income attributable to such Subsidiary multiplied by (ii) the percentage ownership interest in the income of such Subsidiary not owned by the Guarantor on the last day of such period; provided, further, that, for the period of four fiscal quarters commencing with the quarter ending September 30, 2014 and ending with the quarter ending June 30, 2015, all non-cash gains and/or losses from dispositions of any assets allowed under the Regions Credit Agreement or consented to by the Required Lenders thereunder shall be excluded in the calculation of Consolidated EBITDA;  provided, however, that if any acquisition or disposition of assets permitted to be made under this Agreement (other than non-material acquisitions or dispositions in the ordinary course of business, each with a total value of less than $2,000,000) occurs during such period of determination, Consolidated EBITDA for such period shall be calculated on a pro forma basis to give effect to such acquisition or disposition as if each such acquisition or disposition has been consummated on the first day of such period; provided, further that Consolidated EBITDA based on any such acquisition shall only be based on contracted cash flow;
		

		
			“Consolidated EBITDAR”shall mean, with respect to the Guarantor and its Subsidiaries, on a
		

		
			consolidated basis, for any period (without duplication) the sum of (i) Consolidated EBITDA for such period and (ii) Consolidated Lease Expense for such period;
		

		
			 
		

		
			 
		

		
			“Consolidated Fixed Charge Coverage    shall mean, as of any date of determination, the ratio of (a) 
		

		
			Ratio”  Consolidated EBITDAR for the period of the four fiscal quarters
		

		
			 of the Guarantor most recently ended, minus taxes paid in cash      during such period, minus maintenance Capital Expenditures for the four fiscal quarters of the Guarantor most recently ended: provided that maintenance Capital Expenditure shall be calculated at 50% of consolidated depreciation expense;
		

		
			 
		

		
			“Consolidated Fixed Charges”shall mean with respect to the Guarantor and the Subsidiaries, on a
		

		
			consolidated basis, for any period (without duplication), the sum of (i) Consolidated Interest Expense for such period; (ii) Consolidated Lease Expense for such period; (iii) scheduled principal payments for any outstanding Indebtedness during the applicable period, and (iv) the amount of cash dividends and other distributions made by the Guarantor during such period (other than dividends paid on common stock of the Guarantor in such period in an amount up to $10,000,000). For purposes of this definition, “scheduled principal payments” (a) shall be determined without giving effect to any reduction of such scheduled payments resulting from the application of any voluntary or mandatory prepayments made during the applicable period, (b) shall be deemed to include the Attributable Principal Amount in respect of asset securitization programs and Synthetic Leases and (c) shall not include any voluntary prepayments or mandatory prepayments required pursuant to Section 2.11 of the Regions Credit Agreement;
		

		
			“Consolidated Interest Expense”shall mean, with respect to the Guarantor and the Subsidiaries, on
		

		
			a consolidated basis, for any period (without duplication), interest expense, whether paid or accrued (including the interest component of asset securitization programs and Synthetic Leases), on all Indebtedness of the Guarantor and its Subsidiaries for such period, net of interest income, all determined in accordance with GAAP;
		

		
			“Consolidated Lease Expense”shall mean with respect to the Guarantor and its Subsidiaries, on a
		

		
			consolidated basis, for any period (without duplication), all amounts payable under any leases (whether Capital Leases or operating leases) and time charter agreements which may be classified as operating lease expenses, charter hire expenses or rent as determined in accordance with GAAP during the period in question;
		

		
			“Consolidated Lease Adjustmentshall mean the sum of (i) all Indebtedness of the Guarantor and its      Subsidiaries (other than obligations under any Swap Contract) determined on a consolidated basis in accordance with GAAP and (ii) the product of 6 times the Consolidated Lease Expence of the Guarantor and its Subsidiaries for the past 12 months determined on a consolidated basis in accordance with GAAP;
		

		
			“Consolidated Tangible Net Worth”         shall mean, with respect to the Guarantor and its Subsidiaries, at
		

		
			                                                           any date for which a determination is to be made (determined on a
		

		
			 
		

		

		

		 

 

		consolidated basis without duplication in accordance with GAAP) (a) total stockholders’ equity minus (b) goodwill;
		

		
			“Consolidated Leverage Ratio”shall mean, as of any date of determination, the ratio of (a)
		

		
			Consolidated Lease Adjusted Indebtedness as of such date to (b) Consolidated EBITDAR for the period consisting of the four fiscal quarters of the Guarantor most recently ended;
		

		
			“Consolidated Net Income”shall mean, for any period, the consolidated net income of the
		

		
			Guarantor and its Subsidiaries for such period, as shown on the consolidated financial statements of the Guarantor and its Subsidiaries delivered in accordance with Section 9.1(d);
		

		
			“Creditor(s)”shall mean, together, the Mandated Lead Arrangers, the Agents
		

		
			and the Lenders, each a “Creditor”;
		

		
			“Debt Service”shall mean the scheduled principal amortization payments, the
		

		
			scheduled interest payments and payment of any fees payable under the Transaction Documents;
		

		
			“Default”shall mean any event that would, with the giving of notice or
		

		
			passage of time, or both, be an Event of Default;
		

		
			“Default Rate”shall mean a rate per annum equal to two percent (2%) over the
		

		
			Applicable Rate;
		

		
			“DOC”shall mean a document of compliance issued to an Operator in
		

		
			accordance with rule 13 of the ISM Code;
		

		
			“Dollars” and the sign “$”shall mean the legal currency, at any relevant time hereunder, of
		

		
			the United States of America and, in relation to all payments hereunder, in same day funds settled through the New York Clearing House Interbank Payments System (or such other Dollar funds as may be determined by the Facility Agent to be customary for the settlement in New York City of banking transactions of the type herein involved);
		

		
			“Drawdown Date”shall mean the date, being a Banking Day, upon which the
		

		
			Borrower has requested that the Facility be made available to the Borrower, and the Facility is made available to the Borrower, as provided in Section 3;
		

		
			“Drawdown Notice”shall have the meaning ascribed thereto in Section 3.3;
		

		
			“Earnings”means, in relation to the Vessel, all moneys whatsoever which are
		

		
			now, or later become, payable (actually or contingently) to the Borrower or the Security Trustee (net of charter commissions payable in respect of the Vessel) and which arise out of the use or operation of the Vessel, including (but not limited to):
		

		
			(a)except to the extent that they fall within paragraph (b):
		

		
			(i)all freight, hire and passage moneys;
		

		
			 
		

		 

 

			
	
			
				 (ii)
			

			
	
			
			compensation payable to the Borrower or the Security Trustee in the event of requisition of the Vessel for hire;

			
	
			
				 (iii)
			

			
	
			
			remuneration for salvage and towage services;

			
	
			
				 (iv)
			

			
	
			
			demurrage and detention moneys;

			
	
			
				 (v)
			

			
	
			
			damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Vessel; and

			
	
			
				 (vi)
			

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

		
			(b)if and whenever, with the consent of the Facility Agent,
		

		
			the Vessel is employed on terms whereby any moneys falling within paragraphs (a)(i) to (vi) are pooled or shared with any other Person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Vessel;
		

		
			 
		

		
			“Earnings Account”shall mean the bank account no. 2910053679 maintained in the
		

		
			Name of the Borrower with Account Bank:
		

		
			 
		

		
			“Earnings and Charterpartiesshall mean the first priority assignment of Earnings, charterparties Assignment”and requisition compensation in respect of (i) the Earnings of the  
		

		
			Vessel from, any and all sources (including requisition   compensation) and (ii) any charter or other contract relating to the 
		

		
			Vessel, to be executed by the Borrower in favor of the Security
		

		
			Trustee pursuant to Section 4.1(s)(i), substantially in the form set
		

		
			Out in Exhibit E:
		

		
			   
		

		
			“Environmental Affiliate(s)”shall mean, with respect to a Security Party, any Person or entity,
		

		
			the liability of which for Environmental Claims any Security Party may have assumed by contract or operation of law;
		

		
			“Environmental Approval(s)”shall have the meaning ascribed thereto in Section 2.1(q);
		

		
			“Environmental Claim(s)”shall have the meaning ascribed thereto in Section 2.1(q);
		

		
			“Environmental Law(s)”shall have the meaning ascribed thereto in Section 2.1(q);
		

		
			“ERISA”shall mean the Employee Retirement Income Security Act of
		

		
			1974, as amended, and any successor statute and regulation promulgated thereunder;
		

		
			“ERISA Affiliate”shall mean a trade or business (whether or not incorporated) which
		

		
			is under common control with any Security Party or any of their respective subsidiaries within the meaning of Sections 414(b), (c), (m) or (o) of the Code or which would be considered a member of a “controlled group” with any Security Party or any of their respective subsidiaries under Section 4001 of ERISA;
		

		
			“ERISA Funding Event”shall mean (i) any failure by any Plan to satisfy the minimum
		

		
			funding standards (for purposes of Section 412 of the Code or
		

		
			 
		

		

		

		 

 

		Section 302 of ERISA), whether or not waived; (ii) the filing pursuant to Section 412 of the Code or Section 303 of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (iii) the failure by any Security Party, any of their respective subsidiaries or any ERISA Affiliate to make any required contribution to a Multiemployer Plan; (iv) a determination that any Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430(i) of the Code); (v) the incurrence by any Security Party, any of their respective subsidiaries or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; (vi) the receipt by any Security Party, any of their respective subsidiaries or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from any Security Party, any of their respective subsidiaries or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent within the meaning of Section 4245 of ERISA, in reorganization within the meaning of Section 4241 of ERISA, or in endangered or critical status within the meaning of Section 432 of the Code or Section 305 of ERISA; (vii) any “reportable event”, as defined in Section 4043 of ERISA with respect to a Plan (other than an event for which the 30-day notice period to the PBGC is waived); or (viii) the existence with respect to any Plan of a “prohibited transaction” for purposes of Section 406 of ERISA or Section 4975 of the Code;
		

		
			“ERISA Termination Event”shall mean (i) the imposition of any lien under Section 430(k) of
		

		
			the Code or any other lien in favor of the PBGC or any Plan or Multiemployer Plan on any asset of any Security Party, any of their respective subsidiaries or any ERISA Affiliate in connection with any Plan or Multiemployer Plan; (ii) the receipt by any Security Party, any of their respective subsidiaries or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Multiemployer Plan or to appoint a trustee to administer any Plan or Multiemployer Plan under Section 4042 of ERISA; (iii) the filing of a notice of intent to terminate a Plan under Section 4041 of ERISA or the treatment of a Multiemployer Plan amendment as a termination under Section 4041A of ERISA; (iv) the institution of proceeding to terminate a Plan or a Multiemployer Plan; (v) the incurrence by any Security Party, any of their respective subsidiaries or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Plan or Multiemployer Plan; or (vi) the occurrence of any other event or condition which might constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan;
		

		
			“Event(s) of Default”shall mean any of the events set out in Section 8.1;
		

		
			“Excess Cash Flow”shall mean the aggregate amount of the Earnings of the Vessel
		

		
			during each fiscal quarter of the Borrower’s fiscal year minus
		

		
			 
		

		

		

		 

 

		during each such period:
		

			
	
			
				 (a)
			any voyage expenses of the Vessel payable by the Borrower;

			
	
			
				 (b)
			operating expenses (including expenses related to special survey, dry-docking, crew costs, insurance, maintenance, stores, lube oils, etc.) of the Vessel and corporate overhead of the Borrower relating to the Vessel in accordance with the operating expenditure budget delivered pursuant to Section 9.1(d)(vii) up to an amount equal to the OpEx Cap Amount;

			
	
			
				 (c)
			scheduled payments of principal and interest under this Agreement; and

			
	
			
				 (d)
			any other amounts payable hereunder or under the other Transaction Documents, including any fees and expenses;

		
			“Exchange Act”shall mean the Securities and Exchange Act of 1934, as amended;
		

		
			“Facility”shall mean the facility to be made available by the Lenders to the
		

		
			Borrower hereunder pursuant to Section 3 in the maximum principal amount equal to the lesser of (i) Thirty Two Million Dollars ($32,000,000) and (ii) sixty percent (60%) of the Fair Market Value of the Vessel, or the balance thereof from time to time outstanding;
		

		
			“Facility Agent”shall have the meaning ascribed thereto in the preamble;
		

		
			“Fair Market Value”shall mean, at any time and from time to time, a desk-top charter-
		

		
			free appraisal on an “as is”, “willing seller, willing buyer” basis of the Vessel from one independent ship broker selected by the Facility Agent (which shall be one of Maritime Strategies International Ltd., Hesnes Shipping, Fearnley’s A/S and H. Clarkson & Company unless the Facility Agent advises the Borrower otherwise in its sole discretion) or at the Borrower’s option, the average of two (2) appraisals from one ship broker selected by the Facility Agent above and one Approved Ship Broker selected by the Borrower and appointed by the Facility Agent; provided, that if the higher of the two valuations exceeds the lower of the two valuations by more than 10%, Fair Market Value will be the average of three (3) such appraisals by adding another appraisal from one Approved Ship Broker selected by the Facility Agent;
		

		
			“FATCA”shall mean Sections 1471 through 1474 of the Code, as of the date
		

		
			of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof;
		

		
			“Fee Letter”shall mean the fee letter of even date herewith between the
		

		
			Borrower and the Facility Agent;
		

		
			 
		

		

		

		 

 

		“Final Payment Date”shall mean March 31, 2020;
		

		
			“Foreign Plan”shall mean an employee benefit plan, program, policy, scheme or
		

		
			arrangement that is not subject to U.S. law and is maintained or contributed to by any Security Party or any of their respective subsidiaries or for which any Security Party or any of their respective subsidiaries has or could have any liability;
		

		
			“Foreign Termination Event”shall mean the occurrence of an event with respect to the funding
		

		
			or maintenance of a Foreign Plan, that could reasonably be expected to result in a lien on, or seizure of, any collateral hereunder;
		

		
			“Foreign Underfunding Event”shall mean the excess, if any, of the accrued benefit obligations of
		

		
			a Foreign Plan (based on those assumptions used to fund that Foreign Plan or, if that Foreign Plan is unfunded, based on those assumptions used for financial accounting statement purposes or, if accrued benefit obligations are not calculated for financial accounting purposes, based on such reasonable assumptions as may be approved by the applicable Security Party’s independent auditors for these purposes) over the sum of (i) the assets of such Foreign Plan and (ii) the liability related to such Foreign Plan accrued for financial accounting statement purposes;
		

		
			“GAAP”shall have the meaning ascribed thereto in Section 1.3;
		

		
			“GLOVIS COUNTESS-$38.5M Credit shall mean the “GLOVIS COUNTESS Mortgage” as defined in
		

		
			Facility Mortgage”the GREEN BAY Credit Facility;
		

		
			“GREEN BAY”shall mean that certain pure car truck carrier GREEN BAY with
		

		
			IMO No. 9339818;
		

		
			“GREEN BAY Assignments”shall mean the GREEN BAY Earnings and Charterparties
		

		
			Assignment and the GREEN BAY Insurances Assignment;
		

		
			“GREEN BAY Credit Facility”shall mean the credit facility contemplated by that certain credit
		

		
			agreement providing for a senior secured term loan of up to $38,500,000, dated August 26, 2014, between LCI Shipholdings, as borrower, and DVB Bank SE, as facility agent and security trustee and as lender, as amended, amended and restated, supplemented or otherwise modified from time to time;
		

		
			“GREEN BAY-$38.5M Credit Facility shall mean the “Mortgage” as defined in the GREEN BAY Credit
		

		
			Mortgage”Facility;
		

		
			“GREEN BAY Earnings Account”shall mean the bank account no. 2910053652 (or such other bank
		

		
			account designed as “Earnings Account” under the GREEN BAY Credit Facility), maintained in the name of the Borrower with Account Bank;
		

		
			“GREEN BAY Earnings andshall mean the assignment of Earnings, charterparties and
		

		
			Charterparties Assignment”requisition compensation in respect of (i) the Earnings of the
		

		
			GREEN BAY from any and all sources (including requisition
		

		
			 
		

		

		

		 

 

		compensation) and (ii) any charter or other contract relating to the GREEN BAY, substantially in the form set out in Exhibit E;
		

		
			“GREENBAY Insurances Assignment” shall mean the assignment in respect of the insurances over the GREEN BAY, substantially in the form set out in Exhibit F;
		

		
			“GREEN BAY Mortgage”shall mean the preferred Marshall Islands mortgage over the
		

		
			GREEN BAY, securing the Facility, substantially in the form attached hereto as Exhibit G-2;
		

		
			“GREEN BAY Retention Account”shall mean the bank account no. 2910053660 (or such other bank
		

		
			account designed as “Earnings Account” under the GREEN BAY Credit Facility) maintained in the name of the Borrower with Account Bank;
		

		
			“Guaranteed Obligations”shall have the meaning ascribed thereto in Section 11.1;
		

		
			“Guarantor”shall have the meaning ascribed thereto in the preamble;
		

		
			“Indebtedness”shall mean, with respect to any Person at any date of determination
		

		
			(without duplication), (i) all indebtedness of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto), (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery thereof or the completion of such services, except trade payables, (v) all obligations on account of principal of such Person as lessee under capitalized leases, (vi) all indebtedness of other Persons secured by a lien on any asset of such Person, whether or not such indebtedness is assumed by such Person; provided that the amount of such indebtedness shall be the lesser of (a) the fair market value of such asset at such date of determination and (b) the amount of such indebtedness, and (vii) all indebtedness of other Persons guaranteed by such Person to the extent guaranteed; the amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation, provided that the amount outstanding at any time of any indebtedness issued with original issue discount is the face amount of such indebtedness less the remaining unamortized portion of the original issue discount of such indebtedness at such time as determined in conformity with GAAP; and provided further that Indebtedness shall not include any liability for current or deferred federal, state, local or other taxes, or any current trade payables;
		

		
			“ING Credit Agreement”shall mean the facility agreement, dated as of August 2, 2010,
		

		
			providing for a senior secured term loan of up to $55,200,000
		

		
			 
		

		

		

		 

 

		between the Borrower, as borrower, and ING Bank N.V., as facility agent and security trustee and lender, as such agreement is amended, amended and restated, supplemented or otherwise modified from time to time;
		

		
			“Indemnitee”shall have the meaning ascribed thereto in Section 19.8;
		

		
			“Initial Charter Party Agreement”shall mean the time charter agreement set forth on Schedule V;
		

		
			“Initial Charterer”shall mean Hyundai Glovis Co. Ltd.;
		

		
			“Initial Payment Date”shall mean July 31, 2015;
		

		
			“Insurances Assignment”shall mean the first priority assignment in respect of the insurances
		

		
			over the Vessel, to be executed by the Borrower in favor of the Security Trustee pursuant to Section 4.1(s)(ii), substantially in the form set out in Exhibit F;
		

		
			“Interest Expense”shall mean, with respect to the Guarantor and the Subsidiaries, on
		

		
			a consolidated basis, for any period (without duplication), interest expense, whether paid or accrued (including the interest component of capitalized leases), on all Indebtedness of the Guarantor and the Subsidiaries for such period, net of interest income, all determined in accordance with GAAP;
		

		
			“Interest Period”shall mean a period of three (3) months or as otherwise agreed
		

		
			upon by the Facility Agent and the Borrower;
		

		
			“ISM Code”shall mean the International Safety Management Code for the Safe
		

		
			Operating of Ships and for Pollution Prevention constituted pursuant to Resolution A.741(18) of the International Maritime Organization and incorporated into the Safety of Life at Sea Convention and includes any amendments or extensions thereto and any regulation issued pursuant thereto;
		

		
			“ISPS Code”shall mean the International Ship and Port Facility Security Code
		

		
			adopted by the International Maritime Organization at a conference in December, 2002 and amending the Safety of Life at Sea Convention and includes any amendments or extensions thereto and any regulation issued pursuant thereto;
		

		
			“ISSC”shall mean the International Ship Security Certificate issued
		

		
			pursuant to the ISPS Code;
		

		
			“LCI Shipholdings”shall mean LCI Shipholdings, Inc., a corporation existing under
		

		
			the laws of the Marshall Islands;
		

		
			“Lenders”shall have the meaning ascribed thereto in the preamble;
		

		
			“LIBOR”shall mean the rate (rounded upward to the nearest 1/16th of one
		

		
			percent) for deposits of Dollars for the relevant Interest Period at or about 11:00 A.M. (London time) on the second London Banking Day before the first day of such period as displayed on the Reuters screen “LIBOR01”, or any successor service for the
		

		
			 
		

		

		

		 

 

		purpose of displaying the London Interbank rates of major banks for Dollars (the Reuters screen “LIBOR01” is the display designated as the Reuters screen “LIBOR01”, or such other page as may replace the Reuters screen “LIBOR01” on that service or such other service or services as may be administered by ICE Benchmark Administration Limited (or any other Person which takes over the administration of that rate) for the purpose of displaying London Interbank offered rates for Dollar deposits), provided, however, that LIBOR shall never be less than 0%;
		

		
			“Liquidity”means the sum of Revolver Undrawn Availability plus
		

		
			“Loan Administration Form”shall mean the DVB loan administration form as attached in
		

		
			Exhibit M;
		

		
			“Majority Lenders”at any time shall mean Lenders holding an aggregate of more than
		

		
			66.67% of the Facility then outstanding;
		

		
			“Manager’s Undertaking”shall mean letters of undertaking to the Facility Agent to be issued
		

		
			by any party that is or becomes the Commercial Manager (unless the Borrower is the Commercial Manager) or the Technical Manager, substantially in the form set out in Exhibit J or in such form acceptable to the Facility Agent, pursuant to which such manager shall subordinate its rights to those of the Creditors;
		

		
			“Mandated Lead Arranger”shall have the meaning ascribed thereto in the preamble;
		

		
			“Mandatory Costs”shall mean in relation to the Facility or an unpaid sum the rate per
		

		
			annum notified by any Lender to the Facility Agent to be the cost to that Lender of compliance with all reserve asset, liquidity or cash margin or similar requirement of any Federal Reserve Bank, any other central bank or European Central Bank or the Financial Services Authority or similar institution whose requirements such Lender complies with;
		

		
			“Margin”shall mean 275 basis points;
		

		
			“Material Adverse Effect”shall mean a material adverse effect on the ability or prospective
		

		
			ability of the Borrower and/or the Guarantor to meet any of their respective obligations with regard to (i) the Facility and the financing arrangements established in connection therewith or (ii) any of their respective Indebtedness or other obligations that, considered as a whole, are material to the Borrower and/or the Guarantor;
		

		
			“Materials of Environmental Concern” shall have the meaning ascribed thereto in Section 2.1(q);
		

		
			“Mortgage”shall mean the first preferred Marshall Islands mortgage on the
		

		
			Vessel, substantially in the form attached hereto as Exhibit G-1;
		

		
			“MTSA”shall mean the Maritime & Transportation Security Act, 2002, as
		

		
			amended, inter alia, by Public Law 107-295;
		

		
			 
		

		

		

		 

 

		“Multiemployer Plan”shall mean, at any time, a “multiemployer plan” (as defined in
		

		
			Section 4001(a)(3) of ERISA) to which any Security Party, any of their respective Subsidiaries or any ERISA Affiliate has any liability or obligation to contribute or has within any of the six preceding plan years had any liability or obligation to contribute;
		

		
			“Note”shall mean the promissory note to be executed by the Borrower to
		

		
			the order of the Facility Agent pursuant to Section 4.1(c), to evidence the Facility substantially in the form set out in Exhibit A;
		

		
			“OFAC”shall have the meaning ascribed thereto in Section 19.9;
		

		
			“Operator”shall mean the Person who is concerned with the operation of the
		

		
			Vessel and falls within the definition of “Company” set out in rule 1.1.2 of the ISM Code;
		

		
			“OpEx Cap Amount”shall mean $6,652 per day to be increased as of March 1 of each
		

		
			subsequent year following the Closing Date by 3.0% for each subsequent one-year period;
		

		
			“Other Borrower Vessels”shall mean (i) the 23,054 gross registered tons and 11,349 net
		

		
			registered tons currently named “EGS CREST”, IMO Number 9576727 and (ii) the 23,054 gross registered tons and 11,349 net registered tons currently named “EGS WAVE”, IMO Number 9576741;
		

		
			“Parallel Debt”shall have the meaning ascribed to it in Section 17.17(a);
		

		
			“Pari Passu Intercreditor Agreement”shall mean the intercreditor agreement substantially in the form set
		

		
			out in Exhibit L;
		

		
			“PATRIOT Act”shall have the meaning ascribed to it in Section 19.9;
		

		
			“Payment Dates”shall mean the Initial Payment Date and the dates falling at three
		

		
			(3) month intervals thereafter, the last of which is the Final Payment Date;
		

		
			“PBGC”shall mean the Pension Benefit Guaranty Corporation or any
		

		
			successor entity thereto;
		

		
			“Person”shall mean any individual, sole proprietorship, corporation,
		

		
			partnership (general or limited), limited liability company, business trust, bank, trust company, joint venture, association, joint stock company, trust or other unincorporated organization, whether or not a legal entity, or any government or agency or political subdivision thereof;
		

		
			“Plan”shall mean any employee benefit plan (other than a Multiemployer
		

		
			Plan subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect to which any Security Party, any of their respective subsidiaries or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as
		

		
			 
		

		

		

		 

 

		defined in Section 3(5) of ERISA;
		

		
			“Prepayment Premium”shall mean, with respect to prepayments made (i) on or prior to the
		

		
			first anniversary of the Drawdown Date, an amount equal to three percent (3%) of the amount to be prepaid, (ii) after the first anniversary of the Drawdown Date but on or prior to the second anniversary of the Drawdown Date, an amount equal to two percent (2%) of the amount to be prepaid, (iii) after the second anniversary of the Drawdown Date but on or prior to the third anniversary of the Drawdown Date, an amount equal to one percent (1%) of the amount to be prepaid or (iv) after the third anniversary of the Drawdown Date, zero;
		

		
			“Principal Obligations”shall mean, in relation to the Borrower or the Guarantor all
		

		
			monetary obligations (other than its Parallel Debt) which now or at any time hereafter may be or become due, owing or incurred by the Borrower or the Guarantor to any Creditor, whether due or not, whether contingent or not and whether alone or jointly with others, as principal, surety or otherwise, under or in connection with or pursuant to the Transaction Documents, as such obligations may be extended, restated, prolonged, amended, renewed or novated from time to time;
		

		
			“Proceeding”shall have the meaning ascribed thereto in Section 8.1(i);
		

		
			“Regions Credit Agreement”shall mean that certain credit agreement, dated as of September 24,
		

		
			2013, between, among others, the Guarantor as a borrower and Regions Bank as administrative agent and collateral agent, as such agreement is amended, amended and restated, supplemented or otherwise modified from time to time;
		

		
			“Required Percentage”shall mean (i) on or prior to the second anniversary of the
		

		
			Drawdown Date, one hundred thirty-five percent (135%), (ii) after the second anniversary of the Drawdown Date but on or prior to the fourth anniversary of the Drawdown Date, one hundred fifty percent (150%) and (iii) after the fourth anniversary of the Drawdown Date, one hundred seventy-three percent (173%);
		

		
			“Retention Account”shall mean the bank account no. 2910053687 maintained in the
		

		
			name of the Borrower with Account Bank;
		

		
			“Revolver Undrawn Availability”shall mean, at any time, the maximum amount of revolving loans
		

		
			that could be incurred by the borrowers under the Regions Credit Agreement (but not to exceed the unutilized revolving commitments of the lenders thereof at such time) such that the Guarantor would remain in compliance with the financial covenants set forth in sections 8.8(a)(i) and 8.8(a)(vi) thereof, determined on a pro forma basis, after giving effect to such revolving loans thereunder;
		

		
			“Sanctions”shall mean any trade, economic or financial sanctions, laws,
		

		
			regulations, embargoes or restrictive measures (i) enacted, enforced or imposed by the United States, including without
		

		
			 
		

		

		

		 

 

		limitation, the Trading With The Enemy Act, the International Emergency, Economic Powers Act, the Iran Sanctions Act of 1996, as amended, the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, the National Defense Authorization Act of 2012 (including the Iran Freedom Counter-Proliferation Act), the Iran Threat Reduction and Syria Human Rights Act of 2012, all as amended; any executive order, directive, or regulation pursuant to the authority of any of the foregoing, including the regulations of the U.S. Treasury Department set forth under 31 CFR, Subtitle B, Chapter V, as amended, or any orders or licenses issued or administered thereunder by OFAC (including the Specially Designated Nationals List), and (ii) any non-U.S. economic or financial sanctions, regulations, trade embargoes or other restrictive measures promulgated or administered by the United Nations Security Council, the European Union or its Member States (including, without limitation, the United Kingdom and France), or the respective governmental institutions and agencies of any of the foregoing, including without limitation, OFAC, the United States Department of State, and Her Majesty’s Treasury (“HMT”), or other relevant sanctions authority (all of the foregoing collectively referred to as the “Sanctions Authorities”) that are applicable to (A) a Security Party or any Affiliate thereof in the operation of its business or (B) a Lender and have been designated as “Sanctions” by the Facility Agent (acting on the request of such Lender) but only to the extent that compliance with such sanctions, regulations, trade embargoes or other restrictive measures so designated does not conflict with any of the provisions listed in (i) and (ii)(A) hereof;
		

		
			“Security Document(s)”shall mean the Mortgage, the GREEN BAY Mortgage, the
		

		
			Assignments, the GREEN BAY Assignments, the Account Pledges, the Pari Passu Intercreditor Agreement and any other documents that may be executed as security for the Facility and the Borrower’s obligations in connection therewith or to establish any form of subordination or priorities arrangement in relation therewith;
		

		
			“Security Party”shall mean each of the Borrower and the Guarantor;
		

		
			“Security Trustee”shall have the meaning ascribed thereto in the preamble;
		

		
			“SMC”shall mean the safety management certificate issued in respect of
		

		
			the Vessel in accordance with rule 13 of the ISM code;
		

		
			“subsidiary”shall mean, with respect to any Person, any business entity of
		

		
			which more than 50% of the outstanding voting stock or other equity interest is owned directly or indirectly by such Person and/or one or more other subsidiaries of such Person;
		

		
			“Subsidiary”shall mean with respect to any Person, any subsidiary of such
		

		
			Person or if the context requires, any subsidiary of the Guarantor;
		

		
			“Swap Contract”shall mean (a) any and all rate swap transactions, basis swaps,
		

		
			 
		

		

		

		 

 

		credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transaction, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement;
		

		
			“Synthetic Lease”shall mean (a) a so-called synthetic, off-balance sheet or tax
		

		
			retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment);
		

		
			“Taxes”shall mean any present or future income or other taxes, levies,
		

		
			duties, charges, fees, deductions or withholdings of any nature now or hereafter imposed, levied, collected, withheld or assessed by any taxing authority whatsoever, except for (i) taxes on or measured by the overall net income of each Lender imposed by its jurisdiction of incorporation or applicable lending office, the United States of America, the State or City of New York or any governmental subdivision or taxing authority of any thereof or by any other taxing authority having jurisdiction over such Lender (unless such jurisdiction is asserted by reason of the activities of the Borrower or any of the Subsidiaries) ), (ii) taxes imposed under FATCA, or (iii) any Taxes that are attributable solely to the failure of any Lender to comply with Section 7.2(c);
		

		
			“Technical Manager”shall mean LMS Shipmanagement, Inc. (which may subcontract
		

		
			the services to Wallem Shipmanagement Limited) or such other manager acceptable to the Facility Agent;
		

		
			“Total Loss”shall have the meaning ascribed thereto in the Mortgage;
		

		
			“Transaction Documents”shall mean each of this Agreement, the Note, the Security
		

		
			Documents and the Fee Letter;
		

		
			“Unrestricted Cash”shall mean all unencumbered (other than security interests in favor
		

		
			of the Security Trustee securing the Facility) cash and Cash
		

		
			 
		

		

		

		 

 

		Equivalents of the Guarantor and its Subsidiaries at such time;
		

		
			“Vessel”shall mean that certain pure car truck carrier GLOVIS
		

		
			COUNTESS with IMO No. 9476721; and
		

		
			“Withdrawal Liability(ies)”shall mean liability to a Multiemployer Plan as a result of a
		

		
			complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part 1 of Subtitle E of Title IV of ERISA.
		

		
			1.2Computation of Time Periods; Other Definitional Provisions. In this Agreement, the Note
		

		
			and the other Transaction Documents, in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”; words importing either gender include the other gender; references to “writing” include printing, typing, lithography and other means of reproducing words in a tangible visible form; the words “including,” “includes” and “include” shall be deemed to be followed by the words “without limitation”; references to articles, sections (or subdivisions of sections), exhibits, annexes or schedules are to this Agreement, the Note or such Transaction Document, as applicable; references to agreements and other contractual instruments (including this Agreement, the Note and the Transaction Documents) shall be deemed to include all subsequent amendments, amendments and restatements, supplements, extensions, replacements and other modifications to such instruments (without, however, limiting any prohibition on any such amendments, extensions and other modifications by the terms of this Agreement, the Note or any Transaction Document); references to any matter that is “approved” or requires “approval” of a party shall mean approval given in the sole and absolute discretion of such party unless otherwise specified.
		

		
			1.3Accounting Terms. Unless otherwise specified herein, all accounting terms used in this
		

		
			Agreement, the Note and in the Transaction Documents shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Facility Agent or to the Lenders under this Agreement shall be prepared, in accordance with generally accepted accounting principles for the United States (“GAAP”), as amended from time to time including amendments to GAAP made as a result of the conformity of GAAP to International Financial Reporting Standards; provided, however, that for purposes of determining the Guarantor’s ratios and financial covenants set forth in Section 9.3, GAAP shall be GAAP in effect as at December 31, 2014.
		

		
			1.4Certain Matters Regarding Materiality. To the extent that any representation, warranty,
		

		
			covenant or other undertaking of any of the Security Parties in this Agreement is qualified by reference to those which are not reasonably expected to result in a “Material Adverse Effect” or language of similar import, no inference shall be drawn therefrom that any Agent or Lender has knowledge or approves of any noncompliance by such Security Party with any governmental rule.
		

		
			2.REPRESENTATIONS AND WARRANTIES
		

		
			2.1Representations and Warranties. In order to induce the Creditors to enter into this
		

		
			Agreement and to make the Facility available, each Security Party hereby represents and warrants to the Creditors (which representations and warranties shall survive the execution and delivery of this Agreement and the Note and the drawdown of the Facility) that:
		

		
			(a)Due Organization and Power. Each Security Party is validly existing in good standing under
		

		
			the laws of its jurisdiction of incorporation, has full power to carry on its business as now being conducted and to enter into and perform its obligations under this Agreement, the Note and the Transaction Documents to which it is a party, and is in compliance with all statutory, regulatory and other requirements relative to such business and such agreements;
		

		
			 
		

		 

 

			
	
			
				 (b)
			Authorization and Consents. All necessary corporate action has been taken to authorize, and all necessary consents and authorities have been obtained and remain in full force and effect to permit, each Security Party to enter into and perform its obligations under this Agreement, the Note and the Transaction Documents and, in the case of the Borrower to borrow, service and repay the Facility and, as of the date of this Agreement, no further consents or authorities are necessary for the service and repayment of the Facility or any part thereof;

			
	
			
				 (c)
			Binding Obligations. This Agreement, the Note and the Transaction Documents constitute or will, when executed and delivered, constitute the legal, valid and binding obligations of each Security Party that is a party thereto enforceable against such Security Party in accordance with their respective terms, except to the extent that such enforcement may be limited by equitable principles, principles of public policy or applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting generally the enforcement of creditors' rights;

			
	
			
				 (d)
			No Violation. The execution and delivery of, and the performance of the provisions of, this Agreement, the Note and the other Transaction Documents to which it is to be a party by each Security Party do not contravene any applicable law or regulation existing at the date hereof or any contractual restriction (including, without limitation, the Regions Credit Agreement and the ING Credit Agreement) binding on such Security Party or the certificate of incorporation or by-laws (or equivalent instruments) thereof and that the proceeds of the Facility shall be used by the Borrower exclusively for its own account and for the purpose set forth in Section 3.1(a);

			
	
			
				 (e)
			Filings; Stamp Taxes. Other than the recording of the Mortgage with the appropriate authorities for the Republic of the Marshall Islands, and the filing of Uniform Commercial Code Financing Statements with the Recorder of Deeds of the District of Columbia in respect of the Assignments, and the payment of filing or recording fees consequent thereto, it is not necessary for the legality, validity, enforceability or admissibility into evidence of this Agreement, the Note and the other Transaction Documents that any of them or any document relating thereto be registered, filed, recorded or enrolled with any court or authority in any relevant jurisdiction or that any stamp, registration or similar Taxes be paid on or in relation to this Agreement, the Note or the other Transaction Documents;

			
	
			
				 (f)
			Litigation. No action, suit or proceeding is pending or threatened against any Security Party before any court, board of arbitration or administrative agency which could or might have a Material Adverse Effect;

			
	
			
				 (g)
			No Default. No Security Party is in default under any agreement by which it is bound, or is in default in respect of any financial commitment or obligation, in each case, exceeding $5,000,000 individually or $20,000,000 in the aggregate;

			
	
			
				 (h)
			Vessel. The Vessel is:

			
	
			
				 
			

			
	
			
			(i)in the sole and absolute ownership of the Borrower and duly registered in the Borrower's name under the Marshall Islands flag, unencumbered, save and except for the Mortgage and the GLOVIS COUNTESS-$38.5M Credit Facility Mortgage and as permitted thereby;

			
	
			
				 (ii)
			

			
	
			
			classed in the highest classification and rating for vessels of the same age and type with its Classification Society without any outstanding recommendations;

			
	
			
				 (iii)
			

			
	
			
			operationally seaworthy and in every way fit for its intended service; and

			
	
			
				 (iv)
			

			
	
			
			insured in accordance with the provisions of the Mortgage and the requirements thereof in respect of such insurances will have been complied with;

		
			 
		

		

		

		 

 

		risks and in such amounts as are customary for companies engaged in similar businesses;
		

			
	
			
				 (j)
			Financial Information. Except as otherwise disclosed in writing to the Facility Agent on or prior to the date hereof, all financial statements, information and other data furnished by any Security Party to the Facility Agent are complete and correct, such financial statements have been prepared in accordance with GAAP and accurately and fairly present the financial condition of the parties covered thereby as of the respective dates thereof and the results of the operations thereof for the period or respective periods covered by such financial statements, and since the date of the Guarantor's financial statements most recently delivered to the Facility Agent, there has been no Material Adverse Effect as to any of such parties and none thereof has any contingent obligations, liabilities for taxes or other outstanding financial obligations except as disclosed in such statements, information and data;

			
	
			
				 (k)
			Tax Returns. Each Security Party has filed all material tax returns required to be filed thereby and has paid all taxes payable thereby which have become due, other than those not yet delinquent or the nonpayment of which would not have a Material Adverse Effect and except for those taxes being contested in good faith and by appropriate proceedings or other acts and for which adequate reserves shall have been set aside on its books;

			
	
			
				 (l)
			ERISA. The execution and delivery of this Agreement and the consummation of the transactions hereunder will not involve any “prohibited transaction” for purposes of ERISA or Section 4975 of the Code and no condition exists or event or transaction has occurred in connection with any Plan or Multiemployer Plan maintained or contributed to, or required to be maintained or contributed to, by any Security Party, any of their respective subsidiaries or any ERISA Affiliate resulting from the failure of any thereof to comply with ERISA which is reasonably likely to result in any Security Party, any of their respective subsidiaries or any ERISA Affiliate incurring any liability, fine or penalty which individually or in the aggregate could have a Material Adverse Effect. No ERISA Funding Event, ERISA Termination Event, Foreign Termination Event or Foreign Underfunding Event exists or has occurred, or is reasonably expected to exist or occur, that, when taken together with all other ERISA Funding Events, ERISA Termination Events, Foreign Termination Events and Foreign Underfunding Events that exist or have occurred, or which could reasonably be expected to exist or occur, could reasonably be expected to result in liability to the Security Parties, their respective subsidiaries and ERISA Affiliates in the aggregate in excess of $1,000,000;

			
	
			
				 (m)
			Chief Executive Office. The chief executive office and chief place of business of each Security Party and the office in which the records relating to the earnings and other receivables of each Security Party are kept is, and will continue to be, located at 11 North Water Street, Suite 18290, Mobile, Alabama 36602, USA, until such time as each Security Party relocates its offices to New Orleans, Louisiana with prior written notice to the Facility Agent, which is anticipated to occur in the first half of 2016;

			
	
			
				 (n)
			Foreign Trade Control Regulations. (i) None of the Security Parties nor any of their respective Subsidiaries, nor any director, officer, employee, agent, Affiliate or representative of a Security Party, is an individual or entity (“Person”) that is, or is owned or controlled by a Person that is a Blocked Person or otherwise the subject of any Sanctions.

		
			(ii)The Borrower will not, directly or indirectly, use the proceeds of the Facility, or
		

		
			lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person:
		

			
	
			
				 (A)
			to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions; or

			
	
			
				 (B)
			in any other manner that will result in a violation of Sanctions by any Person.

		
			 
		

		 

 

			
	
			
				 (iii)
			

			
	
			
			For the past 5 years, the Borrower has not knowingly engaged in, is not now knowingly engaged in, and will not knowingly engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.

			
	
			
				 (iv)
			

			
	
			
			None of the transactions contemplated herein will violate Sanctions.

			
	
			
				 (o)
			Money Laundering. (i) The operations of the Borrower are and have been conducted at all times in compliance with all applicable financial recordkeeping and reporting requirements, including those of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the Bank Secrecy Act, as amended by the PATRIOT Act, and the applicable anti-money laundering statutes of jurisdictions where the Borrower conducts business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Borrower with respect to the Anti-Money Laundering Laws is pending or, to the best knowledge of the Borrower, threatened.

		
			(ii) The Borrower requires the Facility for use in connection with its lawful organizational purpose and for no other purposes and the Borrower has not contravened any Anti-Money Laundering Laws. The Borrower represents that it is the ultimate beneficiary of the Facility to be made to it as contemplated in this Agreement and will promptly notify the Lenders (by written notice to the Facility Agent) if it ceases to be the ultimate beneficiary. Such written notice shall disclose the name and the address of the new ultimate beneficiary.
		

			
	
			
				 (p)
			Equity Ownership. The Borrower is owned directly one hundred percent (100%) by the Guarantor;

			
	
			
				 (q)
			Environmental Matters and Claims. (a) Except as heretofore disclosed in writing to the Facility Agent (i) each of the Borrower and its Affiliates (which for purposes of this Section 2.1(q) shall be deemed to include the Guarantor and its Affiliates) will, when required to operate their business as then being conducted, be in compliance with all applicable United States federal and state, local, foreign and international laws, regulations, conventions and agreements relating to pollution prevention or protection of human health or the environment (including, without limitation, ambient air, surface water, ground water, navigable waters, waters of the contiguous zone, ocean waters and international waters), including, without limitation, laws, regulations, conventions and agreements relating to (1) emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous materials, oil, hazardous substances, petroleum and petroleum products and by-products (“Materials of Environmental Concern”), or (2) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern (“Environmental Laws”); (ii) each of the Borrower and its Affiliates will, when required, have all permits, licenses, approvals, rulings, variances, exemptions, clearances, consents or other authorizations required under applicable Environmental Laws (“Environmental Approvals”) and will, when required, be in compliance with all Environmental Approvals required to operate their business as then being conducted; (iii) the Borrower has not nor has any Affiliate thereof received any notice of any claim, action, cause of action, investigation or demand by any person, entity, enterprise or government, or any political subdivision, intergovernmental body or agency, department or instrumentality thereof, alleging potential liability for, or a requirement to incur, material investigator costs, cleanup costs, response and/or remedial costs (whether incurred by a governmental entity or otherwise), natural resources damages, property damages, personal injuries, attorneys' fees and expenses, or fines or penalties, in each case arising out of, based on or resulting from (1) the presence, or release or threat of release into the environment, of any Materials of Environmental Concern at any location, whether or not owned by such person, or (2) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law or Environmental Approval (“Environmental Claim”) (other than Environmental Claims that have been fully and finally adjudicated or otherwise determined and all fines, penalties and other costs, if any, payable

		
			 
		

		

		

		 

 

		by the Security Parties in respect thereof have been paid in full or which are fully covered by insurance (including permitted deductibles)); and (iv) there are no circumstances that may prevent or interfere with such full compliance in the future; and (b) except as heretofore disclosed in writing to the Facility Agent there is no Environmental Claim pending or threatened against the Borrower or any Affiliate thereof and there are no past or present actions, activities, circumstances, conditions, events or incidents, including, without limitation, the release, emission, discharge or disposal of any Materials of Environmental Concern, that could form the basis of any Environmental Claim against such persons the adverse disposition of which may result in a Material Adverse Effect;
		

			
	
			
				 (r)
			Compliance with ISM Code, ISPS Code and MTSA. The Vessel and the Operator comply with the requirements of the ISM Code, the ISPS Code and the MTSA including, but not limited to, the maintenance and renewal of valid certificates pursuant thereto;

			
	
			
				 (s)
			Threatened Withdrawal of DOC or SMC. There is no threatened or actual withdrawal of the Operator's DOC or SMC in respect of the Vessel;

			
	
			
				 (t)
			Liens. Other than as disclosed in Schedule III, there are no liens of any kind on any property owned by any Security Party other than those liens created pursuant to this Agreement or the other Transaction Documents or permitted thereby;

			
	
			
				 (u)
			Indebtedness. Other than as disclosed in Schedule IV, none of the Security Parties has any Indebtedness;

			
	
			
				 (v)
			Payment Free of Taxes. All payments made or to be made by the Security Parties under or pursuant to this Agreement, the Note and the other Transaction Documents shall be made free and clear of, and without deduction or withholding for an account of, any Taxes;

			
	
			
				 (w)
			No Proceedings to Dissolve. There are no proceedings or actions pending or contemplated by any Security Party or, to the best knowledge of any Security Party, contemplated by any third party, to dissolve or terminate any Security Party;

			
	
			
				 (x)
			Solvency. In the case of each of the Security Parties, (a) the sum of its assets, at a fair valuation, does and will exceed its liabilities, including, to the extent they are reportable as such in accordance with GAAP, contingent liabilities, (b) the present fair market salable value of its assets is not and shall not be less than the amount that will be required to pay its probable liability on its then existing debts, including, to the extent they are reportable as such in accordance with GAAP, contingent liabilities, as they mature, (c) it does not and will not have unreasonably small working capital with which to continue its business and (d) it has not incurred, does not intend to incur and does not believe it will incur debts beyond its ability to pay such debts as they mature;

			
	
			
				 (y)
			Compliance with Laws. Each of the Security Parties is in compliance with all applicable laws, except where any failure to comply with any such applicable laws would not, alone or in the aggregate, have a Material Adverse Effect;

			
	
			
				 (z)
			GREEN BAY Credit Facility. All of the representations and warranties contained in Section 2 of the GREEN BAY Credit Facility are true and correct; and

		
			(bb)Survival. All representations, covenants and warranties made herein and in any certificate or
		

		
			other document delivered pursuant hereto or in connection herewith shall survive the making of the Facility and the issuance of the Note.
		

		
			 
		

		

		

		 

 

		3.THE FACILITY
		

		
			3.1Purposes. (a) The Lenders shall, during the Availability Period, make the Facility available
		

		
			to the Borrower for the purpose of partially financing the Vessel.
		

		
			(b)Making of the Facility. Each of the Lenders, relying upon each of the
		

		
			representations and warranties set out in Section 2, hereby severally and not jointly agrees with the Borrower that, subject to and upon the terms of this Agreement, it will, not later than 11:00 a.m. New York City time on the Drawdown Date, make its portion of the Facility, in Federal or other funds, immediately available in New York City to the Facility Agent at its address set forth on Schedule I or to such account of the Facility Agent most recently designated by it for such purpose by notice to the Lenders. Unless the Facility Agent determines that any applicable condition specified in Sections 4.1 or 4.2 has not been satisfied, the Facility Agent will make the funds so received from the Lenders available to the Borrower at the aforesaid address, subject to the receipt of the funds by the Facility Agent as provided in the immediately preceding sentence, not later than 2:30 P.M. (New York City time) on the Drawdown Dates, and in any event as soon as practicable after receipt. The Facility will be made available in one (1) drawing.
		

		
			3.2Receipt of Funds. Unless the Facility Agent shall have received notice from a Lender prior
		

		
			to the Drawdown Date that such Lender will not make available to the Facility Agent such Lender’s share of the Advance, the Facility Agent may assume that such Lender has made such share available to the Facility Agent on the Drawdown Date in accordance with this Section 3.2 and the Facility Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such share available to the Facility Agent, such Lender and the Borrower (but without duplication) severally agree to repay to the Facility Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Facility Agent, at (i) in the case of the Borrower, a rate per annum equal to the Applicable Rate and (ii) in the case of such Lender, the actual costs of funds incurred by the Facility Agent for such funds. If such Lender shall repay to the Facility Agent such corresponding amount, such amount so repaid shall constitute such Lender’s share of the Advance for purposes of this Agreement as of the Drawdown Date. Nothing in this Section 3.2 shall be deemed to relieve any Lender of its obligation to make its share of the Advance to the extent provided in this Agreement. In the event that the Borrower is required to repay the Advance to the Facility Agent pursuant to this Section 3.2 as between the Borrower and the defaulting Lender, the liability for any breakfunding costs as described in Section 4.3 shall be borne by the defaulting Lender. If the defaulting Lender has not paid any such breakfunding costs upon demand by the Facility Agent therefor, the Borrower shall pay such breakfunding costs upon demand by the Facility Agent and the Borrower shall be entitled to recover any such payment for breakfunding costs made by the Borrower from the defaulting Lender.
		

		
			3.3Drawdown Notice. The Borrower shall, by 10:00 a.m. New York City time on a day which
		

		
			is at least three (3) Banking Days (or fewer Banking Days if agreed by the Lenders) before the Drawdown Date serve a notice (a “Drawdown Notice”), substantially in the form of Exhibit B, on the Facility Agent, which notice shall (a) be in writing addressed to the Facility Agent, (b) be effective on receipt by the Facility Agent, (c) specify the amount of the Facility to be drawn, (d) specify the Banking Day on which the Facility is to be drawn, (e) specify the disbursement instructions, and (f) be irrevocable.
		

		
			3.4Effect of Drawdown Notice. Delivery of the Drawdown Notice shall be deemed to
		

		
			constitute a warranty by the Borrower (a) that the representations and warranties stated in Section 2 (updated mutatis mutandis) are true and correct on and as of the date of the Drawdown Notice and will be true and correct on and as of the Drawdown Date as if made on such date, and (b) that no Event of Default nor any event which with the giving of notice or lapse of time or both would constitute an Event of Default has occurred and is continuing.
		

		
			 
		

		

		

		 

 

		4.CONDITIONS PRECEDENT
		

		
			4.1Conditions Precedent to this Agreement. The obligation of the Lenders to make the Facility
		

		
			available to the Borrower under this Agreement shall be expressly subject to the following conditions precedent:
		

		
			(a)Corporate Authority. The Facility Agent shall have received the following documents in
		

		
			form and substance satisfactory to the Facility Agent and its legal advisers:
		

			
	
			
				 (i)
			

			
	
			
			copies, certified as true and complete by an officer of each of the Security Parties, of the resolutions of its board of directors and, with respect to the Borrower, shareholder evidencing approval of the Transaction Documents to which each is a party and authorizing an appropriate officer or officers or attorney-in-fact or attorneys-in-fact to execute the same on its behalf, including the execution of the Drawdown Notice;

			
	
			
				 (ii)
			

			
	
			
			copies, certified as true and complete by an officer of each of the Security Parties, of the certificate or articles of incorporation and by-laws or similar constituent document thereof;

			
	
			
				 (iii)
			

			
	
			
			copies, certified as true and complete by an officer of each of the Security Parties, of the names and true signatures of the officers of such Security Parties authorized to sign each Transaction Document to which it is or is to be a party and the other documents to be delivered hereunder and thereunder;

			
	
			
				 (iv)
			

			
	
			
			certificate of the jurisdiction of each Security Party as to the good standing thereof;

			
	
			
				 (v)
			

			
	
			
			the capital and shareholding structure of the Borrower certified to be true and complete by an officer of the Borrower;

			
	
			
				 (vi)
			

			
	
			
			a certificate signed by the Chairman, President, Executive Vice President, Treasurer, Comptroller, Controller or chief financial officer of each of the Security Parties to the effect that (A) no Default or Event of Default shall have occurred and be continuing and (B) the representations and warranties of such Security Party contained in this Agreement are true and correct as of the date of such certificate.

		
			(b)The Agreement. Each of the Security Parties shall have duly executed and delivered this
		

		
			Agreement to the Facility Agent.
		

		
			(c)The Note. The Borrower shall have duly executed and delivered the Note to the Facility
		

		
			Agent.
		

		
			(d)The Creditors. The Facility Agent shall have received executed counterparts of this
		

		
			Agreement from each of the Lenders.
		

		
			(e)Fees. The Creditors shall have received payment in full of all fees and expenses due to each
		

		
			thereof pursuant to the terms hereof on the date when due including, without limitation, all fees and expenses due under Section 15 and the Fee Letter.
		

		
			(f)Environmental Claims. The Lenders shall be satisfied that none of the Security Parties is
		

		
			subject to any Environmental Claim which could reasonably be expected to have a Material Adverse Effect.
		

		
			(g)Legal Opinions. The Facility Agent, on behalf of the Agents and the Lenders, shall have
		

		
			received opinions addressed to the Facility Agent from (i) Jones Walker, L.L.P., special counsel to the
		

		
			 
		

		

		

		 

 

		Security Parties, and (ii) Seward & Kissel LLP, special counsel to the Agents and the Lenders, in each case in such form as the Facility Agent may require, as well as such other legal opinions as the Lenders shall have required as to all or any matters under the laws of the State of Delaware, the State of New York and the United States of America, covering certain of the representations and warranties and conditions which are the subjects of Sections 2 and 4, respectively.
		

		
			(h)Officer's Certificate. The Facility Agent shall have received a certificate signed by the
		

		
			President or other duly authorized executive officer of the Borrower certifying that under applicable law existing on the date hereof, the Borrower shall not be compelled by law to withhold or deduct any Taxes from any amounts to become payable to the Facility Agent for the account of the Creditors hereunder.
		

		
			(i)Initial Charter Party Agreement. The Borrower shall have delivered to the Facility Agent a
		

		
			copy, certified as true and complete by an officer of the Borrower, of the Initial Charter Party Agreement.
		

		
			(j)Accounts. The Borrower shall have established the Earnings Accounts and the Retention
		

		
			Accounts in the name of the Borrower, in each case, with Account Bank.
		

		
			(k)UCC Filings. The Facility Agent shall have received evidence that Uniform Commercial
		

		
			Code Financing Statements have been filed in the State of New York and in such other jurisdictions as the Facility Agent may reasonably require.
		

		
			(l)Financial Statements. Each of the Security Parties shall deliver to the Facility Agent
		

		
			consolidated financial statements for the period ending December 31, 2014 or for any other period requested by the Facility Agent prior to the Closing Date.
		

		
			(m)Licenses, Consents and Approvals. The Facility Agent shall have received satisfactory
		

		
			evidence that all necessary licenses, consents and approvals in connection with the transactions contemplated by this Agreement, the Note and the other Transaction Documents have been obtained.
		

		
			(n)Know Your Customer Requirements. The Facility Agent shall have received
		

		
			documentation, with respect to the Security Parties, to its satisfaction in connection with its know your customer requirements, including but not limited to:
		

			
	
			
				 (i)
			

			
	
			
			completed bank account opening mandates with telephone and fax indemnities to include a list of all account holders’ authorized signatories and specimens of their signatures;

			
	
			
				 (ii)
			

			
	
			
			certified list of directors, including titles, business and residential addresses and dates of birth;

			
	
			
				 (iii)
			

			
	
			
			certified true copy of photo identification (i.e. passport or driving license) and evidence of residential address for all authorized signatories;

			
	
			
				 (iv)
			

			
	
			
			with respect to the Borrower, certificate of ultimate beneficial ownership, certified by the respective secretary or assistant secretary of such entity; and

			
	
			
				 (v)
			

			
	
			
			non-resident declaration forms, if applicable.

		
			(o)Loan Administration Form. The Facility Agent shall have received a duly executed Loan Administration Form.
		

		
			(p)[Intentionally Omitted].
		

		
			(q)[Intentionally Omitted].
		

		
			 
		

		

		

		 

 

		(r)Vessel Documents. The Facility Agent shall have received:
		

			
	
			
				 (i)
			

			
	
			
			the latest survey report in respect of the Vessel;

			
	
			
				 (ii)
			

			
	
			
			the classification certificate of the Vessel and the trading certificate of the Vessel from the Classification Society with which such Vessel is classed at least ten (10) days prior to the Drawdown Date, unless otherwise agreed by the Facility Agent;

			
	
			
				 (iii)
			

			
	
			
			the relevant pages of the Trim & Stability booklet, including (x) a copy of the approval page displaying the name of the Vessel and the stamp of class, (y) a copy of the page giving the description of the Vessel and (z) the page stating the Vessel’s LDT;

			
	
			
				 (iv)
			

			
	
			
			the chartering description (e.g. Q88 for tankers or Form C for LPG);

			
	
			
				 (v)
			

			
	
			
			last two port state control certificates and the port state control history for the last 3 years (to be provided by the Borrower on a best efforts basis);

			
	
			
				 (vi)
			

			
	
			
			work list from the last dry dock completed;

			
	
			
				 (vii)
			

			
	
			
			details of the Vessel’s tracking device (e.g. INMARSAT number) (to be provided by the Borrower on a best efforts basis);

			
	
			
				 (viii)
			

			
	
			
			evidence satisfactory that the Vessel is:

			
	
			
				 a.
			in the sole and absolute ownership of such Borrower and duly registered in such Borrower's name under the Marshall Islands flag free of all liens and encumbrances of record other than the Mortgage;

			
	
			
				 b.
			insured in accordance with the provisions of the Mortgage and all requirements of the Mortgage in respect of such insurance have been fulfilled (including, but not limited to, letters of undertaking from the insurance brokers, including confirmation notices of assignment, notices of cancellation and loss payable clauses acceptable to the Lenders); the main terms of such insurances (including the copies or drafts of the relevant insurance documents) to be provided to the Facility Agent at least 10 days prior to the Drawdown Date;

			
	
			
				 c.
			classed in the highest classification and rating for vessels of the same age and type with its Classification Society without any outstanding recommendations and requirements; and

			
	
			
				 d.
			operationally seaworthy and in every way fit for its intended service.

		
			(s)Security Documents. The Borrower shall have executed and delivered to the Facility Agent:
		

			
	
			
				 (i)
			

			
	
			
			the Earnings and Charterparties Assignment;

			
	
			
				 (ii)
			

			
	
			
			the Insurances Assignment;

			
	
			
				 (iii)
			

			
	
			
			the Account Pledges relating to the Earnings Account and the Retention Account;

			
	
			
				 (iv)
			

			
	
			
			the Assignment Notices and the acknowledgements thereof in respect of (i) through (iii) above (including the executed and countersigned notice and acknowledgment of assignment of earnings and time charter and subordination agreement from the

		
			 
		

		

		

		 

 

		Initial Charterer, to be provided by the Borrower by the Drawdown Date on a best efforts basis, but in no event later than 90 days following the Drawdown Date);
		

			
	
			
				 (v)
			

			
	
			
			the Mortgage relating to the Vessel;

			
	
			
				 (vi)
			

			
	
			
			Manager’s Undertaking from each of the Commercial Manager (unless the Borrower is the Commercial Manager) and the Technical Manager (and any subcontractor thereof), including, where applicable, an assignment of the interests of such manager in the insurances and subordination undertakings;

			
	
			
				 (vii)
			

			
	
			
			evidence that the Borrower has sent an instruction letter to the Classification Society as required under Section 9.1(z) and that the Classification Society has executed the undertaking as required thereby; and

			
	
			
				 (viii)
			

			
	
			
			an irrevocable power of attorney granted by the Borrower to the Security Trustee which, upon the occurrence and during the continuance of an Event of Default, enables the Security Trustee to make all necessary decisions in relation to the Vessel and obliges the master of the Vessel to adhere to the Security Trustee’s instructions.

			
	
			
				 (t)
			Registration of the Mortgage. The Facility Agent shall have received satisfactory evidence that the Mortgage has been duly registered under the laws of the Republic of the Marshall Islands and constitutes a first preferred mortgage lien under the laws of the Republic of the Marshall Islands.

			
	
			
				 (u)
			Vessel Appraisals. The Facility Agent shall have received appraisals, in form and substance satisfactory to the Facility Agent, as to the Fair Market Value of the Vessel (to be dated not earlier than one month prior to the Drawdown Date).

			
	
			
				 (v)
			ISM DOC. The Facility Agent shall have received a copy of the Operator’s DOC and satisfactory evidence of compliance with the ISM, IPS Codes and/or IAPPC, to the extent applicable.

			
	
			
				 (w)
			Evidence of Current COFR. The Facility Agent shall have received a copy of the current Certificate of Financial Responsibility pursuant to the Oil Pollution Act 1990 for the Vessel.

			
	
			
				 (x)
			Drawdown Notice. The Facility Agent having received the Drawdown Notice in accordance with the terms of Section 3.3.

			
	
			
				 (y)
			Representations and Warranties True. The representations stated in Section 2 being true and correct as if made on that date.

			
	
			
				 (z)
			No Default. No Default or Event of Default having occurred and being continuing or would result from the making of the requested Advance.

		
			(aa)No Material Adverse Effect. Since December 31, 2014, there having been
		

			
	
			
				 (i)
			

			
	
			
			no material adverse change in the consolidated financial strength of the Borrower and the Guarantor;

			
	
			
				 (ii)
			

			
	
			
			no material adverse global economic or political development; and

			
	
			
				 (iii)
			

			
	
			
			no material adverse development in the international money and capital markets;

		
			which, in the reasonable opinion of the Lenders, might prejudice the successful and timely closing of the Facility or the successful and timely performance of any of the material obligations under this Agreement.
		

		
			 
		

		

		

		 

 

		(bb) Amendment to the GREEN BAY Credit Facility. The Facility Agent shall have received an amendment to the Green Bay Credit Facility in form and substance satisfactory to it, duly executed by parties thereto.
		

		
			(cc) ING Amendment. The Facility Agent shall have received an amendment agreement executed by the administrative agent, the collateral agent, the “Required Lenders” and the loan parties under the ING Credit Agreement, in form and substance satisfactory to it, to reflect, among other changes, the new financial covenant levels and to permit the Borrower Restructuring.
		

		
			(dd)Miscellaneous. The Facility Agent shall be satisfied with any other document, authorization,
		

		
			opinion or assurance it may require.
		

		
			4.2Breakfunding Costs. In the event that, on the date specified for the making of the Advance
		

		
			in the Drawdown Notice, the Lenders shall not be obliged under this Agreement to make the requested Advance available, the Borrower shall indemnify and hold the Lenders fully harmless against any losses which the Lenders (or any thereof) may sustain as a result of borrowing or agreeing to borrow funds to meet the drawdown requirement of the Drawdown Notice and the certificate of the relevant Lender or Lenders shall, absent manifest error, be conclusive and binding on the Borrower as to the extent of any such losses.
		

		
			4.3Satisfaction after Drawdown. Without prejudice to any of the other terms and conditions of
		

		
			this Agreement, in the event all of the Lenders elect, in their sole discretion, to make the Facility available to the Borrower prior to the satisfaction of all or any of the conditions referred to in Sections 4.1 and 4.2, the Borrower hereby covenants and undertakes to satisfy or procure the satisfaction of such condition or conditions within seven (7) days after the Drawdown Date (or such longer period as the Majority Lenders, in their sole discretion, may agree).
		

		
			5.REPAYMENT AND PREPAYMENT
		

		
			5.1Repayment. Subject to the provisions of this Section 5 regarding application of
		

		
			prepayments, the Borrower shall repay the principal of the Facility in twenty (20) consecutive quarterly installments beginning on the Initial Payment Date and ending on the Final Payment Date, each of the twenty (20) installments being in an amount equal to $800,000.00 (or during the Amortization Reduction Period, $727,272.73), in each case, accompanied by, in the case of the last such installment, a balloon payment in an amount equal to the then-outstanding principal amount of the Facility and all interest, fees or other moneys payable under any Transaction Document).
		

		
			5.2Voluntary Prepayment; No Re-borrowing. The Borrower may prepay, upon five (5)
		

		
			Banking Days written notice, the Facility or any portion thereof, provided that if such prepayment is made on a day other than a Payment Date, such prepayment shall be made together with the costs and expenses provided for in Section 13.4. Each prepayment shall be in a minimum amount of Two Million Dollars ($2,000,000) and any multiple thereof, or the full amount of the Facility then outstanding. No part of the Facility once repaid or prepaid will be available for re-borrowing.
		

		
			5.3Mandatory Prepayment. Upon (i) the sale of the Vessel or (ii) the earlier of (x) ninety (90)
		

		
			days after the Total Loss (as such term is defined in the Mortgage) of the Vessel or (y) the date on which the insurance proceeds in respect of such loss are received by the Borrower or the Security Trustee as assignee thereof, the Facility shall be repaid in full together with, in the event of a Sale under Subsection (i) hereof only, the Prepayment Premium, as applicable, and the costs and expenses provided for in Section 13.4, and the remainder of the proceeds of such Sale or the insurance proceeds may, in the Borrower’s discretion, be applied to repay the GREEN BAY Credit Facility in an amount equal to the face amount of the Debt Service Letter of Credit (as defined in GREEN BAY Credit Facility) in which case the Debt Service Letter of Credit (as defined in GREEN BAY Credit Facility) shall be terminated.
		

		
			 
		

		

		

		 

 

		5.4Interest and Costs with Prepayments/Application of Prepayments.
		

		
			(a)Any prepayment of the Facility made hereunder (including, without limitation, those
		

		
			made pursuant to Sections 5 and 9) shall be subject to the condition that on the date of prepayment all accrued interest to the date of such prepayment shall be paid in full with respect to the Facility or portions thereof being prepaid, together with the Prepayment Premium, as applicable, and any and all costs or expenses incurred by any Lender in connection with any breaking of funding (as certified by such Lender, which certification shall, absent any manifest error, be conclusive and binding on the Borrower).
		

		
			(b)All prepayments of the Facility under Section 5.2 shall be applied towards the
		

		
			installments of the Facility in the inverse order of their due dates for payment.
		

		
			5.5Borrower's Obligation Absolute. The Borrower's obligation to pay each Creditor hereunder
		

		
			and under the Note shall be absolute, unconditional and irrevocable and shall be paid strictly in accordance with the terms hereof and thereof, under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which the Borrower may have or may have had against the Creditors.
		

		
			6.INTEREST AND RATE
		

		
			6.1Payment of Interest; Interest Rate. (a) The Borrower hereby promises to pay to the Lenders
		

		
			interest on the unpaid principal amount of the Facility for the period commencing on the Drawdown Date until but not including the stated maturity thereof (whether by acceleration or otherwise) or the date of prepayment thereof at the Applicable Rate. The Facility Agent shall promptly notify the Borrower and the Lenders in writing of the Applicable Rate as and when determined. Each such determination, absent manifest error, shall be conclusive and binding upon the Borrower. Accrued interest on the Facility shall be payable in arrears on each Payment Date.
		

		
			(b)Notwithstanding the foregoing, the Borrower agrees that after the occurrence and
		

		
			during the continuance of an Event of Default, the Facility shall bear interest at the Default Rate. In addition, the Borrower hereby promises to pay interest (to the extent that the payment of such interest shall be legally enforceable) on any overdue interest, and on any other amount payable by the Borrower hereunder which shall not be paid in full when due (whether at stated maturity, by acceleration or otherwise), for the period commencing on the due date thereof until but not including the date the same is paid in full at the Default Rate.
		

		
			(c)Interest payable at the Default Rate shall be payable from time to time on demand of
		

		
			the Facility Agent.
		

		
			6.2Maximum Interest. Anything in this Agreement or the Note to the contrary notwithstanding,
		

		
			the interest rate on the Facility shall in no event be in excess of the maximum rate permitted by applicable law.
		

		
			7. PAYMENTS
		

		
			7.1Time and Place of Payments, No Set Off. All payments to be made hereunder by the
		

		
			Borrower shall be made to the Facility Agent, not later than 3 p.m. New York time (any payment received after 3 p.m. New York time shall be deemed to have been paid on the next Banking Day) on the due date of such payment, to HSBC Bank USA, New York (Account No. 000.129.879, ABA No. 021001088, SWIFT ID No. MRMDUS33 for the credit to DVB Bank SE, Frankfurt, Reference: FP 3044858) or to such other account of the Facility Agent as the Facility Agent may direct, without set-off or counterclaim and free from, clear of, and without deduction or withholding for, any Taxes.
		

		
			7.2Taxes. (a) If the Borrower shall at any time be compelled by law to withhold or deduct any
		

		
			Taxes from any amounts payable to the Lenders hereunder, then the Borrower shall pay such additional
		

		
			 
		

		

		

		 

 

		amounts in Dollars as may be necessary in order that the net amounts received after withholding or deduction shall equal the amounts which would have been received if such withholding or deduction were not required and, in the event any withholding or deduction is made, whether for Taxes or otherwise, the Borrower shall promptly send to the Facility Agent such documentary evidence with respect to such withholding or deduction including documentary evidence satisfactory to the Facility Agent that the tax has been paid to the appropriate taxation authority as may be required from time to time by the Lenders.
		

			
	
			
				 (b)
			If any Lender obtains the benefit of a credit against the liability thereof for federal income taxes imposed by any taxing authority for all or part of the Taxes as to which the Borrower have paid additional amounts as aforesaid (and each Lender agrees to use commercially reasonable efforts to obtain the benefit of any such credit which may be available to it, provided that (i) it has knowledge that such credit is in fact available to it and (ii) it is able to attribute such credit to this Facility), then such Lender shall reimburse the Borrower for the amount of the credit so obtained. The decision as to whether or not to seek such a benefit is in the sole discretion of the Lenders.

			
	
			
				 (c)
			On or prior to the date hereof (or in the case of a transferee Lender, the date that it becomes a party to this Agreement), and thereafter when reasonably requested by a Security Party, each Lender or transferee that is organized under the laws of a jurisdiction outside the United States (a “Non-U.S. Lender”) shall deliver to the Borrower and the Facility Agent two properly completed and duly executed copies of (as applicable) IRS Form W-8BEN-E, W-8ECI or W-8IMY or, upon request of a Security Party or the Facility Agent, any subsequent versions thereof or successors thereto, in each case claiming a reduced rate (which may be zero) of U.S. federal withholding tax under Sections 1441 and 1442 of the Code with respect to payments of interest hereunder as such Non-U.S. Lender may properly claim. In addition, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code, such Non-U.S. Lender shall, on or prior to the date hereof (or in the case of a transferee Lender, the date that it becomes a party to this Agreement), and thereafter when reasonably requested by the Borrower, provide to the Facility Agent in addition to the IRS Form W-8 required above a certificate representing that such Non-U.S. Lender is not a “bank” for purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of such Borrower and is not a controlled foreign corporation related to such Borrower (within the meaning of Section 864(d)(4) of the Code), and such Non-U.S. Lender agrees that it shall promptly notify the Facility Agent in the event any representation in such certificate is no longer accurate.

			
	
			
				 (d)
			Without limiting the generality of the foregoing, if a payment made to a Lender under this Agreement or any of the other Transaction Documents would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Facility Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Facility Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Facility Agent as may be necessary for the Borrower and the Facility Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (k), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. In addition, each Lender shall indemnify the Facility Agent and the Borrower for any withholding Tax or other penalties imposed in connection with any “withholdable payment,” as defined in Section 1473 of the Internal Revenue Code, made to a Lender that is not a U.S. Person that has failed to comply with the reporting requirements or otherwise qualify for an exemption under FATCA.

			
	
			
				 (e)
			Nothing contained in this Section 7.2 shall require the Facility Agent or Lender (or any transferee Lender) to make available any of its tax returns or any other information that it deems to be confidential or proprietary.

		
			 
		

		

		

		 

 

		7.3Sharing of Setoffs. Each Lender agrees that if it shall, through the exercise of a right of
		

		
			banker’s lien, setoff or counterclaim or pursuant to a secured claim under Section 506 of the Federal Bankruptcy Code or other security or interest arising from, or in lieu of, such secured claim, exercised or received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, obtain payment (voluntary or involuntary) in respect of the Facility as a result of which its funded Commitment shall be proportionately less than the funded Commitment of any other Lender, it shall be deemed simultaneously to have purchased from such other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a participation in the funded Commitment of such other Lender so that the aggregate funded Commitment of each Lender shall be in the same proportion to the aggregate funded Commitments then outstanding as its funded Commitment prior to such exercise of banker’s lien, setoff or counterclaim or other event was to the principal amount of all funded Commitments outstanding prior to such exercise of banker’s lien, setoff or counterclaim or other event; provided, however, that, if any such purchase or purchases or adjustments shall be made pursuant to this Section 7.3 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest. Any Lender holding a participation in a funded Commitment deemed to have been so purchased may exercise any and all rights of banker’s lien, setoff or counterclaim with respect to any and all moneys owing to such Lender by reason thereof as fully as if such Lender had made an advance in the amount of such participation. The Borrower expressly consents to the foregoing arrangement.
		

		
			7.4Computations; Banking Days. (a) All computations of interest and fees shall be made by
		

		
			the Facility Agent or the Lenders, as the case may be, on the basis of a 360-day year, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which interest or fees are payable. Each determination by the Facility Agent or the Lenders of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.
		

		
			(b) Whenever any payment hereunder or under the Note shall be stated to be due on a day other than a Banking Day, such payment shall be due and payable on the next succeeding Banking Day unless the next succeeding Banking Day falls in the following calendar month, in which case it shall be payable on the immediately preceding Banking Day.
		

		
			8.EVENTS OF DEFAULT
		

		
			8.1Events of Default. In the event that any of the following events shall occur and be
		

		
			continuing:
		

			
	
			
				 (a)
			Principal Payments. Any principal of the Facility is not paid on the due date therefor; or

			
	
			
				 (b)
			Interest and Other Payments. Any interest on the Facility or any other amount becoming payable under this Agreement or any other Transaction Document is not paid within three (3) Banking Days from the date when due; or

			
	
			
				 (c)
			Representations, etc. Any representation, warranty or other statement made by any of the Security Parties in this Agreement, any of the other Transactions Documents or in any other instrument, document or other agreement delivered in connection herewith proves to have been untrue or misleading in any material respect as at the date as of which it was made or confirmed; or

			
	
			
				 (d)
			Impossibility, Illegality. It becomes impossible or unlawful for any of the Security Parties to fulfill any of the covenants and obligations contained herein or in any Transaction Document, or for any of the Lenders to exercise any of the rights vested in any of them hereunder or under the other Transaction Documents; or

			
	
			
				 (e)
			Mortgage. There is any default under the Mortgage; or

		
			 
		

		 

 

			
	
			
				 (f)
			Certain Covenants. Any Security Party defaults in the performance or observance of any covenant contained in Section 9.1(b), 9.1(d), 9.1(f), 9.1(m), 9.1(n), 9.1(o), 9.1(r), 9.1(v), 9.2 (other than clauses (j), (l) and (m) thereof), 9.3, 9.4 and 9.5; or

			
	
			
				 (g)
			Covenants. One or more of the Security Parties default in the performance of any term, covenant or agreement contained in this Agreement or in the other Transaction Documents, or in any other instrument, document or other agreement delivered in connection herewith or therewith, in each case other than an Event of Default referred to elsewhere in this Section 8.1, and such default continues unremedied for a period of ten (10) days after written notice thereof has been given to the relevant Security Party or Parties by the Facility Agent at the request of any Lender; or

			
	
			
				 (h)
			Indebtedness and Other Obligations. Any Security Party or any of its Subsidiaries defaults in the payment when due (subject to any applicable grace period) of any Indebtedness or of any other indebtedness, in either case, in an outstanding principal amount equal to or exceeding Five Million Dollars ($5,000,000) individually or Twenty Million Dollars ($20,000,000) in the aggregate or such Indebtedness or other indebtedness is, or by reason of such default is subject to being, accelerated or any party becomes entitled to enforce the security for any such Indebtedness or other indebtedness and such party shall take steps to enforce the same, unless such default or enforcement is being contested in good faith and by appropriate proceedings or other acts and such Security Party has set aside on its books adequate reserves with respect thereto; or

			
	
			
				 (i)
			Bankruptcy. Any Security Party commences any proceedings relating to any substantial portion of its property under any reorganization, arrangement or readjustment of debt, dissolution, winding up, adjustment, composition, bankruptcy or liquidation law or statute of any jurisdiction, whether now or hereafter in effect (a “Proceeding”), or there is commenced against any thereof any Proceeding and such Proceeding remains undismissed or unstayed for a period of sixty (60) days; or any receiver, trustee, liquidator or sequestrator of, or for, any thereof or any substantial portion of the property of any thereof is appointed and is not discharged within a period of sixty (60) days; or any thereof by any act indicates consent to or approval of or acquiescence in any Proceeding or to the appointment of any receiver, trustee, liquidator or sequestrator of, or for, itself or any substantial portion of its property; or

			
	
			
				 (j)
			Judgments. Any judgment or order is made the effect whereof would be to render invalid this Agreement or any other Transaction Document or any material provision thereof or any Security Party asserts that any such agreement or provision thereof is invalid; or judgments or orders for the payment of money (not paid or fully covered by insurance, subject to applicable deductibles) in excess of $2,500,000 in the aggregate for the Guarantor or its Subsidiaries (or its equivalent in any other currency) shall be rendered against the Guarantor and/or any of its Subsidiaries and such judgments or orders shall continue unsatisfied and unstayed for a period of thirty (30) days; or

			
	
			
				 (k)
			Inability to Pay Debts. Any Security Party is unable to pay or admits its inability to pay its debts as they fall due or a moratorium shall be declared in respect of any Indebtedness of any thereof; or

			
	
			
				 (l)
			Termination of Operations; Sale of Assets. Except as expressly permitted under this Agreement or as contemplated by the Borrower Restructuring, any Security Party ceases its operations or sells or otherwise disposes of all or substantially all of its assets or all or substantially all of the assets of any Security Party are seized or otherwise appropriated; or

			
	
			
				 (m)
			Change in Financial Position. Any change in the operations or the financial position of any Security Party which, in the reasonable opinion of the Majority Lenders, could reasonably be expected to have a Material Adverse Effect; or

		
			 
		

		 

 

			
	
			
				 (n)
			Cross-Default. Any Security Party defaults under any material contract or agreement to which it is a party or by which it is bound including, but not limited to, the Initial Charter Party Agreements or any Approved Charter; or

			
	
			
				 (o)
			ERISA Debt. An ERISA Funding Event, ERISA Termination Event, Foreign Termination Event or Foreign Underfunding Event shall exist or occur that, in the reasonable opinion of the Majority Lenders, when taken together with all other ERISA Funding Events, ERISA Termination Events, Foreign Termination Events and Foreign Underfunding Events that exist or have occurred, or could reasonably be expected to exist or occur, result in liability to the Security Parties, their respective subsidiaries and ERISA Affiliates in the aggregate in excess of $1,000,000; or

			
	
			
				 (p)
			Change of Control. A Change of Control has occurred; or

			
	
			
				 (q)
			Instability of a Flag State. There exists instability in the jurisdiction where the Vessel is flagged, which, in the reasonable opinion of the Majority Lenders, could reasonably be expected to have a Material Adverse Effect; or

			
	
			
				 (r)
			Class Certification Withdrawal. There occurs a withdrawal of the Vessel’s rating by its Classification Society; or

			
	
			
				 (s)
			Arrest and/or Detention of the Vessel. There occurs any capture, seizure, arrest, detention or confiscation of the Vessel by any government or by persons acting or purporting to act on behalf of any government unless the Vessel is released and restored to the Borrower from such capture, seizure, arrest, detention or confiscation within fourteen (14) days after the occurrence thereof; or

			
	
			
				 (t)
			Borrower Restructuring. The Borrower Restructuring shall not have been consummated in a manner reasonably satisfactory to the Facility Agent within ninety (90) days following the Closing Date.

			
	
			
				 (u)
			Cancellation of Approved Charter. An Approved Charter with a duration of more than 12 months is terminated, unless the Borrower continues to pay the Debt Service; or

			
	
			
				 (v)
			Off Charter. The Vessel is off charter (other than for scheduled drydockings of the Vessel) for a continuous period of 14 days at any time, or 56 days in total in any 12-month period, unless the Borrower continues to pay the Debt Service; or

			
	
			
				 (w)
			Material Adverse Effect. There occurs any event or condition that could reasonably be expected to have a Material Adverse Effect; or

			
	
			
				 (x)
			GREEN BAY Credit Facility Event of Default. Any “Event of Default” occurs under the GREEN BAY Credit Facility;

		
			then, the Lenders' obligation to make the Facility available shall cease and the Facility Agent on behalf of the Lenders may, with the Majority Lenders' consent and shall, upon the Majority Lenders' instruction, by notice to the Borrower, declare the entire Facility, accrued interest and any other sums payable by the Borrower hereunder, under the Note and under the other Transaction Documents due and payable whereupon the same shall forthwith be due and payable without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived; provided that upon the happening of an event specified in subclauses (i) or (k) of this Section 8.1, the Facility, accrued interest and any other sums payable by the Borrower hereunder, under the Note and under the other Transaction Documents shall be immediately due and payable without declaration, presentment, demand, protest or other notice to the Borrower all of which are expressly waived. In such event, the Creditors, or any thereof, may proceed to protect and enforce their respective rights by action at law, suit in equity or in admiralty or other appropriate proceeding, whether for specific performance of any covenant contained in this Agreement or in the Note or in any other Transaction Document or in aid of the exercise of any power granted herein or therein, or the Lenders or the Facility Agent may proceed to
		

		
			 
		

		

		

		 

 

		enforce the payment of the Note when due or to enforce any other legal or equitable right of the Lenders, or proceed to take any action authorized or permitted by Applicable Law for the collection of all sums due, or so declared due, including, without limitation, the right to appropriate and hold or apply (directly, by way of set-off or otherwise) to the payment of the obligations of the Borrower to any of the Creditors hereunder, under the Note and/or under the other Transaction Documents (whether or not then due) all moneys and other amounts of the Borrower then or thereafter in possession of any Creditor, the balance of any deposit account (demand or time, matured or unmatured) of the Borrower then or thereafter with any Creditor and every other claim of the Borrower then or thereafter against any of the Creditors.
		

		
			8.2Application of Moneys. Except as otherwise provided in any Security Document, all
		

		
			moneys received by the Creditors under or pursuant to this Agreement, the Note or any of the other Transaction Documents after the happening of any Event of Default (unless cured to the satisfaction of the Majority Lenders) shall be applied by the Facility Agent in the following manner:
		

			
	
			
				 (1)
			first, in or towards the payment or reimbursement of any expenses or liabilities incurred by any of the Creditors in connection with the ascertainment, protection or enforcement of its rights and remedies hereunder, under the Note and under the other Transaction Documents;

			
	
			
				 (2)
			second, in or towards payment of any interest owing in respect of the

		
			Facility;
		

			
	
			
				 (3)
			third, in or towards repayment of the principal of the Facility;

			
	
			
				 (4)
			fourth, in or towards payment of all other sums which may be owing to any of the Creditors under this Agreement, under the Note and under the other Transaction Documents;

			
	
			
				 (5)
			fifth, the surplus (if any) shall be paid to the Borrower or to whomsoever else may be entitled thereto.

		
			9.COVENANTS
		

		
			9.1Affirmative Covenants. Each of the Security Parties hereby covenants and undertakes with
		

		
			the Lenders that, from the date hereof and so long as any principal, interest or other moneys are owing in respect of this Agreement, the Note or any of the other Transaction Documents, it will:
		

			
	
			
				 (a)
			Performance of Agreements. Duly perform and observe, and procure the observance and performance by all other parties thereto (other than the Lenders) of, the terms of this Agreement, the Note and the other Transaction Documents;

			
	
			
				 (b)
			Notice of Default, etc. Promptly upon obtaining knowledge thereof, inform the Facility Agent of the occurrence of (a) any Event of Default or of any event which, with the giving of notice or lapse of time, or both, would constitute an Event of Default, (b) any litigation or governmental proceeding pending or threatened against any Security Party which could reasonably be expected to have a Material Adverse Effect, (c) the withdrawal of the Vessel’s rating by its Classification Society or the issuance by the Classification Society of any recommendation or notation affecting class and (d) any other event or condition which is reasonably likely to have a Material Adverse Effect, in each case promptly, and in any event within three (3) Banking Days after becoming aware of the occurrence thereof;

			
	
			
				 (c)
			Obtain Consents. Without prejudice to Section 2.1 and this Section 9.1, obtain every consent and do all other acts and things which may from time to time be necessary or advisable for the continued due performance of all its and the other Security Parties' respective obligations under this Agreement, the Note and the other Transaction Documents;

		
			 
		

		

		

		 

 

		be distributed to the Lenders by the Facility Agent promptly upon the receipt thereof:
		

			
	
			
				 (i)
			

			
	
			
			as soon as available, but not later than one hundred fifty (150) days after the end of each fiscal year of the Guarantor, complete copies of the consolidated financial reports of the Guarantor and its Subsidiaries together with a separate financial report of the Borrower (together with a Compliance Certificate that includes, inter alia, a reconciliation of all of the differences between GAAP as at December 31, 2014 and GAAP as at the time of delivery), all in reasonable detail which shall include at least the consolidated balance sheet of the Guarantor and its Subsidiaries and the profit and loss accounts and balance sheet of each Subsidiary, including the Borrower, as a separate column, as of the end of such year and the related statements of income for such year as well as the related statement of sources and uses of funds, cash flow and changes in the capital for such year for the Guarantor and its Subsidiaries, each as prepared in accordance with GAAP, all in reasonable detail, which shall be prepared by an Acceptable Accounting Firm and, with respect to the Guarantor, be audited reports;

			
	
			
				 (ii)
			

			
	
			
			as soon as available, but not later than ninety (90) days after the end of each of the first three fiscal quarters of the Guarantor, a quarterly interim balance sheets and profit and loss statements of the Guarantor and its Subsidiaries and the related profit and loss statements as well as the related statement of sources and uses of funds, cash flow and changes in the capital for such year for the Guarantor and its Subsidiaries (together with a Compliance Certificate that includes, inter alia, a reconciliation of all of the differences between GAAP as at December 31, 2014 and GAAP as at the time of delivery), all in reasonable detail, unaudited, but certified to be true and complete by the chief financial officer of the Guarantor;

			
	
			
				 (iii)
			

			
	
			
			as soon as available, but not later than the end of each of the second and fourth fiscal quarters of the Guarantor, an Asset Maintenance Compliance Certificate in reasonable detail and certified to be true and complete by the chief financial officer of the Guarantor (it being understood that appraisals of the Fair Market Value of the Vessel for such Asset Maintenance Compliance Certificate shall be provided to the Facility Agent no later than 15 days prior thereto);

			
	
			
				 (iv)
			

			
	
			
			promptly upon the mailing thereof to the shareholders of the Guarantor, copies of all financial statements, reports, proxy statements and other communications provided to the Guarantor's shareholders;

			
	
			
				 (v)
			

			
	
			
			within ten (10) days of the Guarantor's receipt thereof, copies of all audit letters or other correspondence from any external auditors including material financial information in respect of the Guarantor and its Subsidiaries; and

			
	
			
				 (vi)
			

			
	
			
			an updated business forecast which shall include a financial forecast for the following five year period, together with the financial statements required to be delivered in clause (i) above;

			
	
			
				 (vii)
			

			
	
			
			not later than the third Friday of February of each fiscal year, a budget for operating expenditures of the Borrower relating to the Vessel for the following twelve (12) month period in form and substance satisfactory to the Facility Agent; and

			
	
			
				 (viii)
			

			
	
			
			such other statements (including, without limitation, monthly consolidated statements of operating revenues and expenses), lists of assets and accounts,

		
			 
		

		

		

		 

 

		budgets, forecasts, reports and other financial information with respect to its business as the Facility Agent may from time to time reasonably request, certified to be true and complete by the chief financial officer of the Guarantor;
		

		
			(e)Contingent Liabilities. For inclusion with each Compliance Certificate delivered in
		

		
			connection with Sections 9.1(d)(i) and 9.1(d)(ii), and in any event upon the reasonable request of the Facility Agent, an accounting of all of the contingent liabilities of each Security Party;
		

		
			(f)Vessel Covenants. With respect to the Vessel:
		

			
	
			
				 (i)
			

			
	
			
			keep the Vessel registered in the name of the Borrower under the flag of an Approved Jurisdiction;

			
	
			
				 (ii)
			

			
	
			
			keep the Vessel in good and safe condition and state of repair (loss or damage by casualty or condemnation excepted);

			
	
			
				 (iii)
			

			
	
			
			keep the Vessel classed in the highest classification and rating for vessels of the same age and type with its Classification Society without any outstanding recommendations or qualification unless otherwise agreed by the Facility Agent in writing;

			
	
			
				 (iv)
			

			
	
			
			keep the Vessel insured in accordance with the provisions of the Mortgage recorded against it and the requirements thereof in respect of such insurances have been complied with;

			
	
			
				 (v)
			

			
	
			
			be in possession of a proper trading certificate at all times;

			
	
			
				 (vi)
			

			
	
			
			notify the Facility Agent of all modifications to the Vessel and of the removal of any parts or equipment from the Vessel; and

			
	
			
				 (vii)
			

			
	
			
			provide the Facility Agent with all requested Vessel related information;

		
			(g)Vessel Valuations. For inclusion with each Asset Maintenance Compliance Certificate
		

		
			delivered pursuant to Section 9.1(d)(iii) (for the second and fourth fiscal quarters of the Guarantor or more frequently at the Facility Agent’s option upon and during the continuation of a Default or an Event of Default), and in any event upon the reasonable request of the Facility Agent, the Borrower shall obtain appraisals of the Fair Market Value of the Vessel. All valuations are to be at the Borrower's cost. In the event the Borrower fails or refuses to obtain the valuations requested pursuant to this Section 9.1(g) within ten (10) days of the Facility Agent's request therefor, the Facility Agent will be authorized to obtain such valuations, at the Borrower’s cost, from one of the Approved Ship Brokers, which valuations shall be deemed the equivalent of valuations duly obtained by the Borrower pursuant to this Section 9.1(g), but the Facility Agent's actions in doing so shall not excuse any default of the Borrower under this Section 9.1(g);
		

		
			(h)Corporate Existence. Do or cause to be done all things necessary to preserve and keep in
		

		
			full force and effect its corporate existence in good standing and all licenses, franchises, permits and assets necessary to the conduct of its business;
		

		
			(i)Books and Records. At all times keep proper books of record and account into which full
		

		
			and correct entries shall be made in accordance with GAAP;
		

		
			(j)Taxes and Assessments. Pay and discharge all material taxes, assessments and
		

		
			governmental charges or levies imposed upon it or upon its income or property prior to the date upon which penalties attach thereto; provided, however, that it shall not be required to pay and discharge, or cause to be paid and discharged, any such tax, assessment, charge or levy so long as the legality thereof shall be
		

		
			 
		

		

		

		 

 

		contested in good faith and by appropriate proceedings or other acts and it shall set aside on its books adequate reserves with respect thereto;
		

			
	
			
				 (k)
			Inspection. Allow any representative or representatives designated by the Facility Agent, subject to applicable laws and regulations, to visit and inspect any of its properties, and, on request, to examine its books of account, records, reports and other papers and to discuss its affairs, finances and accounts with its officers, all at such reasonable times and as often as the Facility Agent reasonably requests and at the expense of the Borrower. In addition, the Borrower shall provide the Facility Agent with (and cause any Approved Charter, other than the Initial Charter Party Agreement, to contain a requirement for the provision with full rights of disclosure to the Facility Agent of) a copy of any jointly appointed independent inspection report accepted and signed by the Borrower, any disponent owner and the relevant charterer in respect of the Vessel issued during the term of this Agreement, promptly upon the issuance of any such inspection report and whether or not the Borrower is party to any such inspection report;

			
	
			
				 (l)
			Inspection and Survey Reports. If the Lenders shall so request, the Borrower shall provide the Lenders with copies of all internally generated inspection or survey reports on the Vessel;

			
	
			
				 (m)
			Compliance with Statutes, Agreements, etc. Do or cause to be done all things (including, but not limited to, obtaining all consents) necessary to comply with all material contracts or agreements to which any of the Security Parties is a party, and all material laws, and the rules and regulations thereunder, applicable to such Security Party, including, without limitation, those laws, rules and regulations relating to employee benefit plans and environmental matters except where failure to do so would not be reasonably likely to have a Material Adverse Effect and shall cause the Technical Manager and the Commercial Manager to comply with (or shall cause to be included in any Approved Charter other than the Initial Charter Party Agreement a provision requiring any charterer party there to comply with in respect of the Vessel and its operations) all national and international laws, directives, regulations, decrees, rulings and analogous rules, including but not limited to, rules relating to international sanctions;

			
	
			
				 (n)
			Environmental Matters. Promptly upon the occurrence of any of the following conditions, provide to the Facility Agent a certificate of a chief executive officer of the Guarantor, specifying in detail the nature of such condition and its proposed response or the proposed response of any Environmental Affiliate: (a) its receipt or the receipt by any Environmental Affiliate of any written communication whatsoever that alleges that such Person is not in compliance with any applicable Environmental Law or Environmental Approval, if such noncompliance could reasonably be expected to have a Material Adverse Effect, (b) knowledge by it or any Environmental Affiliate that there exists any Environmental Claim pending or threatened against any such Person, which could reasonably be expected to have a Material Adverse Effect, or (c) any release, emission, discharge or disposal of any material that could form the basis of any Environmental Claim against it or against any Environmental Affiliate, if such Environmental Claim could reasonably be expected to have a Material Adverse Effect. Upon the written request by the Facility Agent, the Borrower will submit to the Facility Agent at reasonable intervals, a report providing an update of the status of any issue or claim identified in any notice or certificate required pursuant to this subsection;

			
	
			
				 (o)
			Insurance. Maintain with financially sound and reputable insurance companies insurance on all its properties and against all such risks and in at least such amounts and with such deductibles as are usually insured against by companies of established reputation engaged in the same or similar business from time to time;

			
	
			
				 (p)
			Vessel Management. Cause the Vessel to be managed by the Guarantor or a wholly-owned Subsidiary thereof (it being understood that the technical management of the Vessel may be subcontracted to Wallem Shipmanagement Hong Kong, or another internationally recognized vessel technical manager approved by the Agents, such approval not to be unreasonably withheld, delayed or conditioned);

		
			 
		

		 

 

			
	
			
				 (q)
			Brokerage Commissions, etc. Indemnify and hold each of the Agents and the Lenders harmless from any claim for any brokerage commission, fee or compensation from any broker or third party resulting from the transactions contemplated hereby;

			
	
			
				 (r)
			ISM Code, ISPS Code and MTSA Matters. (i) Procure that the Operator will comply with and ensure that the Vessel will comply with the requirements of the ISM Code, ISPS Code and MTSA in accordance with the implementation schedules thereof, including (but not limited to) the maintenance and renewal of valid certificates, and when required, security plans, pursuant thereto throughout the term of the Facility; and (ii) procure that the Operator will immediately inform the Facility Agent if there is any threatened or actual withdrawal of its DOC, SMC or the ISSC in respect of the Vessel; and (iii) procure that the Operator will promptly inform the Facility Agent upon the issuance to the Borrower or Operator of a DOC and to the Vessel of an SMC or ISSC;

			
	
			
				 (s)
			ERISA. Forthwith upon learning of the existence or occurrence of any ERISA Funding Event, ERISA Termination Event, Foreign Termination Event or Foreign Underfunding Event that, when taken together with all other ERISA Funding Events, ERISA Termination Events, Foreign Termination Events and Foreign Underfunding Events that exist or have occurred, or which could reasonably be expected to exist or occur, could reasonably be expected to result in liability to the Security Parties, their respective subsidiaries and ERISA Affiliates in the aggregate in excess of $500,000, furnish or cause to be furnished to the Lenders written notice thereof;

			
	
			
				 (t)
			Evidence of Current COFR. If the Lenders shall so request, provide the Lenders with copies of the current Certificate of Financial Responsibility pursuant to the Oil Pollution Act 1990 for the Vessel;

			
	
			
				 (u)
			Listing on NYSE. With respect to the Guarantor, maintain its listing on the New York Stock Exchange;

			
	
			
				 (v)
			Change of Ownership. Ensure no change in the ownership of the capital stock or other equity interest of the Borrower;

			
	
			
				 (w)
			Subordination of Loans. Cause all loans made to the Borrower by the Guarantor, any Affiliate, parent or subsidiary of the Guarantor, and all sums and other financial obligations owed by it to the Guarantor, any Affiliate, parent or subsidiary of the Guarantor to be fully subordinated to the obligations owed under the Transaction Documents on terms acceptable to the Facility Agent (and the Guarantor and the Borrower (and any such Affiliate by its execution of an Acknowledgment and Agreement hereto) hereby agree (and agree to cause any other such Affiliate to agree) that any payment by the Borrower, whether in cash, in kind, securities or any other property, in respect of any such loans made by the Guarantor or any Affiliate is and shall be expressly junior and subordinated in right of payment to all amounts due and owing in respect of the Facility, except that payment by the Borrower in respect of such loans made by the Guarantor or any Affiliate is permitted unless before or after giving effect thereto an Event of Default shall have occurred and be continuing)Maintenance of Properties. Keep all material property necessary in its business in good working order and condition (loss or damage by casualty or condemnation excepted);

		
			(y)Know Your Customer Requirements. Provide all documentation (including documentation
		

		
			requested by the Lenders or any prospective Lenders subsequent to the date hereof) to the satisfaction of the Lenders or prospective Lenders (as the case may be) in connection with their know your customer requirements, including but not limited to:
		

		
			(i) completed bank account opening mandates with telephone and fax indemnities to include the list of the all account holders’ authorized
		

		
			signatories and specimens of their signatures;
		

		
			 
		

		 

 

			
	
			
				 (ii)
			

			
	
			
			certified list of directors, including titles, business and residential addresses and dates of birth;

			
	
			
				 (iii)
			

			
	
			
			certified true copy of photo identification (i.e. passport or driving license) and evidence of residential address for all authorized signatories;

			
	
			
				 (iv)
			

			
	
			
			with respect to the Borrower, certificate of ultimate beneficial ownership, certified by the respective secretary or assistant secretary of such entity; and

			
	
			
				 (v)
			

			
	
			
			non-resident declaration forms, if applicable;

		
			(z)Classification Society Instructions and Undertaking. The Borrower shall instruct the
		

		
			Classification Society through a letter sent by the Borrower to the Classification Society in the form attached hereto as Exhibit H-1 (and procure that the Classification Society undertakes with the Security Trustee through a letter in the form attached hereto as Exhibit H-2):
		

		
			(i)to send to the Security Trustee, following receipt of a written request from the
		

		
			Security Trustee, certified true copies of all original class records held by the Classification Society in relation to the Vessel (and, upon the consummation of the Borrower Restructuring, the GREEN BAY);
		

		
			(ii)to allow the Security Trustee (or its agents), at any time and from time to time, to
		

		
			inspect the original class, related records and other information of the Borrower and the Vessel (and, upon the consummation of the Borrower Restructuring, the GREEN BAY) either (i) electronically (through the Classification Society directly or by way of indirect access via the Borrower’s account manager and designating the Security Trustee as a user or administrator of the system under its account) or (ii) in person at the offices of the Classification Society, and to take copies of them electronically or otherwise;
		

		
			(iii)to notify the Security Trustee immediately in writing and by Email at
		

		
			techcom@dvbbank.com if the Classification Society:
		

			
	
			
				 (1)
			receives notification from the Borrower or any other person that the Classification Society of the Vessel (or, upon the consummation of the Borrower Restructuring, the GREEN BAY) is to be changed; or

			
	
			
				 (2)
			becomes aware of any facts or matters which may result in or have resulted in a condition of class or a recommendation, or a change, suspension, discontinuance, withdrawal or expiry of the class of the Vessel (or, upon the consummation of the Borrower Restructuring, the GREEN BAY) under the rules or terms and conditions of the Borrower’s or the relevant vessel’s membership of the Classification Society;

		
			(iv)following receipt of a written request from the Security Trustee:
		

			
	
			
				 (1)
			to confirm that the Borrower is not in default of any of its contractual obligations or liabilities to the Classification Society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the Classification Society; or

			
	
			
				 (2)
			if the Borrower is in default of any of its contractual obligations or liabilities to the Classification Society, to specify to the Security Trustee in reasonable detail the facts and circumstances of such default, the consequences of such default, and any remedy period agreed or allowed by the Classification Society; or

		
			 
		

		

		

		 

 

		(3)to provide any other information reasonably requested;
		

		
			(aa) GREEN BAY Credit Facility Requirements. Comply with the terms of the GREEN BAY Credit Facility;
		

		
			(bb) Further Assurances. Promptly upon the written request of the Facility Agent:
		

			
	
			
				 (i)
			

			
	
			
			correct any material defect or error that may be discovered in any Transaction Document or in the execution, acknowledgement, filing or recordation thereof; and

			
	
			
				 (ii)
			

			
	
			
			do, execute, acknowledge, deliver, record, re-record, file, re-file, register and reregister any and all such further acts, deeds, conveyances, pledge agreements, mortgages, deeds of trust, trust deeds, assignments, financing statements and continuations thereof, termination statements, notices of assignments, transfers, certificates, assurances and other instruments as the Facility Agent, may reasonably require from time to time in order to:

			
	
			
				 (1)
			carry out the purposes of the Transaction Documents;

			
	
			
				 (2)
			to the fullest extent permitted by applicable law, subject each of item of Collateral to the Liens now or hereafter intended to be covered by the Transaction Documents pursuant to the terms thereof;

			
	
			
				 (3)
			perfect and maintain the validity, effectiveness and priority of the Liens intended to be created under the Transaction Documents; and

			
	
			
				 (4)
			assure, convey, grant, assign, transfer, preserve, protect and confirm to the Security Trustee, the rights granted or now or hereafter intended to be granted to the Security Trustee under any Transaction Document or under any other instruments executed in connection with any Transaction Document to which any Security Party is or is to be a party.

		
			9.2Negative Covenants. Each of the Security Parties hereby covenants and undertakes with the
		

		
			Lenders that, from the date hereof and so long as any principal, interest or other moneys are owing in respect of this Agreement, the Note or any other Transaction Documents, it will not, without the prior written consent of the Majority Lenders (or all of the Lenders if required pursuant to Section 17.8):
		

		
			(a)Liens. Create, assume or permit to exist, any mortgage, pledge, lien, charge, encumbrance
		

		
			or any security interest whatsoever upon any Collateral or, in respect of the Borrower and the Guarantor, other property except:
		

			
	
			
				 (i)
			

			
	
			
			liens disclosed in Schedule III;

			
	
			
				 (ii)
			

			
	
			
			liens to secure Indebtedness permitted under Section 9.2(m), such liens to be limited to the vessels constructed or acquired;

			
	
			
				 (iii)
			

			
	
			
			liens for taxes not yet payable for which adequate reserves have been maintained;

			
	
			
				 (iv)
			

			
	
			
			the Mortgage, the GREEN BAY Mortgage, the Assignments, the GREEN BAY Assignments and other liens in favor of the Security Trustee or the Lenders;

			
	
			
				 (v)
			

			
	
			
			liens, charges and encumbrances against the Vessel permitted to exist under the terms of the Mortgage (or in the case of the GREEN BAY, under the terms of the GREEN BAY Mortgage);

		
			 
		

		 

 

			
	
			
				 (vi)
			

			
	
			
			pledges of certificates of deposit or other cash collateral securing reimbursement obligations in connection with letters of credit now or hereinafter issued for its account in connection with the establishment of its financial responsibility under 33 C.F.R. Part 130 or 46 C.F.R. Part 540, as the case may be, as the same may be amended and replaced;

			
	
			
				 (vii)
			

			
	
			
			pledges or deposits to secure obligations under workmen's compensation laws or similar legislation, deposits to secure public or statutory obligations, warehousemen's or other like liens, or deposits to obtain the release of such liens and deposits to secure surety, appeal or customs bonds on which it is the principal, as to all of the foregoing, only to the extent arising and continuing in the ordinary course of business; and

			
	
			
				 (viii)
			

			
	
			
			other liens, charges and encumbrances incidental to the conduct of its business, the ownership of its property and assets which are not more than thirty (30) days overdue and which do not in the aggregate materially detract from the value of its property or assets or materially impair the use thereof in the operation of its business;

			
	
			
				 (b)
			Third Party Guaranties. Guarantee the obligations of any third party, except a direct or indirect subsidiary of the Guarantor, whether or not affiliated with such Security Party, provided, that the Guarantor may guarantee the obligations of any third party in which the Guarantor owns an equity interest if such guarantee is of a percentage of the obligations of such third party being guaranteed which is no more than the percentage of the Guarantor’s equity ownership in such third party. By way of illustration, if the Guarantor owns a 35% equity interest in a third party, the Guarantor may guarantee up to 35% of such third party’s debt;

			
	
			
				 (c)
			Liens on Shares of Borrower. With respect to the Guarantor, create, assume or permit to exist, any mortgage, pledge, lien, charge, encumbrance or any security interest whatsoever upon the shares of the Borrower;

			
	
			
				 (d)
			Subordination of Inter-Company Indebtedness. Upon the occurrence and during the continuance of an Event of Default, allow any payments to be made by any of the Security Parties on any inter-company Indebtedness until such time as the Facility is paid in full;

			
	
			
				 (e)
			Transaction with Affiliates. Other than as contemplated by the Borrower Restructuring, enter into any transaction with an Affiliate, other than on an arm’s length basis;

			
	
			
				 (f)
			Change of Flag, Class, Management or Ownership. Change the flag of the Vessel other than to an Approved Jurisdiction, its Classification Society other than to another member of the International Association of Classification Societies acceptable to each of the Lenders, the management of the Vessel other than to the Guarantor or a wholly-owned Subsidiary thereof (it being understood that the technical management of the Vessel may be subcontracted to Wallen Shipmanagement Hong Kong, or another internationally recognized vessel technical manager approved by the Agents, such approval not to be unreasonably withheld, delayed or conditioned);

			
	
			
				 (g)
			Chartering. Enter into any charter party agreement with respect to the Vessel, other than an Approved Charter, or permit the Vessel to be sub-chartered, in each case, without the prior consent of the Majority Lenders, which consent shall not be unreasonably withheld;

			
	
			
				 (h)
			Change in Business. Other than as contemplated by the Borrower Restructuring, change the nature of its business or commence any business materially different from its current business;

		
			 
		

		 

 

			
	
			
				 (i)
			Sale of Assets. Other than as contemplated by the Borrower Restructuring or as reasonably acceptable to the Majority Lenders, sell, or otherwise dispose of, the Vessel or any other asset (including by way of spin-off, installment sale or otherwise) which is substantial in relation to its assets taken as a whole; provided, however, that the Borrower may sell the Vessel to a third party in an arm's length transaction provided that either (i) the Facility shall be repaid in full together with the Prepayment Premium, as applicable, and the costs and expenses provided for in Section 13.4 or (ii) the Borrower places the amount referred to in clause (i) above on charged deposits with the Facility Agent;

			
	
			
				 (j)
			Changes in Offices or Names. Change the location of its chief executive office, its chief place of business or the office in which its records relating to the earnings or insurances of the Vessel are kept or change its name unless the Lenders shall have received sixty (60) days prior written notice of such change;

			
	
			
				 (k)
			Consolidation and Merger. Consolidate with, or merge into, any corporation or other entity, or merge any corporation or other entity into it; provided, however, that the Guarantor and/or either Borrower may merge with any Subsidiary thereof or any other Person if (A) at the time of such transaction and after giving effect thereto, no Default or Event of Default shall have occurred or be continuing, (B) the surviving entity of such consolidation or merger shall be the Guarantor or the respective Borrower and (C) after giving effect to the transaction, the Guarantor's Consolidated Tangible Net Worth shall be greater or equal to its Consolidated Tangible Net Worth prior to the merger;

			
	
			
				 (l)
			Change Fiscal Year. In the case of the Guarantor, change its fiscal year;

			
	
			
				 (m)
			Indebtedness. In the case of the Security Parties, incur any new Indebtedness (which, for the sake of clarity, shall exclude any Indebtedness pursuant to this Agreement) other than (i) upon the consummation of the Borrower Restructuring, assumption of Indebtedness under the GREEN BAY Credit Facility, (ii) with respect to the Guarantor only, Indebtedness incurred to finance the acquisition and/or construction of any vessels; (iii) Indebtedness incurred by the Guarantor to finance the acquisition of any shipping related asset, or any railroad or railcar repair yard asset ancillary to the Guarantor’s existing railroad business; (iv) Indebtedness incurred by the Guarantor to finance the acquisition of the equity interests of any company owning shipping related assets whose primary business activity is shipping or any company owning railroad or railcar repair yard assets ancillary to the Guarantor’s existing railroad business whose primary business activity is related to such assets; (v) any Indebtedness incurred in connection with any refinancing of any Indebtedness permitted under this Section 9.2(m)(i) through (iv), provided, however, that in each exception listed in clauses (i) through (iv) above, the principal amount of such Indebtedness shall not exceed eighty percent (80%) of such acquisition and/or construction price; and (vi) Indebtedness incurred by the Guarantor in connection with any guarantees permitted under Section 9.2(b) hereof;

			
	
			
				 (n)
			Limitations on Ability to Make Distributions. Create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary to pay dividends or make any other distributions on its capital stock or limited liability company interests, as the case may be, to the Borrower or the Guarantor, except that the Borrower may declare a dividend or make other distributions to the Guarantor if and so long as both immediately before and after payment of such dividend or distribution, no Default or Event of Default shall have occurred and be continuing and the Security Parties are in compliance with Sections 9.3, 9.4 and 10.3;

			
	
			
				 (o)
			No Money Laundering. Contravene any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of the Directive (2005/60/EC) of the Council of the European Communities) and comparable United States Federal and state laws;

			
	
			
				 (p)
			Charter Party Agreements. Amend any material provision in the Initial Charter Party Agreement or any Approved Charter, without the prior written consent of the Facility Agent;

		
			 
		

		

		

		 

 

		(q)Nuclear Waste, War Zone, Etc.
		

			
	
			
				 (i)
			

			
	
			
			Permit the Vessel to carry nuclear waste or material; or

			
	
			
				 (ii)
			

			
	
			
			in the event of hostilities in any part of the world (whether war is declared or not), cause or permit the Vessel to enter or trade to any zone which is declared a war zone by any government or by the Vessel’s war risks insurers, unless the Borrower has (at its expense) effected the special, additional or modified insurance cover which the Security Trustee may reasonably require, prior to entering into such war zone; and

		
			(r)GREEN BAY Credit Facility. Amend, or enter into any transaction that has the effect of
		

		
			amending, the GREEN BAY Credit Facility without the prior written consent of the Facility Agent.
		

		
			9.3Financial Covenants. The Guarantor hereby covenants and undertakes with the Lenders that,
		

		
			from the date hereof and so long as any principal, interest or other moneys are owing in respect of this Agreement, the Note or any of the other Transaction Documents, it will:
		

			
	
			
				 (a)
			Maximum Consolidated Leverage Ratio. Maintain a Consolidated Leverage Ratio not greater than (i) 4.50:1.00, for the fiscal quarter ending June 30, 2015, (ii) 5.00:1.00, beginning with the fiscal quarter ending September 30, 2015 through the fiscal quarter ending December 31, 2015, (iii) 4.75:1.00, for the fiscal quarter ending March 31, 2016, (iv) 4.50:1.00, for the fiscal quarter ending June 30, 2016 and (v) 4.25:1.00, thereafter, measured at the end of each fiscal quarter of the Guarantor based on the four most recent fiscal quarters of the Guarantor for which financial information is available;

			
	
			
				 (b)
			Working Capital. Maintain on a consolidated basis a ratio of current assets to current liabilities of not less than 1.00 to 1.00, measured at the end of each fiscal quarter of the Guarantor based on the four most recent fiscal quarters for which financial information is available;

			
	
			
				 (c)
			Intentionally Omitted.

			
	
			
				 (d)
			Minimum Liquidity. Maintain Liquidity of not less than Twenty Million Dollars ($20,000,000) at all times, measured as of the end of each fiscal quarter of the Guarantor;

			
	
			
				 (e)
			Minimum Consolidated Tangible Net Worth. Maintain a Consolidated Tangible Net Worth, as measured at the end of each fiscal quarter of the Guarantor, in an amount of not less than the sum of Two Hundred Fifty-Four Million Eight Hundred Eighty Thousand Dollars ($254,880,000) plus fifty percent (50%) of all Consolidated Net Income of the Guarantor and the Subsidiaries earned after March 31, 2015 plus one hundred percent (100%) of the proceeds of all issuances of equity interests (common or preferred) of the Guarantor and the Subsidiaries (on a consolidated basis) received after March 31, 2015 (other than issuances in connection with the exercise by a present or former employee, officer or director under a stock incentive plan, stock option plan or other equity-based compensation plan or arrangement);

			
	
			
				 (f)
			Consolidated EBITDA to Consolidated Interest Expense. Maintain, on a consolidated basis, a ratio of Consolidated EBITDA to Consolidated Interest Expense of not less than 2.50 to 1.00, measured at the end of each fiscal quarter of each fiscal year based on the four most recent fiscal quarters for which financial information is available;

			
	
			
				 (g)
			Minimum Consolidated Fixed Charge Coverage Ratio. Maintain a Consolidated Fixed Charge Coverage Ratio of at least (i) 1.15:1.00, for the fiscal quarter ending June 30, 2015, (ii) 1.05:1.00, beginning with the fiscal quarter ending September 30, 2015 through the fiscal quarter ending December 31, 2015, (iii) 1.15:1.00, for the fiscal quarter ending March 31, 2016, (iv) 1.20:1.00, for the fiscal quarter ending June 30, 2016 and (v) 1.25:1.00, thereafter, measured at the end of each fiscal quarter of the Guarantor based on the four most recent fiscal quarters of the Guarantor for which financial information is available;

		
			 
		

		 

 

			
	
			
				 (h)
			MFN. In the event the Guarantor or any of its Subsidiaries shall enter into, assume or otherwise become bound by or obligated under any agreement creating or evidencing Indebtedness, and any financial covenant included therein, in the sole judgment of the Facility Agent or the Majority Lenders, is more restrictive than the financial covenants set forth in this Section 9.3 at such time or is different from the subject matter of such financial covenants (each such covenant, a “Specified Covenant”), this Agreement shall, without any further action on the part of the Facility Agent, the Lenders or the Creditors, be deemed to be amended automatically to include each such Specified Covenant; and

			
	
			
				 (i)
			Covenant Reset. In the event that the Borrower or the Guarantor enters into a transaction that has a materially positive impact on the financial condition of the Borrower or the Guarantor, the Borrower and the Guarantor shall in good faith negotiate with the Lenders to amend this Agreement in order to bring the covenant levels set forth in this Section 9.3 closer to the levels that the Guarantor was subject to in other credit facilities prior to the Closing Date. If the Lenders and the Security Parties, acting in good faith, fail to agree to new covenant levels, the covenant levels set forth in Section 9.3 shall revert to the levels in effect as of December 31, 2014 under the GREEN BAY Credit Facility.

		
			9.4 Asset Maintenance. If, at any time from the date hereof and so long as any principal, interest
		

		
			or other moneys are owing in respect of this Agreement, the Note or any other Transaction Documents, the Fair Market Value of the Vessel is less than the Required Percentage of the outstanding amount of the Facility, the Borrower shall, within 30 days following receipt by the Borrower of written notice from the Facility Agent notifying the Borrower of such shortfall and specifying the amount thereof (which amount shall, in the absence of manifest error, be deemed to be conclusive and binding on the Borrower), either (i) prepay such amount of the Facility (together with interest thereon and any other monies payable in respect of such prepayment pursuant to Section 5.4) as shall result in the Fair Market Value of the Vessel being not less than the Required Percentage of the outstanding amount of the Facility or (ii) place on charged deposits with the Facility Agent an amount in Dollars (together with interest thereon and any other monies payable in respect of such prepayment pursuant to Section 5.4) as shall result in the Fair Market Value of the Vessel together with the amount deposited being not less than the Required Percentage of the outstanding amount of the Facility. The charged deposit shall be released to the Borrower when the Fair Market Value of the Vessel is not less than the Required Percentage of the outstanding amount of the Facility.
		

		
			9.5 Borrower Restructuring. The Borrower and the Guarantor shall, as soon as possible after the
		

		
			Closing Date but in no event later than 90 days thereafter, ensure that:
		

			
	
			
				 (a)
			The GREEN BAY shall be transferred into the ownership of the Borrower and the Other Borrower Vessels shall be transferred out of the ownership of the Borrower, the effect of which is that the only two vessels owned by the Borrower as of that date shall be the Vessel and the GREEN BAY;

			
	
			
				 (b)
			The Borrower shall provide to the Facility Agent the following documents:

			
	
			
				 (i)
			

			
	
			
			Evidence of Vessel Transfer. copies of the bills of sale and other evidence satisfactory to it and its counsel that the transfers of the GREEN BAY into the Borrower and of the Other Borrower Vessels out of the Borrower have been consummated;

			
	
			
				 (ii)
			

			
	
			
			Vessel Documents. evidence satisfactory to it and its counsel that the GREEN BAY is:

		
			(1)in the sole and absolute ownership of the Borrower and duly registered in
		

		
			the Borrower’s name in the Republic of the Marshall Islands, free of all liens and encumbrances of record other than the GREEN BAY Mortgage and the GREEN BAY-$38.5M Credit Facility Mortgage;
		

		
			 
		

		 

 

			
	
			
				 (2)
			insured in accordance with the provisions of the GREEN BAY Mortgage and all requirements of the GREEN BAY Mortgage in respect of such insurance have been fulfilled (including, but not limited to, letters of undertaking from the insurance brokers, including confirmation notices of assignment, notices of cancellation and loss payable clauses acceptable to the Lenders);

			
	
			
				 (3)
			classed in the highest classification and rating for vessels of the same age and type with its Classification Society without any outstanding recommendations; and

			
	
			
				 (4)
			operationally seaworthy and in every way fit for its intended service.

		
			(iii)Charter and NYK Consent. (A) copies of the charter party, along with the relevant
		

		
			addenda, entered by the Borrower with Nippon Yusen Kaisha in respect of the GREEN BAY, each certified as true and complete by an officer of the Borrower, and (B) a copy of the executed and countersigned notice and acknowledgment of assignment of earnings and time charter and subordination agreement from Nippon Yusen Kaisha;
		

		
			(iv)Security Documents.
		

			
	
			
				 (1)
			the GREEN BAY Earnings and Charterparties Assignment;

			
	
			
				 (2)
			the GREEN BAY Insurances Assignment;

			
	
			
				 (3)
			the Assignment Notices and the acknowledgements thereof in respect of (1) and (2) above (including the executed and countersigned notice and acknowledgment of assignment of earnings and time charter and subordination agreement from Nippon Yusen Kaisha);

			
	
			
				 (4)
			the GREEN BAY Mortgage; and

			
	
			
				 (5)
			the Manager’s Undertaking in respect of the GREEN BAY from each of the Commercial Manager (unless the Borrower is the Commercial Manager) and the Technical Manager (or any subcontractor thereof), including, where applicable, an assignment of the interests of such manager in the insurances and subordination undertakings;

			
	
			
				 (6)
			evidence that the Borrower has sent an instruction letter in respect of the GREEN BAY to the Classification Society as required under Section 9.1(z) and that the Classification Society has executed the undertaking as required thereby; and

			
	
			
				 (7)
			an irrevocable power of attorney granted by the Borrower to the Security Trustee which, upon the occurrence of an Event of Default, enables the Security Trustee to make all necessary decisions in relation to the GREEN BAY and obliges the master of the GREEN BAY to adhere to the Security Trustee’s instructions;

		
			(v)Registration of the GREEN BAY Mortgage. satisfactory evidence that the GREEN
		

		
			BAY Mortgage has been duly registered under the laws of the Republic of the Marshall Islands and constitutes a preferred mortgage lien under such jurisdiction;
		

		
			(vi)Pari Passu Intercreditor Agreement. a Pari Passu Intercreditor Agreement, duly
		

		
			executed by the Borrower, the Guarantor, and the security trustee and the facility agent in respect of the GREEN BAY Credit Facility;
		

		
			 
		

		

		

		 

 

		(vii) UCC Filings. evidence that Uniform Commercial Code Financing Statements have been filed in the District of Columbia and in such other jurisdictions as the Facility Agent may reasonably require;
		

		
			(viii) Legal Opinions. opinions addressed to the Facility Agent from (i) Jones Walker, L.L.P., special counsel to the Borrower (including a no conflicts opinion with the other material agreements of the Borrower and the Guarantor) and (ii) Seward & Kissel LLP, special counsel to the Agents and the Lenders, in each case in such form as the Facility Agent may require, as well as such other legal opinions as the Lenders shall have required as to all or any matters under the laws of New York and the Republic of the Marshall Islands;
		

		
			(ix)ING Credit Agreement Amendment. evidence that the ING Credit Agreement is
		

		
			amended to provide for the change of the borrower thereunder, to reset financial covenant levels and to effect other changes relating to the Borrower Restructuring in form and substance satisfactory to the Facility Agent;
		

		
			(x)Consent. evidence that all third party consent, including that of Citizens Asset
		

		
			Finance, Inc. as lender under the credit facility entered into by LCI Shipholdings with respect to the GREEN DALE, required or necessary to effect the transfer of the GREEN BAY to the Borrower has been obtained;
		

		
			(xi)Officer’s Certificate. an officer’s certificate of the Borrower certifying as of the date
		

		
			of the GREEN BAY Mortgage that after giving effect to the Borrower Restructuring
		

			
	
			
				 (i)
			the representations stated in Section 2 are true and correct as if made on that date,

			
	
			
				 (ii)
			no Default or Event of Default has occurred and is continuing, (iii) there has not been any Material Adverse Effect since the date of the Closing Date, (iv) no third party or governmental consent (other than those already obtained) is necessary or required in order for the Borrower to consummate the Borrower Restructuring and (v) the conditions set forth in this Section 9.5 have been satisfied;

		
			(xii) ING Credit Agreement. evidence that the EGS Borrower is released from all obligations under the ING Credit Agreement; and
		

		
			(xiii) Miscellaneous. any other certificates, instruments or other documents (including any amendment to the GREEN BAY Credit Facility) that the Facility Agent may reasonably require in connection with the Borrower Restructuring and the GREEN BAY.
		

		
			(c)The Borrower shall comply with the obligations set forth in Sections 9.5 and 12.2(c) of the
		

		
			GREEN BAY Credit Facility.
		

		
			10. ACCOUNTS.
		

		
			10.1General. From the date hereof and so long as any principal, interest or other moneys are
		

		
			owing in respect of this Agreement, the Note or any other Transaction Documents, each of the Borrower and the Guarantor, as the case may be, agrees to comply or cause compliance with the following provisions of this Section 10 except as the Facility Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld.
		

		
			10.2 Payment of Earnings. The Borrower shall ensure that all Earnings of the Vessel are to be paid to the Earnings Account.
		

		
			 
		

		

		

		 

 

		10.3 Monthly Retentions. The Borrower shall ensure that (x) all Earnings of the Vessel paid into the Earnings Account on or prior to the 15th day of each calendar month shall be transferred to the Retention Account and (y) all or a portion of the Earnings of the Vessel paid into the Earnings Account on or after the 15th day of each calendar month shall be transferred to the Retention Account, so that on the last day of each calendar month, an aggregate amount equal to one-third of the Debt Service payable on the next Payment Date is transferred to the Retention Account. The Borrower hereby authorizes the Facility Agent and the Account Bank to make such transfer(s). The frequency and amount of such transfer(s) may be modified in the reasonable discretion of the Facility Agent if the payment intervals under the relevant Approved Charter changes.
		

		
			10.4Intentionally Omitted.
		

		
			10.5Shortfall in Earnings. If the aggregate Earnings received in the Earnings Account are
		

		
			insufficient in any month for the required amount to be transferred to the Retention Account under Section 10.3, the Borrower shall immediately deposit an amount equal to such deficiency into the Retention Account.
		

		
			10.6 Transfers from Retention Account; Application of Retentions.
		

		
			(a)The Borrower shall ensure that on each Payment Date, the amount of the Debt
		

		
			Service payable on such Payment Date is transferred (and the Borrower hereby authorizes the Facility Agent to transfer such amount) from the Retention Account to the Facility Agent’s account specified in Section 7.1.
		

		
			(b)Upon the occurrence and during the continuation of an Event of Default or any
		

		
			breach under Section 9.3 or 9.4, without prejudice to any other right the Security Trustee may have under the Transaction Documents, the Facility Agent may withdraw from the Earnings Accounts any Excess Cash Flow and, at the Facility Agent’s option:
		

			
	
			
				 (i)
			

			
	
			
			transfer any portion of such Excess Cash Flow to the Retention Account; or

			
	
			
				 (ii)
			

			
	
			
			apply any portion of such Excess Cash Flow to prepayment of the Facility on the next Payment Date, and Section 5 shall apply in relation to any such prepayment.

		
			(c)Any amount deposited in the Retention Account shall be retained as security and no
		

		
			funds may be withdrawn by the Borrower from the Retention Account at any time, so long as any principal, interest or other moneys are owing in respect of this Agreement or the other Transaction Documents.
		

		
			10.7 Location of Accounts. Each of the Borrower and the Guarantor, as the case may be, shall promptly:
		

			
	
			
				 (a)
			comply with any requirement of the Facility Agent as to the location or re-location of the Earnings Account and the Retention Account (or either of them), and without limiting the foregoing, each of the Borrower and the Guarantor agrees to segregate the Earnings Account and the Retention Account (or any of them) from the banking platform on which their other accounts are located or designated; and

			
	
			
				 (b)
			execute any documents which the Facility Agent specifies to create or maintain in favor of the Security Trustee a security interest over (and/or rights of set-off, consolidation or other rights in relation to) the Earnings Account and the Retention Account.

		
			10.8 Debits for Expenses. The Facility Agent, upon providing the Borrower and the Guarantor with one (1) Banking Day’s prior notice, shall be entitled (but not obliged) from time to time to debit the Earnings Account or the Retention Account in order to discharge any amount due and payable under Section 15.2 or 19.8 to a Creditor or payment of which any Creditor has become entitled to demand under Section 15.2 or 19.8.
		

		
			 
		

		

		

		 

 

		10.9 Borrower’s Obligations Unaffected. The provisions of this Section 10 do not affect:
		

			
	
			
				 (a)
			the liability of the Borrower to make payments of principal and interest on the due dates; or

			
	
			
				 (b)
			any other liability or obligation of the Borrower or any other Security Party under any Transaction Document

		
			11. GUARANTEE
		

		
			11.1The Guarantee. The Guarantor hereby irrevocably and unconditionally guarantees to each of
		

		
			the Creditors and their respective successors and assigns the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the principal of and interest on the Facility made by the Lenders to the Borrower and evidenced by the Note and all other amounts from time to time owing to the Creditors by the Borrower under this Agreement, under the Note and under any of the Transaction Documents, in each case strictly in accordance with the terms thereof (such obligations being herein collectively called the “Guaranteed Obligations”). The Guarantor hereby further agrees that if the Borrower shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the Guarantor will promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal.
		

		
			11.2 Obligations Unconditional. The obligations of the Guarantor under Section 11.1 are absolute, unconditional and irrevocable, irrespective of the value, genuineness, validity, regularity or enforceability of the obligations of the Borrower under this Agreement, the Note or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of, or security for, any of the Guaranteed Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section 11.2 that the obligations of the Guarantor hereunder shall be absolute, unconditional and irrevocable, under any and all circumstances. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Guarantor hereunder, which shall remain absolute, unconditional and irrevocable as described above:
		

			
	
			
				 a.
			at any time or from time to time, without notice to the Guarantor, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;

			
	
			
				 b.
			any of the acts mentioned in any of the provisions of this Agreement or the Note or any other agreement or instrument referred to herein or therein shall be done or omitted;

			
	
			
				 c.
			the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be modified, supplemented or amended in any respect, or any right under this Agreement or the Note or any other agreement or instrument referred to herein or therein shall be waived or any other guarantee of any of the Guaranteed Obligations or any security therefor shall be released or exchanged, in whole or in part, or otherwise dealt with; or

			
	
			
				 d.
			any lien or security interest granted to, or in favor of, the Security Trustee or any Lender or Lenders as security for any of the Guaranteed Obligations shall fail to be perfected.

		
			 
		

		

		

		 

 

		The Guarantor hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that any Agent or any Lender exhaust any right, power or remedy or proceed against the Borrower under this Agreement or the Note or any other agreement or instrument referred to herein or therein, or against any other Person under any other guarantee of, or security for, any of the Guaranteed Obligations.
		

		
			11.3Reinstatement. The obligations of the Guarantor under this Section 11 shall be
		

		
			automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrower in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any Proceedings and the Guarantor agrees that it will indemnify each Creditor on demand for all reasonable costs and expenses (including, without limitation, fees of counsel) incurred by such Creditor in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law.
		

		
			11.4 Subrogation. The Guarantor hereby irrevocably waives, but only until all amounts payable hereunder by the Guarantor to the Creditors (or any of them) have been paid in full, any and all rights to which any of them may be entitled by operation of law or otherwise, upon making any payment hereunder to be subrogated to the rights of the payee against the Borrower with respect to such payment or to be reimbursed, indemnified or exonerated by or to seek contribution from the Borrower in respect thereof.
		

		
			11.5 Remedies. The Guarantor agrees that, as between the Guarantor and the Lenders, the obligations of the Borrower under this Agreement and the Note may be declared to be forthwith due and payable as provided in Section 8 (and shall be deemed to have become automatically due and payable in the circumstances provided in said Section 8) for purposes of Section 11.1 notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against the Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by the Borrower) shall forthwith become due and payable by the Guarantor for purposes of Section 11.1.
		

		
			11.6Joint, Several and Solidary Liability. The Guarantor’s obligations and liability under this
		

		
			Agreement shall be on a “solidary” or “joint and several” basis along with Borrower to the same degree and extent as if the Guarantor had been and/or will be a co-borrower, co-principal obligor and/or co-maker of the Guaranteed Obligations. In the event that there is more than one Guarantor under this Agreement, or in the event that there are other guarantors, endorsers or sureties of all or any portion of the Guaranteed Obligations, the Guarantor's obligations and liability hereunder shall further be on a “solidary” or “joint and several” basis along with such other guarantors, endorsers and/or sureties.
		

		
			11.7Continuing Guarantee. The guarantee in this Section 11 is a continuing guarantee, and shall
		

		
			apply to all Guaranteed Obligations whenever arising.
		

		
			12. ASSIGNMENT
		

		
			12.1Generally. This Agreement shall be binding upon, and inure to the benefit of, each of the
		

		
			Security Parties and each of the Creditors and their respective successors and assigns.
		

		
			12.2 Assignment by Security Parties. The Security Parties may not assign any of their respective rights or obligations hereunder without the written consent of the Lenders.
		

		
			12.3 Assignment by Lender.
		

		
			(a)Each Lender shall be entitled to assign its rights and obligations under this
		

		
			Agreement or grant participation(s) in the Facility to any subsidiary, holding company or other affiliate or office of such Lender, to any subsidiary, office or other affiliate company, special purpose entity or funding
		

		
			 
		

		

		

		 

 

		vehicle of any thereof or, with the consent of the Borrower (such consent not to be unreasonably withheld or delayed and to be deemed granted within ten (10) Banking Days from the day it has been sought unless it has been expressly refused within that period, provided, however, that such consent from the Borrower is not required if an Event of Default has occurred and is continuing) and with the consent of the Facility Agent, to any other bank or financial institution (in a minimum amount of not less than $1,000,000), and such Lender shall forthwith give notice of any such assignment or participation to the Borrower and pay the other Lender an assignment fee of $3,000 for each such assignment or participation; provided, however, that any such assignment must be made pursuant to an Assignment and Assumption Agreement. The Borrower will take all reasonable actions requested by the Agents or any Lender to effect such assignment. In addition, any Lender may disclose to any prospective assignee any information about the Security Parties and the Transaction Documents as the Lender shall consider appropriate if the person to whom the information is given agrees in writing to keep such information confidential.
		

			
	
			
				 (b)
			The Facility Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption Agreement delivered to it and a register for the recordation of the names and addresses of the Lenders and principal amount of the Facility owing to each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and the Borrower, the Facility Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

			
	
			
				 (c)
			Upon its receipt of a duly completed Assignment and Assumption Agreement executed by an assigning Lender and an assignee, the assignment fee referred to above and any written consent to such assignment required, the Facility Agent shall accept such Assignment and Assumption Agreement and record the information contained therein in the Register; provided, that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it pursuant to this Agreement, the Facility Agent shall have no obligation to accept such Assignment and Assumption Agreement and record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest thereon. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

			
	
			
				 (d)
			In addition, any Lender may at any time, without the consent of, or notice to, the Borrower or any Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower’s Affiliates) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Advance owing to it); provided, that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Guarantor, the Facility Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that requires the consent of each Lender directly affected thereby pursuant to the terms of this Agreement and that directly affects such Participant.

		
			13.ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.
		

		
			13.1Illegality. In the event that by reason of any change in any applicable law, regulation or
		

		
			regulatory requirement or in the interpretation thereof, a Lender has a reasonable basis to conclude that it has become unlawful for any Lender to maintain or give effect to its obligations as contemplated by this Agreement, such Lender shall inform the Facility Agent and the Borrower to that effect, whereafter the
		

		
			 
		

		

		

		 

 

		liability of such Lender to make its Commitment available shall forthwith cease and the Borrower shall be required either to repay to such Lender that portion of the Facility advanced by such Lender immediately or, if such Lender so agrees, to repay such portion of the Facility to the Lender on the last day of the calendar month in accordance with and subject to the provisions of Section 13.4. In any such event, but without prejudice to the aforesaid obligations of the Borrower to repay such portion of the Facility, the Borrower and the relevant Lender shall negotiate in good faith with a view to agreeing on terms for making such portion of the Facility available from another jurisdiction or otherwise restructuring such portion of the Facility on a basis which is not unlawful.
		

		
			13.2 Increased Costs. If any change in applicable law, regulation or regulatory requirement, or in the interpretation or application thereof by any governmental or other authority, shall:
		

			
	
			
				 (i)
			

			
	
			
			subject any Lender to any Taxes with respect to its income from the Facility, or any part thereof, or

			
	
			
				 (ii)
			

			
	
			
			change the basis of taxation to any Lender of payments of principal or interest or any other payment due or to become due pursuant to this Agreement (other than a change in the basis effected by the jurisdiction of organization of such Lender, the jurisdiction of the principal place of business of such Lender, the United States of America, the State or City of New York or any governmental subdivision or other taxing authority having jurisdiction over such Lender (unless such jurisdiction is asserted by reason of the activities of any Security Party) or such other jurisdiction where the Facility may be payable), or

			
	
			
				 (iii)
			

			
	
			
			impose, modify or deem applicable any reserve requirements or require the making of any special deposits against or in respect of any assets or liabilities of, deposits with or for the account of, or loans by, a Lender, or

			
	
			
				 (iv)
			

			
	
			
			impose on any Lender any other condition affecting the Facility or any part thereof,

		
			and the result of the foregoing is either to increase the cost to such Lender of making available or maintaining its Commitment or any part thereof or to reduce the amount of any payment received by such Lender, then and in any such case if such increase or reduction in the opinion of such Lender materially affects the interests of such Lender under or in connection with this Agreement:
		

			
	
			
				 (1)
			such Lender shall notify the Facility Agent and the Borrower of the happening of such event, and

			
	
			
				 (2)
			the Borrower agrees forthwith upon demand to pay to such Lender such amount as such Lender certifies to be necessary to compensate such Lender for such additional cost or such reduction; provided, however, that the foregoing provisions shall not be applicable in the event that increased costs to the Lender result from the exercise by the Lender of its right to assign its rights or obligations under Section 12.3.

		
			For the avoidance of doubt, this Section 13.2 shall apply to all requests, rules, guidelines or directives concerning liquidity and capital adequacy issued by any United States regulatory authority (i) under or in connection with the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act and (ii) in connection with the implementation of the recommendations of the Bank for International Settlements or the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar authority), regardless of the date adopted, issued, promulgated or implemented.
		

		
			13.3Lender's Certificate Conclusive. A certificate or determination notice of the Facility Agent
		

		
			or any Lender, as the case may be, as to any of the matters referred to in this Section 13 shall, absent manifest error, be conclusive and binding on the Borrower.
		

		
			 
		

		

		

		 

 

		13.4 Compensation for Losses. Where any portion of the Facility is to be repaid by the Borrower pursuant to Section 5 or this Section 13, the Borrower agrees simultaneously with such repayment to pay to the relevant Lender all accrued interest to the date of actual payment on the amount repaid and all other sums then payable by the Borrower to the relevant Lender pursuant to this Agreement, together with such amounts as may be certified by the relevant Lender to be necessary to compensate such Lender for any actual loss, premium or penalties incurred or to be incurred thereby on account of funds borrowed to make, fund or maintain its Commitment or such portion thereof for the remainder (if any) of the then current calendar month, but otherwise without penalty or premium.
		

			
	
			
				 14.
			CURRENCY INDEMNITY

		
			14.1Currency Conversion. If for the purpose of obtaining or enforcing a judgment in any court
		

		
			in any country it becomes necessary to convert into any other currency (the “judgment currency”) an amount due in Dollars under this Agreement or the other Transaction Documents then the conversion shall be made, in the discretion of the Facility Agent, at the rate of exchange prevailing either on the date of default or on the day before the day on which the judgment is given or the order for enforcement is made, as the case may be (the “conversion date”), provided that the Facility Agent shall not be entitled to recover under this Section any amount in the judgment currency which exceeds at the conversion date the amount in Dollars, as applicable, due under this Agreement, the Note and/or the other Transaction Documents.
		

		
			14.2 Change in Exchange Rate. If there is a change in the rate of exchange prevailing between the conversion date and the date of actual payment of the amount due, the Borrower shall pay such additional amounts (if any, but in any event not a lesser amount) as may be necessary to ensure that the amount paid in the judgment currency when converted at the rate of exchange prevailing on the date of payment will produce the amount then due under this Agreement, the Note and/or the other Transaction Documents in Dollars; any excess over the amount due received or collected by the Lenders shall be remitted to the Borrower.
		

		
			14.3 Additional Debt Due. Any amount due from the Borrower under this Section 14 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Agreement, the Note and/or any of the other Transaction Documents.
		

		
			14.4 Rate of Exchange. The term “rate of exchange” in this Section 14 means the rate at which the Facility Agent in accordance with its normal practices is able on the relevant date to purchase Dollars with the judgment currency and includes any premium and costs of exchange payable in connection with such purchase.
		

			
	
			
				 15.
			FEES AND EXPENSES

		
			15.1Fees. The Borrower shall pay all fees in the Fee Letter.
		

		
			15.2 Expenses. The Borrower agrees, whether or not the transactions hereby contemplated are consummated, on demand to pay, or reimburse the Agents for their payment of, the reasonable expenses of the Agents and (after the occurrence and during the continuance of an Event of Default) the Lenders incident to said transactions (and in connection with any supplements, amendments, waivers or consents relating thereto or incurred in connection with the enforcement or defense of any of the Agents' and the Lenders' rights or remedies with respect thereto or in the preservation of the Agents' and the Lenders' priorities under the documentation executed and delivered in connection therewith) including, without limitation, all reasonable costs and expenses of preparation, negotiation, execution and administration of this Agreement and the documents referred to herein, the reasonable fees and disbursements of the Agents' counsel in connection therewith, as well as the reasonable fees and expenses of any independent appraisers, surveyors, engineers and other consultants retained by the Agents in connection with this transaction, all costs and expenses, if any, in connection with the enforcement of this Agreement and the other Transaction Documents
		

		
			 
		

		

		

		 

 

		(and the security granted pursuant thereto) and stamp and other similar taxes, if any, incident to the execution and delivery of the documents (including, without limitation, the other Transaction Documents) herein contemplated and to hold the Agents and the Lenders free and harmless in connection with any liability arising from the nonpayment of any such stamp or other similar taxes. Such taxes and, if any, interest and penalties related thereto as may become payable after the date hereof shall be paid immediately by the Borrower to the Agents or the Lenders, as the case may be, when liability therefor is no longer contested by such party or parties or reimbursed immediately by the Borrower to such party or parties after payment thereof (if the Agents or the Lenders, at their sole discretion, chooses to make such payment).
		

			
	
			
				 16.
			APPLICABLE LAW, JURISDICTION AND WAIVER

		
			16.1 Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.
		

		
			16.2 Jurisdiction. Each of the Security Parties hereby irrevocably submits to the jurisdiction of the courts of the State of New York and of the United States District Court for the Southern District of New York in any action or proceeding brought against it by any of the Lenders or the Agents under this Agreement or under any document delivered hereunder and hereby irrevocably agrees that valid service of summons or other legal process on it may be effected by serving a copy of the summons and other legal process in any such action or proceeding on the Security Parties by mailing or delivering the same by hand to the Security Parties at the address indicated for notices in Section 18.1. The service, as herein provided, of such summons or other legal process in any such action or proceeding shall be deemed personal service and accepted by the Security Parties as such, and shall be legal and binding upon the Security Parties for all the purposes of any such action or proceeding. Final judgment (a certified or exemplified copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness of the Security Parties to the Lenders or the Agent) against the Security Parties in any such legal action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment. The Security Parties will advise the Facility Agent promptly of any change of address for the purpose of service of process. Notwithstanding anything herein to the contrary, the Lenders may bring any legal action or proceeding in any other appropriate jurisdiction.
		

		
			16.3 WAIVER OF IMMUNITY. TO THE EXTENT THAT ANY OF THE SECURITY PARTIES HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM SUIT, JURISDICTION OF ANY COURT OR ANY LEGAL PROCESS (WHETHER THROUGH ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OF A JUDGMENT, OR FROM ANY OTHER LEGAL PROCESS OR REMEDY) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH OF THE SECURITY PARTIES HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.
		

		
			16.4 WAIVER OF JURY TRIAL. IT IS MUTUALLY AGREED BY AND AMONG EACH OF THE SECURITY PARTIES AND EACH OF THE CREDITORS THAT EACH OF THEM HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY HERETO ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.
		

			
	
			
				 17.
			THE AGENTS

		
			17.1 Appointment of Facility Agent. Each of the Lenders irrevocably appoints and authorizes the Facility Agent to take such action as facility agent on its behalf and to exercise such powers under this Agreement, the Note and the other Transaction Documents as are delegated to the Facility Agent by the terms hereof and thereof. Neither the Facility Agent nor any of its directors, officers, employees or agents shall be liable for any action taken or omitted to be taken by it or them under this Agreement, the Note or the
		

		
			 
		

		

		

		 

 

		other Transaction Documents or in connection therewith, except for its or their own gross negligence or willful misconduct.
		

		
			17.2 Appointment of Security Trustee. Each of the Lenders irrevocably appoints, designates and authorizes the Security Trustee to act as security trustee on its behalf with regard to (i) the security, powers, rights, titles, benefits and interests (both present and future) constituted by and conferred on the Lenders or any of them or for the benefit thereof under or pursuant to this Agreement or any of the other Transaction Documents (including, without limitation, the benefit of all covenants, undertakings, representations, warranties and obligations given, made or undertaken to any Lender in the Agreement or the other Transaction Documents), (ii) all moneys, property and other assets paid or transferred to or vested in any Lender or any agent thereof or received or recovered by any Lender or any agent thereof pursuant to, or in connection with, this Agreement or the other Transaction Documents whether from any Security Party or any other person and (iii) all money, investments, property and other assets at any time representing or deriving from any of the foregoing, including all interest, income and other sums at any time received or receivable by any Lender or any agent thereof in respect of the same (or any part thereof). The Security Trustee hereby accepts such appointment but shall have no obligations under this Agreement, under the Note or under any of the other Transaction Documents except those expressly set forth herein and therein. Neither the Security Trustee nor any of its directors, officers, employees or agents shall be liable for any action taken or omitted to be taken by it or them under this Agreement, the Note or the other Transaction Documents or in connection therewith, except for its or their own gross negligence or willful misconduct.
		

		
			17.3 Distribution of Payments. Whenever any payment is received by the Facility Agent or the Security Trustee from the Borrower or the Guarantor for the account of the Lenders, or any of them, whether of principal or interest on the Note, commissions, fees under Section 15 or otherwise, it will thereafter cause to be distributed on the day of receipt if received before 10:00 a.m. New York time, or on the day after receipt if received thereafter, like funds relating to such payment ratably to the Lenders according to their respective Commitments, in each case to be applied according to the terms of this Agreement. Unless the Facility Agent or the Security Trustee, as the case may be, shall have received notice from the Borrower prior to the date when any payment is due hereunder that the Borrower will not make any payment on such date, the Facility Agent or the Security Trustee may assume that the Borrower have made such payment to the Facility Agent or the Security Trustee, as the case may be, on the relevant date and the Facility Agent or the Security Trustee may, in reliance upon such assumption, make available to the Lenders on such date a corresponding amount relating to such payment ratably to the Lenders according to their respective Commitments. If and to the extent that the Borrower shall not have so made such payment available to the Facility Agent or the Security Trustee, as the case may be, the Lenders and the Borrower (but without duplication) severally agree to repay to the Facility Agent or the Security Trustee, as the case may be, forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Lenders until the date such amount is repaid to the Facility Agent or the Security Trustee, as the case may be, as calculated by the Facility Agent or Security Trustee to reflect its cost of funds.
		

		
			17.4 Holder of Interest in Note. The Agents may treat each Lender as the holder of all of the interest of such Lender in the Note.
		

		
			17.5 No Duty to Examine, Etc. The Agents shall not be under a duty to examine or pass upon the validity, effectiveness or genuineness of any of this Agreement, the other Transaction Documents or any instrument, document or communication furnished pursuant to this Agreement or in connection therewith or in connection with any other Transaction Document, and the Agents shall be entitled to assume that the same are valid, effective and genuine, have been signed or sent by the proper parties and are what they purport to be.
		

		
			17.6 Agents as Lenders. With respect to that portion of the Facility made available by it, each Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as
		

		
			 
		

		

		

		 

 

		though it were not an Agent, and the term “Lender” or “Lenders” shall include any Agent in its capacity as a Lender. Each Agent and its affiliates may accept deposits from, lend money to and generally engage in any kind of business with, the Borrower and the Guarantor as if it were not an Agent.
		

		
			17.7 Acts of the Agents. Each Agent shall have duties and discretion, and shall act as follows:
		

			
	
			
				 (a)
			Obligations of the Agents. The obligations of each Agent under this Agreement, the Note and the other Transaction Documents are only those expressly set forth herein and therein;

			
	
			
				 (b)
			No Duty to Investigate. No Agent shall at any time, unless requested to do so by a Lender or Lenders, be under any duty to enquire whether an Event of Default, or an event which with the giving of notice or lapse of time, or both, would constitute an Event of Default, has occurred or to investigate the performance of this Agreement, the Note or any other Transaction Document by any Security Party; and

			
	
			
				 (c)
			Discretion of the Agents. Each Agent shall be entitled to use its discretion with respect to exercising or refraining from exercising any rights which may be vested in it by, and with respect to taking or refraining from taking any action or actions which it may be able to take under or in respect of, this Agreement and the other Transaction Documents, unless the Facility Agent shall have been instructed by the Majority Lenders to exercise such rights or to take or refrain from taking such action; provided, however, that no Agent shall be required to take any action which exposes it to personal liability or which is contrary to this Agreement or applicable law;

			
	
			
				 (d)
			Instructions of Majority Lenders. Each Agent shall in all cases be fully protected in acting or refraining from acting under this Agreement or under any other Transaction Document in accordance with the instructions of the Majority Lenders, and any action taken or failure to act pursuant to such instructions shall be binding on all of the Lenders.

		
			17.8 Certain Amendments. Neither this Agreement, the Note nor any of the other Transaction Documents nor any terms hereof or thereof may be amended unless such amendment is approved by the Borrower and the Majority Lenders, provided that no such amendment shall, without the consent of each Lender affected thereby, (i) reduce the interest rate or extend the time of payment of scheduled principal payments or interest or fees on the Facility, or reduce the principal amount of the Facility or any fees hereunder, (ii) increase or decrease the Commitment of any Lender or subject any Lender to any additional obligation (it being understood that a waiver of any Event of Default or any mandatory repayment of the Facility shall not constitute a change in the terms of any Commitment of any Lender), (iii) amend, modify or waive any provision of this Section 17.8, (iv) amend the definition of Majority Lenders or any other definition referred to in this Section 17.8, (v) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement, (vi) release any Security Party from any of its obligations under any Transaction Document except as expressly provided herein or in such Transaction Document, or (vii) amend any provision relating to the maintenance of collateral under Section 9.4. All amendments approved by the Majority Lenders under this Section 17.8 must be in writing and signed by the Borrower and each of the Lenders. In the event that any Lender is unable to or refuses to sign an amendment approved by the Majority Lenders hereunder, such Lender hereby appoints the Facility Agent as its Attorney-in-Fact for the purposes of signing such amendment. No provision of this Section 17 or any other provisions relating to the Facility Agent may be modified without the consent of the Facility Agent.
		

		
			17.9 Assumption regarding Event of Default. Except as otherwise provided in Section 17.15, the Facility Agent and the Security Trustee shall be entitled to assume that no Event of Default, or event which with the giving of notice or lapse of time, or both, would constitute an Event of Default, has occurred and is continuing, unless it has been notified by any Security Party of such fact, or has been notified by a Lender that such Lender considers that an Event of Default or such an event (specifying in detail the nature thereof) has occurred and is continuing. In the event that either thereof shall have been notified by any Security Party or any Lender in the manner set forth in the preceding sentence of any Event of Default or of an event which
		

		
			 
		

		

		

		 

 

		with the giving of notice or lapse of time, or both, would constitute an Event of Default, the Facility Agent shall notify the Lenders and shall take action and assert such rights under this Agreement, under the Note and under the other Transaction Documents as the Majority Lenders shall request in writing.
		

		
			17.10 Limitations of Liability. No Agent or Lender shall be under any liability or responsibility whatsoever:
		

			
	
			
				 (1)
			to any Security Party or any other person or entity as a consequence of any failure or delay in performance by, or any breach by, any other Lenders or any other person of any of its or their obligations under this Agreement or under any Transaction Document;

			
	
			
				 (2)
			to any Lender or Lenders as a consequence of any failure or delay in performance by, or any breach by, any Security Party of any of its respective obligations under this Agreement or under the other Transaction Documents; or

			
	
			
				 (3)
			to any Lender or Lenders for any statements, representations or warranties contained in this Agreement, in any other Transaction Document or in any document or instrument delivered in connection with the transaction hereby contemplated; or for the validity, effectiveness, enforceability or sufficiency of this Agreement, any other Transaction Document or any document or instrument delivered in connection with the transactions hereby contemplated.

		
			17.11 Indemnification of the Facility Agent and Security Trustee. The Lenders agree to indemnify each Agent (to the extent not reimbursed by the Security Parties or any thereof), pro rata according to the respective amounts of their Commitments, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including legal fees and expenses incurred in investigating claims and defending itself against such liabilities) which may be imposed on, incurred by or asserted against, such Agent in any way relating to or arising out of this Agreement or any other Transaction Document, any action taken or omitted by such Agent thereunder or the preparation, administration, amendment or enforcement of, or waiver of any provision of, this Agreement or any other Transaction Document, except that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or willful misconduct of either such Agent.
		

		
			17.12 Consultation with Counsel. Each of the Facility Agent and the Security Trustee may consult with legal counsel selected by such Agent and shall not be liable for any action taken, permitted or omitted by it in good faith in accordance with the advice or opinion of such counsel.
		

		
			17.13 Resignation. Any Agent may resign at any time by giving sixty (60) days' written notice thereof to the other Agents, the Lenders and the Borrower. Upon any such resignation, the Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Lenders and shall have accepted such appointment within sixty (60) days after the retiring Agent's giving notice of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a bank or trust company of recognized standing. The appointment of any successor Agent shall be subject to the prior written consent of the Borrower, such consent not to be unreasonably withheld. After any retiring Agent's resignation as Agent hereunder, the provisions of this Section 17 shall continue in effect for its benefit with respect to any actions taken or omitted by it while acting as an Agent.
		

		
			17.14 Representations of Lenders. Each Lender represents and warrants to each other Lender and the Agents that:
		

		
			(1)in making its decision to enter into this Agreement and to make its
		

		
			Commitment available hereunder, it has independently taken whatever steps it considers
		

		
			 
		

		

		

		 

 

		necessary to evaluate the financial condition and affairs of the Security Parties, that it has made an independent credit judgment and that it has not relied upon any statement, representation or warranty by any other Lender or any Agent; and
		

		
			(2)so long as any portion of its Commitment remains outstanding, it will
		

		
			continue to make its own independent evaluation of the financial condition and affairs of the Security Parties.
		

		
			17.15 Notification of Event of Default. The Facility Agent hereby undertakes to promptly notify the Lenders, and the Lenders hereby promptly undertake to notify the Facility Agent and the other Lenders, of the existence of any Event of Default which shall have occurred and be continuing of which such party has actual knowledge.
		

		
			17.16 Reversal of Redistribution. Each of the Lenders agrees that, if it should receive any amount hereunder (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or banker’s lien, by counterclaim or cross action, by the enforcement of any right under the Transaction Documents, or otherwise), which is applicable to the payment of the principal of, or interest on, the Facility, of a sum which with respect to the related sum or sums received by other Lenders is in a greater proportion than the total of such obligation then owed and due to such Lender bears to the total of such obligation then owed and due to all of the Lenders immediately prior to such receipt, then such Lender receiving such excess payment shall purchase for cash without recourse or warranty from the other Lenders an interest in the obligations of the respective Security Party to such Lenders in such amount as shall result in a proportional participation by all the Lenders in such amount; provided that if all or any portion of such excess amount is thereafter recovered from such Lender, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
		

		
			17.17 Parallel Debt.
		

			
	
			
				 (a)
			The Borrower hereby irrevocably and unconditionally undertakes, as far as necessary in advance, to pay to the Security Trustee, as creditor in its own right and not as representative of any of the other Creditor, an amount equal to the aggregate of all its Principal Obligations to all the Creditor Parties from time to time due in accordance with the terms and conditions of such Principal Obligations (such payment undertaking and the obligations and liabilities which are the result thereof, its “Parallel Debt”).

			
	
			
				 (b)
			Each of the parties hereto hereby acknowledges that (i) the Parallel Debt of the Borrower constitutes undertakings, obligations and liabilities of the Borrower to the Security Trustee which are separate and independent from, and without prejudice to, the Principal Obligations which the Borrower has to any other Creditor and (ii) that the Parallel Debt represents the Security Trustee’s own claim to receive payment of such Parallel Debt by the Borrower, provided that the total amount which may become due under the Parallel Debt of the Borrower under this Section 17.17 shall never exceed the total amount which may become due under all the Principal Obligations of the Borrower to all the Creditor Parties.

			
	
			
				 (i)
			

			
	
			
			The total amount due by the Borrower as the Parallel Debt under Section 17.17(a) shall be decreased to the extent that the Borrower shall have paid any amounts to the Creditor Parties or any of them to reduce the Borrower’s outstanding Principal Obligations or any Creditor otherwise receive any amount of such Principal Obligations (other than by virtue of Section 17.17(b)(ii)); and

			
	
			
				 (ii)
			

			
	
			
			To the extent that the Borrower shall have paid any amounts to the Security Trustee under the Parallel Debt or the Security Trustee shall have otherwise received monies in payment of such Parallel Debt, the total amount due under the Principal Obligations shall be decreased by the same amount.

		
			 
		

		

		

		 

 

		(c)In the event the Security Trustee should resign, the Security Trustee shall assign the
		

		
			Parallel Debt owed to it to its successor security trustee together with all of its other rights and obligations under this Section 17.17 and shall take all such further actions as the Facility Agent in its sole discretion may deem necessary or desirable in order to assign and transfer to the successor security trustee the Parallel Debt and the other rights and obligations under this Section 17.17.
		

		
			18.NOTICES AND DEMANDS
		

		
			18.1 Notices. All notices, requests, demands and other communications to any party hereunder shall be in writing (including prepaid overnight courier, facsimile transmission, electronic transmission or similar writing) and shall be given to the Borrower or the Guarantor at the address, facsimile number or email address set forth below and to the Lenders and the Agents at their address, facsimile number or email address set forth in Schedule I or at such other address, facsimile number or email address as such party may hereafter specify for the purpose by notice to each other party hereto. Each such notice, request or other communication shall be effective (i) if given by facsimile, on the date of dispatch thereof (provided further that if the date of dispatch is not a Banking Day in the locality of the party to whom such notice or demand is sent, it shall be deemed to have been received on the next following Banking Day in such locality), (ii) if by email or other electronic communication, upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgment) or (iii) if given by mail, prepaid overnight courier or any other means, when received at the address specified in this Section or when delivery at such address is refused.
		

		
			If to the Borrower or the Guarantor:
		

		
			11 North Water Street, Suite 18290 Mobile, Alabama 36602
		

		
			Facsimile No.: (251) 243-9121 Attention: Chief Financial Officer
		

		
			With a copy to
		

		
			One Whitehall Street
		

		
			New York, NY 10004
		

		
			Facsimile No.: (212) 514-5692 Attention: Mr. Niels M. Johnsen
		

		
			If to the Facility Agent or the Security Trustee:
		

		
			DVB Bank SE
		

		
			Park House
		

		
			16-18 Finsbury Circus
		

		
			London EC2M 7EB, United Kingdom
		

		
			Attention: Peter Attridge
		

		
			Department: Transaction and Loan Services
		

		
			Email: tls.london@dvbbank.com 
		

		
			Fax: +44 207 256 4352
		

		
			with a copy to:
		

		
			DVB TRANSPORT (US) LLC
		

		
			609 Fifth Avenue, 5th Floor
		

		
			New York, New York 10017, USA
		

		
			Facsimile: + 1 212 858 2664/+ 1 917 369 2196
		

		
			 
		

		

		

		 

 

		Attention: Christoph Clauss / Matthew Galici
		

		
			 christoph.clauss@dvbbank.com/ matthew.galici@dvbbank.com
		

		
			19. MISCELLANEOUS
		

		
			19.1 Right of Set-off. Upon the occurrence and during the continuance of any Event of Default, each Agent and each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and otherwise apply any and all deposits (general or special, time or demand, provisional or final) at any time held (including, but not limited to, the Earnings Accounts) and other indebtedness at any time owing by the Facility Agent, such Lender or such Affiliate to or for the credit or the account of the Borrower or any other Security Party against any and all of the Obligations of the Borrower or other Security Party now or hereafter existing under the Transaction Documents, irrespective of whether the Facility Agent or such Lender shall have made any demand under this Agreement and although such Obligations may be unmatured. The Facility Agent and each Lender agrees promptly to notify the Borrower after any such set-off and application; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Facility Agent and each Lender and their respective Affiliates under this Section 19.1 are in addition to other rights and remedies (including, without limitation, other rights of set-off) that the Facility Agent, such Lender and their respective Affiliates may have. Notwithstanding anything to the contrary set forth in Section 17 or elsewhere herein, the Facility Agent may not discriminate against the Lenders generally in favor of its own interests when exercising setoff rights against amounts received from any Security Party hereunder, including any amount in any Earnings Account or Retention Account.
		

		
			19.2 Time of Essence. Time is of the essence of this Agreement but no failure or delay on the part of any Creditor to exercise any power or right under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise by any Creditor of any power or right hereunder preclude any other or further exercise thereof or the exercise of any other power or right. The remedies provided herein are cumulative and are not exclusive of any remedies provided by law.
		

		
			19.3 Unenforceable, etc., Provisions - Effect. In case any one or more of the provisions contained in this Agreement or in the other Transaction Documents would, if given effect, be invalid, illegal or unenforceable in any respect under any law applicable in any relevant jurisdiction, said provision shall not be enforceable against the relevant Security Party, but the validity, legality and enforceability of the remaining provisions herein or therein contained shall not in any way be affected or impaired thereby.
		

		
			19.4 References. References herein to Articles, Sections, Exhibits and Schedules are to be construed as references to articles, sections of, exhibits to, and schedules to, this Agreement or the other Transaction Documents as applicable, unless the context otherwise requires.
		

		
			19.5 Further Assurances. Each of the Security Parties hereby agrees that if this Agreement or any of the other Transaction Documents shall, in the reasonable opinion of the Lenders, at any time be deemed by the Lenders for any reason insufficient in whole or in part to carry out the true intent and spirit hereof or thereof, it will execute or cause to be executed such other and further assurances and documents as in the opinion of the Lenders may be required in order to more effectively accomplish the purposes of this Agreement and/or the other Transaction Documents.
		

		
			19.6 Prior Agreements, Merger. Any and all prior understandings and agreements heretofore entered into between the Security Parties on the one part, and the Creditors, on the other part, relating to the transactions contemplated hereby, whether written or oral, are superseded by and merged into this Agreement and the other agreements (the forms of which are exhibited hereto) to be executed and delivered in connection herewith to which the Security Parties, the Agent, the Security Trustee and/or the Lenders are
		

		
			 
		

		

		

		 

 

		parties, which alone fully and completely express the agreements between the Security Parties, the Agents, and the Lenders.
		

		
			19.7 Entire Agreement; Amendments. This Agreement constitutes the entire agreement of the parties hereto including all parties added hereto pursuant to an Assignment and Assumption Agreement. Subject to Section 17.8, any provision of this Agreement or any other Transaction Document may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower, the Agents, and the Majority Lenders. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute one and the same instrument.
		

		
			19.8 Indemnification. Neither any Creditor nor any of its directors, officers, agents or employees
		

		
			shall be liable to any of the Security Parties for any action taken or not taken thereby in connection herewith in the absence of its own gross negligence or willful misconduct. Each of the Borrower and the Guarantor hereby jointly and severally agree to indemnify the Creditors, their respective affiliates and the respective directors, officers, agents and employees of the foregoing (each an “Indemnitee”) and hold each Indemnitee harmless from and against any and all liabilities (including without limitation all such liabilities arising out of (x) Environmental Claims, (y) business conducted by any of the Security Parties in a Sanctioned Country or with a Blocked Person in violation of Sanctions, at all times subject to applicable law and the Security Parties’ continued cooperation with OFAC or any other governmental entity, to the extent necessary and (z) any electronic communication purporting to have originated from any of the Security Parties to any Lender without proper authorization), losses, damages, costs and expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by such Indemnitee in connection with any investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto) brought or threatened relating to or arising out of this Agreement, any actual or proposed use of proceeds of the Facility hereunder, or any related transaction or claim; provided that (i) no Indemnitee shall have the right to be indemnified hereunder for such Indemnitee's own gross negligence or willful misconduct as determined by final judgment by a court of competent jurisdiction and (ii) to the extent permitted by law, the Indemnitee shall provide the Security Parties with prompt notice of any such investigative, administrative or judicial proceeding after the Indemnitee becomes aware of such proceeding; provided, however, that the Indemnitee's failure to provide such notice in a timely manner shall not relieve the Security Parties of their obligations hereunder. Each of the Borrower and the Guarantor agrees to, and shall, indemnify and hold each of the Creditors harmless against any loss, as well as against any reasonable costs or expenses (including reasonable legal fees and expenses), which any of the Creditors sustains or incurs as a consequence of any default in payment of the principal amount of the Facility, interest accrued thereon or any other amount payable hereunder, under the Note or under the other Transaction Documents including, but not limited to, all actual losses incurred in liquidating or re-employing fixed deposits made by third parties or funds acquired to effect or maintain the Facility or any portion thereof. Any Creditor's certification of such costs and expenses shall, absent any manifest error, be conclusive and binding on the Borrower.
		

		
			19.9 USA PATRIOT Act Notice; OFAC and Bank Secrecy Act. The Facility Agent hereby notifies each of the Security Parties that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the “PATRIOT Act”), and the policies and practices of the Facility Agent, each of the Creditors is required to obtain, verify and record certain information and documentation that identifies each of the Security Parties, which information includes the name and address of each of the Security Parties and such other information that will allow the Creditors to identify each of the Security Parties in accordance with the Patriot Act. In addition, each of the Security Parties shall: (a) ensure that no Person who owns a controlling interest in or otherwise controls any of the Security Parties or any subsidiary of any thereof is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury or included in any Executive Orders; (b) not use or permit the use of the proceeds of the Facility to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order
		

		
			 
		

		

		

		 

 

		relating thereto; and (c) comply, and cause any of its subsidiaries to comply, with all applicable Bank Secrecy Act laws and regulations, as amended.
		

		
			19.10 Remedies Cumulative and Not Exclusive; No Waiver. Each and every right, power and remedy herein given to the Facility Agent shall be cumulative and shall be in addition to every other right, power and remedy of the Facility Agent now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy, whether herein given or otherwise existing, may be exercised from time to time, in whole or in part, and as often and in such order as may be deemed expedient by the Facility Agent, and the exercise or the beginning of the exercise of any right, power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No failure, delay or omission by the Facility Agent or any of the Creditors in the exercise of any right or power or in the pursuance of any remedy accruing upon any breach or default by the Borrower or any Security Party shall impair any such right, power or remedy or be construed to be a waiver of any such right, power or remedy or to be an acquiescence therein; nor shall the acceptance by the Facility Agent or any of the Creditors of any security or of any payment of or on account of any of the amounts due from the Borrower or any Security Party to the Facility Agent and maturing after any breach or default or of any payment on account of any past breach or default be construed to be a waiver of any right with respect to any future breach or default or of any past breach or default not completely cured thereby. In addition to the rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to any of the Security Parties' obligations, the Facility Agent shall have rights and remedies of a secured party under the Uniform Commercial Code.
		

		
			19.11 Counterparts; Electronic Delivery. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute one and the same instrument. Delivery of an executed counterpart of this Agreement by facsimile or electronic transmission shall be deemed as effective as delivery of an originally executed counterpart. In the event that any of the Security Parties deliver an executed counterpart of this Agreement by facsimile or electronic transmission, such Security Parties shall also deliver an originally executed counterpart as soon as practicable, but the failure of such Security Parties to deliver an originally executed counterpart of this Agreement shall not affect the validity or effectiveness of this Agreement.
		

		
			19.12 Headings. In this Agreement, Section headings are inserted for convenience of reference only and shall not be taken into account in the interpretation of this Agreement.
		

		
			19.13 Disclosure. Each of the Security Parties irrevocably authorizes the Creditors to give, divulge and reveal from time to time information and details relating to its Accounts, any Vessel, the Facility, this Agreement, the Note, the Transaction Documents, the Commitments, any agreement entered into by any of the Security Parties in connection with this Agreement, the Note or the Transaction Documents and any other information provided by any of the Security Parties to any of the Creditors in connection with this Agreement, the Note or the Transaction Documents to (i) any regulatory or self-regulatory authorities (including any stock exchanges) or public or internationally recognized authorities, (ii) the head offices, branches, affiliates and professional advisers of any of the Creditors, (iii) any other parties to this Agreement, the Note or the Transaction Documents and any parties to any agreement entered into by any of the Security Parties in connection therewith, (iv) any rating agencies and their professional advisers, (v) any Person with whom any of the Security Parties propose to enter (or contemplate entering) into contractual relations in relation to the Facility or the Commitments; and (vi) any other Person (including any transferee or potential transferee of the Facility) in connection with the funding, refinancing, transfer, assignment, sale, sub-participation or operational arrangement or other transaction in relation thereto, including, but not limited to, any enforcement, preservation, assignment, transfer, sale or sub-participation of any of the rights and/or obligations of any of the Creditors; provided, that if such information and details have been expressly communicated to the Creditors to be material non-public information, the relevant Creditor shall inform the relevant Security Party of its obligations to make such information or details available prior to giving, divulging or revealing such information or details.
		

		
			 
		

		

		

		 

 

		Securitization. The Credit Parties hereby agree and acknowledge that the Facility Agent or any Lender may include all or part of the Facility in a securitization or similar transaction without any consultation with or consent of the Borrower or the Guarantor and that the Credit Parties shall provide such information as required by the Facility Agent or such Lender to effect such transaction.
		

		
			19.15 Pari Passu Intercreditor Agreement. The terms of this Agreement and the other Transaction Documents are subject to the terms of the Pari Passu Intercreditor Agreement. Where a conflict exists between this Agreement and the Intercreditor Agreement, the Intercreditor Agreement shall govern. The Creditors hereby authorize the Facility Agent and the Security Trustee to enter into the Pari Passu Intercreditor Agreement and any necessary amendment, modification or termination thereof.
		

		
			[Remainder of Page Intentionally Left Blank]
		

		
			 
		

		

		

		 

 

		IN WITNESS whereof the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives as of the day and year first above written.
		

		
			 
		

		
			 
		

		
			 
		

		
			EAST GULF SHIPHOLDING, INC, as Borrower
		

		
			 
		

		
			By: /s/ D. B. Drake
		

		
			Name:   D. B. Drake
		

		
			Title: V/P - Treasurer
		

		
			 
		

		
			INTERNATIONAL SHIPHOLDING CORPORATION, as Guarantor
		

		
			 
		

		
			By: /s/ D. B. Drake
		

		
			Name: D.B. Drake
		

		
			Title: V/P – Treasurer
		

		
			 
		

		
			 
		

		
			DVB BANK SE, as Mandated Lead Arranger, Facility Agent, Security Trustee and Lender
		

		
			 
		

		
			By: /s/ Thibaud Ollivier
		

		
			Name: Thibaud Ollivier
		

		
			Title: Senior Vice President
		

		
			 
		

		
			 
		

		
			By: /s/ Kartal Cona
		

		
			Name: Kartal Cona
		

		
			Title: Vice President
		

		
			 
		

		
			 
		

		

		

		 

 

		ACKNOWLEDGMENT AND AGREEMENT
		

		
			The undersigned, an Affiliate of the Borrower, hereby acknowledges and agrees to be bound by the subordination provisions set forth in Section 9.1(w) of the foregoing Agreement to the same extent as if the undersigned were a party to said Agreement.
		

		
			LCI SHIPHOLDINGS, INC.
		

		
			 
		

		
			 
		

		
			By: /s/ D. B. Drake
		

		
			Name: D. B. Drake 
		

		
			Title: V/P Vice President
		

		

		

		 

 

		LENDERSCOMMITMENT
		

		
			DVB Bank SE        $32,000,000
		

		
			Park House 
		

		
			16-18 Finsbury Circus
		

		
			LondonEC2M 7EB, United Kingdom
		

		
			Attention: Peter Attridge
		

		
			Department: Transaction and Loan Services
		

		
			Email: tls.london@dvbbank.com
		

		
			Fax: +44 207 256 4352
		

		
			 
		

		
			 
		

		
			With a copy to:
		

		
			 
		

		
			DVB TRANSPORT (US) LLC 
		

		
			609 Fifth Avenue, 5th Floor
		

		
			New York, New York 10017 USA
		

		
			Facsimile:/+1 917 369 2196
		

		
			Attention Christoph Class/ Matthew Galici
		

		
			Email:  christoph.clauss@dvbbank.com
		

		
			matthew.galoci@dvbbank.com
		

		
			 
		

		

		

		 

 

		SCHEDULE II
		

		
			 
		

		
			APPROVED SHIP BROKERS
		

		
			 
		

		
			R.S. Platou Shipbrokers a.s. Haakon VII's gate 10
		

		
			Oslo, Norway
		

		
			Telephone No.: +47 23 11 20 00 Facsimile No.: +47 23 11 23 11
		

		
			Fearnleys A/S
		

		
			Grev Wedels plass 9
		

		
			Oslo, Norway
		

		
			Telephone No.: +47 22 93 60 00
		

		
			Facsimile No.: +47 22 93 61 50
		

		
			H. Clarkson & Company
		

		
			12 Camomile Street
		

		
			London EC3A 7BP
		

		
			England
		

		
			Telephone No.: +44 207 334 0000
		

		
			Facsimile No.: +44 207 283 5260
		

		
			Braemar Shipbrokers Ltd.
		

		
			35 Cosway Street
		

		
			London NW1 5BT
		

		
			England
		

		
			Telephone No.: +44 207 535 2600
		

		
			Facsimile No.: +44 207 535 2601
		

		
			Jacq. Pierot Jr. & Sons, Inc. (USA) 29 Broadway
		

		
			New York, NY 10006
		

		
			Telephone No.: (212) 344 3840 Facsimile No.: (212) 943 6598
		

		
			Barry Rogliano Salles (BRS)
		

		
			11, boulevard Jean Mermoz
		

		
			92200 Neuilly-sur-Seine
		

		
			France
		

		
			Telephone No. : +33 (0)1 41 92 12 34
		

		
			Hesnes Shipping AS PO Box 104 Borgheim 3163 Notteroy
		

		
			Norway
		

		
			 
		

		

		

		 

 

		SCHEDULE III
		

		
			Security Party Liens as of the Closing Date
		

		
			LIENS AS OF THE CLOSING DATE International Shipholding Corporation
		

		
			Multiple Indebtedness Mortgage, Assignment of Leases and Rents and Security Agreement in favor of Regions Bank on real estate located at 864-70 South Peters Street, New Orleans, LA.
		

		
			Security Agreement covering various collateral in favor of Regions Bank in connection with the Credit Agreement providing revolving and term loan facilities up to a maximum amount of $145,000,000
		

		
			East Gulf Shipholding, Inc.
		

		
			Mortgages, Earnings Assignments, and Insurance Assignments in favor of ING N.V. on vessels EGS Crest and EGS Wave.
		

		
			 
		

		

		

		 

 

		SCHEDULE IV
		

		
			Security Party Indebtedness as of the Closing Date International Shipholding Corporation
		

		
			Guarantee of indebtedness of East Gulf Shipholding, Inc. in the amount of $26,986,666.56 to ING Bank N.V., which indebtedness has a maturity date of January 24, 2018.
		

		
			Guarantee of indebtedness of Dry Bulk Australia Ltd. and Dry Bulk Americas Ltd. in the amount of $26,246,071.41 to ING Bank N.V., which indebtedness has a maturity date of June 20, 2018.
		

		
			Guarantee of indebtedness of LCI Shipholdings, Inc. in the amount of $21,120,000.00 to Citizens Asset Finance, Inc., which indebtedness has a maturity date of July 31, 2021.
		

		
			Guarantee of indebtedness of LCI Shipholdings, Inc. in the amount of $8,397,321.54 to Capital One N.A. which indebtedness has a maturity date of January 1, 2017.
		

		
			Guarantee of indebtedness of Oslo Bulk 6 Pte Ltd in the amount of $1,000,000.00 to Pareto Bank ASA which has a maturity date of January 2023 dependent upon vessel delivery date.
		

		
			Indebtedness to Regions Bank of up to $10,000,000 secured by real estate located at 864-70 South Peters Street, New Orleans, LA.
		

		
			Guarantee of indebtedness of LCI Shipholdings, Inc. in the amount of $37,019,230.76 to DVB Bank, SE which indebtedness has a maturity date of August 28, 2020.
		

		
			Secured Indebtedness of up to $145,000,000 under a Credit Agreement dated September 23, 2013, between International Shipholding Corporation, Enterprise Ship Company, Inc, Sulphur Carriers, Inc, CG Railway, Inc, Central Gulf Lines, Inc, Coastal Carriers, Inc, Waterman Steamship Corporation, Inc, N.W. Johnsen & Co., Inc, LMS Shipmanagement, Inc, U.S. united Ocean Services, LLC, Mary Ann Hudson, LLC, Sheila McDevitt, LLC, Tower, LLC, and Frascati Shops, Inc, as borrowers, and Regions Bank, among others, as Administrative Agent and Collateral Agent.
		

		
			East Gulf Shipholding, Inc.
		

		
			Indebtedness to ING Bank N.V. in the amount of $26,986,666.56 which has a maturity date of January 24, 2018.
		

		

		

		 

 

		 
		

		
			SCHEDULE V
		

		
			 
		

		
			Initial Charter Party Agreement
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Vessel

					
					
						Charterer

					
					
						Start Date

					
					
						End Date

					
					
						Charter Rate

				
	
					
						GLOVIS COUNTESS

					
					
						Hyundai Glovis Co. Ltd

					
					
						April 1, 2013

					
					
						April 1, 2020

					
					
						US$23,700

				

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		

		

		 

 

		EXHIBIT A
		

		
			PROMISSORY NOTE
		

		
			New York, New York
		

		
			$32,000,000
		

		
			___________, 2015
		

		
			FOR VALUE RECEIVED, the undersigned, EAST GULF SHIPHOLDING, INC., a corporation organized and existing under the laws of the Republic of the Marshall Islands, as borrower (the “Borrower”), hereby promises to pay to the order of DVB BANK SE, a banking corporation organized under the laws of Germany ("DVB"), as facility agent (the “Facility Agent”) for the Lenders (as defined herein), at its offices located at Platz der Republik 6, D-60325 Frankfurt am Main, Germany, or as it may otherwise direct, the principal sum of Thirty Two Million Dollars ($32,000,000) or such lesser amount as may be owing under the Credit Agreement (as defined below). The Borrower, shall repay the indebtedness represented by this Promissory Note (this “Note”) as provided in Section 5 of that certain credit agreement dated as of April __, 2015, (the “Credit Agreement”) made by and among (i) the Borrower, (ii) International Shipholding Corporation, as guarantor, (iii) the banks and financial institutions listed on Schedule I of the Credit Agreement, as lenders (together with any bank or financial institution which becomes a Lender pursuant to Section 12 of the Credit Agreement (the “Lenders”)), (iv) DVB, as facility agent for the Lenders, and security trustee for the Lenders and (v) DVB, as mandated lead arranger. This Promissory Note (this “Note”) may be prepaid on such terms as provided in the Credit Agreement. Interest shall be paid on the indebtedness represented by this Note at the rate (the “Applicable Rate”) determined from time to time in accordance with Section 6 of the Credit Agreement and at the times provided in Section 6 of the Credit Agreement, which provisions are incorporated herein with full force and effect as if they were more fully set forth herein at length.
		

		
			Any principal payment not paid when due, whether on the maturity date thereof or by acceleration, shall bear interest thereafter at a rate per annum equal to the Default Rate (as defined in the Credit Agreement). All interest shall accrue and be calculated on the actual number of days elapsed and on the basis of a 360 day year.
		

		
			Words and expressions used herein and defined in the Credit Agreement shall have the same meaning herein as therein defined.
		

		
			Both principal and interest are payable in Dollars to the Facility Agent, for the account of the Lenders, as the Facility Agent may direct, in immediately available same day funds.
		

		
			The Facility Agent may endorse the amount and the date of the making of an Advance and any prepayment or payment of principal hereunder on the grid annexed hereto and made a part hereof, which endorsement shall constitute prima facie evidence of the accuracy of the information so endorsed; provided, however, that any failure to endorse such information on such grid shall not in any manner affect the obligation of the Borrower, to make payment of principal and interest in accordance with the terms of the Credit Agreement and this Note.
		

		
			 
		

		

		

		 

 

		If this Note or any payment required hereunder becomes due and payable on a day which is not a Banking Day the due date thereof shall be extended until the next following Banking Day (in which event, interest shall be payable during such extension at the rate applicable immediately prior thereto), unless such next following Banking Day falls in the following month, in which case such payment shall be payable immediately preceding the Banking Day.
		

		
			This Note is the Note referred to in, and is entitled to the security and benefits of, the Credit Agreement and the Security Documents. Upon the occurrence of any Event of Default under the Credit Agreement, the principal hereof and accrued interest hereon may be declared to be, and shall thereupon become, forthwith, due and payable.
		

		
			Presentment, demand, protest and notice of dishonor of this Note or any other notice of any kind are hereby expressly waived.
		

		
			THE BORROWER AND, BY ITS ACCEPTANCE HEREOF, THE FACILITY AGENT HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO OR ANY BENEFICIARY HEREOF ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS NOTE.
		

		
			This Note shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to principles of conflicts of law.
		

		
			IN WITNESS WHEREOF, the Borrower has executed and delivered this Note on the date and year first above written.
		

		
			 
		

		
			[Signature page follows]
		

		
			 
		

		

		

		 

 

		EAST GULF SHIPHOLDING, INC., as Borrower
		

		
			 
		

		
			By: ______________________
		

		
			Name:
		

		
			Title:
		

		
			 
		

		
			 
		

		
			 
		

		

		

		 

 

		PAYMENTS OF PRINCIPAL
		

		
			 
		

		
			 
		

		
			 
		

			
					
						 

					
						 

					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Date

					
					
						Amount of Advance

					
					
						Amount of Principal Paid or Prepaid

					
					
						Unpaid Principal Balance

					
					
						Notation Made By

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				

		
			 
		

		

		

		 

 

		EXHIBIT B
		

		
			Drawdown Notice
		

		
			DVB BANK SE2015
		

		
			Park House
		

		
			16-18 Finsbury Circus
		

		
			London EC2M 7EB
		

		
			E-mail: tls.london@dvbbank.com 
		

		
			Fax: +44 207 256 4352
		

		
			Attention: Peter Attridge
		

		
			Department: Transaction and Loan Services
		

		
			Ladies and Gentlemen:
		

		
			Please be advised that, in accordance with Section 3 of the credit agreement among (1) yourselves, as mandated lead arranger, facility agent, and security trustee, (2) East Gulf Shipholding Inc., as borrower (the “Borrower”), (3) the banks and financial institutions listed on Schedule I of the Credit Agreement (as hereinafter defined), as lenders, and (4) International Shipholding Corporation, as guarantor,
		

		
			dated as of___, 2015 (the “Credit Agreement”), the undersigned hereby request that the
		

		
			Advance (as defined in the Credit Agreement) in the aggregate principal amount of_____________________________________________
		

		
			Dollars ($) be advanced to the Borrower as follows:
		

		
			Drawdown Date:
		

		
			Amount to be drawn down: Interest Period:
		

		
			Disbursement Instructions:
		

		
			The undersigned hereby represents and warrants that (a) the representations and warranties stated in Section 2 of the Credit Agreement (updated mutatis mutandis) are true and correct on the date hereof and will be true and correct on the Drawdown Date specified above as if made on such date, (b) no Default or Event of Default has occurred and is continuing or will have occurred and be continuing on the Drawdown Date, and (c) no Default or Event of Default will result from the making of the Advance (as defined in the Credit Agreement).
		

		
			The undersigned hereby covenants and undertakes that, in the event that on the date specified for making available the Advance as stated above, the Lenders (as defined in the Credit Agreement) shall not be obliged under the Credit Agreement to make such Advance available, the undersigned shall indemnify and hold the Lenders fully harmless against any losses which the Lenders may sustain as a result of borrowing or agreeing to borrow funds to meet the drawdown requirements as stated above, and the certificate of the relevant Lender or Lenders shall (save and except for manifest error) be conclusive and binding on the undersigned as to the extent of any such loss.
		

		
			 
		

		

		

		 

 

		This Drawdown Notice is effective upon receipt by you and shall be irrevocable.
		

		
			Very truly yours,
		

		
			EAST GULF SHIPHOLDING, INC., as Borrower
		

		
			By: ________________
		

		
			Name:
		

		
			Title:
		

		
			 
		

		
			 
		

		
			 
		

		

		

		 

 

		EXHIBIT C
		

		
			FORM OF COMPLIANCE CERTIFICATE
		

		
			CERTIFICATE OF THE CHIEF FINANCIAL OFFICER
		

		
			OF
		

		
			INTERNATIONAL SHIPHOLDING CORPORATION FOR THE PERIOD ENDED
		

		
			The undersigned, being the chief financial officer of INTERNATIONAL SHIPHOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware ("ISH"), hereby certifies, on behalf of ISH and the Borrower (as defined below), to DVB BANK SE ("DVB"), as facility agent for the Lenders, in connection with that certain credit agreement, dated as of April ___, 2015 (the "Credit Agreement"), by and among, (1) East Gulf Shipholding, Inc., as borrower (together with any successor thereto, the “Borrower”), (2) ISH, as guarantor, (3) the banks and financial institutions listed on Schedule I of the Credit Agreement, as lenders (together with any bank or financial institution which becomes a Lender pursuant to Section 12 of the Credit Agreement (the "Lenders")), (4) DVB, as facility agent for the Lenders, and security trustee for the Lenders and (5) DVB, as mandated lead arranger, that:
		

			
	
			
				 (i)
			

			
	
			
			I have reviewed (i) the consolidated financial statements of ISH and its

		
			Subsidiaries dated as of and for the __________period 
then ended and (ii) the separate financial report of the Borrower dated as of
		

		
			 and for the  period then ended, and such 
statements and reports fairly present the financial condition of ISH and its Subsidiaries and the Borrower, as the case may be, as of the dates indicated and the results of their operations and cash flows for the periods indicated; and
		

			
	
			
				 (ii)
			

			
	
			
			I have reviewed the terms of the Credit Agreement, the Note and the other Transaction Documents and have made, or caused to be made under my supervision, a review in reasonable detail of the transactions and the condition of ISH during the accounting period covered by the financial statements referred to in clause (i) above; and

			
	
			
				 (iii)
			

			
	
			
			such review has not disclosed the existence during or at the end of such accounting period of any condition or event that constitutes a Default or an Event of Default, nor do I have knowledge of the existence of any such condition or event as at the date of this Certificate [EXCEPT, [IF SUCH CONDITION OR EVENT EXISTED OR EXISTS, DESCRIBE THE NATURE AND PERIOD OF EXISTENCE THEREOF AND WHAT ACTION ISH, THE BORROWER OR ANY OTHER ISH ENTITY, AS THE CASE MAY BE, HAS TAKEN, IS TAKING AND PROPOSES TO TAKE WITH RESPECT THERETO]];

		
			 
		

		 

 

			
	
			
				 (iv)
			

			
	
			
			ISH and the Borrower are in compliance with all of the covenants contained in the Credit Agreement and in each other Transaction Document to which each is a party. The financial covenant analyses and calculations for the periods identified therein of the financial covenants set forth in Section 9.3 of the Credit Agreement are set forth on Annex A attached hereto. In the event of any conflict between the formulas used for such analyses and calculations provided in the attached Annex A and the formulas provided in the Credit Agreement, the Credit Agreement shall govern;

			
	
			
				 (v)
			

			
	
			
			ISH is [not] in compliance with the Amortization Reduction Conditions contained in the Credit Agreement;

			
	
			
				 (vi)
			

			
	
			
			set forth on Annex B is a summary of all changes in GAAP and in the consistent application thereof, unless such change and the effects thereof have been described in a previous Compliance Certificate, the effect on the financial covenants resulting therefrom, and a reconciliation between calculation of the financial covenants before and after giving effect to such changes; and

			
	
			
				 (vii)
			

			
	
			
			set forth on Annex C is an accounting of all of the contingent liabilities of each Security Party as required by Section 9.1(e) of the Credit Agreement.

		
			Capitalized terms used herein without definition have the meaning ascribed thereto in the Credit Agreement.
		

		
			 
		

		

		

		 

 

		IN WITNESS WHEREOF, the undersigned has executed this Certificate as of this_____ day of 201_.
		

		
			INTERNATIONAL SHIPHOLDING CORPORATION
		

		
			By: ____________________
		

		
			Name:
		

		
			Title:
		

		
			 
		

		
			 
		

		
			 
		

		

		

		 

 

		ANNEX A
		

		
			Financial Covenant Analyses
		

		
			 
		

		
			 
		

		

		

		 

 

		ANNEX B
		

		
			 
		

		
			GAAP Changes
		

		
			 
		

		
			 
		

		

		

		 

 

		ANNEX C
		

		
			 
		

		
			Contingent Liabilities
		

		
			 
		

		
			 
		

		

		

		 

 

		EXHIBIT D
		

		
			ASSIGNMENT AND ASSUMPTION AGREEMENT
		

		
			ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement"), dated as of ______, 201_ among [NAME OF ASSIGNOR], a [bank]/[corporation] organized under the laws of [JURISDICTION OF ASSIGNOR] (the "Assignor"), as assignor, and [NAME OF ASSIGNEE], a [bank]/[corporation] organized under the laws of [JURISDICTION OF ASSIGNEE] (the "Assignee"), as assignee, supplemental to:
		

			
	
			
				 (i)
			

			
	
			
			that certain credit agreement, dated as of [ ], 2015 (the "Credit Agreement"), made among (1) East Gulf Shipholding, Inc., as borrower (the "Borrower"), (2) International Shipholding Corporation, as guarantor, (3) the banks and financial institutions listed on Schedule I of the Credit Agreement, as lenders (together with any bank or financial institution which becomes a Lender pursuant to Section 12 of the Credit Agreement, the "Lenders"), (4) DVB BANK SE ("DVB"), as facility agent for the Lenders (in such capacity, the “Facility Agent”) and security trustee for the Lenders and (5) DVB, as mandated lead arranger, pursuant to which the Lenders have agreed to provide to the Borrower, a secured term loan in the amount of up to Thirty Two Million Dollars ($32,000,000) (the “Loan”);

			
	
			
				 (ii)
			

			
	
			
			the promissory note from the Borrower in favor of the Facility Agent dated [ ], 2015 (the “Note”) evidencing the Loan;

			
	
			
				 (iii)
			

			
	
			
			the Security Documents (as such term is defined in the Credit Agreement).

		
			Except as otherwise defined herein, terms defined in the Credit Agreement shall have the same meaning when used herein.
		

		
			In consideration of the premises and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
		

			
	
			
				 1.
			The Assignor hereby sells, transfers and assigns •% of its right, title and interest in, to and under the Credit Agreement, under the Note (including, without limitation, its interest in the indebtedness evidenced by the Note) and under the Security Documents to the Assignee. Simultaneously herewith, the Assignee shall pay to the Assignor an amount equal to the product derived by multiplying (a) $•, being the sum of the present outstanding principal balance of the Loan, by (b) the Assignor’s percentage of interest in the Loan transferred pursuant hereto.

			
	
			
				 2.
			The Assignee hereby assumes •% of the obligations of the Assignor under the Credit Agreement (including, but not limited to, the obligation to advance its respective percentage of the Loan as and when required) and shall hereinafter be deemed a “Lender” for all purposes of the Credit Agreement, the Note, the Security Documents and any other Assignment and Assumption Agreement(s), the Assignee’s Commitment thereunder being $•  in respect of the Loan.

		
			 
		

		 

 

			
	
			
				 3.
			The Assignee shall pay an administrative fee of US$3,000 to the Facility Agent to reimburse the Facility Agent for its cost in processing the assignment and assumption herein contained.

			
	
			
				 4.
			All references in the Note and in each of the other Security Documents to the Credit Agreement shall be deemed to be references to the Credit Agreement as assigned and assumed pursuant to the terms hereof.

			
	
			
				 5.
			The Assignee irrevocably designates and appoints the Facility Agent as its agent and irrevocably authorizes the Facility Agent to take such action on its behalf and to exercise such powers on its behalf under the Credit Agreement, under the Note and under the other Security Documents, each as supplemented hereby, as are delegated to the Facility Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto all as provided in Section 17 of the Credit Agreement.

			
	
			
				 6.
			Every notice or demand under this Agreement shall be in writing and may be given by facsimile and shall be sent as follows:

		
			If to the Assignor:
		

		
			[NAME OF ASSIGNOR]
		

		
			[ADDRESS] Facsimile No.:
		

		
			Attention:
		

		
			If to the Assignee
		

		
			[NAME OF ASSIGNEE]
		

		
			[ADDRESS] Facsimile No.:
		

		
			Attention:
		

		
			Every notice or demand hereunder shall be deemed to have been received at the time of receipt thereof.
		

		
			EACH OF THE ASSIGNOR, AND BY ITS ACCEPTANCE HEREOF, THE ASSIGNEE, HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO OR ANY BENEFICIARY HEREOF ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT.
		

		
			This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.
		

		
			This Agreement may be executed in several counterparts with the same effect as if the parties executing such counterparts shall have all executed one agreement as of the date hereof, each of which counterparts when executed and delivered shall be deemed to be an original and all of such counterparts together shall constitute this Agreement.
		

		
			 
		

		

		

		 

 

		IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed as of the day and year first above written.
		

		
			[NAME OF ASSIGNOR]
		

		
			By___________________________________________________________________
		

		
			Name: Title:
		

		
			[NAME OF ASSIGNEE]
		

		
			By___________________________________________________________________
		

		
			Name: Title:
		

		
			 
		

		

		

		 

 

		EXHIBIT E
		

		
			ASSIGNMENT OF EARNINGS, CHARTERPARTIES AND REQUISITION 
COMPENSATION
		

		
			in respect of
		

		
			[GLOVIS COUNTESS][GREEN BAY]
		

		
			by
		

		
			EAST GULF SHIPHOLDING, INC., 
as Owner
		

		
			in favor of
		

		
			DVB BANK SE, 
as Security Trustee
		

		
			[_______________________________________,] 2015
		

		
			 
		

		

		

		 

 

		ASSIGNMENT OF EARNINGS, CHARTERPARTIES AND REQUISITION 
COMPENSATION
		

		
			[GLOVIS COUNTESS][GREEN BAY]
		

		
			THIS ASSIGNMENT OF EARNINGS, CHARTERPARTIES AND REQUISITION
		

		
			COMPENSATION (this “Assignment”) is made as of the ___ day of [], 2015 by EAST 
GULF SHIPHOLDING, INC., a corporation organized and existing under the laws of the Republic of the Marshall Islands (the “Assignor”), as assignor, in favor of DVB BANK SE, a banking corporation organized under the laws of the Federal Republic of Germany (“DVB”) (together with its successors and permitted assigns, in such capacity, the “Assignee”), as Security Trustee (as such term is hereinafter defined).
		

		
			W I T N E S S E T H     T H A T :
		

		
			WHEREAS:
		

			
	
			
				 (A)
			The Assignor is the sole owner of the whole of the pure car truck carrier [GREEN BAY, built in 2007 and registered under the laws of the Republic of the Marshall Islands with IMO No. 9339818][GLOVIS COUNTESS, built in 2010 and registered under the laws of the Republic of the Marshall Islands with IMO No. 9476721] (the “Vessel”);

			
	
			
				 (B)
			By a credit agreement dated as of April __, 2015 (the "Credit Agreement"), made by and among (1) the Assignor, as borrower, (2) INTERNATIONAL SHIPHOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware, as guarantor (the “Guarantor”), (3) the banks and financial institutions listed on Schedule I of the Credit Agreement, as lenders (together with any bank or financial institution which becomes a Lender pursuant to Section 12 of the Credit Agreement, the “Lenders” and each a “Lender”), (4) DVB, as facility agent for the Lenders and security trustee for the Lenders (in such capacity, the "Security Trustee"), and (5) DVB, as mandated lead arranger, the Lenders have agreed to make available to the Assignor, a secured term loan in the amount of up to Thirty Two Million Dollars ($32,000,000) (the "Loan"); and

			
	
			
				 (C)
			It is a condition precedent to the availability of the Advances under the Credit Agreement that the Assignor execute and deliver to the Assignee, as security for the obligations of the Assignor to the Creditors under or in connection with the Credit Agreement an assignment of all of the Assignor's right, title and interest in and to the earnings of, requisition compensation of, and charters covering, the Vessel.

		
			NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Assignor:
		

			
	
			
				 1.
			Defined Terms. Unless otherwise defined herein, terms defined in the Credit Agreement shall have the same meanings when used herein.

			
	
			
				 2.
			Grant of Security. The Assignor, as legal and beneficial owner, does hereby assign, transfer and set over unto the Assignee, for the benefit of the Assignee and its

		
			 
		

		

		

		 

 

		successors and assigns, and does hereby grant the Assignee a security interest in all of the Assignor’s right, title and interest in and to:
		

			
	
			
				 A.
			any charter or other contract to which it is a party now or hereafter entered into by the Assignor in respect of the Vessel;

			
	
			
				 B.
			all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Assignor or the Security Trustee (net of charter commissions payable in respect of the Vessel) and which arise out of the use or operation of the Vessel, including (but not limited to): (a) except to the extent that they fall within paragraph (b), (1) all freight, hire and passage moneys, (2) compensation payable in event of requisition of the Vessel for hire, (3) remuneration for salvage and towage services, (4) demurrage and detention moneys, (5) damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Vessel, (6) all moneys which are at any time payable under Insurances in respect of loss of hire and, (b) if and whenever, with the consent of the Assignee, the Vessel is employed on terms whereby any moneys falling within (1) to (6) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Vessel; and

			
	
			
				 C.
			all proceeds of all of the foregoing.

			
	
			
				 3.
			Notice of Assignment. The Assignor will (a) give notice, in the form annexed hereto as Exhibit 1 of this Assignment (or as otherwise agreed upon by the Assignor and the Assignee) to any charterer or contractee of the Vessel and cause such charterer or contractee of the Vessel to execute and deliver to the Assignee a Consent and Subordination Agreement in the form annexed hereto as Exhibit 2 of this Assignment (or as otherwise agreed upon by the Assignor and the Assignee) and (b) give notice, in the form annexed hereto as Exhibit 1 of this Assignment (or as otherwise agreed upon by the Assignor and the Assignee) to any subcharterer or subcontractee of the Vessel for a period in excess of twelve months and use its best efforts to cause such subcharterer or subcontractee of the Vessel to execute and deliver to the Assignee a Consent and Subordiation Agreement substantially in the form annexed hereto as Exhibit 2 of this Assignment (or as otherwise agreed upon by the Assignor and the Assignee).

			
	
			
				 4.
			Payment. Upon the occurrence of an Event of Default, the Assignor shall cause all sums payable to the Assignor and assigned hereby, whether as charter hire, freight, indemnities or otherwise, to be paid directly to an account designated by the Assignee.

			
	
			
				 5.
			Performance under Charters; No Duty of Inquiry. The Assignor hereby undertakes that, notwithstanding the assignment herein contained, it shall punctually perform all its obligations under all charters and contracts pertaining to the Vessel to which it is a party. It is hereby expressly agreed that, anything contained herein to the contrary notwithstanding, the Assignor shall remain liable under all charters and contracts pertaining to the Vessel to which it is a party to perform the obligations assumed by it thereunder, and the Assignee shall have no obligation or liability under any such charter or contract by reason of or arising out of the assignment contained herein, nor shall the Assignee be required to assume or be obligated in any manner to perform or fulfill any obligation of the Assignor under or pursuant to any such charter or contract or to make any payment or make any inquiry as to the nature or sufficiency of any

		
			 
		

		

		

		 

 

		payment received by the Assignee, or, unless and until indemnified to its satisfaction, to present or file any claim or to take any other action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled hereunder or pursuant hereto at any time or times.
		

			
	
			
				 6.
			Requisition. The Assignor shall promptly notify the Assignee in writing of the commencement and termination of any period during which the Vessel may be requisitioned.

			
	
			
				 7.
			Employment of Vessel. The Assignor hereby further covenants and undertakes promptly to furnish the Assignee with all such information as it may from time to time require regarding the employment, position and engagements of the Vessel.

			
	
			
				 8.
			Negative Pledge. The Assignor does hereby warrant and represent that it has not assigned or pledged, except as permitted by the Credit Agreement, and hereby covenants that it will not assign or pledge so long as this Assignment shall remain in effect, except as permitted by the Credit Agreement, any of its right, title or interest in the whole or any part of the moneys and claims hereby assigned to anyone other than the Assignee, and it will not take or omit to take any action, the taking or omission of which might result in an alteration or impairment of the rights hereby assigned or any of the rights created in this Assignment, except as permitted by the Credit Agreement; and the Assignor does hereby irrevocably appoint and constitute the Assignee as the Assignor's true and lawful attorney-in-fact with full power (in the name of the Assignor or otherwise) should an Event of Default have occurred and be continuing to ask, require, demand, receive, compound and give acquittance for any and all moneys and claims for moneys assigned hereby, to endorse any checks or other instruments or orders in connection therewith, to file any claims or take any action or institute any proceedings which the Assignee may deem to be necessary or advisable in the premises and to file any and all Uniform Commercial Code financing statements or renewals thereof in connection with this Assignment without the signature of the Assignor which the Assignee may deem to be necessary or advisable in order to perfect or maintain the security interest granted hereby.

			
	
			
				 9.
			Application of Proceeds. All moneys collected or received from time to time by the Assignee pursuant to this Assignment shall be dealt with as provided in the Credit Agreement and that certain Pari Passu Intercreditor Agreement to be entered into by the Borrower, the Guarantor and DVB in its capacity as (i) facility agent under the Credit Agreement and (ii) facility agent under that certain credit agreement originally entered into by and among (1) Waterman Steamship Corporation, as borrower, (2) International Shipholding Corporation, as guarantor, (3) the banks and financial institutions listed on Schedule I thereto, as lenders (4) DVB, as facility agent and security trustee for the lenders and (5) DVB, as mandated lead arranger, dated as of August 26, 2014, as amended by an Amendment No. 1 dated October 28, 2014 and an Amendment No. 2 dated November 24, 2014 and an Assignment and Assumption Agreement, dated December 29, 2014, whereby LCI Shipholdings, Inc. was deemed the ultimate borrower.

			
	
			
				 10.
			Further Assurances. The Assignor agrees that at any time and from time to time, upon the written request of the Assignee, the Assignor will promptly and duly execute and deliver any and all such further instruments (including an executed, undated notice of

		
			 
		

		

		

		 

 

		assignment to the relevant charterer, which, upon the occurrence and during the continuation of an Event of Default, enables the Security Trustee to redirect the payment of any Earnings under the relevant Approved Charter to the Retention Account) and documents as the Assignee may deem desirable in obtaining the full benefits of this Assignment and of the rights and powers herein granted.
		

			
	
			
				 11.
			Remedies Cumulative and Not Exclusive; No Waiver. Each and every right, power and remedy herein given to the Assignee shall be cumulative and shall be in addition to every other right, power and remedy of the Assignee now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy, whether herein given or otherwise existing, may be exercised from time to time, in whole or in part, and as often and in such order as may be deemed expedient by the Assignee, and the exercise or the beginning of the exercise of any right, power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Assignee or any of the Lenders in the exercise of any right or power or in the pursuance of any remedy accruing upon any breach or default by any Person shall impair any such right, power or remedy or be construed to be a waiver of any such right, power or remedy or to be an acquiescence therein; nor shall the acceptance by the Assignee or any of the Lenders of any security or of any payment of or on account of any of the amounts due from any Person under or in connection with the Credit Agreement or any document delivered in connection therewith and maturing after any breach or default or of any payment on account of any past breach or default be construed to be a waiver of any right to take advantage of any future breach or default or of any past breach or default not completely cured thereby.

			
	
			
				 12.
			Invalidity. If any provision of this Assignment shall at any time for any reason be declared invalid, void or otherwise inoperative by a court of competent jurisdiction, such declaration or decision shall not affect the validity of any other provision or provisions of this Assignment, or the validity of this Assignment as a whole. In the event that it should transpire that by reason of any law or regulation, or by reason of a ruling of any court, or by any other reason whatsoever, the assignment herein contained is either wholly or partly defective, the Assignor hereby undertakes to furnish the Assignee with an alternative assignment or alternative security and/or to do all such other acts as, in the sole opinion of the Assignee, shall be required in order to ensure and give effect to the full intent of this Assignment.

			
	
			
				 13.
			Continuing Security. It is declared and agreed that the security created by this Assignment shall be held by the Assignee as a continuing security for the payment of all moneys which may at any time and from time to time be or become payable by the Assignor under the Credit Agreement and that the security so created shall not be satisfied by an intermediate payment or satisfaction of any part of the amount hereby secured and that the security so created shall be in addition to and shall not in any way be prejudiced or affected by any collateral or other security now or hereafter held by the Assignee for all or any part of the moneys hereby secured.

			
	
			
				 14.
			Waiver; Amendment. None of the terms and conditions of this Assignment may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by the Assignee and the Assignor.

		
			 
		

		 

 

			
	
			
				 15.
			Termination. If the Assignor shall pay and discharge all of its obligations under or in connection with the Credit Agreement or is released therefrom in accordance with the terms thereof, all of the right, title and interest herein assigned shall revert to the Assignor and this Assignment shall terminate.

			
	
			
				 16.
			WAIVER OF JURY TRIAL. EACH OF THE ASSIGNOR, AND, BY ITS ACCEPTANCE HEREOF, THE ASSIGNEE, HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO OR ANY BENEFICIARY HEREOF ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS ASSIGNMENT.

		
			 
		

		

		

		 

 

		and may be sent by facsimile as follows: If to the Assignor:
		

		
			EAST GULF SHIPHOLDING, INC.
		

		
			11 North Water Street Suite 18290
		

		
			Mobile, Alabama 36602
		

		
			Attention: Chief Financial Officer
		

		
			Facsimile: (251) 243 9121
		

		
			with a copy to:
		

		
			International Shipholding Corporation
		

		
			One Whitehall Street
		

		
			New York, New York 10004
		

		
			Attention: Niels M. Johnsen
		

		
			Facsimile: (212) 514-5692/(212) 809-9036
		

		
			Telephone: (212) 943-4141
		

		
			If to the Assignee:
		

		
			DVB BANK SE
		

		
			Park House
		

		
			16-18 Finsbury Circus
		

		
			London EC2M 7EB
		

		
			Attention: Peter Attridge
		

		
			Department: Transaction and Loan Services
		

		
			Email: tls.london@dvbbank.com 
		

		
			Fax: +44 207 256 4352
		

		
			with a copy to:
		

		
			DVB TRANSPORT (US) LLC 609 Fifth Avenue, 5th Floor New York, New York 10017 Facsimile: +1 212 858 2664 /+ 1 917 369 2196
		

		
			Attention: Christoph Clauss/Matthew Galici
		

		
			Email: christoph.clauss@dvbbank.com/ matthew.galici@dvbbank.com
		

		
			or to such other address as either party shall from time to time specify in writing to the other. Any notice sent by facsimile shall be confirmed by letter dispatched as soon as practicable thereafter.
		

		
			Every notice or other communication shall, except so far as otherwise expressly provided by this Assignment, be deemed to have been received (provided that it is received prior
		

		
			 
		

		

		

		 

 

		to 10 a.m. New York time; otherwise it shall be deemed to have been received on the next following Banking Day) in the case of a facsimile on the date of dispatch thereof (provided further that if the date of dispatch is not a Banking Day in the locality of the party to whom such notice or demand is sent, it shall be deemed to have been received on the next following Banking Day in such locality), and in the case of a letter, at the time of receipt thereof.
		

			
	
			
				 18.
			Governing Law. This Assignment shall be governed by and construed in accordance with the laws of the State of New York without giving effect to conflicts principles.

			
	
			
				 19.
			Headings. In this Assignment, Section headings are inserted for convenience of reference only and shall be ignored in the interpretation hereof.

			
	
			
				 20.
			Intercreditor Agreement. This Assignment shall be subject to the terms of the Pari Passu Intercreditor Agreement. Where a conflict exists between this Assignment and the Pari Passu Intercreditor Agreement, the Pari Passu Intercreditor Agreement shall govern.

		
			 
		

		
			[Signature page to follow]
		

		
			 
		

		

		

		 

 

		IN WITNESS WHEREOF, the Assignor has caused this Assignment to be executed as of the day and year first above written.
		

		
			EAST GULF SHIPHOLDING, INC.
		

		
			By:
		

		
			Name: Title:
		

		
			 
		

		

		

		 

 

		EXHIBIT 1
		

		
			EARNINGS ASSIGNMENT NOTICE
		

		
			TO:Hyundai Glovis Co., Ltd.
		

		
			TAKE NOTICE:
		

		
			a)that by an Assignment of Earnings, Charterparties and Requisition
		

		
			Compensation dated the [ ] day of April, 2015 made by us to DVB BANK SE ("the Assignee"), we, the owner of the Marshall Islands registered vessel GLOVIS COUNTESS, Official No. 3831 (the "Vessel"), have assigned to the Assignee as from the date hereof all our right, title and interest in and to:
		

			
	
			
				 (i)
			

			
	
			
			any charter or other contract to which it is a party now or hereafter entered into by the Assignor in respect of the Vessel;

			
	
			
				 (ii)
			

			
	
			
			all moneys whatsoever which are now, or later become, payable (actually or contingently) to us or the Assignee (net of charter commissions payable in respect of the Vessel) and which arise out of the use or operation of the Vessel, including (but not limited to): (a) except to the extent that they fall within paragraph (b), (1) all freight, hire and passage moneys, (2) compensation payable in event of requisition of the Vessel for hire, (3) remuneration for salvage and towage services, (4) demurrage and detention moneys, (5) damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Vessel, (6) all moneys which are at any time payable under Insurances in respect of loss of hire and, (b) if and whenever, with the consent of the Assignee, the Vessel is employed on terms whereby any moneys falling within (1) to (6) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Vessel; and

			
	
			
				 (iii)
			

			
	
			
			all proceeds of all of the foregoing.

		
			b)that you are hereby irrevocably authorized and instructed to pay all of such
		

		
			aforesaid moneys to the Assignee to such account as the Assignee may in the future direct.
		

		
			DATED THIS ___day of_________, 2015
		

		
			EAST GULF SHIPHOLDING, INC.
		

		
			By _____________________________________________________________________________
		

		
			Name: Title:
		

		
			 
		

		

		

		 

 

		EXHIBIT 2
		

		
			CONSENT AND SUBORDINATION AGREEMENT
		

		
			The parties hereto agree as follows:
		

		
			Hyundai Glovis Co., Ltd. (“Glovis”), being the charterer of the Marshall Islands registered vessel GLOVIS COUNTESS, Official No. 3831 (the "Vessel"), from EAST GULF SHIPHOLDING, INC. (the "Owner") under the time charter dated February 5, 2013, between Glovis and the Owner (as at any time further amended, the "Time Charter") which is the subject of the attached Assignment of Earnings, Charterparties and Requisition Compensation (the "Assignment") by the Owner to DVB BANK SE (the "Assignee"), in consideration of One Dollar lawful money of the United States of America to it in hand paid, hereby acknowledges notice of and consents and agrees to the Assignment and to any amendments, revisions or extensions of the Assignment and further agrees that it will make payment of all moneys due and to become due under the Time Charter to the Assignee at its office at Platz der Republik 6, D-60325 Frankfurt am Main, Germany (or at such office or account as the Assignee may designate in writing to Glovis), upon receipt of written notice from the Assignee and that each such payment shall be final and Glovis will not seek to recover from the Assignee for any reason whatsoever any moneys paid by Glovis to the Assignee by virtue of the Assignment and this Consent and Subordination Agreement.
		

		
			Glovis hereby agrees to subordinate all of its right, title and interest in and to the Vessel under the Time Charter to the interests of the Mortgagee (as defined below) under that certain first preferred mortgage, dated as of April __, 2015 (the “Mortgage”), executed by the Owner in favor of the Assignee as security trustee (together with its successors and assigns, the “Mortgagee”). By signing below, Glovis agrees that, under the terms of this Consent and Subordination Agreement, notwithstanding the effective date of the Time Charter and the delivery of the Vessel thereunder, all right, title and interest of the Mortgagee in and to the Vessel, and all right, title, interest, liens and security interests of the Mortgagee arising under the Mortgage, shall, for all times and for all purposes, be superior in rank, preference and priority to any right, interest, claim, lien or security interest in or against the Vessel, whether now existing or hereafter arising, in favor of Glovis, whether arising under the Time Charter or otherwise. Without limiting the foregoing, Glovis agrees that at no time and under no circumstance shall it seek to challenge, invalidate or assert priority over any right, title or interest of the Mortgagee in and to the Vessel, or any right, title, interest, liens and security interests of the Mortgagee under the Mortgage or the Assignment. Glovis further agrees that, so long as the Mortgage remains in effect, it will forbear from exercising any lien rights against the Vessel arising under the Time Charter or under applicable law and that it will not foreclose on any claim, lien and/or security interest created in its favor under the Time Charter or otherwise without the prior written consent of the Mortgagee first being obtained. In the event of foreclosure by Glovis, Glovis shall not accept any proceeds from any foreclosure (or sale) of the Vessel unless and until the indebtedness and other obligations of the Security Parties (including interest, fees and expenses (including fees and expenses related to the repossession of the Vessel)) to the Creditors under the Credit Agreement and related Transaction Documents (as defined in the Credit Agreement) have been fully paid.
		

		
			In consideration of Glovis’ agreement to subordinate any lien claims it might have against the
		

		
			 
		

		

		

		 

 

		Vessel for breach of the Time Charter to the rights of the Mortgagee under the Mortgage, the Mortgagee agrees that Glovis’ quiet and peaceful use, possession and enjoyment of the Vessel in accordance with the terms of the Time Charter will not be disturbed or interfered with by the Mortgagee. Notwithstanding the foregoing, the Mortgagee shall not be required to ensure Glovis’ quiet enjoyment of the Vessel if Glovis has (i) ceased to comply with the terms of this Consent and Subordination Agreement, (ii) ceased to comply with the terms of the Time Charter or (iii) the Owner, under the Time Charter, has ceased to be obliged to charter the Vessel to Glovis, whether or not the Owner has exercised its right to terminate chartering of the Vessel to Glovis.
		

		
			[Signature page follows]
		

		
			 
		

		

		

		 

 

		IN WITNESS WHEREOF, the parties hereto have executed this Consent and
		

		
			Subordination Agreement as of this ___day of_________________, 2015
		

		
			Hyundai Glovis Co., Ltd.
		

		
			By _____________________________________________________________________________
		

		
			Name: Title:
		

		
			DVB BANK SE
		

		
			By _____________________________________________________________________________
		

		
			Name: Title:
		

		
			By _____________________________________________________________________________
		

		
			Name: Title:
		

		
			 
		

		

		

		 

 

		EXHIBIT F
		

		
			 
		

		
			ASSIGNMENT OF INSURANCES 
in respect of
		

		
			[GREEN BAY][GLOVIS COUNTESS] 
by 
EAST GULF SHIPHOLDING, INC., as Owner 
in favor of
		

		
			DVB BANK SE, 
as Security Trustee
		

		
			[ ], 2015
		

		
			 
		

		

		

		 

 

		ASSIGNMENT OF INSURANCES 
[GREEN BAY] [GLOVIS COUNTESS]
		

		
			THIS ASSIGNMENT OF INSURANCES (this “Assignment”) is made as of the
		

		
			___ day of, 2015 by EAST GULF SHIPHOLDING, INC., a corporation organized 
and existing under the laws of the Republic of the Marshall Islands (the “Assignor”), as assignor, in favor of DVB BANK SE, a banking corporation organized under the laws of the Federal Republic of Germany (“DVB”) (together with its successors and permitted assigns, in such capacity, the “Assignee”), as Security Trustee (as such term is hereinafter defined).
		

		
			W I T N E S S E T H T H A T:
		

		
			WHEREAS:
		

			
	
			
				 (A)
			The Assignor is the sole owner of the whole of the pure car truck carrier [GREEN BAY, built in 2007 and registered under the laws of the Republic of the Marshall Islands with IMO No. 9339818][GLOVIS COUNTESS, built in 2010 and registered under the laws of the Republic of the Marshall Islands with IMO No. 9476721] (the "Vessel");

			
	
			
				 (B)
			By a credit agreement dated as of April __, 2015 (the "Credit Agreement"), made by and among (1) the Assignor, as borrower, (2) INTERNATIONAL SHIPHOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware, as guarantor (the "Guarantor"), (3) the banks and financial institutions listed on Schedule I of the Credit Agreement, as lenders (together with any bank or financial institution which becomes a Lender pursuant to Section 12 of the Credit Agreement, the “Lenders” and each a “Lender”), (4) DVB, as facility agent for the Lenders and security trustee for the Lenders (in such capacity, the "Security Trustee") and (5) DVB, as mandated lead arranger, the Lenders have agreed to make available to the Assignor, a secured term loan in the amount of up to Thirty Two Million Dollars($32,000,000) (the “Loan”); and

			
	
			
				 (C)
			It is a condition precedent to the availability of the Advance under the Credit Agreement that the Assignor execute and deliver to the Assignee, as security for the obligations of the Assignor to the Creditors under or in connection with the Credit Agreement an assignment of any and all insurances taken out in respect of the Vessel and its earnings.

		
			NOW, THEREFORE, in consideration of the premises and of other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Assignor:
		

			
	
			
				 1.
			Defined Terms. Unless otherwise defined herein, terms defined in the Credit Agreement shall have the same meanings when used herein.

			
	
			
				 2.
			Grant of Security. The Assignor, as legal and beneficial owner, does hereby assign, transfer and set over unto the Assignee, for the benefit of the Assignee and its successors and assigns, and does hereby grant the Assignee a security interest in, all of the Assignor's right, title and interest in, to and under all policies and contracts of insurance, including the Assignor's rights under all entries in any Protection and Indemnity or War Risks

		
			 
		

		

		

		 

 

		Association or Club, which are from time to time taken out by or for the Assignor in respect of the Vessel, her hull, machinery, freights, disbursements, profits or otherwise, and all the benefits thereof, including, without limitation, all claims of whatsoever nature, as well as return premiums (all of which are herein collectively called the "Insurances"), and in and to all moneys and claims for moneys in connection therewith and all proceeds of all of the foregoing.
		

		
			3.Notices; Loss Payable Clauses. (A) All Insurances, except entries in
		

		
			Protection and Indemnity Associations or Clubs or insurances effected in lieu of such entries, relating to the Vessel shall contain a loss payable and notice of cancellation clause in the form of Exhibit 1 hereto or in such other form as the Assignee may agree.
		

		
			(B)All entries in Protection and Indemnity Associations or Clubs or
		

		
			insurances effected in lieu of such entries relating to the Vessel shall contain a loss payable and notice of cancellation clause in the form of Exhibit 2 hereto or in such other form as the Assignee may agree.
		

		
			4.Covenants and Undertakings. The Assignor hereby covenants with the
		

		
			Assignee that:
		

			
	
			
				 (A)
			It will do or permit to be done each and every act or thing which the Assignee may from time to time reasonably require to be done for the purpose of enforcing the Assignee's rights under this Assignment and will allow its name to be used as and when required by the Assignee for that purpose; and

			
	
			
				 (B)
			It will forthwith give notice in the form set out in Exhibit 3 hereto, or cause its insurance brokers to give notice, of this Assignment to all insurers, underwriters, clubs and associations providing insurance in connection with the Vessel and her earnings and procure that such notice is endorsed on all the policies and entries of insurances in respect of the Vessel and her earnings.

		
			5.No Duty of Inquiry. The Assignee shall not be obliged to make any
		

		
			inquiry as to the nature or sufficiency of any payment received by it hereunder or to make any claim or take any other action to collect any moneys or to enforce any rights and benefits hereby assigned to the Assignee or to which the Assignee may at any time be entitled hereunder except such reasonable action as may be requested by any underwriter, association or club. The Assignor shall remain liable to perform all the obligations assumed by it in relation to the property hereby assigned and the Assignee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever (including, without limitation, any obligation or liability with respect to the payment of premiums, calls, assessments or any other sums at any time due and owing in respect of the Insurances) in the event of any failure by the Assignor to perform such obligations.
		

		
			6.Negative Pledge. The Assignor does hereby warrant and represent that it
		

		
			has not assigned or pledged, except as permitted by the Credit Agreement, and hereby covenants that it will not assign or pledge so long as this Assignment shall remain in effect, except as permitted by the Credit Agreement, any of its right, title or interest in the whole or any part of the moneys and claims hereby assigned, to anyone other than the Assignee, and it will not take or omit to take any action, the taking or omission of which might result in an alteration or impairment of the rights hereby assigned or any of the rights created in this Assignment, except
		

		
			 
		

		

		

		 

 

		as permitted by the Credit Agreement; and the Assignor hereby irrevocably appoints and constitutes the Assignee as the Assignor's true and lawful attorney-in-fact with full power (in the name of the Assignor or otherwise) should an Event of Default have occurred and be continuing to ask, require, demand, receive, compound and give acquittance for any and all moneys and claims for moneys assigned hereby, to endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings which the Assignee may deem to be necessary or advisable and otherwise to do any and all things which the Assignor itself could do in relation to the property hereby assigned, including, but not limited to, filing any and all Uniform Commercial Code financing statements or renewals thereof in connection with this Assignment, without the signature of the Assignor, which the Assignee may deem to be necessary or advisable in order to perfect or maintain the security interest granted hereby.
		

			
	
			
				 7.
			Further Assurances. The Assignor agrees that any time and from time to time upon the written request of the Assignee it will promptly and duly execute and deliver to the Assignee any and all such further instruments and documents as the Assignee may reasonably deem advisable in obtaining the full benefits of this Assignment and of the rights and powers herein granted.

			
	
			
				 8.
			Remedies Cumulative and Not Exclusive; No Waiver. Each and every right, power and remedy herein given to the Assignee shall be cumulative and shall be in addition to every other right, power and remedy of the Assignee now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy, whether herein given or otherwise existing, may be exercised from time to time, in whole or in part, and as often and in such order as may be deemed expedient by the Assignee, and the exercise or the beginning of the exercise of any right, power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Assignee in the exercise of any right or power in the pursuance of any remedy accruing upon any breach or default by any Person shall impair any such right, power or remedy or be construed to be a waiver of any such right, power or remedy or to be an acquiescence therein; nor shall the acceptance by the Assignee of any security or of any payment of or on account of any of the amounts due from any Person under or in connection with the Credit Agreement or any document delivered in connection therewith and maturing after any breach or default or of any payment on account of any past breach or default be construed to be a waiver of any right to take advantage of any future breach or default or of any past breach or default not completely cured thereby.

			
	
			
				 9.
			Invalidity. If any provision of this Assignment shall at any time for any reason be declared invalid, void or otherwise inoperative by a court of competent jurisdiction, such declaration or decision shall not affect the validity of any other provision or provisions of this Assignment, or the validity of this Assignment as a whole. In the event that it should transpire that by reason of any law or regulation, or by reason of a ruling of any court, or by any other reason whatsoever, the assignment herein contained is either wholly or partly defective, the Assignor hereby undertakes to furnish the Assignee with an alternative assignment or alternative security and/or to do all such other acts as, in the sole opinion of the Assignee, shall be required in order to ensure and give effect to the full intent of this Assignment.

			
	
			
				 10.
			Continuing Security. It is declared and agreed that the security created by this Assignment shall be held by the Assignee as a continuing security for the payment of all

		
			3
		

		
			 
		

		

		

		 

 

		moneys which may at any time and from time to time be or become payable by the Assignor under the Credit Agreement and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby secured and that the security so created shall be in addition to and shall not in any way be prejudiced or affected by any other collateral or security now or hereafter held by the Assignee for all or any part of the moneys hereby secured.
		

			
	
			
				 11.
			Waiver; Amendment. None of the terms and conditions of this Assignment may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by the Assignee and the Assignor.

			
	
			
				 12.
			Termination. If the Assignor shall pay and discharge all of its obligations under or in connection with the Credit Agreement or is released therefrom in accordance with the terms thereof, all the right, title and interest herein assigned shall revert to the Assignor, and this Assignment shall terminate.

			
	
			
				 13.
			WAIVER OF JURY TRIAL. EACH OF THE ASSIGNOR, AND, BY ITS ACCEPTANCE HEREOF, THE ASSIGNEE, HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO OR ANY BENEFICIARY HEREOF ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS ASSIGNMENT.

			
	
			
				 14.
			Notices. Notices and other communications hereunder shall be in writing and may be given or made by facsimile as follows:

		
			If to the Assignor:
		

		
			EAST GULF SHIPHOLDING, INC. 11 North Water Street
		

		
			Suite 18290
		

		
			Mobile, Alabama 36602
		

		
			Attention: Chief Financial Officer Facsimile: (251) 243 9121
		

		
			with a copy to:
		

		
			International Shipholding Corporation
		

		
			One Whitehall Street
		

		
			New York, New York 10004
		

		
			Attention: Niels M. Johnsen
		

		
			Facsimile: (212) 514-5692/(212) 809-9036
		

		
			Telephone: (212) 943-4141
		

		
			If to the Assignee:
		

		
			DVB BANK SE
		

		
			Park House
		

		
			6-18 Finsbury Circus London EC2M 7EB
		

		
			Attention: Peter Attridge
		

		
			 
		

		

		

		 

 

		Department: Transaction and Loan Services  tls.london@dvbbank.com 
		

		
			Fax: +44 207 256 4352
		

		
			with a copy to:
		

		
			DVB TRANSPORT (US) LLC 609 Fifth Avenue, 5th Floor New York, New York 10017 Facsimile: +1 212 858 2664/+ 1 917 369 2196 Attention: Christoph Clauss/Matthew Galici
		

		
			 christoph.clauss@dvbbank.com/ matthew.galici@dvbbank.com 
		

		
			or to such other address as either party shall from time to time specify in writing to the other. Any notice or communication sent by facsimile shall be confirmed by letter dispatched as soon as practicable thereafter.
		

		
			Every notice or other communication shall, except so far as otherwise expressly provided by this Assignment, be deemed to have been received (provided that it is received prior to 10 a.m. New York time; otherwise it shall be deemed to have been received on the next following Business Day) in the case of a facsimile at the time of dispatch thereof (provided further that if the date of dispatch is not a Business Day in the locality of any party to whom such notice or communication is sent it shall be deemed to have been received on the next following Business Day in such locality), and in the case of a letter, at the time of receipt thereof.
		

			
	
			
				 15.
			Governing Law. This Assignment shall be governed by and construed in accordance with the laws of the State of New York without giving effect to conflicts principles.

			
	
			
				 16.
			Headings. In this Assignment, Section headings are inserted for convenience of reference only and shall be ignored in the interpretation hereof.

			
	
			
				 17.
			Intercreditor Agreement. This Assignment shall be subject to the terms of the Pari Passu Intercreditor Agreement. Where a conflict exists between this Assignment and the Pari Passu Intercreditor Agreement, the Pari Passu Intercreditor Agreement shall govern.

		
			[Signature page to follow]
		

		
			 
		

		

		

		 

 

		IN WITNESS WHEREOF, the Assignor has caused this Assignment to be executed and delivered as of the day and year first above written.
		

		
			EAST GULF SHIPHOLDING, INC.
		

		
			By:
		

		
			Name: Title:
		

		
			 
		

		

		

		 

 

		EXHIBIT 1
		

		
			LOSS PAYABLE CLAUSE 
Hull and Machinery
		

		
			Loss, if any, payable to DVB Bank SE, as mortgagee (the “Mortgagee”), for distribution by it to itself and to EAST GULF SHIPHOLDING, INC., as owner (the “Owner”), as their respective interests may appear, or order, except that, unless underwriters have been otherwise instructed by notice in writing from the Mortgagee, in the case of any loss involving any damage to the Vessel, the underwriters may pay directly for the repair, salvage, and other charges involved or, if the Owner shall have first fully repaired the damage or paid all of the salvage and other charges, then the underwriters may pay the Owner as reimbursement therefor; provided, however, that if such damage involves a loss of U.S.$500,000 or more or its equivalent, the underwriters shall not make such payment without first obtaining the written consent thereto of the Mortgagee.
		

		
			In the event of the actual total loss or agreed, compromised or constructive total loss of the Vessel, payment shall be made to the Mortgagee for distribution by it to itself and to the Owner as their respective interests appear.
		

		
			 
		

		

		

		 

 

		EXHIBIT 2
		

		
			LOSS PAYABLE CLAUSE 
Protection and Indemnity
		

		
			Payment of any recovery that the Member is entitled to make out of the funds of the Club in 
respect of any liability, costs or expenses incurred by him shall be made to the Member into that
		

		
			certain account (Account No. []; Ref: [ ]) unless and until the Club receives notice from 
DVB Bank SE ("DVB"), in which event all recoveries shall thereafter be paid to DVB, or their order; provided always that no liability whatsoever shall attach to the Club, its Managers or their Agents for failure to comply with the latter obligation until after the expiry of two business days from the receipt of such notice.
		

		
			 
		

		

		

		 

 

		EXHIBIT 3
		

		
			NOTICE OF ASSIGNMENT OF INSURANCES
		

		
			TO:
		

		
			TAKE NOTICE:
		

		
			(a)that by an Assignment of Insurances dated as of the __ of,
		

		
			2015 made by us to DVB Bank SE (the "Assignee"), a copy of which is attached hereto, we have assigned to the Assignee as from the date hereof, inter alia, all our right, title and interest in, to and under all policies and contracts of insurance, including our rights under all entries in any Protection and Indemnity or War Risk Association or Club, which are from time to time taken out by us in respect of the pure car truck carrier [GREEN BAY, built in 2007 and registered under the laws of the United States of America with Official No. 9339818][GLOVIS COUNTESS, built in 2010 and registered under the laws of the Republic of the Marshall Islands with IMO No. 9476721] (the "Vessel"), and its earnings and all the benefits thereof including all claims of whatsoever nature (all of which together are hereinafter called the "Insurances").
		

		
			(b)that you are hereby irrevocably authorized and instructed to make all
		

		
			payments under
		

			
	
			
				 (i)
			

			
	
			
			all Insurances, except entries in Protection and Indemnity Associations or Clubs or insurances effected in lieu of such entries, relating to the Vessel in accordance with the loss payable clause in Exhibit 1 of the Assignment of Insurances; and

			
	
			
				 (ii)
			

			
	
			
			all entries in Protection and Indemnity Associations or Clubs or insurances affected in lieu of such entries relating to the Vessel in accordance with the loss payable clause in Exhibit 2 of the Assignment of Insurances.

		
			(c)that you are hereby instructed to endorse the assignment, notice of
		

		
			which is given to you herein, on all policies or entries relating to the Vessel.
		

		
			DATED AS OF THE ___ day of_____________, 2015.
		

		
			EAST GULF SHIPHOLDING, INC.
		

		
			By:
		

		
			Name:
		

		
			Title:
		

		
			 
		

		
			We hereby acknowledge receipt of the foregoing Notice of Assignment and agree to act in accordance with the terms thereof:
		

		
			 
		

		
			By_________________________________________
		

		
			Name: Title:
		

		
			 
		

		

		

		 

 

		EXHIBIT G-1 
		

		
			FIRST PREFERRED MORTGAGE 
on the
		

		
			Marshall Islands Flag Vessel 
GLOVIS COUNTESS
		

		
			EAST GULF SHIPHOLDING, INC., 
as Owner
		

		
			TO
		

		
			DVB BANK SE, 
as Mortgagee
		

		
			Dated as of April ____, 2015
		

		
			 
		

		

		

		 

 

		THIS FIRST PREFERRED MORTGAGE (this “Mortgage”) is made and given as of the [ ] day of April, 2015 by EAST GULF SHIPHOLDING, INC., a corporation existing under the laws of the Republic of the Marshall Islands, with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (the “Owner”) in favor of DVB BANK SE, a banking corporation organized under the laws of the Federal Republic of Germany (“DVB”) with offices at Platz der Republik 6, D-60325 Frankfurt am Main, Germany, as security trustee (hereinafter, in such capacity, called the “Mortgagee”) for the Lenders (as such term is defined in the Credit Agreement (as hereinafter defined), pursuant to the terms of the Credit Agreement.
		

		
			WHEREAS:
		

			
	
			
				 A.
			The Owner is the sole owner of the whole of the vessel GLOVIS COUNTESS Official No. 3831, of 60,213 gross tons, 18,573 net tons, built in 2010 (the “Vessel”); and registered and documented in the name of the Owner under the laws and flag of the Republic of the Marshall Islands.

			
	
			
				 B.
			Pursuant to a credit agreement dated as of April __, 2015 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”, a copy of the form of the Credit Agreement, without schedules or exhibits other than Schedule I is annexed hereto as Exhibit A), made by and among (1) the Owner, as borrower, (2) INTERNATIONAL SHIPHOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware, as guarantor (the “Guarantor”), (3) the banks and financial institutions listed on Schedule I thereto, as lenders (together with any bank or financial institution which becomes a Lender pursuant to Section 12 of the Credit Agreement, the “Lenders” and each a “Lender”), (4) DVB, as facility agent for the Lenders, (in such capacity, the “Facility Agent”) and as security trustee for the Lenders (in such capacity, the “Security Trustee”) and (5) DVB, as mandated lead arranger (together with the Lenders, the Facility Agent and the Security Trustee, the “Creditors”), the Security Trustee has agreed to serve in such capacity under the Credit Agreement and the Lenders have provided to the Owner a secured term loan in the amount of up to Thirty Two Million Dollars ($32,000,000) (the “Loan”).

			
	
			
				 C.
			The obligation of the Owner to repay the Loan under the Credit Agreement is evidenced by a promissory note dated April ____, 2015, from the Owner, to the order of the Facility Agent (the “Note”), a copy of the form of the Note being attached hereto as Exhibit B. The Loan, and interest, fees and commissions thereon are to be repaid or paid, as the case may be, as provided in the Credit Agreement. Unless otherwise defined herein, terms defined in the Credit Agreement shall have the same meaning when used herein.

			
	
			
				 D.
			Pursuant to Section 17 of the Credit Agreement, the Lenders have appointed the Mortgagee as facility agent and security trustee on their behalf with regard to, inter alia, the security conferred on such Lenders pursuant to the terms of the Credit Agreement, the Note and the Transaction Documents.

			
	
			
				 E.
			The Owner, in order to secure the payment of the Obligations, as that term is defined in subsection 1(A)(v) hereof, and to secure the performance and observance of and compliance with all the covenants, terms and conditions in the Credit Agreement and in this

		
			 
		

		

		

		 

 

		Mortgage contained, expressed or implied, to be performed, observed and complied with by and on the part of the Owner, has duly authorized the execution and delivery of this First Preferred Mortgage under and pursuant to the Maritime Law.
		

		
			N O W,     T H E R E F O R E,     T H I S     M O R T G A G E     W I T N E S S E T H:
		

		
			1.Definitions: In this Mortgage, unless the context otherwise requires:
		

		
			(A)(i)“Classification Society” when used herein shall have the same meaning as in the Credit Agreement;
		

			
	
			
				 (ii)
			

			
	
			
			“Earnings” includes all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Owner or the Security Trustee (net of charter commissions payable in respect of the Vessel) and which arise out of the use or operation of the Vessel, including (but not limited to): (a) except to the extent that they fall within paragraph (b) (1) all freight, hire and passage moneys, (2) compensation payable in event of requisition of the Vessel for hire, (3) remuneration for salvage and towage services, (4) demurrage and detention moneys, (5) damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Vessel, (6) all moneys which are at any time payable under Insurances in respect of loss of hire and, (b) if and whenever, with the consent of the Mortgagee, the Vessel is employed on terms whereby any moneys falling within (1) to (6) above are pooled or shared with any other Person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Vessel;

			
	
			
				 (iii)
			

			
	
			
			“Insurances” includes all policies and contracts of insurance and all entries of the Vessel in a protection and indemnity or war risks association or club which are from time to time taken out or entered into pursuant to this Mortgage in respect of the Vessel and its Earnings or otherwise howsoever in connection with the Vessel;

			
	
			
				 (iv)
			

			
	
			
			“Intercreditor Agreement” means that certain Pari Passu Intercreditor Agreement to be entered into by the Owner, the Guarantor and DVB in its capacity as (i) facility agent under the Credit Agreement and (ii) facility agent under that certain credit agreement originally entered into by and among (1) Waterman Steamship Corporation, as borrower, (2) International Shipholding Corporation, as guarantor, (3) the banks and financial institutions listed on Schedule I thereto, as lenders (4) DVB, as facility agent and security trustee for the lenders and (5) DVB, as mandated lead arranger, dated as of August 26, 2014, as amended by an Amendment No. 1 dated October 28, 2014 and an Amendment No. 2

		
			 
		

		
			2
		

		
			 
		

		

		

		 

 

		dated November 24, 2014 and an Assignment and Assumption Agreement, dated December 29, 2014, whereby LCI Shipholdings, Inc. was deemed the ultimate borrower.
		

		
			(v)“Maritime Law” means Chapter 3 of the Maritime Act 1990 of the
		

		
			Republic of the Marshall Islands;
		

		
			(vi) “Obligations” means the obligations of the Owner or the Guarantor under or in connection with the Credit Agreement, the Note, this Mortgage, any other Security Document and any Transaction Documents, including but not limited to the obligations to repay the Loan when due;
		

		
			(vii) “Person” when used herein shall have the same meaning as in the Credit Agreement;
		

		
			(viii) “Requisition Compensation” means all moneys or other compensation payable and belonging to the Owner during the Security Period by reason of requisition for title or other compulsory acquisition of the Vessel or otherwise than by requisition for hire;
		

		
			(ix) “Security Documents” when used herein shall have the same meaning as in the Credit Agreement;
		

		
			(x)“Security Period” means the period commencing on the date hereof and
		

		
			terminating upon discharge of the security created by this Mortgage by indefeasible payment in full of all of the Obligations;
		

		
			(xi) “Total Loss” means:
		

			
	
			
				 (a)
			

			
	
			
			actual, constructive or compromised or arranged total loss of the Vessel;

			
	
			
				 (b)
			

			
	
			
			requisition for title or other compulsory acquisition of the Vessel (otherwise than by requisition for hire) which shall continue for fourteen (14) days; or

			
	
			
				 (c)
			

			
	
			
			capture, seizure, arrest, detention or confiscation of the Vessel by any government or by Persons acting or purporting to act on behalf of any government unless the Vessel be released and restored to the Owner from such capture, seizure, arrest, detention or confiscation within fourteen (14) days after the occurrence thereof; and

		
			(xii) “Vessel” means the whole of the vessel described in Recital A hereof and includes its engines, machinery, boats, boilers, masts, rigging, anchors, chains, cables, apparel, tackle, outfit, spare gear, fuel, consumable or other
		

		
			 
		

		
			3
		

		
			 
		

		

		

		 

 

		stores, freights, belongings and appurtenances, whether on board or ashore, whether now owned or hereafter acquired, and all additions, improvements and replacements hereafter made in or to said vessel, or any part thereof, or in or to the stores, belongings and appurtenances aforesaid except such equipment or stores which, when placed aboard said vessel, do not become the property of the Owner.
		

		
			(B)In Section 5(B) hereof:
		

			
	
			
				 (i)
			

			
	
			
			“excess risks” means the proportion of claims for general average and salvage charges and under the ordinary running-down clause not recoverable in consequence of the value at which a vessel is assessed for the purpose of such claims exceeding her insured value;

			
	
			
				 (ii)
			

			
	
			
			“protection and indemnity risks” means the usual risks covered by a United States or an English or another protection and indemnity association or club acceptable to the Mortgagee including the proportion not recoverable in case of collision under the ordinary running-down clause; and

			
	
			
				 (iii)
			

			
	
			
			“war risks” means the risk of mines and all risks excluded from the standard form of United States marine policy by the War, Strikes and Related Exclusion Clause.

		
			(C)This Mortgage shall be read together with the Credit Agreement but in case of any
		

		
			conflict between the two, the provisions of the Credit Agreement shall prevail.
		

		
			2.Grant of Mortgage; Representations and Warranties.
		

		
			2.1 In consideration of the premises and of other good and valuable consideration, the receipt and adequacy whereof are hereby acknowledged, and in order to secure the payment of the Obligations and to secure the performance and observance of and compliance with the covenants, terms and conditions in the Credit Agreement, the Note, this Mortgage, the other Security Documents and the other Transaction Documents contained, the Owner has granted, conveyed and mortgaged and does by these presents grant, convey and mortgage to and in favor of the Mortgagee, its successors and assigns, the whole of the Vessel TO HAVE AND TO HOLD the same unto the Mortgagee, its successors and assigns, forever, upon the terms set forth in this Mortgage for the enforcement of the payment of the Obligations and to secure the performance and observance of and compliance with the covenants, terms and conditions in this Mortgage, the Credit Agreement, the Note, the other Security Documents and the other Transaction Documents contained;
		

		
			PROVIDED, ONLY, and the conditions of these presents are such that, if the Owner and/or its successors or assigns shall pay or cause to be paid to the Lenders, their respective successors and assigns, the Obligations as and when the same shall become due and payable in accordance with the terms of this Mortgage, the Credit Agreement, the Note and the other Transaction Documents and shall perform, observe and comply with all and singular of the
		

		
			4
		

		
			 
		

		

		

		 

 

		covenants, terms and conditions in this Mortgage, the Credit Agreement, the Note and the other Transaction Documents contained, expressed or implied, to be performed, observed or complied with by and on the part of the Owner or its successors or assigns, all without delay or fraud and according to the true intent and meaning hereof and thereof, then, these presents and the rights of the Mortgagee under this Mortgage shall cease and determine and, in such event, the Mortgagee agrees by accepting this Mortgage, at the expense of the Owner, to execute all such documents as the Owner may reasonably require to discharge this Mortgage under the laws of the Republic of the Marshall Islands; otherwise to be and remain in full force and effect.
		

		
			2.2 The Owner hereby represents and warrants to the Mortgagee that:
		

			
	
			
				 (A)
			the Owner is a corporation duly domesticated, validly existing and in good standing under the laws of the Republic of the Marshall Islands qualified to own and register the Vessel under the Marshall Islands flag;

			
	
			
				 (B)
			the Owner lawfully owns the whole of the Vessel free from any security interest, debt, lien, mortgage, charge, encumbrance or other adverse interest, other than the encumbrance of this Mortgage and except as permitted by Section 5(N) hereof; and

			
	
			
				 (C)
			the Vessel is tight, staunch and strong and well and sufficiently tackled, appareled, furnished and equipped and in all respects seaworthy.

			
	
			
				 3.
			Payment of Obligations. The Owner hereby further covenants and agrees to pay the Obligations when due to the Mortgagee or its successors or assigns.

			
	
			
				 4.
			Covenants Regarding Security Granted Hereunder. It is declared and agreed that:

			
	
			
				 (A)
			The security created by this Mortgage shall be held by the Mortgagee as a continuing security for the payment of the Obligations and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby secured.

			
	
			
				 (B)
			Any settlement or discharge under this Mortgage between the Mortgagee and the Owner shall be conditional upon no security or payment to the Mortgagee or the Lenders, related to or which reduces the obligations secured hereby, by the Owner or any other Person being avoided or set-aside or ordered to be refunded or reduced by virtue of any provision or enactment relating to bankruptcy, insolvency or liquidation for the time being in force, and if such condition is not satisfied, the Mortgagee shall be entitled to recover from the Owner on demand the value of such security or the amount of any such payment as if such settlement or discharge had not occurred.

			
	
			
				 (C)
			The rights of the Mortgagee under this Mortgage and the security hereby constituted shall not be affected by any act, omission, matter or thing which, but for this provision, might operate to impair, affect or discharge such rights and security, including without

		
			 
		

		
			5
		

		
			 
		

		

		

		 

 

		limitation, and whether or not known to or discoverable by the Owner, the Mortgagee or any other Person:
		

			
	
			
				 (i)
			any time or waiver granted to, or composition with, the Owner or any other Person; or

			
	
			
				 (ii)
			the taking, variation, compromise, renewal or release of or refusal or neglect to perfect or enforce any rights, remedies or securities against the Owner or any other Person; or

			
	
			
				 (iii)
			any legal limitation, disability, dissolution, incapacity or other circumstances relating to the Owner or any other Person; or

			
	
			
				 (iv)
			any amendment or supplement to the Credit Agreement, the Note, any of the Security Documents or the other Transaction Documents; or

			
	
			
				 (v)
			the unenforceability, invalidity or frustration of any obligations of the Owner or any other Person under the Credit Agreement, the Note, any of the Security Documents or the other Transaction Documents.

			
	
			
				 (D)
			The Owner acknowledges and agrees that it has not received any security from any Person for the granting of this Mortgage and it will not take any such security without the prior written consent of the Mortgagee, and the Owner will hold any security taken in breach of this provision in trust for the Mortgagee.

			
	
			
				 (E)
			Until the Obligations have been unconditionally and irrevocably paid and discharged in full to the satisfaction of the Mortgagee, the Owner shall not by virtue of any payment made under the Credit Agreement, the Note or this Mortgage on account of such moneys and liabilities or by virtue of any enforcement by the Mortgagee of its right under or the security constituted by this Mortgage:

			
	
			
				 (i)
			be entitled to exercise any right of contribution from any co-surety liable in respect of such moneys and liabilities under any other guarantee, security or agreement; or

			
	
			
				 (ii)
			exercise any right of set-off or counterclaim against any such co-surety; or

			
	
			
				 (iii)
			receive, claim or have the benefit of any payment, distribution, security or indemnity from any such co-surety; or

			
	
			
				 (iv)
			unless so directed by the Mortgagee (which the Owner shall prove in accordance with such directions), claim as a creditor of any such co-surety in competition with the Mortgagee.

		
			 
		

		
			6
		

		
			 
		

		

		

		 

 

		The Owner shall hold in trust for the Mortgagee and forthwith pay or transfer (as appropriate) to the Mortgagee any such payment (including an amount equal to any such set-off), distribution or benefit of such security, indemnity or claim in fact received by it.
		

		
			(F)The Owner hereby irrevocably subordinates all of its rights of subrogation
		

		
			(whether contractual, statutory, under common law or otherwise) to the claims of the Mortgagee against any Person and all contractual, statutory or common law rights of contribution, reimbursement indemnification and similar rights and claims against any Person which arise in connection with, or as a result of, the Credit Agreement or this Mortgage until full and final payment of all of the Obligations.
		

		
			5. Affirmative Covenants and Insurances. The Owner further covenants with the Mortgagee and undertakes at all times throughout the Security Period:
		

			
	
			
				 (A)
			to maintain its existence as a corporation under the laws of the Republic of the Marshall Islands;

			
	
			
				 (B)
			(i) To insure and keep the Vessel insured or cause or procure the Vessel to be insured and to be kept insured at no expense to the Mortgagee (or to reimburse the Mortgagee therefor (including with regard to the insurance cover described in (f) below), using brokers, insurance companies, underwriters and/or War Risk/P&I Associations and on such terms as the Mortgagee shall from time to time approve in writing, in regard to:

			
	
			
				 (a)
			

			
	
			
			hull and machinery plus freight interest and hull interest and any other usual marine risks (such as excess risks);

			
	
			
				 (b)
			

			
	
			
			war risks (including war protection and indemnity liability with a separate limit not less than hull value and including the London blocking and trapping addendum or similar arrangement) covering, inter alia, the perils of confiscation, terrorism, expropriation, nationalization, seizure and blocking;

			
	
			
				 (c)
			

			
	
			
			protection and indemnity risks (including pollution risks and including protection and indemnity war risks in excess of the amount for war risks (hull) to the highest amount available in the market for the full value and tonnage of the Vessel, as approved in writing by the Mortgagee, and, in case of oil pollution liability risks, at the highest level of cover from time to time available under basic protection and indemnity clubs entry, currently One Billion United States Dollars ($1,000,000,000) covered by a protection and indemnity association which is a member of the International Group of Protection and Indemnity Associations (and to strictly comply with all rules of such association as they are in effect);

			
	
			
				 (d)
			

			
	
			
			freight, demurrage and defense risks;

		
			 
		

		
			7
		

		
			 
		

		 

 

			
	
			
				 (e)
			

			
	
			
			loss of hire in respect of any charter party agreement, with the minimum obtaining waiting period and a minimum cover of 90 days with an insured daily amount equal to at least (i) the daily rate under such charter party agreement or (ii) the daily running costs plus the daily debt service amount under the Credit Agreement;

			
	
			
				 (f)
			

			
	
			
			Mortgagee's interest insurance in an amount not less than one hundred twenty percent (120%) of the Facility and mortgagee’s additional perils (pollution) insurance against the possible consequences of pollution involving the Vessel including, without limitation, expropriation or sequestration of the Vessel or the imposition of a Lien or encumbrances of any kind having priority to the security interest granted to the Mortgagee or claims against the Lenders to be subscribed by the Mortgagee and, on demand, reimburse the Mortgagee for all premiums, costs and expenses paid or incurred by the Mortgagee from time to time;

			
	
			
				 (g)
			

			
	
			
			such other insurances as the Mortgagee may reasonably require (including without limitation political risks or mortgage rights insurance in the event that the Vessel is registered (or operated via a charter agreement fully and exclusively) in a jurisdiction that is not an Approved Jurisdiction);

		
			(ii) with respect to the Vessel, to effect the Insurances aforesaid or to cause or procure the same to be effected:
		

			
	
			
				 (a)
			

			
	
			
			in the cases of the Insurances referred to in sub-sections (i) (a) and (b) above, (x) in such amounts as shall be at least equivalent to the higher of (I) the Fair Market Value (as such term is defined in the Credit Agreement) of the Vessel at the most recent date at which such Fair Market Value shall have been determined pursuant to the terms of the Credit Agreement and (II) One Hundred Twenty percent (120%) of the total amount outstanding under the Facility (as such term is defined in the Credit Agreement), and all such insurance shall be payable in lawful money of the United States of America, and (y) upon such terms (including provisions as to named insureds and loss payees and prior notice of cancellation) and with such deductibles as shall from time to time be approved by the Mortgagee;

			
	
			
				 (b)
			

			
	
			
			in the case of the protection and indemnity Insurances referred to in subsection (i)(c) above payable in lawful money of the United States of America, to the full extent commercially available and to include provisions as to loss payees and prior notice of cancellation in form and substance satisfactory to the Mortgagee; and

			
	
			
				 (c)
			

			
	
			
			with first class insurance companies, underwriters and protection and indemnity associations or clubs with a rating from Standard & Poor’s of at least BBB as shall from time to time be approved by the Mortgagee (hereinafter called the “Insurers”);

		
			 
		

		
			8
		

		
			 
		

		 

 

			
	
			
				 (iii)
			(a) to renew all such Insurances or cause or procure the same to be renewed before the relevant policies or contracts expire and (b) to procure that the Insurers or the firm of insurance brokers referred to herein below shall promptly confirm in writing to the Mortgagee at least fourteen (14) days prior to all insurance renewals;

			
	
			
				 (iv)
			to procure concurrently with the execution hereof and thereafter at intervals of not more than twelve (12) calendar months, a detailed report from a firm of independent marine insurance brokers, appointed by the Owner and acceptable to the Mortgagee, with respect to the Insurances together with their opinion to the Mortgagee that the Insurances comply with the provisions of this Section 5(B), such report and opinion to be addressed and delivered promptly to the Mortgagee and the costs of such report and opinion to be for the account of the Owner;

			
	
			
				 (v)
			to cause the said independent marine insurance brokers or the Insurers to agree to use reasonable efforts to advise the Mortgagee promptly of any failure to renew any of the Insurances and of any default in payment of any premium and of any other act or omission on the part of the Owner of which they have knowledge and which might, in their opinion, invalidate or render unenforceable, or cause the lapse of or prevent the renewal or extension of, in whole or in part, any Insurances on the Vessel;

			
	
			
				 (vi)
			to cause the said independent marine insurance brokers to agree to mark their records and to use their best efforts to promptly advise the Mortgagee that such Insurances have been renewed or replaced with new insurance which complies with the provisions of this Section 5(B);

			
	
			
				 (vii)
			duly and punctually to pay or to cause duly and punctually to be paid all premiums, calls, contributions or other sums payable in respect of all such Insurances, to produce or to cause to be produced all relevant receipts when so required by the Mortgagee and duly and punctually to perform and observe or to cause duly and punctually to be performed and observed any other obligations and conditions under all such Insurances;

			
	
			
				 (viii)
			to execute or use reasonable efforts to cause to be executed such guarantees as may from time to time be required by any relevant protection and indemnity association or club;

			
	
			
				 (ix)
			to procure that all policies, binders, cover notes or other instruments of the Insurances referred to in subsections (i)(a) and (b) above shall be taken out in the name of the Owner, with the Mortgagee as an additional assured, the Owner to ensure that the Mortgagee is not liable for any premiums thereby, as its or their respective interests may appear, and shall incorporate a loss payable clause naming the Mortgagee as loss payee and first priority mortgagee prepared in compliance with the terms of this Mortgage and such loss payable clause to be in any event in form and substance acceptable to the Mortgagee and all policies, binders, cover notes or other instruments referred to in subsection (i) shall provide (a) for prompt notice to be given to the Mortgagee before cancellation of insurance for any reason whatsoever and for a waiver of liability for payment of premiums as to the Mortgagee; provided, however, that

		
			 
		

		
			9
		

		
			 
		

		

		

		 

 

		unless otherwise required by the Mortgagee by notice to the underwriters, although all losses under such Insurances are payable to the Mortgagee, in case of any such losses involving any damage to the Vessel the underwriters may pay direct for the repair, salvage and other charges involved or, if the Owner shall have first fully repaired the damage or paid all of the salvage and other charges, may pay the Owner as reimbursement therefor, provided, further, however, that if such damage involves a loss in excess of US$500,000, or its equivalent, the underwriters shall not make such payment without first obtaining the written consent thereto of the Mortgagee and (b) in the event that the Vessel shall be insured under any form of fleet cover, written undertakings that the brokers, underwriters, association or club (as the case may be) will not set off claims relating to the Vessel against premiums, calls or contributions in respect of any other vessel or other insurance and that the insurance cover of the Vessel will not be cancelled by reason of non-payment of premiums, calls or contributions relating to any other vessel or other insurance; the brokers shall also undertake in writing to issue a separate policy in respect of either or both Vessels if requested to do so by the Mortgagee;
		

			
	
			
				 (x)
			to procure that all entries, policies, binders, cover notes or other instruments of the Insurances referred to in sub-section (i)(c) above incorporate a loss payable clause naming the Mortgagee as loss payee and first priority mortgagee prepared in compliance with the terms of this Mortgage and such loss payable clause to be in any event in form and substance acceptable to the Mortgagee and shall provide for prompt notice to be given to the Mortgagee before cancellation of insurance for any reason whatsoever and for a waiver of liability for payment of premiums, backcalls and assessments as to the Mortgagee, it being agreed that although such insurance is payable to the Mortgagee so long as no Event of Default has occurred and is continuing under this Mortgage, any loss payments under any such insurance on the Vessel may be paid directly to the Owner to reimburse it for any loss, damage or expenses incurred by it and covered by such insurance or to the Person to whom any liability covered by such insurance has been incurred;

			
	
			
				 (xi)
			to procure that originals or photocopies of all such instruments of Insurances as are referred to in sub-sections (ix) and (x) above shall be from time to time deposited with the Mortgagee after receipt by the Owner thereof and that the Insurers shall, if so requested by the Mortgagee, furnish the Mortgagee with a letter or letters of undertaking in such form as may be reasonably required by the Mortgagee in respect of such Insurances;

			
	
			
				 (xii)
			not to change any terms of any Insurances or suffer them to be changed, or change underwriters of any Insurances or suffer them to be changed, without the Mortgagee's prior written approval;

			
	
			
				 (xiii)
			not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of all policies, binders, cover notes or other instruments of the Insurances (including any warranties express or implied therein) without first obtaining the written consent of the Insurers to such employment (if required by such Insurers) and complying with such requirements as to extra premiums or otherwise as the Mortgagee and/or the Insurers may prescribe;

		
			 
		

		
			10
		

		
			 
		

		 

 

			
	
			
				 (xiv)
			to do all things necessary and proper, and execute and deliver all documents and instruments to enable the Mortgagee to collect or recover any moneys to become due the Mortgagee in respect of the Insurances; and

			
	
			
				 (xv)
			to obtain an assignment from any Person other than the Owner who is named as an assured or co-assured in any insurance policy covering a Vessel, such assignment to be made to the Mortgagee upon such terms and conditions as the Mortgagee may require.

			
	
			
				 (C)
			To keep and to cause to be kept the Vessel in a good and efficient state of repair so as to maintain her present class with its Classification Society and so as to comply with the provisions of all laws, regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws of the Republic of the Marshall Islands, to procure that the Vessel’s Classification Society make available to the Mortgagee, upon its request, such information and documents in respect of the Vessel as are maintained in the records of such Classification Society, and to procure that all repairs to or replacements of any damaged, worn or lost parts or equipment be effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessel;

			
	
			
				 (D)
			To submit or to cause the Vessel to be submitted on a timely basis to such periodic or other surveys as may be required for classification purposes and, if requested by the Mortgagee, to supply or to cause to be supplied to the Mortgagee copies of all survey and inspection reports and confirmations of class issued in respect thereof;

			
	
			
				 (E)
			To permit the Mortgagee, by surveyors or other Persons appointed by it in its behalf, to board the Vessel at all reasonable times for the purpose of inspecting her condition or for the purpose of satisfying themselves in regard to proposed or executed repairs and compliance by the Owner with relevant covenants in the Transaction Documents and to afford or to cause to be afforded all proper facilities for such inspections, provided that such inspections will cause no undue delay to the Vessel;

			
	
			
				 (F)
			(i) To pay and discharge or to cause to be paid and discharged all debts, damages and liabilities whatsoever which have given or may give rise to maritime or possessory liens on or claims enforceable against the Vessel except to the extent permitted by Section 5(N) hereof and (ii) in event of arrest of the Vessel pursuant to legal process or in event of her detention in exercise or purported exercise of any such lien as aforesaid to procure the release of the Vessel from such arrest or detention within fourteen (14) days of receiving notice thereof by providing bail or otherwise as the circumstances may require;

			
	
			
				 (G)
			Not to employ the Vessel or suffer her employment in any trade or business which is forbidden by the laws of the Republic of the Marshall Islands or is otherwise illicit or in carrying illicit or prohibited goods or in any manner whatsoever which may render her liable to condemnation in a Prize Court or to destruction, seizure or confiscation and in event of hostilities in any part of the world (whether war be declared or not), not to employ the Vessel or suffer her employment in carrying any contraband goods or to enter or trade to any zone which is declared a war zone by any government or by the Vessel's War Risks Insurers unless the required extra war risk insurance cover has been obtained for the Vessel;

		
			 
		

		
			11
		

		
			 
		

		

		

		 

 

		(H) Promptly to furnish or to use its best efforts to cause promptly to be furnished to the Mortgagee all such information as the Mortgagee may from time to time reasonably request regarding the Vessel, her employment, position and engagements, particulars of all towages and salvages and copies of all charters and other contracts for her employment or otherwise howsoever pertaining to the Vessel;
		

		
			(I) Promptly after learning of the same to notify or cause to be notified the Mortgagee forthwith in writing of:
		

			
	
			
				 (i)
			any accident to the Vessel involving repairs the cost whereof will or is likely to exceed US$500,000 (or the equivalent in any other currency);

			
	
			
				 (ii)
			any occurrence in consequence whereof the Vessel has become or is likely to become a Total Loss;

			
	
			
				 (iii)
			any material requirement or recommendation made by any Insurer or Classification Society or by any competent authority which is not complied with in accordance with reasonable commercial practices;

			
	
			
				 (iv)
			any arrest of the Vessel or the exercise or purported exercise of any lien on the Vessel or her Earnings; and

			
	
			
				 (v)
			any occurrence of circumstances forming the basis of an Environmental Claim.

		
			(J) To keep or to cause to be kept proper books of account of the Owner in respect of the Vessel and her Earnings and, if requested by the Mortgagee, to make or to cause to be made such books available for inspection on behalf of the Mortgagee and furnish or cause to be furnished satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being regularly paid and that all deductions from crew's wages in respect of any tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress;
		

		
			(K) To assign and provide that Requisition Compensation is applied in accordance with Section 8 hereof as if received in respect of the sale of the Vessel;
		

		
			(L) [Intentionally Omitted];
		

		
			(M) To keep the Vessel registered under the flag of the Republic of the Marshall Islands and to do or suffer to be done nothing whereby such registration may be forfeited or imperiled;
		

		
			(N) To keep and to cause the Vessel to be kept free and clear of all liens, charges, mortgages and encumbrances except in favor of the Mortgagee and as otherwise provided for in
		

		
			 
		

		
			12
		

		
			 
		

		

		

		 

 

		the Credit Agreement, and except for crew's wages remaining unpaid in accordance with reasonable commercial practices or for collision or salvage, liens in favor of suppliers of necessaries or other similar liens arising in the ordinary course of its business, accrued for not more than thirty (30) days or, if requested by the Mortgagee by written notice to the Owner to discharge such lien, not more than twenty one (21) days from the date of such written notice (unless any such lien is being contested in good faith and by appropriate proceedings or other acts and the Owner shall have set aside on its books adequate reserves with respect to such lien and so long as such deferment in payment shall not subject the Vessel to forfeiture or loss) or liens for loss, damage or expense which are fully covered by insurance, subject to applicable deductibles satisfactory to the Mortgagee, or in respect of which a bond or other security has been posted by or on behalf of the Owner with the appropriate court or other tribunal to prevent the arrest or secure the release of the Vessel from arrest, and not, except in favor of the Mortgagee and as otherwise provided for in the Credit Agreement, to pledge, charge, assign or otherwise encumber her Insurances, Earnings or Requisition Compensation or to suffer the creation of any such pledge, charge, assignment or encumbrance as aforesaid to or in favor of any Person other than the Mortgagee or as otherwise provided for in the Credit Agreement;
		

			
	
			
				 (O)
			Not, without the previous consent in writing of the Mortgagee (and then only subject to such terms and conditions as the Mortgagee may impose), to sell (otherwise than on an arm’s length basis provided that the proceeds of such sale are distributed in accordance with Section 5.3 of the Credit Agreement), abandon or otherwise dispose of the Vessel or any interest therein;

			
	
			
				 (P)
			To pay promptly to the Mortgagee all moneys (including reasonable fees of counsel) whatsoever which the Mortgagee shall or may expend, be put to or become liable for, in or about the protection, maintenance or enforcement of the security created by this Mortgage or in or about the exercise by the Mortgagee of any of the powers vested in it hereunder and to pay interest thereon at the Default Rate from the date whereon such expense or liability was incurred by the Mortgagee;

			
	
			
				 (Q)
			To comply with all declaration and reporting requirements imposed by the protection and indemnity club or insurers including, without limitation, the quarterly declarations required by the U.S. Oil Pollution Section 20/2/91, and to pay all premiums required to maintain in force the necessary U.S. Oil Pollution Cover;

			
	
			
				 (R)
			To comply with and satisfy all the requisites and formalities established by the laws of the Republic of the Marshall Islands to perfect this Mortgage as a legal, valid and enforceable first and preferred lien upon the Vessel and to furnish to the Mortgagee from time to time such proofs as the Mortgagee may reasonably request for its satisfaction with respect to the compliance by the Owner with the provisions of this Section 5(R);

			
	
			
				 (S)
			Not without the previous consent of the Mortgagee in writing, which consent shall not be unreasonably withheld, to enter into any charter party agreement with respect to the Vessel, other than an Approved Charter;

		
			 
		

		
			13
		

		
			 
		

		

		

		 

 

		(T) To place or to cause to be placed and at all times and places to retain or to cause to be retained a properly certified copy of this Mortgage on board the Vessel with her papers and cause this Mortgage to be exhibited to any and all Persons having business with the Vessel which might give rise to any lien thereon other than liens for crew's wages and salvage, and to any representative of the Mortgagee on demand; and to place and keep or to cause to be placed and kept prominently displayed in the chart room and in the Master's cabin of the Vessel a framed printed notice in plain type in English of such size that the paragraph of reading matter shall cover a space not less than six inches wide by nine inches high, reading as follows:
		

		
			“NOTICE OF MORTGAGE
		

		
			This Vessel is owned by EAST GULF SHIPHOLDING, INC., and is subject to a first preferred mortgage (the “First Mortgage”) in favor of DVB BANK SE, as security trustee, under the authority of Chapter 3 of the Maritime Act 1990 of the Republic of the Marshall Islands. Under the terms of the said First Mortgage, neither the Owner nor any charterer nor the Master of this Vessel nor any other Person has any power, right or authority whatever to create, incur or permit to be imposed upon this Vessel any lien or encumbrance except as permitted thereunder.”
		

		
			6. Mortgagee's Right to Cure. Without prejudice to any other rights of the Mortgagee hereunder:
		

			
	
			
				 (i)
			in the event that the provisions of Section 5(B) hereof or any of them shall not be complied with, the Mortgagee shall be at liberty, but not obligated, to effect and thereafter to replace, maintain and renew all such Insurances upon the Vessel as it in its sole discretion may deem advisable;

			
	
			
				 (ii)
			in the event that the provisions of Section 5(C) and/or 5(D) hereof or any of them shall not be complied with, the Mortgagee shall be at liberty, but not obligated, to arrange for the carrying out of such repairs and/or surveys as it deems expedient or necessary; and

			
	
			
				 (iii)
			in the event that the provisions of Section 5(F) hereof or any of them shall not be complied with, the Mortgagee shall be at liberty, but not obligated, to pay and discharge all such debts, damages and liabilities as are therein mentioned and/or to take any such measures as it deems expedient or necessary for the purpose of securing the release of the Vessel;

		
			Any and all expenses incurred by the Mortgagee (including fees of counsel) in respect of its performances under the foregoing subsections (i), (ii) and (iii) shall be paid by the Owner on demand, with interest thereon at the rate provided for in Section 5(P) hereof from the date when such expenses were incurred by the Mortgagee.
		

		
			 
		

		
			14
		

		
			 
		

		

		

		 

 

		7.Events of Default and Remedies.
		

		
			(A) In case any one or more of the following events herein termed an “Event of Default” shall occur and shall not have been received:
		

			
	
			
				 (i)
			a default in the payment when due of all or any part of the Obligations;

			
	
			
				 (ii)
			an Event of Default stipulated in Section 8.1 of the Credit Agreement shall occur and be continuing;

			
	
			
				 (iii)
			a default by the Owner occurs in the due and punctual observance of any of the covenants contained in Section 5 of this Mortgage (other than those listed in clause (iv) below); or

			
	
			
				 (iv)
			a default by the Owner occurs in the due and punctual observance of any of the covenants contained in subsections (A), (D), (E), (H), (J), or (P) of Section 5 of this Mortgage and such default continues unremedied for a period of ten (10) days; or

			
	
			
				 (v)
			it becomes impossible or unlawful for the Owner to fulfill any of the covenants and obligations contained in this Mortgage and the Mortgagee considers that such impossibility or illegality will have a material adverse effect on its rights under this Mortgage or the enforcement thereof.

		
			(B) If any Event of Default shall occur, the Mortgagee shall be entitled:
		

			
	
			
				 (i)
			to demand payment by written notice of the Obligations, whereupon such payment shall be immediately due and payable, anything contained in the Credit Agreement, the Note, this Mortgage, any of the other Transaction to the contrary notwithstanding and without prejudice to any other rights and remedies of the Mortgagee under the Credit Agreement, the Note, this Mortgage or any of the other Transaction Documents, provided, however, that if, before any sale of the Vessel, all defaults shall have been remedied in a manner satisfactory to the Mortgagee, the Mortgagee may waive such defaults by written notice to the Owner; but no such waiver shall extend to or affect any subsequent or other default or impair any rights and remedies consequent thereon;

			
	
			
				 (ii)
			at any time and as often as may be necessary to take any such action as the Mortgagee may in its discretion deem advisable for the purpose of protecting the security created by this Mortgage and each and every expense or liability (including reasonable fees of counsel) so incurred by the Mortgagee in or about the protection of such security shall be repayable to it by the Owner promptly after demand, together with interest thereon at the Default Rate from the date when such expense or liability was incurred by the Mortgagee. The Owner shall promptly execute and deliver to the Mortgagee such documents or cause promptly to be executed and delivered to the Mortgagee such documents, if any, and shall

		
			 
		

		
			15
		

		
			 
		

		

		

		 

 

		promptly do and perform such acts, if any, as in the opinion of the Mortgagee or its counsel may be necessary or advisable to facilitate or expedite the protection, maintenance and enforcement of the security created by this Mortgage;
		

			
	
			
				 (iii)
			to exercise all the rights and remedies in foreclosure and otherwise given to the Mortgagee by any applicable law, including those under the provisions of the Maritime Law;

			
	
			
				 (iv)
			to take possession of the Vessel, wherever the same may be, without prior demand and without legal process (when permissible under applicable law) and cause the Owner or other Person in possession thereof forthwith upon demand of the Mortgagee to surrender to the Mortgagee possession thereof as demanded by the Mortgagee;

			
	
			
				 (v)
			to require that all policies, contracts and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be forthwith delivered to such adjusters, brokers or other insurers as the Mortgagee may nominate;

			
	
			
				 (vi)
			to collect, recover, compromise and give a good discharge for all claims then outstanding or thereafter arising under the Insurances or any of them and to take over or institute (if necessary using the name of the Owner) all such proceedings in connection therewith as the Mortgagee in its absolute discretion deems advisable and to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefor;

			
	
			
				 (vii)
			to discharge, compound, release or compromise claims against the Owner in respect of the Vessel which have given or may give rise to any charge or lien thereon or which are or may be enforceable by proceedings thereagainst;

			
	
			
				 (viii)
			to take appropriate judicial proceedings for the foreclosure of this Mortgage and/or for the enforcement of the Mortgagee's rights hereunder or otherwise; recover judgment for any amount due in respect of the Credit Agreement, the Note, this Mortgage or any of the other Transaction Documents and collect the same out of any property of the Owner;

			
	
			
				 (ix)
			to sell the Vessel by private contract at any time, free from any claim of or by the Owner of any nature whatsoever;

			
	
			
				 (x)
			to sell the Vessel at public auction (with power for the Security Trustee to purchase the Vessel at any such public auction and to set off the purchase price against all or any part of the Obligations), free from any claim of or by the Owner of any nature whatsoever by first giving notice of the time and place of sale with a general description of the property in the following manner:

		
			 
		

		
			16
		

		
			 
		

		 

 

			
	
			
				 (a)
			

			
	
			
			by publishing such notice for ten (10) consecutive days in a daily newspaper of general circulation published in New York City;

			
	
			
				 (b)
			

			
	
			
			if the place of sale should not be New York City, then also by publication of a similar notice in a daily newspaper, if any, published at the place of sale; and

			
	
			
				 (c)
			

			
	
			
			by sending a similar notice by telecopy confirmed by registered mail to the Owner at its address hereinafter set forth at least fourteen (14) days prior to the date of sale.

		
			Such sale of the Vessel may be held at such place as the Mortgagee in such notices may have specified, or such sale may be adjourned by the Mortgagee from time to time by announcement at the time and place appointed for such sale or for such adjourned sale and without further notice or publication the Mortgagee may make such sale at the time and place to which the same shall be so adjourned; and such sale may be conducted without bringing the Vessel to the place designated for such sale and in such manner as the Mortgagee may deem to be for its best advantage, and the Mortgagee may become the purchaser at such sale.
		

			
	
			
				 (xi)
			

			
	
			
			pending sale of the Vessel (either directly or indirectly) to manage, charter, lease, insure, maintain and repair the Vessel and to employ or lay up the Vessel upon such terms, in such manner and for such period as the Mortgagee in its absolute discretion deems expedient and for the purpose aforesaid the Mortgagee shall be entitled to do all acts and things incidental or conducive thereto and in particular to enter into such arrangements respecting the Vessel, her insurance, management, maintenance, repair, classification and employment in all respects as if the Mortgagee were the owner of the Vessel and without being responsible for any loss thereby incurred;

			
	
			
				 (xii)
			

			
	
			
			to recover from the Owner on demand any such losses as may be incurred by the Mortgagee in or about the exercise of the powers vested in the Mortgagee under Section 7(B)(xi) above with interest thereon at the Default Rate from the date when such losses were incurred by the Mortgagee; and

			
	
			
				 (xiii)
			

			
	
			
			to recover from the Owner on demand all expenses, payments and disbursements (including fees and expenses of counsel) incurred by the Mortgagee in or about or incidental to the exercise by it of any of the powers vested in it hereunder together with interest thereon at the Default Rate from the date when such expenses, payments or disbursements were incurred by it;

		
			PROVIDED, ALWAYS, that any sale of the Vessel or any interest therein by the Mortgagee pursuant to Section 7(B)(x) above shall operate to divest all right, title and interest of the Owner, its successors and assigns, in or to the Vessel so sold and upon such sale the purchaser shall not be bound to see or inquire whether the Mortgagee's power of sale has arisen in the manner herein
		

		
			 
		

		
			17
		

		
			 
		

		

		

		 

 

		provided and the sale shall be deemed to be within the power of the Mortgagee and the receipt of the Mortgagee for the purchase money shall effectively discharge the purchaser who shall not be concerned with the manner of application of the proceeds of sale or be in any way answerable therefor.
		

		
			In case the Mortgagee shall have proceeded to enforce any right, power or remedy under this Mortgage by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Mortgagee, then and in every such case the Owner and the Mortgagee shall be restored to their former positions and rights hereunder with respect to the property, subject or intended to be subject to this Mortgage, and all rights, remedies and powers of the Mortgagee shall continue as if no such proceedings had been taken.
		

		
			(C)Notwithstanding the foregoing, it is understood that, other than Clause (c)
		

		
			of the definition of Total Loss, a Total Loss of the Vessel which is covered by the insurance maintained by the Owner pursuant to Section 5(B) hereof shall not be deemed to be a default under this Mortgage, the Credit Agreement, the Note, the other Security Documents, or any of them.
		

		
			8. Application of Proceeds. The proceeds of any sale made either under the power of sale hereby granted to the Mortgagee or under a judgment or decree in any judicial proceedings for the foreclosure of this Mortgage or for the enforcement of any remedy granted to the Mortgagee hereunder, any net earnings arising from the management, charter or other use of the Vessel by the Mortgagee under any of the powers herein contained or by law provided and the proceeds of any and all Insurances and any claims for damages on account of the Vessel or the Owner of any nature whatsoever and any Requisition Compensation, shall be applied as follows:
		

		
			First:To the payment of all costs and expenses (together with interest
		

		
			thereon as hereinbefore provided) incurred by the Mortgagee, the Agents and/or the Lenders, including the compensation of their respective agents and attorneys, by reason of any sale, retaking, management or operation of the Vessel and all other sums payable to the Mortgagee, the Agents and/or the Lenders hereunder by reason of any expenses or liabilities incurred or advances made by it for the protection, maintenance and enforcement of the security or of any of its rights hereunder or in the pursuit of any remedy hereby conferred; and at the option of the Mortgagee to the payment of all taxes, assessments or liens claiming priority over the lien of this Mortgage;
		

		
			Second:To the payment of the Obligations in the manner provided in the
		

		
			Credit Agreement; and
		

		
			 
		

		
			18
		

		
			 
		

		

		

		 

 

		Third:Any surplus thereafter remaining, to the Owner or to the Owner's successors in interest or assigns, or to whomsoever may be lawfully entitled to receive the same.
		

		
			In the event that the proceeds are insufficient to pay the amounts specified in paragraphs “First” and “Second” above, the Mortgagee shall be entitled to collect the balance from the Owner or any other Person liable therefor.
		

			
	
			
				 9.
			No Waiver. No delay or omission of the Mortgagee to exercise any right or power vested in it under the Credit Agreement, the Note, this Mortgage, the other Transaction Documents or any of them shall impair such right or power or be construed as a waiver thereof or as acquiescence in any default by the Owner hereunder, nor shall the acceptance by the Mortgagee of any payments in connection with this Mortgage from any source be deemed a waiver hereunder. However, if at any time after an Event of Default and prior to the actual sale of the Vessel by the Mortgagee or prior to any foreclosure proceedings the Owner cures all Events of Default and pays all expenses, advances and damages to the Mortgagee consequent on such Events of Default, with interest at the Default Rate from the date when such expenses, advances and damages were incurred, then the Mortgagee may accept such cure and payment and restore the Owner to its former position, but such action shall not affect any subsequent Event of Default or impair any rights consequent thereon.

			
	
			
				 10.
			Delegation of Power. The Mortgagee shall be entitled at any time and as often as may be expedient to delegate all or any of the powers and discretions vested in it by this Mortgage (including the power vested in it by virtue of Section 12 hereof) in such manner and upon such terms and to such Persons as the Mortgagee in its absolute discretion may deem advisable.

			
	
			
				 11.
			Indemnity. Without prejudice to any other rights and remedies of the Mortgagee under the Credit Agreement, the Note, this Mortgage or any of the other Transaction Documents, the Owner hereby agrees and undertakes to indemnify the Mortgagee against all obligations and liabilities whatsoever and whensoever arising which the Mortgagee may incur in good faith in respect of, in relation to or in connection with the Vessel or otherwise howsoever in relation to or in connection with the enforcement of the Mortgagee's rights hereunder or under any of the other Transaction Documents to which the Owner is a party.

			
	
			
				 12.
			Power of Attorney.

		
			(A) The Owner hereby irrevocably appoints the Mortgagee as its attorney-in-fact for the duration of the Security Period to do in its name or in the name of the Owner all acts which the Owner, or its successors or assigns, could do in relation to the Vessel, including without limitation, to demand, collect, receive, compromise, settle and sue for (insofar as the Mortgagee lawfully may) all freights, hire, earnings, issues, revenues, income and profits of the Vessel, and all amounts due from underwriters under the Insurances as payment of losses or as return premiums or otherwise, salvage awards and recoveries, recoveries in general average or otherwise, and all other sums due or to become due to the Owner or in respect of the Vessel, and to make, give and execute in the name of the Owner, acquittance, receipts, releases or other
		

		
			 
		

		
			19
		

		
			 
		

		

		

		 

 

		discharges for the same, whether under seal or otherwise, to take possession of, sell or otherwise dispose of or manage or employ, the Vessel, to execute and deliver charters and a bill of sale with respect to the Vessel, and to endorse and accept in the name of the Owner all checks, notes, drafts, warrants, agreements and all other instruments in writing with respect to the foregoing; PROVIDED, HOWEVER, that, unless the context otherwise permits under this Mortgage, such power shall not be exercisable by or on behalf of the Mortgagee unless and until any Event of Default shall occur and shall not be exercisable after all defaults have been cured.
		

		
			(B) The exercise of the power granted in this Section 12 by or on behalf of the Mortgagee shall not require any Person dealing with the Mortgagee to conduct any inquiry as to whether any such Event of Default has occurred and is continuing, nor shall such Person be in any way affected by notice that any such Event of Default has not occurred nor is continuing, and the exercise by the Mortgagee of such power shall be conclusive evidence of its right to exercise the same.
		

			
	
			
				 13.
			Appointment of Receiver. If any legal proceedings shall be taken to enforce any right under this Mortgage, the Mortgagee shall be entitled as a matter of right to the appointment of a receiver of the Vessel and of the freights, hire, earnings, issues, revenues, income and profits due or to become due and arising from the operation thereof.

			
	
			
				 14.
			Commencement of Proceedings. The Mortgagee shall have the right to commence proceedings in the courts of any country having competent jurisdiction and in particular the Mortgagee shall have the right to arrest and take action against the Vessel at whatever place the Vessel shall be found lying and for the purpose of any action which the Mortgagee may bring before the local court for the jurisdiction of such court or other judicial authority and the Owner agrees that for the purpose of proceedings against the Vessel any writ, notice, judgment or other legal process or documents may be served upon the Master of the Vessel (or upon anyone acting as the Master) and that such service shall be deemed good service on the Owner for all purposes.

			
	
			
				 15.
			Partial Invalidity. In the event that any provision or provisions of this Mortgage shall be declared invalid, void or otherwise inoperative by any present or future court of competent jurisdiction in any country, the Owner will, without prejudice to any other right and remedy of the Mortgagee under the Credit Agreement, the Note, this Mortgage, the other Transaction Documents or any of them, execute and deliver such other and further instruments and do such things as in the opinion of the Mortgagee or its counsel will be necessary or advisable to carry out the true intent and spirit of this Mortgage. In any event, any such declaration of partial invalidity shall not affect the validity of any other provision or provisions of this Mortgage, or the validity of this Mortgage as a whole.

			
	
			
				 16.
			Cumulative Remedies. Each and every power and remedy in this Mortgage specifically given to the Mortgagee shall be in addition to every other power and remedy herein or in the Credit Agreement, the Note or the other Transaction Documents specifically given or now or hereafter existing at law, in equity, admiralty, or by statute, and each and every power and remedy whether specifically in this Mortgage or in the Credit Agreement, the Note or the other Transaction Documents given or otherwise existing may be exercised from time to time

		
			 
		

		
			20
		

		
			 
		

		

		

		 

 

		and as often and in such order as may be deemed expedient by the Mortgagee, and the exercise or the beginning of the exercise of any such power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other power or remedy under the Credit Agreement, the Note, this Mortgage or any other Transaction Documents.
		

			
	
			
				 17.
			Recordation of Mortgage. For the purpose of recording this First Preferred Mortgage the total amount is Thirty Two Million Dollars ($32,000,000) (exclusive of interest, expenses and fees) and interest and performance of mortgage covenants. The discharge amount is the same as the total amount and there is no separate discharge amount for the Vessel. It is not intended that this Mortgage shall include property other than the Vessel, and it shall not include property other than the Vessel as the term “vessel” is used in the Maritime Law. Notwithstanding the foregoing, for property other than the Vessel, if any should be determined to be covered by this Mortgage, the discharge amount is zero point zero one percent (0.01%) of the total amount.

			
	
			
				 18.
			No Waiver of Preferred Status. Anything herein to the contrary notwithstanding, it is intended that nothing herein shall waive the preferred status of this Mortgage under the Maritime Law or under the corresponding provisions of any other jurisdiction in which it is sought to be enforced and that, if any provision or portion thereof herein shall be construed to waive the preferred status of this Mortgage, then such provision to such extent shall be void and of no effect.

			
	
			
				 19.
			Counterparts. This Mortgage may be executed in any number of counterparts each of which shall be an original but such counterparts shall together constitute but one and the same instrument.

			
	
			
				 20.
			Notices. Notices and other communications under this Mortgage shall be in writing and may be given by facsimile as follows:

		
			If to the Owner:
		

		
			East Gulf Shipholding, Inc.
		

		
			11 North Water Street
		

		
			Suite 18290
		

		
			Mobile, Alabama 36602
		

		
			Attention: Chief Financial Officer
		

		
			Facsimile No.: (251) 243 9121
		

		
			with a copy to:
		

		
			International Shipholding Corporation
		

		
			One Whitehall Street
		

		
			New York, New York 10004 Attention: Niels M. Johnsen Facsimile No.: (212) 514-5692
		

		
			If to the Mortgagee:
		

		
			21
		

		
			 
		

		

		

		 

 

		DVB Bank SE
		

		
			Park House
		

		
			16-18 Finsbury Circus
		

		
			London EC2M 7EB, United Kingdom
		

		
			Attention: Peter Attridge
		

		
			Department: Transaction and Loan Services
		

		
			 tls.london@dvbbank.com 
		

		
			Fax: +44 207 256 4352
		

		
			with a copy to:
		

		
			DVB TRANSPORT (US) LLC
		

		
			609 Fifth Avenue, 5th Floor
		

		
			New York, New York 10017, USA
		

		
			Facsimile: + 212 858 2664/+ 1 917 369 2196 Attention: Christoph Clauss/Matthew Galici  christoph.clauss@dvbbank.com/ matthew.galici@dvbbank.com
		

		
			or to such other address as either party shall from time to time specify in writing to the other. Any notice sent by facsimile shall be confirmed by letter dispatched as soon as practicable thereafter.
		

		
			Every notice or other communication shall, except so far as otherwise expressly provided by this Mortgage, be deemed to have been received (provided that it is received prior to 10 a.m. New York time; otherwise it shall be deemed to have been received on the next following Banking Day), in the case of a facsimile at the time of dispatch thereof (provided further that if the date of dispatch is not a Banking Day in the locality of the party to whom such notice or demand is sent it shall be deemed to have been received on the next following Banking Day in such locality), and in the case of a letter, at the time of receipt thereof.
		

			
	
			
				 21.
			Rights of Owner. Unless one or more Events of Default shall have occurred and be continuing, the Owner (a) shall be suffered and permitted to retain actual possession and use of the Vessel and (b) shall have the right, from time to time in its discretion, and without application to the Mortgagee, and without obtaining a release thereof by the Mortgagee, to dispose of, free from the lien hereof, any boilers, engines, machinery, masts, spars, sails, rigging, boats, anchors, cables, chains, tackle, apparel, furniture, fittings, equipment or any other appurtenances of the Vessel that are no longer useful, necessary, profitable or advantageous in the operation of the Vessel, first or simultaneously replacing the same by new boilers, engines, machinery, masts, spars, sails, rigging, boats, anchors, cables, chains, tackle, apparel, furniture, fittings, equipment or any other appurtenances of substantially equal value to the Owner, which shall forthwith become subject to the lien of this Mortgage.

			
	
			
				 22.
			Waiver; Amendment. None of the terms and conditions of this Mortgage may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by the Owner and the Mortgagee.

		
			 
		

		
			22
		

		
			 
		

		 

 

			
	
			
				 23.
			Successors and Assigns. All the covenants, promises, stipulations and agreements of the Owner and all the rights and remedies of the Mortgagee contained in this Mortgage shall bind the Owner, its successors and assigns, and shall inure to the benefit of the Mortgagee, its successors and assigns, whether so expressed or not.

			
	
			
				 24.
			Applicable Law. This Mortgage shall be governed by, and construed in accordance with, the laws of the Republic of the Marshall Islands.

			
	
			
				 25.
			Headings. In this Mortgage, section headings are inserted for convenience of reference only and shall be ignored in the interpretation of this Mortgage.

			
	
			
				 26.
			Intercreditor Agreement. This Mortgage shall be subject to the terms of the Intercreditor Agreement. Where a conflict exists between this Mortgage and the

		
			Intercreditor Agreement, the Intercreditor Agreement shall govern.
		

		
			[Signature Page to Follow]
		

		
			 
		

		
			23
		

		
			 
		

		

		

		 

 

		IN WITNESS WHEREOF, the Owner has executed this Mortgage by its duly authorized representative as of the day and year first above written.
		

		
			EAST GULF SHIPHOLDING, INC., as Owner
		

		
			By:___________________________________________________
		

		
			Name: Title:
		

		
			 
		

		

		

		 

 

		ACKNOWLEDGMENT OF MORTGAGE
		

		
			STATE OF NEW YORK)
		

		
			: ss:
		

		
			COUNTY OF NEW YORK)
		

		
			On the ____ day of ___________________________________, in the year 2015, before me, the
		

		
			undersigned personally appeared_________________________________, personally known to me or
		

		
			proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.
		

		
			Notary Public
		

		
			 
		

		

		

		 

 

		ACKNOWLEDGMENT OF MORTGAGE
		

		
			STATE OF NEW YORK)
		

		
			: ss:
		

		
			COUNTY OF NEW YORK)
		

		
			On the ____ day of___________________________________, in the year 2015, before me, the
		

		
			undersigned personally appeared_________________________________, personally known to me or
		

		
			proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.
		

		
			Notary Public
		

		
			 
		

		

		

		 

 

		Exhibit A
		

		
			 
		

		
			Credit Agreement
		

		
			 
		

		
			 
		

		

		

		 

 

		Exhibit B
		

		
			 
		

		
			 
		

		

		

		 

 

		EXHIBIT G-2
		

		
			PREFERRED MORTGAGE 
on the
		

		
			Marshall Islands Flag Vessel 
GREEN BAY
		

		
			EAST GULF SHIPHOLDING, INC., 
as Owner
		

		
			TO
		

		
			DVB BANK SE, 
as Mortgagee
		

		
			Dated as of April ____, 2015
		

		
			 
		

		

		

		 

 

		THIS PREFERRED MORTGAGE (this “Mortgage”) is made and given as of the _____ day of April, 2015 by EAST GULF SHIPHOLDING, INC., a corporation existing under the laws of the Republic of the Marshall Islands, with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (the “Owner”) in favor of DVB BANK SE, a banking corporation organized under the laws of the Federal Republic of Germany (“DVB”) with offices at Platz der Republik 6, D-60325 Frankfurt am Main, Germany, as security trustee (hereinafter, in such capacity, called the “Mortgagee”) for the Lenders (as such term is defined in the Credit Agreement (as hereinafter defined), pursuant to the terms of the Credit Agreement.
		

		
			WHEREAS:
		

			
	
			
				 A.
			The Owner is the sole owner of the whole of the vessel GREEN BAY Official No. 5904, of 59,217 gross tons, 17,775 net tons, built in 2007 (the “Vessel”); and registered and documented in the name of the Owner under the laws and flag of the Republic of the Marshall Islands.

			
	
			
				 B.
			Pursuant to a credit agreement dated as of April __, 2015 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”, a copy of the form of the Credit Agreement, without schedules or exhibits other than Schedule I is annexed hereto as Exhibit A), made by and among (1) the Owner, as borrower, (2) INTERNATIONAL SHIPHOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware, as guarantor (the “Guarantor”), (3) the banks and financial institutions listed on Schedule I thereto, as lenders (together with any bank or financial institution which becomes a Lender pursuant to Section 12 of the Credit Agreement, the “Lenders” and each a “Lender”), (4) DVB, as facility agent for the Lenders, (in such capacity, the “Facility Agent”) and as security trustee for the Lenders (in such capacity, the “Security Trustee”) and (5) DVB, as mandated lead arranger (together with the Lenders, the Facility Agent and the Security Trustee, the “Creditors”), the Security Trustee has agreed to serve in such capacity under the Credit Agreement and the Lenders have provided to the Owner a secured term loan in the amount of up to Thirty Two Million Dollars ($32,000,000) (the “Loan”).

			
	
			
				 C.
			The obligation of the Owner to repay the Loan under the Credit Agreement is evidenced by a promissory note dated April ____, 2015, from the Owner, to the order of the Facility Agent (the “Note”), a copy of the form of the Note being attached hereto as Exhibit B. The Loan, and interest, fees and commissions thereon are to be repaid or paid, as the case may be, as provided in the Credit Agreement. Unless otherwise defined herein, terms defined in the Credit Agreement shall have the same meaning when used herein.

			
	
			
				 D.
			Pursuant to Section 9.5 of the Credit Agreement, the Owner has effectuated the Borrower Restructuring.

			
	
			
				 E.
			Pursuant to Section 17 of the Credit Agreement, the Lenders have appointed the Mortgagee as facility agent and security trustee on their behalf with regard to, inter alia, the security conferred on such Lenders pursuant to the terms of the Credit Agreement, the Note and the Transaction Documents.

		
			 
		

		

		

		 

 

		F.The Owner, in order to secure the payment of the Obligations, as that term
		

		
			is defined in subsection 1(A)(v) hereof, and to secure the performance and observance of and compliance with all the covenants, terms and conditions in the Credit Agreement and in this Mortgage contained, expressed or implied, to be performed, observed and complied with by and on the part of the Owner, has duly authorized the execution and delivery of this Preferred Mortgage under and pursuant to the Maritime Law.
		

		
			N O W, T H E R E F O R E, T H I S M O R T G A G E W I T N E S S E T H:
		

		
			1.Definitions: In this Mortgage, unless the context otherwise requires:
		

		
			(A)(i)“Classification Society” when used herein shall have the same meaning as
		

		
			in the Credit Agreement;
		

			
	
			
				 (ii)
			

			
	
			
			“Earnings” includes all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Owner or the Security Trustee (net of charter commissions payable in respect of the Vessel) and which arise out of the use or operation of the Vessel, including (but not limited to): (a) except to the extent that they fall within paragraph (b) (1) all freight, hire and passage moneys, (2) compensation payable in event of requisition of the Vessel for hire, (3) remuneration for salvage and towage services, (4) demurrage and detention moneys, (5) damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Vessel, (6) all moneys which are at any time payable under Insurances in respect of loss of hire and, (b) if and whenever, with the consent of the Mortgagee, the Vessel is employed on terms whereby any moneys falling within (1) to (6) above are pooled or shared with any other Person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Vessel;

			
	
			
				 (iii)
			

			
	
			
			“Insurances” includes all policies and contracts of insurance and all entries of the Vessel in a protection and indemnity or war risks association or club which are from time to time taken out or entered into pursuant to this Mortgage in respect of the Vessel and its Earnings or otherwise howsoever in connection with the Vessel;

			
	
			
				 (iv)
			

			
	
			
			“Intercreditor Agreement” means that certain Pari Passu Intercreditor Agreement to be entered into by the Owner, the Guarantor and DVB in its capacity as (i) facility agent under the Credit Agreement and (ii) facility agent under that certain credit agreement originally entered into by and among (1) Waterman Steamship Corporation, as borrower, (2) International Shipholding Corporation, as guarantor, (3) the banks and financial institutions listed on Schedule I thereto, as lenders (4) DVB, as

		
			 
		

		

		

		 

 

		facility agent and security trustee for the lenders and (5) DVB, as mandated lead arranger, dated as of August 26, 2014, as amended by an Amendment No. 1 dated October 28, 2014 and an Amendment No. 2 dated November 24, 2014 and an Assignment and Assumption Agreement, dated December 29, 2014, whereby LCI Shipholdings, Inc. was deemed the ultimate borrower.
		

			
	
			
				 (v)
			

			
	
			
			“Maritime Law” means Chapter 3 of the Maritime Act 1990 of the Republic of the Marshall Islands;

			
	
			
				 (vi)
			

			
	
			
			“Obligations” means the obligations of the Owner or the Guarantor under or in connection with the Credit Agreement, the Note, this Mortgage, any other Security Document and any Transaction Documents, including but not limited to the obligations to repay the Loan when due;

			
	
			
				 (vii)
			

			
	
			
			“Person” when used herein shall have the same meaning as in the Credit Agreement;

			
	
			
				 (viii)
			

			
	
			
			“Requisition Compensation” means all moneys or other compensation payable and belonging to the Owner during the Security Period by reason of requisition for title or other compulsory acquisition of the Vessel or otherwise than by requisition for hire;

			
	
			
				 (ix)
			

			
	
			
			“Security Documents” when used herein shall have the same meaning as in the Credit Agreement;

			
	
			
				 (x)
			

			
	
			
			“Security Period” means the period commencing on the date hereof and terminating upon discharge of the security created by this Mortgage by indefeasible payment in full of all of the Obligations;

			
	
			
				 (xi)
			

			
	
			
			“Total Loss” means:

			
	
			
				 (a)
			

			
	
			
			actual, constructive or compromised or arranged total loss of the Vessel;

			
	
			
				 (b)
			

			
	
			
			requisition for title or other compulsory acquisition of the Vessel (otherwise than by requisition for hire) which shall continue for fourteen (14) days; or

			
	
			
				 (c)
			

			
	
			
			capture, seizure, arrest, detention or confiscation of the Vessel by any government or by Persons acting or purporting to act on behalf of any government unless the Vessel be released and restored to the Owner from such capture, seizure, arrest, detention or confiscation within fourteen (14) days after the occurrence thereof; and

		
			 
		

		

		

		 

 

		(xii) “Vessel” means the whole of the vessel described in Recital A hereof and includes its engines, machinery, boats, boilers, masts, rigging, anchors, chains, cables, apparel, tackle, outfit, spare gear, fuel, consumable or other stores, freights, belongings and appurtenances, whether on board or ashore, whether now owned or hereafter acquired, and all additions, improvements and replacements hereafter made in or to said vessel, or any part thereof, or in or to the stores, belongings and appurtenances aforesaid except such equipment or stores which, when placed aboard said vessel, do not become the property of the Owner.
		

		
			(B)In Section 5(B) hereof:
		

			
	
			
				 (i)
			

			
	
			
			“excess risks” means the proportion of claims for general average and salvage charges and under the ordinary running-down clause not recoverable in consequence of the value at which a vessel is assessed for the purpose of such claims exceeding her insured value;

			
	
			
				 (ii)
			

			
	
			
			“protection and indemnity risks” means the usual risks covered by a United States or an English or another protection and indemnity association or club acceptable to the Mortgagee including the proportion not recoverable in case of collision under the ordinary running-down clause; and

			
	
			
				 (iii)
			

			
	
			
			“war risks” means the risk of mines and all risks excluded from the standard form of United States marine policy by the War, Strikes and Related Exclusion Clause.

		
			(C)This Mortgage shall be read together with the Credit Agreement but in case of any
		

		
			conflict between the two, the provisions of the Credit Agreement shall prevail.
		

		
			2.Grant of Mortgage; Representations and Warranties.
		

		
			2.1 In consideration of the premises and of other good and valuable consideration, the receipt and adequacy whereof are hereby acknowledged, and in order to secure the payment of the Obligations and to secure the performance and observance of and compliance with the covenants, terms and conditions in the Credit Agreement, the Note, this Mortgage, the other Security Documents and the other Transaction Documents contained, the Owner has granted, conveyed and mortgaged and does by these presents grant, convey and mortgage to and in favor of the Mortgagee, its successors and assigns, the whole of the Vessel TO HAVE AND TO HOLD the same unto the Mortgagee, its successors and assigns, forever, upon the terms set forth in this Mortgage for the enforcement of the payment of the Obligations and to secure the performance and observance of and compliance with the covenants, terms and conditions in this Mortgage, the Credit Agreement, the Note, the other Security Documents and the other Transaction Documents contained;
		

		
			PROVIDED, ONLY, and the conditions of these presents are such that, if the Owner and/or its successors or assigns shall pay or cause to be paid to the Lenders, their
		

		
			 
		

		

		

		 

 

		respective successors and assigns, the Obligations as and when the same shall become due and payable in accordance with the terms of this Mortgage, the Credit Agreement, the Note and the other Transaction Documents and shall perform, observe and comply with all and singular of the covenants, terms and conditions in this Mortgage, the Credit Agreement, the Note and the other Transaction Documents contained, expressed or implied, to be performed, observed or complied with by and on the part of the Owner or its successors or assigns, all without delay or fraud and according to the true intent and meaning hereof and thereof, then, these presents and the rights of the Mortgagee under this Mortgage shall cease and determine and, in such event, the Mortgagee agrees by accepting this Mortgage, at the expense of the Owner, to execute all such documents as the Owner may reasonably require to discharge this Mortgage under the laws of the Republic of the Marshall Islands; otherwise to be and remain in full force and effect.
		

		
			2.2 The Owner hereby represents and warrants to the Mortgagee that:
		

			
	
			
				 (A)
			the Owner is a corporation duly domesticated, validly existing and in good standing under the laws of the Republic of the Marshall Islands qualified to own and register the Vessel under the Marshall Islands flag;

			
	
			
				 (B)
			the Owner lawfully owns the whole of the Vessel free from any security interest, debt, lien, mortgage, charge, encumbrance or other adverse interest, other than the encumbrance of this Mortgage and except as permitted by Section 5(N) hereof; and

			
	
			
				 (C)
			the Vessel is tight, staunch and strong and well and sufficiently tackled, appareled, furnished and equipped and in all respects seaworthy.

			
	
			
				 3.
			Payment of Obligations. The Owner hereby further covenants and agrees to pay the Obligations when due to the Mortgagee or its successors or assigns.

			
	
			
				 4.
			Covenants Regarding Security Granted Hereunder. It is declared and agreed that:

			
	
			
				 (A)
			The security created by this Mortgage shall be held by the Mortgagee as a continuing security for the payment of the Obligations and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby secured.

			
	
			
				 (B)
			Any settlement or discharge under this Mortgage between the Mortgagee and the Owner shall be conditional upon no security or payment to the Mortgagee or the Lenders, related to or which reduces the obligations secured hereby, by the Owner or any other Person being avoided or set-aside or ordered to be refunded or reduced by virtue of any provision or enactment relating to bankruptcy, insolvency or liquidation for the time being in force, and if such condition is not satisfied, the Mortgagee shall be entitled to recover from the Owner on demand the value of such security or the amount of any such payment as if such settlement or discharge had not occurred.

		
			 
		

		

		

		 

 

		(C) The rights of the Mortgagee under this Mortgage and the security hereby constituted shall not be affected by any act, omission, matter or thing which, but for this provision, might operate to impair, affect or discharge such rights and security, including without limitation, and whether or not known to or discoverable by the Owner, the Mortgagee or any other Person:
		

			
	
			
				 (i)
			any time or waiver granted to, or composition with, the Owner or any other Person; or

			
	
			
				 (ii)
			the taking, variation, compromise, renewal or release of or refusal or neglect to perfect or enforce any rights, remedies or securities against the Owner or any other Person; or

			
	
			
				 (iii)
			any legal limitation, disability, dissolution, incapacity or other circumstances relating to the Owner or any other Person; or

			
	
			
				 (iv)
			any amendment or supplement to the Credit Agreement, the Note, any of the Security Documents or the other Transaction Documents; or

			
	
			
				 (v)
			the unenforceability, invalidity or frustration of any obligations of the Owner or any other Person under the Credit Agreement, the Note, any of the Security Documents or the other Transaction Documents.

		
			(D) The Owner acknowledges and agrees that it has not received any security from any Person for the granting of this Mortgage and it will not take any such security without the prior written consent of the Mortgagee, and the Owner will hold any security taken in breach of this provision in trust for the Mortgagee.
		

		
			(E) Until the Obligations have been unconditionally and irrevocably paid and discharged in full to the satisfaction of the Mortgagee, the Owner shall not by virtue of any payment made under the Credit Agreement, the Note or this Mortgage on account of such moneys and liabilities or by virtue of any enforcement by the Mortgagee of its right under or the security constituted by this Mortgage:
		

			
	
			
				 (i)
			be entitled to exercise any right of contribution from any co-surety liable in respect of such moneys and liabilities under any other guarantee, security or agreement; or

			
	
			
				 (ii)
			exercise any right of set-off or counterclaim against any such co-surety; or

			
	
			
				 (iii)
			receive, claim or have the benefit of any payment, distribution, security or indemnity from any such co-surety; or

		
			 
		

		

		

		 

 

		(iv) unless so directed by the Mortgagee (which the Owner shall prove in accordance with such directions), claim as a creditor of any such co-surety in competition with the Mortgagee.
		

		
			The Owner shall hold in trust for the Mortgagee and forthwith pay or transfer (as appropriate) to the Mortgagee any such payment (including an amount equal to any such set-off), distribution or benefit of such security, indemnity or claim in fact received by it.
		

		
			(F)The Owner hereby irrevocably subordinates all of its rights of subrogation
		

		
			(whether contractual, statutory, under common law or otherwise) to the claims of the Mortgagee against any Person and all contractual, statutory or common law rights of contribution, reimbursement indemnification and similar rights and claims against any Person which arise in connection with, or as a result of, the Credit Agreement or this Mortgage until full and final payment of all of the Obligations.
		

		
			5. Affirmative Covenants and Insurances. The Owner further covenants with the Mortgagee and undertakes at all times throughout the Security Period:
		

			
	
			
				 (A)
			to maintain its existence as a corporation under the laws of the Republic of the Marshall Islands;

			
	
			
				 (B)
			(i) To insure and keep the Vessel insured or cause or procure the Vessel to be insured and to be kept insured at no expense to the Mortgagee (or to reimburse the Mortgagee therefor (including with regard to the insurance cover described in (f) below), using brokers, insurance companies, underwriters and/or War Risk/P&I Associations and on such terms as the Mortgagee shall from time to time approve in writing, in regard to:

			
	
			
				 (a)
			

			
	
			
			hull and machinery plus freight interest and hull interest and any other usual marine risks (such as excess risks);

			
	
			
				 (b)
			

			
	
			
			war risks (including war protection and indemnity liability with a separate limit not less than hull value and including the London blocking and trapping addendum or similar arrangement) covering, inter alia, the perils of confiscation, terrorism, expropriation, nationalization, seizure and blocking;

			
	
			
				 (c)
			

			
	
			
			protection and indemnity risks (including pollution risks and including protection and indemnity war risks in excess of the amount for war risks (hull) to the highest amount available in the market for the full value and tonnage of the Vessel, as approved in writing by the Mortgagee, and, in case of oil pollution liability risks, at the highest level of cover from time to time available under basic protection and indemnity clubs entry, currently One Billion United States Dollars ($1,000,000,000) covered by a protection and indemnity association which is a member of the International Group of Protection and Indemnity Associations (and to strictly comply with all rules of such association as they are in effect);

		
			 
		

		 

 

			
	
			
				 (d)
			

			
	
			
			freight, demurrage and defense risks;

			
	
			
				 (e)
			

			
	
			
			loss of hire in respect of any charter party agreement, with the minimum obtaining waiting period and a minimum cover of 90 days with an insured daily amount equal to at least (i) the daily rate under such charter party agreement or (ii) the daily running costs plus the daily debt service amount under the Credit Agreement;

			
	
			
				 (f)
			

			
	
			
			Mortgagee's interest insurance in an amount not less than one hundred twenty percent (120%) of the Facility and mortgagee’s additional perils (pollution) insurance against the possible consequences of pollution involving the Vessel including, without limitation, expropriation or sequestration of the Vessel or the imposition of a Lien or encumbrances of any kind having priority to the security interest granted to the Mortgagee or claims against the Lenders to be subscribed by the Mortgagee and, on demand, reimburse the Mortgagee for all premiums, costs and expenses paid or incurred by the Mortgagee from time to time;

			
	
			
				 (g)
			

			
	
			
			such other insurances as the Mortgagee may reasonably require (including without limitation political risks or mortgage rights insurance in the event that the Vessel is registered (or operated via a charter agreement fully and exclusively) in a jurisdiction that is not an Approved Jurisdiction);

		
			(ii) with respect to the Vessel, to effect the Insurances aforesaid or to cause or procure the same to be effected:
		

			
	
			
				 (a)
			

			
	
			
			in the cases of the Insurances referred to in sub-sections (i) (a) and (b) above, (x) in such amounts as shall be at least equivalent to the higher of (I) the Fair Market Value (as such term is defined in the Credit Agreement) of the Vessel at the most recent date at which such Fair Market Value shall have been determined pursuant to the terms of the Credit Agreement and (II) One Hundred Twenty percent (120%) of the total amount outstanding under the Facility (as such term is defined in the Credit Agreement), and all such insurance shall be payable in lawful money of the United States of America, and (y) upon such terms (including provisions as to named insureds and loss payees and prior notice of cancellation) and with such deductibles as shall from time to time be approved by the Mortgagee;

			
	
			
				 (b)
			

			
	
			
			in the case of the protection and indemnity Insurances referred to in subsection (i)(c) above payable in lawful money of the United States of America, to the full extent commercially available and to include provisions as to loss payees and prior notice of cancellation in form and substance satisfactory to the Mortgagee; and

		
			 
		

		

		

		 

 

		(c)with first class insurance companies, underwriters and protection and
		

		
			indemnity associations or clubs with a rating from Standard & Poor’s of at least BBB as shall from time to time be approved by the Mortgagee (hereinafter called the “Insurers”);
		

			
	
			
				 (iii)
			(a) to renew all such Insurances or cause or procure the same to be renewed before the relevant policies or contracts expire and (b) to procure that the Insurers or the firm of insurance brokers referred to herein below shall promptly confirm in writing to the Mortgagee at least fourteen (14) days prior to all insurance renewals;

			
	
			
				 (iv)
			to procure concurrently with the execution hereof and thereafter at intervals of not more than twelve (12) calendar months, a detailed report from a firm of independent marine insurance brokers, appointed by the Owner and acceptable to the Mortgagee, with respect to the Insurances together with their opinion to the Mortgagee that the Insurances comply with the provisions of this Section 5(B), such report and opinion to be addressed and delivered promptly to the Mortgagee and the costs of such report and opinion to be for the account of the Owner;

			
	
			
				 (v)
			to cause the said independent marine insurance brokers or the Insurers to agree to use reasonable efforts to advise the Mortgagee promptly of any failure to renew any of the Insurances and of any default in payment of any premium and of any other act or omission on the part of the Owner of which they have knowledge and which might, in their opinion, invalidate or render unenforceable, or cause the lapse of or prevent the renewal or extension of, in whole or in part, any Insurances on the Vessel;

			
	
			
				 (vi)
			to cause the said independent marine insurance brokers to agree to mark their records and to use their best efforts to promptly advise the Mortgagee that such Insurances have been renewed or replaced with new insurance which complies with the provisions of this Section 5(B);

			
	
			
				 (vii)
			duly and punctually to pay or to cause duly and punctually to be paid all premiums, calls, contributions or other sums payable in respect of all such Insurances, to produce or to cause to be produced all relevant receipts when so required by the Mortgagee and duly and punctually to perform and observe or to cause duly and punctually to be performed and observed any other obligations and conditions under all such Insurances;

			
	
			
				 (viii)
			to execute or use reasonable efforts to cause to be executed such guarantees as may from time to time be required by any relevant protection and indemnity association or club;

			
	
			
				 (ix)
			to procure that all policies, binders, cover notes or other instruments of the Insurances referred to in subsections (i)(a) and (b) above shall be taken out in the name of the Owner, with the Mortgagee as an additional assured, the Owner to ensure that the Mortgagee is not liable for any premiums thereby, as its or their respective interests may appear, and shall incorporate a loss payable clause naming the Mortgagee as loss payee and first priority mortgagee prepared in compliance with the terms of this Mortgage and such loss payable clause

		
			 
		

		

		

		 

 

		to be in any event in form and substance acceptable to the Mortgagee and all policies, binders, cover notes or other instruments referred to in subsection (i) shall provide (a) for prompt notice to be given to the Mortgagee before cancellation of insurance for any reason whatsoever and for a waiver of liability for payment of premiums as to the Mortgagee; provided, however, that unless otherwise required by the Mortgagee by notice to the underwriters, although all losses under such Insurances are payable to the Mortgagee, in case of any such losses involving any damage to the Vessel the underwriters may pay direct for the repair, salvage and other charges involved or, if the Owner shall have first fully repaired the damage or paid all of the salvage and other charges, may pay the Owner as reimbursement therefor, provided, further, however, that if such damage involves a loss in excess of US$500,000, or its equivalent, the underwriters shall not make such payment without first obtaining the written consent thereto of the Mortgagee and (b) in the event that the Vessel shall be insured under any form of fleet cover, written undertakings that the brokers, underwriters, association or club (as the case may be) will not set off claims relating to the Vessel against premiums, calls or contributions in respect of any other vessel or other insurance and that the insurance cover of the Vessel will not be cancelled by reason of non-payment of premiums, calls or contributions relating to any other vessel or other insurance; the brokers shall also undertake in writing to issue a separate policy in respect of either or both Vessels if requested to do so by the Mortgagee;
		

			
	
			
				 (x)
			to procure that all entries, policies, binders, cover notes or other instruments of the Insurances referred to in sub-section (i)(c) above incorporate a loss payable clause naming the Mortgagee as loss payee and first priority mortgagee prepared in compliance with the terms of this Mortgage and such loss payable clause to be in any event in form and substance acceptable to the Mortgagee and shall provide for prompt notice to be given to the Mortgagee before cancellation of insurance for any reason whatsoever and for a waiver of liability for payment of premiums, backcalls and assessments as to the Mortgagee, it being agreed that although such insurance is payable to the Mortgagee so long as no Event of Default has occurred and is continuing under this Mortgage, any loss payments under any such insurance on the Vessel may be paid directly to the Owner to reimburse it for any loss, damage or expenses incurred by it and covered by such insurance or to the Person to whom any liability covered by such insurance has been incurred;

			
	
			
				 (xi)
			to procure that originals or photocopies of all such instruments of Insurances as are referred to in sub-sections (ix) and (x) above shall be from time to time deposited with the Mortgagee after receipt by the Owner thereof and that the Insurers shall, if so requested by the Mortgagee, furnish the Mortgagee with a letter or letters of undertaking in such form as may be reasonably required by the Mortgagee in respect of such Insurances;

			
	
			
				 (xii)
			not to change any terms of any Insurances or suffer them to be changed, or change underwriters of any Insurances or suffer them to be changed, without the Mortgagee's prior written approval;

			
	
			
				 (xiii)
			not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of all policies, binders, cover notes or other instruments of the Insurances (including any warranties express or implied therein) without first obtaining the written consent of the Insurers to such employment (if required by such Insurers) and complying

		
			 
		

		

		

		 

 

		with such requirements as to extra premiums or otherwise as the Mortgagee and/or the Insurers may prescribe;
		

			
	
			
				 (xiv)
			to do all things necessary and proper, and execute and deliver all documents and instruments to enable the Mortgagee to collect or recover any moneys to become due the Mortgagee in respect of the Insurances; and

			
	
			
				 (xv)
			to obtain an assignment from any Person other than the Owner who is named as an assured or co-assured in any insurance policy covering a Vessel, such assignment to be made to the Mortgagee upon such terms and conditions as the Mortgagee may require.

			
	
			
				 (C)
			To keep and to cause to be kept the Vessel in a good and efficient state of repair so as to maintain her present class with its Classification Society and so as to comply with the provisions of all laws, regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws of the Republic of the Marshall Islands, to procure that the Vessel’s Classification Society make available to the Mortgagee, upon its request, such information and documents in respect of the Vessel as are maintained in the records of such Classification Society, and to procure that all repairs to or replacements of any damaged, worn or lost parts or equipment be effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessel;

			
	
			
				 (D)
			To submit or to cause the Vessel to be submitted on a timely basis to such periodic or other surveys as may be required for classification purposes and, if requested by the Mortgagee, to supply or to cause to be supplied to the Mortgagee copies of all survey and inspection reports and confirmations of class issued in respect thereof;

			
	
			
				 (E)
			To permit the Mortgagee, by surveyors or other Persons appointed by it in its behalf, to board the Vessel at all reasonable times for the purpose of inspecting her condition or for the purpose of satisfying themselves in regard to proposed or executed repairs and compliance by the Owner with relevant covenants in the Transaction Documents and to afford or to cause to be afforded all proper facilities for such inspections, provided that such inspections will cause no undue delay to the Vessel;

			
	
			
				 (F)
			(i) To pay and discharge or to cause to be paid and discharged all debts, damages and liabilities whatsoever which have given or may give rise to maritime or possessory liens on or claims enforceable against the Vessel except to the extent permitted by Section 5(N) hereof and (ii) in event of arrest of the Vessel pursuant to legal process or in event of her detention in exercise or purported exercise of any such lien as aforesaid to procure the release of the Vessel from such arrest or detention within fourteen (14) days of receiving notice thereof by providing bail or otherwise as the circumstances may require;

			
	
			
				 (G)
			Not to employ the Vessel or suffer her employment in any trade or business which is forbidden by the laws of the Republic of the Marshall Islands or is otherwise illicit or in carrying illicit or prohibited goods or in any manner whatsoever which may render her liable to condemnation in a Prize Court or to destruction, seizure or confiscation and in event of hostilities in any part of the world (whether war be declared or not), not to employ the Vessel or suffer her

		
			 
		

		

		

		 

 

		employment in carrying any contraband goods or to enter or trade to any zone which is declared a war zone by any government or by the Vessel's War Risks Insurers unless the required extra war risk insurance cover has been obtained for the Vessel;
		

		
			(H) Promptly to furnish or to use its best efforts to cause promptly to be furnished to the Mortgagee all such information as the Mortgagee may from time to time reasonably request regarding the Vessel, her employment, position and engagements, particulars of all towages and salvages and copies of all charters and other contracts for her employment or otherwise howsoever pertaining to the Vessel;
		

		
			(I) Promptly after learning of the same to notify or cause to be notified the Mortgagee forthwith in writing of:
		

			
	
			
				 (i)
			any accident to the Vessel involving repairs the cost whereof will or is likely to exceed US$500,000 (or the equivalent in any other currency);

			
	
			
				 (ii)
			any occurrence in consequence whereof the Vessel has become or is likely to become a Total Loss;

			
	
			
				 (iii)
			any material requirement or recommendation made by any Insurer or Classification Society or by any competent authority which is not complied with in accordance with reasonable commercial practices;

			
	
			
				 (iv)
			any arrest of the Vessel or the exercise or purported exercise of any lien on the Vessel or her Earnings; and

			
	
			
				 (v)
			any occurrence of circumstances forming the basis of an Environmental Claim.

		
			(J) To keep or to cause to be kept proper books of account of the Owner in respect of the Vessel and her Earnings and, if requested by the Mortgagee, to make or to cause to be made such books available for inspection on behalf of the Mortgagee and furnish or cause to be furnished satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being regularly paid and that all deductions from crew's wages in respect of any tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress;
		

		
			(K) To assign and provide that Requisition Compensation is applied in accordance with Section 8 hereof as if received in respect of the sale of the Vessel;
		

		
			(L) [Intentionally Omitted];
		

		
			(M) To keep the Vessel registered under the flag of the Republic of the Marshall Islands and to do or suffer to be done nothing whereby such registration may be forfeited or imperiled;
		

		
			 
		

		 

 

			
	
			
				 (N)
			To keep and to cause the Vessel to be kept free and clear of all liens, charges, mortgages and encumbrances except in favor of the Mortgagee and as otherwise provided for in the Credit Agreement, and except for crew's wages remaining unpaid in accordance with reasonable commercial practices or for collision or salvage, liens in favor of suppliers of necessaries or other similar liens arising in the ordinary course of its business, accrued for not more than thirty (30) days or, if requested by the Mortgagee by written notice to the Owner to discharge such lien, not more than twenty one (21) days from the date of such written notice (unless any such lien is being contested in good faith and by appropriate proceedings or other acts and the Owner shall have set aside on its books adequate reserves with respect to such lien and so long as such deferment in payment shall not subject the Vessel to forfeiture or loss) or liens for loss, damage or expense which are fully covered by insurance, subject to applicable deductibles satisfactory to the Mortgagee, or in respect of which a bond or other security has been posted by or on behalf of the Owner with the appropriate court or other tribunal to prevent the arrest or secure the release of the Vessel from arrest, and not, except in favor of the Mortgagee and as otherwise provided for in the Credit Agreement, to pledge, charge, assign or otherwise encumber her Insurances, Earnings or Requisition Compensation or to suffer the creation of any such pledge, charge, assignment or encumbrance as aforesaid to or in favor of any Person other than the Mortgagee or as otherwise provided for in the Credit Agreement;

			
	
			
				 (O)
			Not, without the previous consent in writing of the Mortgagee (and then only subject to such terms and conditions as the Mortgagee may impose), to sell (otherwise than on an arm’s length basis provided that the proceeds of such sale are distributed in accordance with Section 5.3 of the Credit Agreement), abandon or otherwise dispose of the Vessel or any interest therein;

			
	
			
				 (P)
			To pay promptly to the Mortgagee all moneys (including reasonable fees of counsel) whatsoever which the Mortgagee shall or may expend, be put to or become liable for, in or about the protection, maintenance or enforcement of the security created by this Mortgage or in or about the exercise by the Mortgagee of any of the powers vested in it hereunder and to pay interest thereon at the Default Rate from the date whereon such expense or liability was incurred by the Mortgagee;

			
	
			
				 (Q)
			To comply with all declaration and reporting requirements imposed by the protection and indemnity club or insurers including, without limitation, the quarterly declarations required by the U.S. Oil Pollution Section 20/2/91, and to pay all premiums required to maintain in force the necessary U.S. Oil Pollution Cover;

			
	
			
				 (R)
			To comply with and satisfy all the requisites and formalities established by the laws of the Republic of the Marshall Islands to perfect this Mortgage as a legal, valid and enforceable preferred lien upon the Vessel and to furnish to the Mortgagee from time to time such proofs as the Mortgagee may reasonably request for its satisfaction with respect to the compliance by the Owner with the provisions of this Section 5(R);

		
			 
		

		 

 

			
	
			
				 (S)
			Not without the previous consent of the Mortgagee in writing, which consent shall not be unreasonably withheld, to enter into any charter party agreement with respect to the Vessel, other than an Approved Charter;

			
	
			
				 (T)
			To place or to cause to be placed and at all times and places to retain or to cause to be retained a properly certified copy of this Mortgage on board the Vessel with her papers and cause this Mortgage to be exhibited to any and all Persons having business with the Vessel which might give rise to any lien thereon other than liens for crew's wages and salvage, and to any representative of the Mortgagee on demand; and to place and keep or to cause to be placed and kept prominently displayed in the chart room and in the Master's cabin of the Vessel a framed printed notice in plain type in English of such size that the paragraph of reading matter shall cover a space not less than six inches wide by nine inches high, reading as follows:

		
			“NOTICE OF MORTGAGE
		

		
			This Vessel is owned by EAST GULF SHIPHOLDING, INC., and is subject to a preferred mortgage (the “Mortgage”) in favor of DVB BANK SE, as security trustee, under the authority of Chapter 3 of the Maritime Act 1990 of the Republic of the Marshall Islands. Under the terms of the said Mortgage, neither the Owner nor any charterer nor the Master of this Vessel nor any other Person has any power, right or authority whatever to create, incur or permit to be imposed upon this Vessel any lien or encumbrance except as permitted thereunder.”
		

		
			6. Mortgagee's Right to Cure. Without prejudice to any other rights of the Mortgagee hereunder:
		

			
	
			
				 (i)
			in the event that the provisions of Section 5(B) hereof or any of them shall not be complied with, the Mortgagee shall be at liberty, but not obligated, to effect and thereafter to replace, maintain and renew all such Insurances upon the Vessel as it in its sole discretion may deem advisable;

			
	
			
				 (ii)
			in the event that the provisions of Section 5(C) and/or 5(D) hereof or any of them shall not be complied with, the Mortgagee shall be at liberty, but not obligated, to arrange for the carrying out of such repairs and/or surveys as it deems expedient or necessary; and

			
	
			
				 (iii)
			in the event that the provisions of Section 5(F) hereof or any of them shall not be complied with, the Mortgagee shall be at liberty, but not obligated, to pay and discharge all such debts, damages and liabilities as are therein mentioned and/or to take any such measures as it deems expedient or necessary for the purpose of securing the release of the Vessel;

		
			Any and all expenses incurred by the Mortgagee (including fees of counsel) in respect of its performances under the foregoing subsections (i), (ii) and (iii) shall be paid by the Owner on demand, with interest thereon at the rate
		

		
			 
		

		

		

		 

 

		provided for in Section 5(P) hereof from the date when such expenses were incurred by the Mortgagee.
		

		
			7.Events of Default and Remedies.
		

		
			(A) In case any one or more of the following events herein termed an “Event of Default” shall occur and shall not have been received:
		

			
	
			
				 (i)
			a default in the payment when due of all or any part of the Obligations;

			
	
			
				 (ii)
			an Event of Default stipulated in Section 8.1 of the Credit Agreement shall occur and be continuing;

			
	
			
				 (iii)
			a default by the Owner occurs in the due and punctual observance of any of the covenants contained in Section 5 of this Mortgage (other than those listed in clause (iv) below); or

			
	
			
				 (iv)
			a default by the Owner occurs in the due and punctual observance of any of the covenants contained in subsections (A), (D), (E), (H), (J), or (P) of Section 5 of this Mortgage and such default continues unremedied for a period of ten (10) days; or

			
	
			
				 (v)
			it becomes impossible or unlawful for the Owner to fulfill any of the covenants and obligations contained in this Mortgage and the Mortgagee considers that such impossibility or illegality will have a material adverse effect on its rights under this Mortgage or the enforcement thereof.

		
			(B) If any Event of Default shall occur, the Mortgagee shall be entitled:
		

			
	
			
				 (i)
			to demand payment by written notice of the Obligations, whereupon such payment shall be immediately due and payable, anything contained in the Credit Agreement, the Note, this Mortgage, any of the other Transaction to the contrary notwithstanding and without prejudice to any other rights and remedies of the Mortgagee under the Credit Agreement, the Note, this Mortgage or any of the other Transaction Documents, provided, however, that if, before any sale of the Vessel, all defaults shall have been remedied in a manner satisfactory to the Mortgagee, the Mortgagee may waive such defaults by written notice to the Owner; but no such waiver shall extend to or affect any subsequent or other default or impair any rights and remedies consequent thereon;

			
	
			
				 (ii)
			at any time and as often as may be necessary to take any such action as the Mortgagee may in its discretion deem advisable for the purpose of protecting the security created by this Mortgage and each and every expense or liability (including reasonable fees of counsel) so incurred by the Mortgagee in or about the protection of such security shall be repayable to it by the Owner promptly after demand, together with interest thereon at the Default Rate from the date

		
			 
		

		

		

		 

 

		when such expense or liability was incurred by the Mortgagee. The Owner shall promptly execute and deliver to the Mortgagee such documents or cause promptly to be executed and delivered to the Mortgagee such documents, if any, and shall promptly do and perform such acts, if any, as in the opinion of the Mortgagee or its counsel may be necessary or advisable to facilitate or expedite the protection, maintenance and enforcement of the security created by this Mortgage;
		

			
	
			
				 (iii)
			to exercise all the rights and remedies in foreclosure and otherwise given to the Mortgagee by any applicable law, including those under the provisions of the Maritime Law;

			
	
			
				 (iv)
			to take possession of the Vessel, wherever the same may be, without prior demand and without legal process (when permissible under applicable law) and cause the Owner or other Person in possession thereof forthwith upon demand of the Mortgagee to surrender to the Mortgagee possession thereof as demanded by the Mortgagee;

			
	
			
				 (v)
			to require that all policies, contracts and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be forthwith delivered to such adjusters, brokers or other insurers as the Mortgagee may nominate;

			
	
			
				 (vi)
			to collect, recover, compromise and give a good discharge for all claims then outstanding or thereafter arising under the Insurances or any of them and to take over or institute (if necessary using the name of the Owner) all such proceedings in connection therewith as the Mortgagee in its absolute discretion deems advisable and to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefor;

			
	
			
				 (vii)
			to discharge, compound, release or compromise claims against the Owner in respect of the Vessel which have given or may give rise to any charge or lien thereon or which are or may be enforceable by proceedings thereagainst;

			
	
			
				 (viii)
			to take appropriate judicial proceedings for the foreclosure of this Mortgage and/or for the enforcement of the Mortgagee's rights hereunder or otherwise; recover judgment for any amount due in respect of the Credit Agreement, the Note, this Mortgage or any of the other Transaction Documents and collect the same out of any property of the Owner;

			
	
			
				 (ix)
			to sell the Vessel by private contract at any time, free from any claim of or by the Owner of any nature whatsoever;

			
	
			
				 (x)
			to sell the Vessel at public auction (with power for the Security Trustee to purchase the Vessel at any such public auction and to set off the purchase price against all or any part of the Obligations), free from any claim of or by the Owner

		
			 
		

		

		

		 

 

		of any nature whatsoever by first giving notice of the time and place of sale with a general description of the property in the following manner:
		

			
	
			
				 (a)
			

			
	
			
			by publishing such notice for ten (10) consecutive days in a daily newspaper of general circulation published in New York City;

			
	
			
				 (b)
			

			
	
			
			if the place of sale should not be New York City, then also by publication of a similar notice in a daily newspaper, if any, published at the place of sale; and

			
	
			
				 (c)
			

			
	
			
			by sending a similar notice by telecopy confirmed by registered mail to the Owner at its address hereinafter set forth at least fourteen (14) days prior to the date of sale.

		
			Such sale of the Vessel may be held at such place as the Mortgagee in such notices may have specified, or such sale may be adjourned by the Mortgagee from time to time by announcement at the time and place appointed for such sale or for such adjourned sale and without further notice or publication the Mortgagee may make such sale at the time and place to which the same shall be so adjourned; and such sale may be conducted without bringing the Vessel to the place designated for such sale and in such manner as the Mortgagee may deem to be for its best advantage, and the Mortgagee may become the purchaser at such sale.
		

			
	
			
				 (xi)
			

			
	
			
			pending sale of the Vessel (either directly or indirectly) to manage, charter, lease, insure, maintain and repair the Vessel and to employ or lay up the Vessel upon such terms, in such manner and for such period as the Mortgagee in its absolute discretion deems expedient and for the purpose aforesaid the Mortgagee shall be entitled to do all acts and things incidental or conducive thereto and in particular to enter into such arrangements respecting the Vessel, her insurance, management, maintenance, repair, classification and employment in all respects as if the Mortgagee were the owner of the Vessel and without being responsible for any loss thereby incurred;

			
	
			
				 (xii)
			

			
	
			
			to recover from the Owner on demand any such losses as may be incurred by the Mortgagee in or about the exercise of the powers vested in the Mortgagee under Section 7(B)(xi) above with interest thereon at the Default Rate from the date when such losses were incurred by the Mortgagee; and

			
	
			
				 (xiii)
			

			
	
			
			to recover from the Owner on demand all expenses, payments and disbursements (including fees and expenses of counsel) incurred by the Mortgagee in or about or incidental to the exercise by it of any of the powers vested in it hereunder together with interest thereon at the Default Rate from the date when such expenses, payments or disbursements were incurred by it;

		
			 
		

		

		

		 

 

		PROVIDED, ALWAYS, that any sale of the Vessel or any interest therein by the Mortgagee pursuant to Section 7(B)(x) above shall operate to divest all right, title and interest of the Owner, its successors and assigns, in or to the Vessel so sold and upon such sale the purchaser shall not be bound to see or inquire whether the Mortgagee's power of sale has arisen in the manner herein provided and the sale shall be deemed to be within the power of the Mortgagee and the receipt of the Mortgagee for the purchase money shall effectively discharge the purchaser who shall not be concerned with the manner of application of the proceeds of sale or be in any way answerable therefor.
		

		
			In case the Mortgagee shall have proceeded to enforce any right, power or remedy under this Mortgage by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Mortgagee, then and in every such case the Owner and the Mortgagee shall be restored to their former positions and rights hereunder with respect to the property, subject or intended to be subject to this Mortgage, and all rights, remedies and powers of the Mortgagee shall continue as if no such proceedings had been taken.
		

		
			(C)Notwithstanding the foregoing, it is understood that, other than Clause (c)
		

		
			of the definition of Total Loss, a Total Loss of the Vessel which is covered by the insurance maintained by the Owner pursuant to Section 5(B) hereof shall not be deemed to be a default under this Mortgage, the Credit Agreement, the Note, the other Security Documents, or any of them.
		

		
			8. Application of Proceeds. The proceeds of any sale made either under the power of sale hereby granted to the Mortgagee or under a judgment or decree in any judicial proceedings for the foreclosure of this Mortgage or for the enforcement of any remedy granted to the Mortgagee hereunder, any net earnings arising from the management, charter or other use of the Vessel by the Mortgagee under any of the powers herein contained or by law provided and the proceeds of any and all Insurances and any claims for damages on account of the Vessel or the Owner of any nature whatsoever and any Requisition Compensation, shall be applied as follows:
		

		
			First: To the payment of all costs and expenses (together with interest thereon as hereinbefore provided) incurred by the Mortgagee, the Agents and/or the Lenders, including the compensation of their respective agents and attorneys, by reason of any sale, retaking, management or operation of the Vessel and all other sums payable to the Mortgagee, the Agents and/or the Lenders hereunder by reason of any expenses or liabilities incurred or advances made by it for the protection, maintenance and enforcement of the security or of any of its rights hereunder or in the pursuit of any remedy hereby conferred; and at the option of the Mortgagee to the payment of all taxes, assessments or liens claiming priority over the lien of this Mortgage;
		

		
			Second: To the payment of Obligations in the manner provided in the Credit Agreement, and
		

		
			Third: Any surplus thereafter remaining, to the Owner or to the Owner's successors in interest or assigns, or to whomsoever may be lawfully entitled to receive the same.
		

		

		

		 

 

		In the event that the proceeds are insufficient to pay the amounts specified in paragraphs “First” and “Second” above, the Mortgagee shall be entitled to collect the balance from the Owner or any other Person liable therefor.
		

			
	
			
				 9.
			No Waiver. No delay or omission of the Mortgagee to exercise any right or power vested in it under the Credit Agreement, the Note, this Mortgage, the other Transaction Documents or any of them shall impair such right or power or be construed as a waiver thereof or as acquiescence in any default by the Owner hereunder, nor shall the acceptance by the Mortgagee of any payments in connection with this Mortgage from any source be deemed a waiver hereunder. However, if at any time after an Event of Default and prior to the actual sale of the Vessel by the Mortgagee or prior to any foreclosure proceedings the Owner cures all Events of Default and pays all expenses, advances and damages to the Mortgagee consequent on such Events of Default, with interest at the Default Rate from the date when such expenses, advances and damages were incurred, then the Mortgagee may accept such cure and payment and restore the Owner to its former position, but such action shall not affect any subsequent Event of Default or impair any rights consequent thereon.

			
	
			
				 10.
			Delegation of Power. The Mortgagee shall be entitled at any time and as often as may be expedient to delegate all or any of the powers and discretions vested in it by this Mortgage (including the power vested in it by virtue of Section 12 hereof) in such manner and upon such terms and to such Persons as the Mortgagee in its absolute discretion may deem advisable.

			
	
			
				 11.
			Indemnity. Without prejudice to any other rights and remedies of the Mortgagee under the Credit Agreement, the Note, this Mortgage or any of the other Transaction Documents, the Owner hereby agrees and undertakes to indemnify the Mortgagee against all obligations and liabilities whatsoever and whensoever arising which the Mortgagee may incur in good faith in respect of, in relation to or in connection with the Vessel or otherwise howsoever in relation to or in connection with the enforcement of the Mortgagee's rights hereunder or under any of the other Transaction Documents to which the Owner is a party.

			
	
			
				 12.
			Power of Attorney.

		
			(A) The Owner hereby irrevocably appoints the Mortgagee as its attorney-in-fact for the duration of the Security Period to do in its name or in the name of the Owner all acts which the Owner, or its successors or assigns, could do in relation to the Vessel, including without limitation, to demand, collect, receive, compromise, settle and sue for (insofar as the Mortgagee lawfully may) all freights, hire, earnings, issues, revenues, income and profits of the Vessel, and all amounts due from underwriters under the Insurances as payment of losses or as
		

		
			 
		

		

		

		 

 

		return premiums or otherwise, salvage awards and recoveries, recoveries in general average or otherwise, and all other sums due or to become due to the Owner or in respect of the Vessel, and to make, give and execute in the name of the Owner, acquittance, receipts, releases or other discharges for the same, whether under seal or otherwise, to take possession of, sell or otherwise dispose of or manage or employ, the Vessel, to execute and deliver charters and a bill of sale with respect to the Vessel, and to endorse and accept in the name of the Owner all checks, notes, drafts, warrants, agreements and all other instruments in writing with respect to the foregoing; PROVIDED, HOWEVER, that, unless the context otherwise permits under this Mortgage, such power shall not be exercisable by or on behalf of the Mortgagee unless and until any Event of Default shall occur and shall not be exercisable after all defaults have been cured.
		

		
			(B) The exercise of the power granted in this Section 12 by or on behalf of the Mortgagee shall not require any Person dealing with the Mortgagee to conduct any inquiry as to whether any such Event of Default has occurred and is continuing, nor shall such Person be in any way affected by notice that any such Event of Default has not occurred nor is continuing, and the exercise by the Mortgagee of such power shall be conclusive evidence of its right to exercise the same.
		

			
	
			
				 13.
			Appointment of Receiver. If any legal proceedings shall be taken to enforce any right under this Mortgage, the Mortgagee shall be entitled as a matter of right to the appointment of a receiver of the Vessel and of the freights, hire, earnings, issues, revenues, income and profits due or to become due and arising from the operation thereof.

			
	
			
				 14.
			Commencement of Proceedings. The Mortgagee shall have the right to commence proceedings in the courts of any country having competent jurisdiction and in particular the Mortgagee shall have the right to arrest and take action against the Vessel at whatever place the Vessel shall be found lying and for the purpose of any action which the Mortgagee may bring before the local court for the jurisdiction of such court or other judicial authority and the Owner agrees that for the purpose of proceedings against the Vessel any writ, notice, judgment or other legal process or documents may be served upon the Master of the Vessel (or upon anyone acting as the Master) and that such service shall be deemed good service on the Owner for all purposes.

			
	
			
				 15.
			Partial Invalidity. In the event that any provision or provisions of this Mortgage shall be declared invalid, void or otherwise inoperative by any present or future court of competent jurisdiction in any country, the Owner will, without prejudice to any other right and remedy of the Mortgagee under the Credit Agreement, the Note, this Mortgage, the other Transaction Documents or any of them, execute and deliver such other and further instruments and do such things as in the opinion of the Mortgagee or its counsel will be necessary or advisable to carry out the true intent and spirit of this Mortgage. In any event, any such declaration of partial invalidity shall not affect the validity of any other provision or provisions of this Mortgage, or the validity of this Mortgage as a whole.

			
	
			
				 16.
			Cumulative Remedies. Each and every power and remedy in this Mortgage specifically given to the Mortgagee shall be in addition to every other power and remedy herein or in the Credit Agreement, the Note or the other Transaction Documents specifically given or

		
			 
		

		

		

		 

 

		now or hereafter existing at law, in equity, admiralty, or by statute, and each and every power and remedy whether specifically in this Mortgage or in the Credit Agreement, the Note or the other Transaction Documents given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Mortgagee, and the exercise or the beginning of the exercise of any such power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other power or remedy under the Credit Agreement, the Note, this Mortgage or any other Transaction Documents.
		

			
	
			
				 17.
			Recordation of Mortgage. For the purpose of recording this Preferred Mortgage the total amount is Thirty Two Million Dollars ($32,000,000) (exclusive of interest, expenses and fees) and interest and performance of mortgage covenants. The discharge amount is the same as the total amount and there is no separate discharge amount for the Vessel. It is not intended that this Mortgage shall include property other than the Vessel, and it shall not include property other than the Vessel as the term “vessel” is used in the Maritime Law. Notwithstanding the foregoing, for property other than the Vessel, if any should be determined to be covered by this Mortgage, the discharge amount is zero point zero one percent (0.01%) of the total amount.

			
	
			
				 18.
			No Waiver of Preferred Status. Anything herein to the contrary 
notwithstanding, it is intended that nothing herein shall waive the preferred status of this Mortgage under the Maritime Law or under the corresponding provisions of any other jurisdiction in which it is sought to be enforced and that, if any provision or portion thereof herein shall be construed to waive the preferred status of this Mortgage, then such provision to such extent shall be void and of no effect.

			
	
			
				 19.
			Counterparts. This Mortgage may be executed in any number of counterparts each of which shall be an original but such counterparts shall together constitute but one and the same instrument.

			
	
			
				 20.
			Notices. Notices and other communications under this Mortgage shall be in writing and may be given by facsimile as follows:

		
			If to the Owner:
		

		
			East Gulf Shipholding, Inc.
		

		
			11 North Water Street
		

		
			Suite 18290
		

		
			Mobile, Alabama 36602
		

		
			Attention: Chief Financial Officer
		

		
			Facsimile No.: (251) 243 9121
		

		
			with a copy to:
		

		
			International Shipholding Corporation
		

		
			One Whitehall Street
		

		
			New York, New York 10004 
Attention: Niels M. Johnsen
		

		
			 
		

		

		

		 

 

		Facsimile No.: (212) 514-5692
		

		
			If to the Mortgagee:
		

		
			DVB Bank SE
		

		
			Park House
		

		
			16-18 Finsbury Circus
		

		
			London EC2M 7EB, United Kingdom
		

		
			Attention: Peter Attridge
		

		
			Department: Transaction and Loan Services
		

		
			 tls.london@dvbbank.com 
		

		
			Fax: +44 207 256 4352
		

		
			with a copy to:
		

		
			DVB TRANSPORT (US) LLC
		

		
			609 Fifth Avenue, 5th Floor
		

		
			New York, New York 10017, USA
		

		
			Facsimile: + 212 858 2664/+ 1 917 369 2196 Attention: Christoph Clauss/Matthew Galici  christoph.clauss@dvbbank.com/ matthew.galici@dvbbank.com
		

		
			or to such other address as either party shall from time to time specify in writing to the other. Any notice sent by facsimile shall be confirmed by letter dispatched as soon as practicable thereafter.
		

		
			Every notice or other communication shall, except so far as otherwise expressly provided by this Mortgage, be deemed to have been received (provided that it is received prior to 10 a.m. New York time; otherwise it shall be deemed to have been received on the next following Banking Day), in the case of a facsimile at the time of dispatch thereof (provided further that if the date of dispatch is not a Banking Day in the locality of the party to whom such notice or demand is sent it shall be deemed to have been received on the next following Banking Day in such locality), and in the case of a letter, at the time of receipt thereof.
		

		
			21. Rights of Owner. Unless one or more Events of Default shall have occurred and be continuing, the Owner (a) shall be suffered and permitted to retain actual possession and use of the Vessel and (b) shall have the right, from time to time in its discretion, and without application to the Mortgagee, and without obtaining a release thereof by the Mortgagee, to dispose of, free from the lien hereof, any boilers, engines, machinery, masts, spars, sails, rigging, boats, anchors, cables, chains, tackle, apparel, furniture, fittings, equipment or any other appurtenances of the Vessel that are no longer useful, necessary, profitable or advantageous in the operation of the Vessel, first or simultaneously replacing the same by new boilers, engines, machinery, masts, spars, sails, rigging, boats, anchors, cables, chains, tackle, apparel, furniture, fittings, equipment or any other appurtenances of substantially equal value to the Owner, which shall forthwith become subject to the lien of this Mortgage.
		

		
			 
		

		 

 

			
	
			
				 22.
			Waiver; Amendment. None of the terms and conditions of this Mortgage may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by the Owner and the Mortgagee.

			
	
			
				 23.
			Successors and Assigns. All the covenants, promises, stipulations and agreements of the Owner and all the rights and remedies of the Mortgagee contained in this Mortgage shall bind the Owner, its successors and assigns, and shall inure to the benefit of the Mortgagee, its successors and assigns, whether so expressed or not.

			
	
			
				 24.
			Applicable Law. This Mortgage shall be governed by, and construed in accordance with, the laws of the Republic of the Marshall Islands.

			
	
			
				 25.
			Headings. In this Mortgage, section headings are inserted for convenience of reference only and shall be ignored in the interpretation of this Mortgage.

			
	
			
				 26.
			Intercreditor Agreement. This Mortgage shall be subject to the terms of the Intercreditor Agreement. Where a conflict exists between this Mortgage and the

		
			Intercreditor Agreement, the Intercreditor Agreement shall govern.
		

		
			[Signature Page to Follow]
		

		
			 
		

		

		

		 

 

		IN WITNESS WHEREOF, the Owner has executed this Mortgage by its duly authorized representative as of the day and year first above written.
		

		
			EAST GULF SHIPHOLDING, INC., as Owner
		

		
			By:___________________________________________________
		

		
			Name: Title:
		

		
			 
		

		

		

		 

 

		ACKNOWLEDGMENT OF MORTGAGE
		

		
			STATE OF NEW YORK)
		

		
			: ss:
		

		
			COUNTY OF NEW YORK)
		

		
			On the ____ day of _________________________________, in the year 2015, before me, the
		

		
			undersigned personally appeared_______________________________, personally known to me or
		

		
			proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.
		

		
			Notary Public
		

		
			 
		

		

		

		 

 

		ACKNOWLEDGMENT OF MORTGAGE
		

		
			STATE OF NEW YORK)
		

		
			: ss:
		

		
			COUNTY OF NEW YORK)
		

		
			On the ____ day of_________________________________, in the year 2015, before me, the
		

		
			undersigned personally appeared_______________________________, personally known to me or
		

		
			proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.
		

		
			Notary Public
		

		
			 
		

		

		

		 

 

		Exhibit A
		

		
			 
		

		
			Credit Agreement
		

		
			 
		

		
			 
		

		

		

		 

 

		Exhibit B
		

		
			 
		

		
			 
		

		

		

		 

 

		EXHIBIT H-1 
		

		
			FORM OF LETTER OF INSTRUCTION TO CLASSIFICATION SOCIETY
		

		
			To:[NAME OF CLASSIFICATION SOCIETY]
		

		
			Date: April [], 2015 Dear Sirs:
		

		
			Name of Vessel: [“GLOVIS COUNTESS”][“GREEN BAY”] (the “Vessel”)
		

		
			Flag: Republic of Marshall Islands
		

		
			IMO Number: [9476721][9339818]
		

		
			Name of Owner: East Gulf Shipholding, Inc. (the “Owner”)
		

		
			Name of mortgagee: DVB Bank SE (the “Mortgagee”)
		

		
			We refer to the Vessel, which is registered in the ownership of the Owner, and which has been entered in and classed by [Name of Classification Society] (the “Classification Society”).
		

		
			The Mortgagee has agreed to provide financing to the Owner upon condition that, among other things, the Owner and the Mortgagee issue this letter of instruction to the Classification Society.
		

		
			The Owner and the Mortgagee irrevocably and unconditionally instruct and authorise the Classification Society (notwithstanding any previous instructions whatsoever which the Owner may have given to the Classification Society to the contrary) as follows:
		

		
			1to send to the Mortgagee, following receipt of a written request from the Mortgagee, certified
		

		
			true copies of all original class records held by the Classification Society in relation to the Vessel;
		

		
			2to allow the Mortgagee (or its agents), at any time and from time to time, to inspect the
		

		
			original class, related records and other information of the Owner and the Vessel either (i) electronically (through the Classification Society directly or by way of indirect access via the Owner’s account manager and designating the Security Trustee as a user or administrator of the system under its account) or (ii) in person at the offices of the Classification Society, and to take copies of them electronically or otherwise;
		

		
			3to notify the Mortgagee immediately in writing and by email to techcom@dvbbank.com if the
		

		
			Classification Society:
		

			
	
			
				 (a)
			

			
	
			
			receives notification from the Owner or any other person that the Vessel’s classification society is to be changed;

			
	
			
				 (b)
			

			
	
			
			becomes aware of any facts or matters which may result or have resulted in a condition of class or a recommendation, or a change, suspension, discontinuance, withdrawal or expiry of the Vessel’s class under the rules or terms and conditions of the Owner’s or the Vessel’s membership of the Classification Society;

		
			 
		

		

		

		 

 

		4following receipt of a written request from the Mortgagee:
		

			
	
			
				 (a)
			

			
	
			
			to confirm that the Owner is not in default of any of its contractual obligations or liabilities to the Classification Society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the Classification Society;

			
	
			
				 (b)
			

			
	
			
			if the Owner is in default of any of its contractual obligations or liabilities to the Classification Society, to specify to the Mortgagee in reasonable detail the facts and circumstances of such default, the consequences thereof, and any remedy period agreed or allowed by the Classification Society; or

			
	
			
				 (c)
			

			
	
			
			to provide any other information reasonably requested.

		
			Notwithstanding the above instructions given for the benefit of the Mortgagee, the Owner shall continue to be responsible to the Classification Society for the performance and discharge of all its obligations and liabilities relating to or arising out of or in connection with the contract it has with the Classification Society, and nothing in this letter should be construed as imposing any obligation or liability on the Mortgagee to the Classification Society in respect thereof. The instructions and authorisations which are contained in this notice shall remain in full force and effect until the Owner and the Mortgagee together give you notice in writing revoking them.
		

		
			The Owner undertakes to reimburse the Classification Society in full for any costs or expenses it may incur in complying with the instructions and authorisations referred to in this letter.
		

		
			This letter and any non-contractual obligations arising from or connected with it are governed by New York law.
		

		
			[Signature page follows]
		

		
			 
		

		

		

		 

 

		EAST GULF SHIPHOLDING, INC., as Owner
		

		
			By: 
		

		
			Name: Title:
		

		
			DVB BANK SE, as Mortgagee
		

		
			By: 
		

		
			Name: Title:
		

		
			 
		

		

		

		 

 

		EXHIBIT H-2 
		

		
			FORM OF CLASSIFICATION SOCIETY LETTER OF UNDERTAKING
		

		
			To:East Gulf Shipholding, Inc.
		

		
			11 North Water Street, Suite 18290
		

		
			Mobile, Alabama 36602
		

		
			Facsimile No.: (251) 243-9121 Attention: Chief Financial Officer
		

		
			with a copy to
		

		
			One Whitehall Street
		

		
			New York, NY 10004
		

		
			Facsimile No.: (212) 514-5692
		

		
			Attention: Mr. Niels M. Johnsen -and-
		

		
			DVB Bank SE
		

		
			Park House
		

		
			16-18 Finsbury Circus
		

		
			London EC2M 7EB, United Kingdom
		

		
			Attention: Peter Attridge
		

		
			Department: Transaction and Loan Services
		

		
			 tls.london@dvbbank.com and techcom@dvbbank.com
		

		
			Fax: +44 207 256 4352
		

		
			with a copy to:
		

		
			DVB TRANSPORT (US) LLC
		

		
			609 Fifth Avenue, 5th Floor
		

		
			New York, New York 10017, USA
		

		
			Facsimile: + 212 858 2664/+ 1 917 369 2196 Attention: Christoph Clauss/Matthew Galici  christoph.clauss@dvbbank.com/ matthew.galici@dvbbank.com
		

		
			Dated: [] Dear Sirs:
		

		
			Name of Vessel: [“GLOVIS COUNTESS”][“GREEN BAY”] (the “Vessel”) Flag: Republic of the Marshall Islands
		

		
			IMO Number: [9476721][9339818]
		

		
			Name of Owner: East Gulf Shipholding, Inc. (the “Owner”)
		

		
			 
		

		

		

		 

 

		Name of mortgagee: DVB Bank SE (the “Mortgagee”)
		

		
			We, [Name of Classification Society], hereby acknowledge receipt of a letter (a copy of which is attached hereto) dated [•] sent to us by the Owner and the Mortgagee (together the “Instructing Parties”) regarding the Vessel.
		

		
			In consideration of the agreement by the Mortgagee to approve the selection of [•] (the receipt and adequacy of which is hereby acknowledged), we undertake to comply with the instructions of the Instructing Parties contained in such letter.
		

		
			This letter and any non-contractual obligations arising out of or in connection with it shall be governed by New York law.
		

		
			Very truly yours
		

		
			For and on behalf of
		

		
			[NAME OF CLASSIFICATION SOCIETY]
		

		
			 
		

		

		

		 

 

		Exhibit I-1
		

		
			 
		

		
			Dated [•] April 2015
		

		
			East Gulf Shipholding, Inc. 
as Pledgor
		

		
			and
		

		
			DVB Bank SE 
as Security Agent
		

		
			and
		

		
			DVB Bank SE 
as Account Bank
		

		
			EARNINGS ACCOUNT PLEDGE
		

		
			relating to the Credit Agreement 
dated [•] April 2015
		

		
			 
		

		

		

		 

 

		Index
		

		
			Clause
		

		
			1Definitions and Interpretation 1
		

		
			2Position of Security Agent and Covenant to Pay and Perform 2
		

		
			3Pledge and Enforceability 3
		

		
			4Undertaking 4
		

		
			5Protection of Security 5
		

		
			6Enforceability and Security Agent's Powers 6
		

		
			7Notice and Acknowledgement 7
		

		
			8Application of Moneys 8
		

		
			9Further Documentation etc. 8
		

		
			10Power of Attorney 9
		

		
			11Incorporation of Credit Agreement Provisions 10
		

		
			12Supplemental 10
		

		
			13Transfer 11
		

		
			14Governing Law 11
		

		
			15Enforcement 11
		

		
			Execution
		

		
			Execution Page 13
		

		
			 
		

		

		

		 

 

		THIS AGREEMENT is made on [•] April 2015 PARTIES
		

			
	
			
				 (1)
			

			
	
			
			East Gulf Shipholding, Inc. a corporation organized in the Marshall Islands with number [•] whose principal office is at [•] (the "Pledgor")

			
	
			
				 (2)
			

			
	
			
			DVB BANK SE (“DVB”) as security agent for the Lenders acting in such capacity through its office at Park House, 16-18 Finsbury Circus, London EC2M 7EB, United Kingdom (the "Security Agent")

			
	
			
				 (3)
			

			
	
			
			DVB BANK SE as account bank for the Lenders acting in such capacity through its office at Platz der Republik 6, D-60325 Frankfurt am Main, Germany (the "Account Bank")

		
			BACKGROUND
		

			
	
			
				 (A)
			

			
	
			
			By the Credit Agreement the Lenders agreed to make available to the Pledgor a facility of US$ 32,000,000.

			
	
			
				 (B)
			

			
	
			
			By the Credit Agreement it was agreed that the Security Agent in that capacity would hold the Collateral on trust for the Creditors.

			
	
			
				 (C)
			

			
	
			
			Under the Credit Agreement the Pledgor has opened, and is to maintain, with the Account Bank the Earnings Account.

			
	
			
				 (D)
			

			
	
			
			It is a condition precedent to the availability of the Facility under the Credit Agreement that the Pledgor enters into this Agreement as security for the Secured Liabilities.

			
	
			
				 (E)
			

			
	
			
			This Agreement supplements the Credit Agreement and is the Account Pledge of the Earnings Account referred to in the Credit Agreement.

		
			OPERATIVE PROVISIONS
		

		
			1DEFINITIONS AND INTERPRETATION
		

		
			1.1Definitions
		

		
			In this Agreement:
		

		
			"Account" means the Earnings Account. "Credit Balance" means:
		

			
	
			
				 (a)
			

			
	
			
			the amount at the time of determination standing to the credit of the Account; and

			
	
			
				 (b)
			

			
	
			
			any amount received by or for the account of the Account Bank which the Account Bank is under a duty to credit to the Account but which the Account Bank has not yet credited to the Account; and

			
	
			
				 (c)
			

			
	
			
			any interest accrued or accruing on an amount covered by paragraph (a) or (b) above, whether or not the interest has been credited to the Account.

		
			"Earnings Account" means:
		

		
			(a)an account in the name of the Pledgor with the Account Bank designated "GLOVIS
		

		
			COUNTESS - Earnings Account"; or
		

		
			 
		

		
			 
		

		

		

		 

 

		(b)any other account (with that or another office of the Account Bank or with a bank or
		

		
			financial institution other than the Account Bank) which is designated by the Security Agent acting on the instructions of the Facility Agent as the Earnings Account for the purposes of this Agreement.
		

		
			"Credit Agreement" means the credit agreement dated [] April 2015 and made between, amongst others, (i) the Pledgor as Borrower, (ii) International Shipholding Corporation (“ISH”) as Guarantor, (iii) the Lenders, (iv) the Facility Agent, (v) the Security Agent in that capacity and (vi) DVB as mandated lead arranger.
		

		
			"Intercreditor Agreement" means the pari passu intercreditor agreement to be entered into by the Pledgor, ISH and DVB in its capacity as (i) facility agent under the Credit Agreement and (ii) facility agent under that certain credit agreement originally entered into by and among (1) Waterman Steamship Corporation, as borrower, (2) ISH, as guarantor, (3) the banks and financial institutions listed on Schedule I thereto, as lenders (4) DVB, as facility agent and security trustee for the lenders and (5) DVB, as mandated lead arranger, dated as of August 26, 2014, as amended by an Amendment No. 1 dated October 28, 2014 and an Amendment No. 2 dated November 24, 2014 and an Assignment and Assumption Agreement, dated December 29, 2014, whereby LCI Shipholdings, Inc. was deemed the ultimate borrower.
		

		
			"Secured Liabilities" means all present and future obligations and liabilities (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of
		

		
			the Pledgor to any Creditor under or in connection with each Transaction Document.
		

		
			"Security Period" means the period commencing on the date of this Agreement and ending on the date on which the Pledgor shall pay and discharge all of its obligations under or in connection with the Credit Agreement, or is released therefrom in accordance with the terms thereof.
		

		
			1.2Defined expressions
		

		
			Defined expressions in the Credit Agreement shall have the same meanings when used in this Agreement unless the context otherwise requires or unless otherwise defined in this Agreement.
		

		
			1.3Application of construction and interpretation provisions of Credit Agreement
		

		
			Clause 1.2 (construction) of the Credit Agreement applies to this Agreement as if it were expressly incorporated in it with any necessary modifications.
		

		
			1.4Inconsistency between Credit Agreement or Intercreditor Agreement provisions and this
		

		
			Agreement
		

		
			This Agreement shall be read together with the Credit Agreement and the Intercreditor Agreement, but in case of any conflict between the Credit Agreement or Intercreditor Agreement and this Agreement, unless expressly provided to the contrary in this Agreement, the provisions of the Credit Agreement or Intercreditor Agreement, as applicable, shall prevail.
		

		
			2POSITION OF SECURITY AGENT AND COVENANT TO PAY AND PERFORM
		

		
			2.1Position of Security Agent
		

		
			The Pledgor agrees and acknowledges that the Security Agent holds its rights under this Agreement on trust for itself (including in its capacity as a Lender) and the Creditors. The Pledgor further agrees and acknowledges that for the purposes of this Clause 2 (Position of Security Agent and Covenant to Pay and Covenant to Perform):
		

		
			 
		

		

		

		 

 

		2the term "Creditors" includes any present lenders that are, and any future lenders that by transfer or accession, may become, lenders in accordance with the terms of the Credit Agreement;
		

			
	
			
				 (a)
			

			
	
			
			the Security Agent is also acting on behalf of such present and future lenders as attorney without authority (Vertreter ohne Vertretungsmacht); and

			
	
			
				 (b)
			

			
	
			
			the Security Agent is liberated from the restrictions set out in Section 181 of the German Civil Code (Bürgerliches Gesetzbuch).

		
			2.2Covenant to Pay
		

			
	
			
				 (a)
			

			
	
			
			The Pledgor undertakes with the Security Agent as a separate covenant that it will pay to the Security Agent an amount equal to the amount of the Secured Liabilities, always provided that any reduction of the Secured Liabilities shall pro tanto reduce the amount payable to the Security Agent under this covenant.

			
	
			
				 (b)
			

			
	
			
			The Pledgor shall duly and punctually pay and discharge the Secured Liabilities in the manner provided for in the Transaction Documents.

		
			2.3Covenant to Perform
		

		
			The Pledgor covenants with the Security Agent to observe and perform all its obligations to the Security Agent in its capacity as Security Agent and in any other capacity, and the other Creditors or any of them under the Transaction Documents, in addition to those referred to in Clause 2.2 (Covenant to Pay),
		

		
			3PLEDGE AND ENFORCEABILITY
		

		
			3.1General
		

		
			Each security created by this Agreement is a continuing security for the due and punctual payment by the Pledgor and any other Security Party of the Secured Liabilities under Clause 2.2 (Covenant to Pay) and the observation and performance by the Pledgor of all its obligations under Clause 2.3 (Covenant to Perform).
		

		
			3.2Pledge
		

		
			The Pledgor to the full extent of its interest, hereby pledges (verpfändet) at the same time and pari passu in rank the Account (including without limitation the Credit Balance on the Account) to the Security Agent.
		

		
			3.3Continuing security
		

		
			(a)This Agreement shall remain in force until the end of the Security Period as a continuing
		

		
			security and, in particular:
		

			
	
			
				 (i)
			

			
	
			
			the security created by Clause 3 (Pledge and Enforceability) will extend to the ultimate balance of all sums payable by the Pledgor under the Transaction Documents, regardless of any intermediate payment or discharge in whole or in part;

			
	
			
				 (ii)
			

			
	
			
			the security created by Clause 3 (Pledge and Enforceability), and the rights of the Security Agent under this Agreement, are only capable of being extinguished, limited or otherwise adversely affected by an express and specific term in a document signed by or on behalf of the Security Agent;

		
			 
		

		
			3
		

		

		

		 

 

		(iii)no failure or delay by or on behalf of the Security Agent to enforce or exercise a
		

		
			security created by Clause 3 (Pledge and Enforceability) or a right of the Security Agent under this Agreement, and no act, course of conduct, acquiescence or failure to act (or to prevent the Pledgor from taking certain action) which is inconsistent with such a security or with such a right shall preclude or estop (either permanently or temporarily) the Security Agent from enforcing or exercising it.
		

		
			(b)This Agreement is in addition to and is not in any way prejudiced by, and shall not prejudice
		

		
			any guarantee or other security or any other right of recourse now or subsequently held by any Creditor or any right of set-off or netting or rights to combine accounts in connection with the Transaction Documents.
		

		
			4UNDERTAKINGS
		

		
			4.1General
		

		
			The undertakings in this Clause 4 (Undertakings) remain in force throughout the Security Period except as the Security Agent may otherwise permit.
		

		
			4.2Restrictions on dealing with Credit Balance
		

		
			Subject to Clause 4.6 (Execution of instructions), the Pledgor shall not attempt to withdraw, transfer or in any other way deal with all or any part of the Credit Balance on the Earnings Account after an Event of Default has occurred and is continuing.
		

		
			4.3Restrictions on operation of the Account
		

		
			Subject to Clause 4.6 (Execution of instructions), the Pledgor shall not purport to give any authorisation or instruction to the Account Bank concerning the Earnings Account after an Event of Default has occurred and is continuing.
		

		
			4.4Maintenance of rights in relation to the Account
		

		
			Subject to Clause 4.6 (Execution of instructions), the Pledgor shall not attempt to vary, or permit to be varied, any right relating to the Account or to a Credit Balance on the Account.
		

		
			4.5No waiver of rights in relation to the Account
		

		
			The Pledgor shall not waive any right relating to the Account or to a Credit Balance nor permit any such right to be lost, suspended or impaired.
		

		
			4.6Execution of instructions
		

		
			The Pledgor shall, if so required by the Security Agent, immediately execute any document which the Security Agent may specify for the purpose of, or in connection with, any withdrawal, transfer or other dealing with all or any part of a Credit Balance or any variation to any right relating to the Account or to a Credit Balance on the Account.
		

		
			4.7Action to protect validity of security over the Account
		

		
			The Pledgor shall take any action which the Security Agent may specify with a view to ensuring or protecting the validity, enforceability and/or priority of any interest or right created by this Agreement in respect of the Account and the Credit Balance on the Account.
		

		
			 
		

		
			4
		

		
			 
		

		

		

		 

 

		4.8Action to enforce security
		

		
			The Pledgor shall:
		

			
	
			
				 (a)
			

			
	
			
			take any action which the Security Agent may direct for the purpose of enforcing (through legal process, arbitration or otherwise) any right which is part of, or which relates to, the Account or the Credit Balance on the Account; and

			
	
			
				 (b)
			

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

		
			4.9Co-operation and assistance relating to the Account
		

		
			The Pledgor shall forthwith provide the Security Agent and its officers and representatives with full and prompt co-operation and assistance relating to the Account.
		

		
			4.10 Negative pledge
		

			
	
			
				 (a)
			

			
	
			
			The Pledgor shall not create or permit to subsist any security over the Account or the Credit Balance on the Account, except as permitted by the Credit Agreement.

			
	
			
				 (b)
			

			
	
			
			This Clause 4.10 (Negative pledge) is in addition to, and shall not be limited by, any provision of the Credit Agreement.

		
			4.11 Disposals
		

		
			The Pledgor shall not dispose of a Credit Balance on the Account if an Event of Default has occurred and is continuing.
		

		
			4.12Protection of Creditor interests
		

		
			The Pledgor shall not enter into any transaction, or do anything, which is contrary to, or which may adversely affect, the rights of the Security Agent under this Agreement or any Creditor’s interest in those rights.
		

		
			5PROTECTION OF SECURITY
		

		
			5.1Protection of Security
		

		
			The Security Agent may, but shall not be obliged to, take any action which it may think fit for the purpose of protecting or maintaining the security created or intended to be created by this Agreement or for any similar or related purpose.
		

		
			5.2No obligations imposed on Security Agent
		

		
			The Pledgor shall remain liable to perform all obligations connected with the Account and the Security Agent shall not, in any circumstances, have or incur any obligation of any kind in connection with the Account.
		

		
			5.3Release of Security
		

		
			At the end of the Security Period, the Security Agent shall, at the request and cost of the Pledgor, release such rights as the Security Agent then has to, or in connection with, the Account.
		

		
			 
		

		
			5
		

		
			 
		

		

		

		 

 

		6ENFORCEABILITY AND SECURITY AGENT'S POWERS
		

		
			6.1Right to enforce security
		

		
			Upon the requirements set forth in Section 1204 et seq. of the German Civil Code (Bürgerliches Gesetzbuch) with regard to the enforcement of the pledge being met (Pfandreife):
		

			
	
			
				 (a)
			

			
	
			
			the security constituted by this Agreement shall immediately become enforceable for all purposes;

			
	
			
				 (b)
			

			
	
			
			the Security Agent shall (subject only to any of the express restrictions or conditions contained in this Agreement) be entitled then or at any later time or times to exercise the powers set out in Clause 6.2 (Right to apply Credit Balance) and all other powers in this Agreement and in any other Transaction Document; and

			
	
			
				 (c)
			

			
	
			
			the Security Agent shall be entitled then or at any later time or times to exercise any other rights which it has, upon default of the Pledgor, under the laws of the Federal Republic of Germany.

		
			6.2Right to apply Credit Balance
		

		
			Subject to the provisions of the Intercreditor Agreement, if the security constituted by this Agreement has become enforceable, the Security Agent shall be entitled then or at any later time or times:
		

			
	
			
				 (a)
			

			
	
			
			to withdraw all or any part of the Credit Balance on the Account and to use the amount withdrawn in or towards discharging the Secured Liabilities; and/or

			
	
			
				 (b)
			

			
	
			
			if applicable, to withdraw all or any part of the Credit Balance on the Earnings Account and to transfer the amount withdrawn to the Retention Account as a monthly retention as stipulated in clause 10.3 (Monthly Retentions) of the Credit Agreement; and/or

			
	
			
				 (c)
			

			
	
			
			to transfer or remit all or any part of the Credit Balance on the Account to the Security Agent or any Creditor up to the amount of the Secured Liabilities to, or for the benefit of, the relevant Security Agent or that Creditor,

		
			and the Security Agent may take any action described in paragraphs (a) to (c) above notwithstanding that any maturity or roll-over date attached to any part or parts of the Credit Balance may not yet have arrived.
		

		
			6.3No liability of Security Agent
		

		
			(a)Neither the Security Agent (nor any Delegate (as hereinafter defined)) shall be obliged to:
		

			
	
			
				 (i)
			

			
	
			
			check the nature or sufficiency of any payment received by it under this Agreement; or

			
	
			
				 (ii)
			

			
	
			
			preserve, exercise or enforce any right forming part of, or relating to, the Account or any of the Credit Balance.

		
			(b)In addition to, and without limiting, any exclusion or limitation of liability of any Creditor
		

		
			under any Transaction Document, neither the Security Agent nor any Delegate shall have any liability to any Security Party:
		

		
			(i)for any loss caused by an exercise of, or failure to exercise, rights under or
		

		
			enforcement of, or failure to enforce any security created by this Agreement to the extent possible under German law;
		

		
			 
		

		
			6
		

		
			 
		

		 

 

			
	
			
				 (ii)
			

			
	
			
			to account for any income or principal amount which might have been produced or realised from any asset forming part of or subject to any security created by this Agreement; or

			
	
			
				 (iii)
			

			
	
			
			for any reduction in the value of any asset forming part of or subject to any security created by this Agreement.

		
			6.4No requirement to commence proceedings
		

		
			Waiving the requirements of Section 1277 of the German Civil Code (Bürgerliches Gesetzbuch) none of the Security Agent nor any other Creditor will need to commence any proceedings under, or enforce any security created by, the Credit Agreement or any other Transaction Document before commencing proceedings under, or enforcing any security created by, this Agreement.
		

		
			6.5Right to convert Credit Balance
		

		
			For the purposes of this Agreement:
		

			
	
			
				 (a)
			

			
	
			
			The Security Agent may convert any moneys received or recovered by it under this Agreement from one currency to another, at a market rate of exchange.

			
	
			
				 (b)
			

			
	
			
			The obligations of the Pledgor to pay in the due currency shall only be satisfied to the extent of the amount of the due currency purchased after deducting the costs of conversion.

		
			6.6Prior Security
		

		
			(a)At any time after the security created by this Agreement has become enforceable, the
		

		
			Security Agent may:
		

			
	
			
				 (i)
			

			
	
			
			redeem any prior security over all or any part of the Account;

			
	
			
				 (ii)
			

			
	
			
			procure the transfer of that security to itself; and/or

			
	
			
				 (iii)
			

			
	
			
			settle the Account of any prior mortgagee, chargee or encumbrancer and any accounts so settled will be, in the absence of manifest error, conclusive and binding on the Pledgor.

		
			(b)The Pledgor shall pay to the Security Agent immediately upon demand the costs and
		

		
			expenses incurred by the Security Agent in connection with any such redemption, settlement and/or transfer including the payment of any principal or interest.
		

		
			6.7Waiver of defences
		

		
			For the benefit of the Security Agent the Pledgor hereby expressly waives its right to the defences of voidability (Anfechtbarkeit), rescission (Rücktritt) and set-off (Aufrechnung) (except with counterclaims that are undisputed or adjudged to be due) as defined in Sections 1211 and 770 of the German Civil Code (Bürgerliches Gesetzbuch) and any rights in its favour that may from time to time result from the release of other security or security rights granted by it to the Security Agent or any Creditor. The Pledgor may not derive rights from the type or timing of realisation or enforcement or from the relinquishing of other security.
		

		
			7NOTICE AND ACKNOWLEDGEMENT
		

		
			7.1Notice and acknowledgement of pledge
		

		
			 
		

		
			7
		

		

		

		 

 

		Pursuant to Section 1280 of the German Civil Code (Bürgerliches Gesetzbuch) the Pledgor hereby gives notice to the Account Bank in its capacity as account holding bank and the Account Bank in its before-mentioned capacity hereby acknowledges receipt of such notification.
		

		
			8APPLICATION OF MONEYS
		

		
			All sums received by the Security Agent under this Agreement or in connection with the realisation or enforcement of any security created by this Agreement over the Account shall be held by the Security Agent upon trust:
		

			
	
			
				 (a)
			

			
	
			
			first, to pay or discharge any expenses or liabilities (including any interest) which have been paid or incurred by the Security Agent or any Delegate in or in connection with the exercise of its powers under the Transaction Documents; and

			
	
			
				 (b)
			

			
	
			
			secondly, to pay the balance over to the Facility Agent for application in accordance with clause 8.2 (Application of Moneys) of the Credit Agreement.

		
			9FURTHER DOCUMENTATION ETC.
		

		
			9.1Obligation to execute further documents etc.
		

		
			The Pledgor shall execute immediately any document which the Security Agent may specify for the purpose of:
		

			
	
			
				 (a)
			

			
	
			
			supplementing the rights which this Agreement confers on the Security Agent in relation to the Account and/or the Credit Balance;

			
	
			
				 (b)
			

			
	
			
			registering or otherwise perfecting this Agreement; or

			
	
			
				 (c)
			

			
	
			
			ensuring or confirming the validity of anything done or to be done under this Agreement.

		
			9.2Terms of further assurances
		

		
			Any document to be executed pursuant to Clause 9.1 (Obligation to execute further documents etc.) shall be in the terms specified by the Security Agent.
		

		
			9.3Further obligations of Pledgor
		

			
	
			
				 (a)
			

			
	
			
			The Pledgor shall also forthwith do any act and execute any document (including a document which amends or replaces this Agreement) which the Security Agent specifies for the purpose of enabling or assisting the Security Agent, the Account Bank or any Creditor to comply, in relation to the Credit Balance, the Account and/or the Secured Liabilities, with any requirement (legally binding or not) applicable to the Account, the Account Bank, any Creditor or the Security Agent and, in particular, any requirements of a banking supervisory authority with regard to netting or cash collateral.

			
	
			
				 (b)
			

			
	
			
			The Pledgor shall pay to the Security Agent on demand any money paid by it or any Delegate:

			
	
			
				 (i)
			

			
	
			
			as a result of the Security Agent or any Delegate taking action which the Security Agent or such Delegate considers necessary or desirable in connection with the Account or to procure compliance with any obligation of the Pledgor in this Agreement; or

			
	
			
				 (ii)
			

			
	
			
			in respect of any action or thing expressed in this Agreement to be done at the cost of the Pledgor.

		
			 
		

		
			8
		

		
			 
		

		

		

		 

 

		10POWER OF ATTORNEY
		

		
			10.1 Appointment
		

		
			The Pledgor, by way of security for the performance of its obligations under this Agreement, irrevocably appoints (with full power of substitution) the Security Agent as its attorney-in-fact:
		

			
	
			
				 (a)
			

			
	
			
			to do all acts and execute or sign all documents which the Pledgor itself can do and execute in relation to the Account and the Credit Balance including, without limitation, all acts and documents necessary to realise and dispose of the Account and the Credit Balance by such means and on such terms as the Security Agent may determine; and

			
	
			
				 (b)
			

			
	
			
			to do all acts and things and execute or sign all documents which the Pledgor is obliged to do, execute or sign under this Agreement and which it has failed so to do, execute or sign immediately upon the Security Agent's first written demand,

		
			provided that the power of attorney constituted by paragraph (a) of this Clause 10.1 (Appointment) shall be exercisable only on the occurrence of an Event of Default which is continuing.
		

		
			10.2 General power of attorney
		

		
			The power of attorney constituted by Clause 10.1 (Appointment) shall be a general power of attorney.
		

		
			10.3 Specific power of attorney in relation to the Account
		

		
			In addition, for the purpose of securing the Security Agent's interest in the Credit Balance, the Pledgor irrevocably appoints the Security Agent as its attorney, on its behalf and in its name or otherwise to require or authorise the Account Bank:
		

			
	
			
				 (a)
			

			
	
			
			to open any sub account within each or the Account;

			
	
			
				 (b)
			

			
	
			
			to open any other accounts in the name of the Pledgor with the Account Bank; or

			
	
			
				 (c)
			

			
	
			
			to make any entries on, or transfers to or from, each or the Account and/or any account opened under paragraph (b) above,

		
			which the Security Agent considers necessary or convenient for or in connection with any exercise or intended exercise of any rights which the Security Agent has under this Agreement or any other purpose connected with this Agreement. The Security Agent is hereby liberated from the restrictions set out in Section 181 of the German Civil Code (Bürgerliches Gesetzbuch).
		

		
			10.4 Acts of attorney
		

		
			Without limiting its generality, Clause 10.3 (Specific power of attorney in relation to the Account) entitles the Security Agent to require or authorise the Account Bank to break the deposit of the Credit Balance in whole or in part, and to transfer any part or parts of the Credit Balance to sub accounts within the Account [denominated in a different currency or currencies and/or] having a different roll-over date or dates from the rest of the Credit Balance.
		

		
			 
		

		
			9
		

		
			 
		

		

		

		 

 

		10.5Ratification of actions of attorney
		

		
			The Pledgor ratifies and confirms, and agrees to ratify and confirm, any act, deed or document which the Security Agent (or any Delegate or substitute) does or executes pursuant to its terms.
		

		
			10.6Delegation
		

		
			The Security Agent may delegate to any person or persons (such person, a “Delegate”) all or any of the powers and discretions conferred on the Security Agent by Clause 10 (Power of Attorney) and may do so on terms authorising successive sub-delegations.
		

		
			10.7Duration
		

		
			The powers of attorney constituted by Clause 10 (Power of Attorney) shall be granted for the duration of the Security Period.
		

		
			11INCORPORATION OF CREDIT AGREEMENT PROVISIONS
		

		
			11.1Incorporation of specific provisions
		

		
			The following provisions of the Credit Agreement apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications:
		

		
			clause 7.2 (Taxes );
		

		
			clause 18.1 (Notices);
		

		
			clause 19.3 (Unenforceable, etc., Provisions - Effect);
		

		
			clause 19.10 (Remedies Cumulative and Not Exclusive; No Waiver);
		

		
			clause 5.5 (Borrower’s Obligation Absolute); and
		

		
			clause 19.11 (Counterparts; Electronic Delivery).
		

		
			11.2Incorporation of general provisions
		

		
			Clause 11.1 (Incorporation of specific provisions) is without prejudice to the application to this Agreement of any provision of the Credit Agreement which, by its terms, applies or relates to the Transaction Documents generally or this Agreement specifically.
		

		
			12 SUPPLEMENTAL
		

		
			12.1No restriction on other rights
		

			
	
			
				 (a)
			

			
	
			
			Nothing in this Agreement excludes or restricts any form of banker's lien or right of set off or any other right or remedy which the Security Agent or any Creditor would have had, apart from this Agreement, under the general law, or otherwise.

			
	
			
				 (b)
			

			
	
			
			Nothing in this Agreement shall be taken to exclude or restrict any power, right or remedy which the Security Agent or any other Creditor may at any time have under:

			
	
			
				 (i)
			

			
	
			
			any other Transaction Document; or

			
	
			
				 (ii)
			

			
	
			
			the law of any country or territory the courts of which have or claim any jurisdiction in respect of the Pledgor, the Account or the Credit Balance.

		
			 
		

		

		

		 

 

		12.2Exercise of other rights
		

		
			The Security Agent may exercise any right under this Agreement before it or any other security agent has exercised any right referred to in paragraphs (a) or (b) of Clause 12.1 (No restriction on other rights).
		

		
			12.3Settlement or discharge conditional
		

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

		
			13TRANSFER
		

		
			13.1 Transfer by the Security Agent
		

		
			The Security Agent may transfer its rights under and in connection with this Agreement to the same extent as it may transfer its rights under the Credit Agreement and the other Transaction Documents.
		

		
			14GOVERNING LAW
		

		
			This Agreement is governed by German law.
		

		
			15ENFORCEMENT 
15.1 Jurisdiction
		

			
	
			
				 (a)
			

			
	
			
			The courts of Frankfurt am Main, Germany have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement (a "Dispute")).

			
	
			
				 (b)
			

			
	
			
			The Pledgor accepts that the courts of Frankfurt am Main, Germany are the most appropriate and convenient courts to settle Disputes and accordingly it will not argue to the contrary.

			
	
			
				 (c)
			

			
	
			
			This Clause 15.1 (Jurisdiction) is for the benefit of the Security Agent only. As a result, the Security Agent shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Security Agent may take concurrent proceedings in any number of jurisdictions.

		
			15.2 Service of process
		

		
			(a)Without prejudice to any other mode of service allowed under any relevant law, the
		

		
			Pledgor:
		

			
	
			
				 (i)
			

			
	
			
			irrevocably appoints IOS International Overseas Services Aktiengesellschaft fuer Consulting und Unternehmensbetieligungen, c/o Friederici und Partner, Rechtsanwaelte, Chilehaus A, Fischertwiete 2, 20095 Hamburg, Germany as its agent for service of process in relation to any proceedings before the German courts in connection with this Agreement; and

			
	
			
				 (ii)
			

			
	
			
			agrees that failure by a process agent to notify the Pledgor of the process will not invalidate the proceedings concerned.

		
			(b)If any person appointed as an agent for service of process is unable for any reason to act as
		

		
			agent for service of process, the Pledgor must immediately (and in any event within 7 days
		

		
			 
		

		
			11
		

		
			 
		

		

		

		 

 

		of such event taking place) appoint another agent on terms acceptable to the Security Agent. Failing this, the Security Agent may appoint another agent for this purpose.
		

		
			THIS AGREEMENT has been duly executed by or on behalf of the parties on the date stated at the beginning of this Agreement.
		

		
			 
		

		
			12
		

		

		

		 

 

		EXECUTION PAGE
		

		
			 
		

		
			PLEDGOR
		

		
			East Gulf Shipholding, Inc.
		

		
			acting by
		

		
			SECURITY AGENT
		

		
			DVB BANK SE
		

		
			acting by
		

		
			and by
		

		
			ACCOUNT BANK
		

		
			DVB BANK SE
		

		
			acting by
		

		
			and by
		

		
			 
		

		
			13
		

		

		

		 

 

		Exhibit I-2
		

		
			 
		

		
			Dated [•] April 2015
		

		
			East Gulf Shipholding, Inc. 
as Pledgor
		

		
			and
		

		
			DVB Bank SE 
as Security Agent
		

		
			and
		

		
			DVB Bank SE 
as Account Bank
		

		
			RETENTION ACCOUNT PLEDGE
		

		
			relating to the Credit Agreement 
dated [•] April 2015
		

		
			 
		

		

		

		 

 

		Index
		

		
			Clause
		

		
			1Definitions and Interpretation 1
		

		
			2Position of Security Agent and Covenant to Pay and Perform 2
		

		
			3Pledge and Enforceability 3
		

		
			4Undertakings 4
		

		
			5Protection of Security 5
		

		
			6Enforceability and Security Agent's Powers 6
		

		
			7Notice and Acknowledgement 7
		

		
			8Application of Moneys 8
		

		
			9Further Documentation etc. 8
		

		
			10Power of Attorney 9
		

		
			11Incorporation of Credit Agreement Provisions 10
		

		
			12Supplemental 10
		

		
			13Transfer 11
		

		
			14Governing Law 11
		

		
			15Enforcement 11
		

		
			Execution
		

		
			Execution Page 13
		

		
			 
		

		

		

		 

 

		THIS AGREEMENT is made on [•] April 2015 PARTIES
		

			
	
			
				 (1)
			

			
	
			
			East Gulf Shipholding, Inc. a corporation organized in the Marshall Islands with number [•] whose principal office is at [•] (the "Pledgor")

			
	
			
				 (2)
			

			
	
			
			DVB BANK SE (“DVB”) as security agent for the Lenders acting in such capacity through its office at Park House, 16-18 Finsbury Circus, London EC2M 7EB, United Kingdom (the "Security Agent")

			
	
			
				 (3)
			

			
	
			
			DVB BANK SE as account bank for the Lenders acting in such capacity through its office at Platz der Republik 6, D-60325 Frankfurt am Main, Germany (the "Account Bank")

		
			BACKGROUND
		

			
	
			
				 (A)
			

			
	
			
			By the Credit Agreement the Lenders agreed to make available to the Pledgor a facility of US$ 32,000,000.

			
	
			
				 (B)
			

			
	
			
			By the Credit Agreement it was agreed that the Security Agent in that capacity would hold the Collateral on trust for the Creditors.

			
	
			
				 (C)
			

			
	
			
			Under the Credit Agreement the Pledgor has opened, and is to maintain, with the Account Bank the Retention Account.

			
	
			
				 (D)
			

			
	
			
			It is a condition precedent to the availability of the Facility under the Credit Agreement that the Pledgor enters into this Agreement as security for the Secured Liabilities.

			
	
			
				 (E)
			

			
	
			
			This Agreement supplements the Credit Agreement and is the Account Pledge of the Retention Account referred to in the Credit Agreement.

		
			OPERATIVE PROVISIONS
		

		
			1DEFINITIONS AND INTERPRETATION
		

		
			1.1Definitions
		

		
			In this Agreement:
		

		
			"Account" means the Retention Account. "Credit Balance" means:
		

			
	
			
				 (a)
			

			
	
			
			the amount at the time of determination standing to the credit of the Account; and

			
	
			
				 (b)
			

			
	
			
			any amount received by or for the account of the Account Bank which the Account Bank is under a duty to credit to the Account but which the Account Bank has not yet credited to the Account; and

			
	
			
				 (c)
			

			
	
			
			any interest accrued or accruing on an amount covered by paragraph (a) or (b) above, whether or not the interest has been credited to the Account.

		
			"Credit Agreement" means the credit agreement dated [•] April 2015 and made between, amongst others, (i) the Pledgor as Borrower, (ii) International Shipholding Corporation (“ISH”) as Guarantor, (iii) the Lenders, (iv) the Facility Agent, (v) the Security Agent in that capacity and (vi) DVB as mandated lead arranger.
		

		
			 
		

		

		

		 

 

		"Intercreditor Agreement" means the pari passu intercreditor agreement to be entered into by the Pledgor, ISH and DVB in its capacity as (i) facility agent under the Credit Agreement and (ii) facility agent under that certain credit agreement originally entered into by and among (1) Waterman Steamship Corporation, as borrower, (2) ISH, as guarantor, (3) the banks and financial institutions listed on Schedule I thereto, as lenders (4) DVB, as facility agent and security trustee for the lenders and (5) DVB, as mandated lead arranger, dated as of August 26, 2014, as amended by an Amendment No. 1 dated October 28, 2014 and an Amendment No. 2 dated November 24, 2014 and an Assignment and Assumption Agreement, dated December 29, 2014, whereby LCI Shipholdings, Inc. was deemed the ultimate borrower.
		

		
			"Retention Account" means:
		

			
	
			
				 (a)
			

			
	
			
			an account in the name of the Pledgor with the Account Bank designated "GLOVIS COUNTESS - Retention Account"; or

			
	
			
				 (b)
			

			
	
			
			any other account (with that or another office of the Account Bank or with a bank or financial institution other than the Account Bank) which is designated by the Security Agent acting on the instructions of the Facility Agent as the Retention Account for the purposes of this Agreement.

		
			"Secured Liabilities" means all present and future obligations and liabilities (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of
		

		
			the Pledgor to any Creditor under or in connection with each Transaction Document.
		

		
			"Security Period" means the period commencing on the date of this Agreement and ending on the date on which the Pledgor shall pay and discharge all of its obligations under or in connection with the Credit Agreement, or is released therefrom in accordance with the terms thereof.
		

		
			1.2Defined expressions
		

		
			Defined expressions in the Credit Agreement shall have the same meanings when used in this Agreement unless the context otherwise requires or unless otherwise defined in this Agreement.
		

		
			1.3Application of construction and interpretation provisions of Credit Agreement
		

		
			Clause 1.2 (construction) of the Credit Agreement applies to this Agreement as if it were expressly incorporated in it with any necessary modifications.
		

		
			1.4Inconsistency between Credit Agreement or Intercreditor Agreement provisions and this
		

		
			Agreement
		

		
			This Agreement shall be read together with the Credit Agreement and the Intercreditor Agreement, but in case of any conflict between the Credit Agreement or Intercreditor Agreement and this Agreement, unless expressly provided to the contrary in this Agreement, the provisions of the Credit Agreement or Intercreditor Agreement, as applicable, shall prevail.
		

		
			2POSITION OF SECURITY AGENT AND COVENANT TO PAY AND PERFORM
		

		
			2.1Position of Security Agent
		

		
			The Pledgor agrees and acknowledges that the Security Agent holds its rights under this Agreement on trust for itself (including in its capacity as a Lender) and the Creditors. The Pledgor further agrees and acknowledges that for the purposes of this Clause 2 (Position of Security Agent and Covenant to Pay and Covenant to Perform):
		

		
			 
		

		

		

		 

 

		the term "Creditors" includes any present lenders that are, and any future lenders that by transfer or accession, may become, lenders in accordance with the terms of the Credit Agreement;
		

			
	
			
				 (a)
			

			
	
			
			the Security Agent is also acting on behalf of such present and future lenders as attorney without authority (Vertreter ohne Vertretungsmacht); and

			
	
			
				 (b)
			

			
	
			
			the Security Agent is liberated from the restrictions set out in Section 181 of the German Civil Code (Bürgerliches Gesetzbuch).

		
			2.2Covenant to Pay
		

			
	
			
				 (a)
			

			
	
			
			The Pledgor undertakes with the Security Agent as a separate covenant that it will pay to the Security Agent an amount equal to the amount of the Secured Liabilities, always provided that any reduction of the Secured Liabilities shall pro tanto reduce the amount payable to the Security Agent under this covenant.

			
	
			
				 (b)
			

			
	
			
			The Pledgor shall duly and punctually pay and discharge the Secured Liabilities in the manner provided for in the Transaction Documents.

		
			2.3Covenant to Perform
		

		
			The Pledgor covenants with the Security Agent to observe and perform all its obligations to the Security Agent in its capacity as Security Agent and in any other capacity, and the other Creditors or any of them under the Transaction Documents, in addition to those referred to in Clause 2.2 (Covenant to Pay),
		

		
			3PLEDGE AND ENFORCEABILITY
		

		
			3.1General
		

		
			Each security created by this Agreement is a continuing security for the due and punctual payment by the Pledgor and any other Security Party of the Secured Liabilities under Clause 2.2 (Covenant to Pay) and the observation and performance by the Pledgor of all its obligations under Clause 2.3 (Covenant to Perform).
		

		
			3.2Pledge
		

		
			The Pledgor to the full extent of its interest, hereby pledges (verpfändet) at the same time and pari passu in rank the Account (including without limitation the Credit Balance on the Account) to the Security Agent.
		

		
			3.3Continuing security
		

		
			(a)This Agreement shall remain in force until the end of the Security Period as a continuing
		

		
			security and, in particular:
		

			
	
			
				 (i)
			

			
	
			
			the security created by Clause 3 (Pledge and Enforceability) will extend to the ultimate balance of all sums payable by the Pledgor under the Transaction Documents, regardless of any intermediate payment or discharge in whole or in part;

			
	
			
				 (ii)
			

			
	
			
			the security created by Clause 3 (Pledge and Enforceability), and the rights of the Security Agent under this Agreement, are only capable of being extinguished, limited or otherwise adversely affected by an express and specific term in a document signed by or on behalf of the Security Agent;

		
			 
		

		
			3
		

		

		

		 

 

		(iii)no failure or delay by or on behalf of the Security Agent to enforce or exercise a
		

		
			security created by Clause 3 (Pledge and Enforceability) or a right of the Security Agent under this Agreement, and no act, course of conduct, acquiescence or failure to act (or to prevent the Pledgor from taking certain action) which is inconsistent with such a security or with such a right shall preclude or estop (either permanently or temporarily) the Security Agent from enforcing or exercising it.
		

		
			(b)This Agreement is in addition to and is not in any way prejudiced by, and shall not prejudice
		

		
			any guarantee or other security or any other right of recourse now or subsequently held by any Creditor or any right of set-off or netting or rights to combine accounts in connection with the Transaction Documents.
		

		
			4UNDERTAKINGS
		

		
			4.1General
		

		
			The undertakings in this Clause 4 (Undertakings) remain in force throughout the Security Period except as the Security Agent may otherwise permit.
		

		
			4.2Restrictions on dealing with Credit Balance
		

		
			Subject to Clause 4.6 (Execution of instructions), the Pledgor shall not attempt to withdraw, transfer or in any other way deal with all or any part of the Credit Balance on the Retention Account.
		

		
			4.3Restrictions on operation of the Account
		

		
			Subject to Clause 4.6 (Execution of instructions), the Pledgor shall not purport to give any authorisation or instruction to the Account Bank concerning the Retention Account.
		

		
			4.4Maintenance of rights in relation to the Account
		

		
			Subject to Clause 4.6 (Execution of instructions), the Pledgor shall not attempt to vary, or permit to be varied, any right relating to the Account or to a Credit Balance on the Account.
		

		
			4.5No waiver of rights in relation to the Account
		

		
			The Pledgor shall not waive any right relating to the Account or to a Credit Balance nor permit any such right to be lost, suspended or impaired.
		

		
			4.6Execution of instructions
		

		
			The Pledgor shall, if so required by the Security Agent, immediately execute any document which the Security Agent may specify for the purpose of, or in connection with, any withdrawal, transfer or other dealing with all or any part of a Credit Balance or any variation to any right relating to the Account or to a Credit Balance on the Account.
		

		
			4.7Action to protect validity of security over the Account
		

		
			The Pledgor shall take any action which the Security Agent may specify with a view to ensuring or protecting the validity, enforceability and/or priority of any interest or right created by this Agreement in respect of the Account and the Credit Balance on the Account.
		

		
			 
		

		
			4
		

		

		

		 

 

		4.8Action to enforce security
		

		
			The Pledgor shall:
		

			
	
			
				 (a)
			

			
	
			
			take any action which the Security Agent may direct for the purpose of enforcing (through legal process, arbitration or otherwise) any right which is part of, or which relates to, the Account or the Credit Balance on the Account; and

			
	
			
				 (b)
			

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

		
			4.9Co-operation and assistance relating to the Account
		

		
			The Pledgor shall forthwith provide the Security Agent and its officers and representatives with full and prompt co-operation and assistance relating to the Account.
		

		
			4.10 Negative pledge
		

			
	
			
				 (a)
			

			
	
			
			The Pledgor shall not create or permit to subsist any security over the Account or the Credit Balance on the Account, except as permitted by the Credit Agreement.

			
	
			
				 (b)
			

			
	
			
			This Clause 4.10 (Negative pledge) is in addition to, and shall not be limited by, any provision of the Credit Agreement.

		
			4.11 Disposals
		

		
			The Pledgor shall not dispose of a Credit Balance on the Account.
		

		
			4.12Protection of Creditor interests
		

		
			The Pledgor shall not enter into any transaction, or do anything, which is contrary to, or which may adversely affect, the rights of the Security Agent under this Agreement or any Creditor's interest in those rights.
		

		
			5PROTECTION OF SECURITY
		

		
			5.1Protection of Security
		

		
			The Security Agent may, but shall not be obliged to, take any action which it may think fit for the purpose of protecting or maintaining the security created or intended to be created by this Agreement or for any similar or related purpose.
		

		
			5.2No obligations imposed on Security Agent
		

		
			The Pledgor shall remain liable to perform all obligations connected with the Account and the Security Agent shall not, in any circumstances, have or incur any obligation of any kind in connection with the Account.
		

		
			5.3Release of Security
		

		
			At the end of the Security Period, the Security Agent shall, at the request and cost of the Pledgor, release such rights as the Security Agent then has to, or in connection with, the Account.
		

		
			 
		

		
			5
		

		

		

		 

 

		6ENFORCEABILITY AND SECURITY AGENT'S POWERS
		

		
			6.1Right to enforce security
		

		
			Upon the requirements set forth in Section 1204 et seq. of the German Civil Code (Bürgerliches Gesetzbuch) with regard to the enforcement of the pledge being met (Pfandreife):
		

			
	
			
				 (a)
			

			
	
			
			the security constituted by this Agreement shall immediately become enforceable for all purposes;

			
	
			
				 (b)
			

			
	
			
			the Security Agent shall (subject only to any of the express restrictions or conditions contained in this Agreement) be entitled then or at any later time or times to exercise the powers set out in Clause 6.2 (Right to apply Credit Balance) and all other powers in this Agreement and in any other Transaction Document; and

			
	
			
				 (c)
			

			
	
			
			the Security Agent shall be entitled then or at any later time or times to exercise any other rights which it has, upon default of the Pledgor, under the laws of the Federal Republic of Germany.

		
			6.2Right to apply Credit Balance
		

		
			Subject to the provisions of the Intercreditor Agreement, if the security constituted by this Agreement has become enforceable, the Security Agent shall be entitled then or at any later time or times:
		

			
	
			
				 (a)
			

			
	
			
			to withdraw all or any part of the Credit Balance on the Account and to use the amount withdrawn in or towards discharging the Secured Liabilities; and/or

			
	
			
				 (b)
			

			
	
			
			if applicable, to withdraw all or any part of the Credit Balance on the Earnings Account and to transfer the amount withdrawn to the Retention Account as a monthly retention as stipulated in clause 10.3 (Monthly Retentions) of the Credit Agreement; and/or

			
	
			
				 (c)
			

			
	
			
			to transfer or remit all or any part of the Credit Balance on the Account to the Security Agent or any Creditor up to the amount of the Secured Liabilities to, or for the benefit of, the relevant Security Agent or that Creditor,

		
			and the Security Agent may take any action described in paragraphs (a) to (c) above notwithstanding that any maturity or roll-over date attached to any part or parts of the Credit Balance may not yet have arrived.
		

		
			6.3No liability of Security Agent
		

		
			(a)Neither the Security Agent (nor any Delegate(as hereinafter defined)) shall be obliged to:
		

			
	
			
				 (i)
			

			
	
			
			check the nature or sufficiency of any payment received by it under this Agreement; or

			
	
			
				 (ii)
			

			
	
			
			preserve, exercise or enforce any right forming part of, or relating to, the Account or any of the Credit Balance.

		
			(b)In addition to, and without limiting, any exclusion or limitation of liability of any Creditor
		

		
			under any Transaction Document, neither the Security Agent nor any Delegate shall have any liability to any Security Party:
		

		
			(i)for any loss caused by an exercise of, or failure to exercise, rights under or
		

		
			enforcement of, or failure to enforce any security created by this Agreement to the extent possible under German law;
		

		
			 
		

		
			6
		

		
			 
		

		 

 

			
	
			
				 (ii)
			

			
	
			
			to account for any income or principal amount which might have been produced or realised from any asset forming part of or subject to any security created by this Agreement; or

			
	
			
				 (iii)
			

			
	
			
			for any reduction in the value of any asset forming part of or subject to any security created by this Agreement.

		
			6.4No requirement to commence proceedings
		

		
			Waiving the requirements of Section 1277 of the German Civil Code (Bürgerliches Gesetzbuch) none of the Security Agent nor any other Creditor will need to commence any proceedings under, or enforce any security created by, the Credit Agreement or any other Transaction Document before commencing proceedings under, or enforcing any security created by, this Agreement.
		

		
			6.5Right to convert Credit Balance
		

		
			For the purposes of this Agreement:
		

			
	
			
				 (a)
			

			
	
			
			The Security Agent may convert any moneys received or recovered by it under this Agreement from one currency to another, at a market rate of exchange.

			
	
			
				 (b)
			

			
	
			
			The obligations of the Pledgor to pay in the due currency shall only be satisfied to the extent of the amount of the due currency purchased after deducting the costs of conversion.

		
			6.6Prior Security
		

		
			(a)At any time after the security created by this Agreement has become enforceable, the
		

		
			Security Agent may:
		

			
	
			
				 (i)
			

			
	
			
			redeem any prior security over all or any part of the Account;

			
	
			
				 (ii)
			

			
	
			
			procure the transfer of that security to itself; and/or

			
	
			
				 (iii)
			

			
	
			
			settle the Account of any prior mortgagee, chargee or encumbrancer and any accounts so settled will be, in the absence of manifest error, conclusive and binding on the Pledgor.

		
			(b)The Pledgor shall pay to the Security Agent immediately upon demand the costs and
		

		
			expenses incurred by the Security Agent in connection with any such redemption, settlement and/or transfer including the payment of any principal or interest.
		

		
			6.7Waiver of defences
		

		
			For the benefit of the Security Agent the Pledgor hereby expressly waives its right to the defences of voidability (Anfechtbarkeit), rescission (Rücktritt) and set-off (Aufrechnung) (except with counterclaims that are undisputed or adjudged to be due) as defined in Sections 1211 and 770 of the German Civil Code (Bürgerliches Gesetzbuch) and any rights in its favour that may from time to time result from the release of other security or security rights granted by it to the Security Agent or any Creditor. The Pledgor may not derive rights from the type or timing of realisation or enforcement or from the relinquishing of other security.
		

		
			7NOTICE AND ACKNOWLEDGEMENT
		

		
			7.1Notice and acknowledgement of pledge
		

		
			 
		

		
			7
		

		
			 
		

		

		

		 

 

		Pursuant to Section 1280 of the German Civil Code (Bürgerliches Gesetzbuch) the Pledgor hereby gives notice to the Account Bank in its capacity as account holding bank and the Account Bank in its before-mentioned capacity hereby acknowledges receipt of such notification.
		

		
			8APPLICATION OF MONEYS
		

		
			All sums received by the Security Agent under this Agreement or in connection with the realisation or enforcement of any security created by this Agreement over the Account shall be held by the Security Agent upon trust:
		

			
	
			
				 (a)
			

			
	
			
			first, to pay or discharge any expenses or liabilities (including any interest) which have been paid or incurred by the Security Agent or any Delegate in or in connection with the exercise of its powers under the Transaction Documents; and

			
	
			
				 (b)
			

			
	
			
			secondly, to pay the balance over to the Facility Agent for application in accordance with clause 8.2 (Application of Moneys) of the Credit Agreement.

		
			9FURTHER DOCUMENTATION ETC.
		

		
			9.1Obligation to execute further documents etc.
		

		
			The Pledgor shall execute immediately any document which the Security Agent may specify for the purpose of:
		

			
	
			
				 (a)
			

			
	
			
			supplementing the rights which this Agreement confers on the Security Agent in relation to the Account and/or the Credit Balance;

			
	
			
				 (b)
			

			
	
			
			registering or otherwise perfecting this Agreement; or

			
	
			
				 (c)
			

			
	
			
			ensuring or confirming the validity of anything done or to be done under this Agreement.

		
			9.2Terms of further assurances
		

		
			Any document to be executed pursuant to Clause 9.1 (Obligation to execute further documents etc.) shall be in the terms specified by the Security Agent.
		

		
			9.3Further obligations of Pledgor
		

			
	
			
				 (a)
			

			
	
			
			The Pledgor shall also forthwith do any act and execute any document (including a document which amends or replaces this Agreement) which the Security Agent specifies for the purpose of enabling or assisting the Security Agent, the Account Bank or any Creditor to comply, in relation to the Credit Balance, the Account and/or the Secured Liabilities, with any requirement (legally binding or not) applicable to the Account, the Account Bank, any Creditor or the Security Agent and, in particular, any requirements of a banking supervisory authority with regard to netting or cash collateral.

			
	
			
				 (b)
			

			
	
			
			The Pledgor shall pay to the Security Agent on demand any money paid by it or any Delegate:

			
	
			
				 (i)
			

			
	
			
			as a result of the Security Agent or any Delegate taking action which the Security Agent or such Delegate considers necessary or desirable in connection with the Account or to procure compliance with any obligation of the Pledgor in this Agreement; or

			
	
			
				 (ii)
			

			
	
			
			in respect of any action or thing expressed in this Agreement to be done at the cost of the Pledgor.

		
			 
		

		
			8
		

		
			 
		

		

		

		 

 

		10POWER OF ATTORNEY
		

		
			10.1 Appointment
		

		
			The Pledgor, by way of security for the performance of its obligations under this Agreement, irrevocably appoints (with full power of substitution) the Security Agent as its attorney-in-fact:
		

			
	
			
				 (a)
			

			
	
			
			to do all acts and execute or sign all documents which the Pledgor itself can do and execute in relation to the Account and the Credit Balance including, without limitation, all acts and documents necessary to realise and dispose of the Account and the Credit Balance by such means and on such terms as the Security Agent may determine; and

			
	
			
				 (b)
			

			
	
			
			to do all acts and things and execute or sign all documents which the Pledgor is obliged to do, execute or sign under this Agreement and which it has failed so to do, execute or sign immediately upon the Security Agent's first written demand,

		
			provided that the power of attorney constituted by paragraph (a) of this Clause 10.1 (Appointment) shall be exercisable only on the occurrence of an Event of Default which is continuing.
		

		
			10.2 General power of attorney
		

		
			The power of attorney constituted by Clause 10.1 (Appointment) shall be a general power of attorney.
		

		
			10.3 Specific power of attorney in relation to the Account
		

		
			In addition, for the purpose of securing the Security Agent's interest in the Credit Balance, the Pledgor irrevocably appoints the Security Agent as its attorney, on its behalf and in its name or otherwise to require or authorise the Account Bank:
		

			
	
			
				 (a)
			

			
	
			
			to open any sub account within each or the Account;

			
	
			
				 (b)
			

			
	
			
			to open any other accounts in the name of the Pledgor with the Account Bank; or

			
	
			
				 (c)
			

			
	
			
			to make any entries on, or transfers to or from, each or the Account and/or any account opened under paragraph (b) above,

		
			which the Security Agent considers necessary or convenient for or in connection with any exercise or intended exercise of any rights which the Security Agent has under this Agreement or any other purpose connected with this Agreement. The Security Agent is hereby liberated from the restrictions set out in Section 181 of the German Civil Code (Bürgerliches Gesetzbuch).
		

		
			10.4 Acts of attorney
		

		
			Without limiting its generality, Clause 10.3 (Specific power of attorney in relation to the Account) entitles the Security Agent to require or authorise the Account Bank to break the deposit of the Credit Balance in whole or in part, and to transfer any part or parts of the Credit Balance to sub accounts within the Account [denominated in a different currency or currencies and/or] having a different roll-over date or dates from the rest of the Credit Balance.
		

		
			 
		

		
			9
		

		

		

		 

 

		10.5Ratification of actions of attorney
		

		
			The Pledgor ratifies and confirms, and agrees to ratify and confirm, any act, deed or document which the Security Agent (or any Delegate or substitute) does or executes pursuant to its terms.
		

		
			10.6Delegation
		

		
			The Security Agent may delegate to any person or persons (such person, a “Delegate”) all or any of the powers and discretions conferred on the Security Agent by Clause 10 (Power of Attorney) and may do so on terms authorising successive sub-delegations.
		

		
			10.7Duration
		

		
			The powers of attorney constituted by Clause 10 (Power of Attorney) shall be granted for the duration of the Security Period.
		

		
			11INCORPORATION OF CREDIT AGREEMENT PROVISIONS
		

		
			11.1Incorporation of specific provisions
		

		
			The following provisions of the Credit Agreement apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications:
		

		
			clause 7.2 (Taxes );
		

		
			clause 18.1 (Notices);
		

		
			clause 19.3 (Unenforceable, etc., Provisions - Effect);
		

		
			clause 19.10 (Remedies Cumulative and Not Exclusive; No Waiver);
		

		
			clause 5.5 (Borrower’s Obligation Absolute); and
		

		
			clause 19.11 (Counterparts; Electronic Delivery).
		

		
			11.2Incorporation of general provisions
		

		
			Clause 11.1 (Incorporation of specific provisions) is without prejudice to the application to this Agreement of any provision of the Credit Agreement which, by its terms, applies or relates to the Transaction Documents generally or this Agreement specifically.
		

		
			12 SUPPLEMENTAL
		

		
			12.1No restriction on other rights
		

			
	
			
				 (a)
			

			
	
			
			Nothing in this Agreement excludes or restricts any form of banker's lien or right of set off or any other right or remedy which the Security Agent or any Creditor would have had, apart from this Agreement, under the general law, or otherwise.

			
	
			
				 (b)
			

			
	
			
			Nothing in this Agreement shall be taken to exclude or restrict any power, right or remedy which the Security Agent or any other Creditor may at any time have under:

			
	
			
				 (i)
			

			
	
			
			any other Transaction Document; or

			
	
			
				 (ii)
			

			
	
			
			the law of any country or territory the courts of which have or claim any jurisdiction in respect of the Pledgor, the Account or the Credit Balance.

		
			 
		

		
			10
		

		
			 
		

		

		

		 

 

		12.2Exercise of other rights
		

		
			The Security Agent may exercise any right under this Agreement before it or any other security agent has exercised any right referred to in paragraphs (a) or (b) of Clause 12.1 (No restriction on other rights).
		

		
			12.3Settlement or discharge conditional
		

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

		
			13TRANSFER
		

		
			13.1 Transfer by the Security Agent
		

		
			The Security Agent may transfer its rights under and in connection with this Agreement to the same extent as it may transfer its rights under the Credit Agreement and the other Transaction Documents.
		

		
			14GOVERNING LAW
		

		
			This Agreement is governed by German law.
		

		
			15ENFORCEMENT 
15.1 Jurisdiction
		

			
	
			
				 (a)
			

			
	
			
			The courts of Frankfurt am Main, Germany have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement (a "Dispute")).

			
	
			
				 (b)
			

			
	
			
			The Pledgor accepts that the courts of Frankfurt am Main, Germany are the most appropriate and convenient courts to settle Disputes and accordingly it will not argue to the contrary.

			
	
			
				 (c)
			

			
	
			
			This Clause 15.1 (Jurisdiction) is for the benefit of the Security Agent only. As a result, the Security Agent shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Security Agent may take concurrent proceedings in any number of jurisdictions.

		
			15.2 Service of process
		

		
			(a)Without prejudice to any other mode of service allowed under any relevant law, the
		

		
			Pledgor:
		

			
	
			
				 (i)
			

			
	
			
			irrevocably appoints IOS International Overseas Services Aktiengesellschaft fuer Consulting und Unternehmensbetieligungen, c/o Friederici und Partner, Rechtsanwaelte, Chilehaus A, Fischertwiete 2, 20095 Hamburg, Germany as its agent for service of process in relation to any proceedings before the German courts in connection with this Agreement; and

			
	
			
				 (ii)
			

			
	
			
			agrees that failure by a process agent to notify the Pledgor of the process will not invalidate the proceedings concerned.

		
			(b)If any person appointed as an agent for service of process is unable for any reason to act as
		

		
			agent for service of process, the Pledgor must immediately (and in any event within 7 days
		

		
			 
		

		
			11
		

		
			 
		

		

		

		 

 

		of such event taking place) appoint another agent on terms acceptable to the Security Agent. Failing this, the Security Agent may appoint another agent for this purpose.
		

		
			THIS AGREEMENT has been duly executed by or on behalf of the parties on the date stated at the beginning of this Agreement.
		

		
			 
		

		
			12
		

		
			 
		

		

		

		 

 

		EXECUTION PAGE
		

		
			 
		

		
			PLEDGOR
		

		
			East Gulf Shipholding, Inc.
		

		
			acting by
		

		
			SECURITY AGENT
		

		
			DVB BANK SE
		

		
			acting by
		

		
			and by
		

		
			ACCOUNT BANK
		

		
			DVB BANK SE
		

		
			acting by
		

		
			and by
		

		
			 
		

		
			13
		

		
			 
		

		

		

		 

 

		EXHIBIT J
		

		
			MANAGER’S UNDERTAKING
		

		
			April ___, 2015
		

		
			DVB Bank SE
		

		
			Park House
		

		
			16-18 Finsbury Circus
		

		
			London EC2M 7EB, United Kingdom
		

		
			Attention: Peter Attridge
		

		
			Department: Transaction and Loan Services
		

		
			 tls.london@dvbbank.com
		

		
			Fax: +44 207 256 4352
		

		
			with a copy to:
		

		
			DVB TRANSPORT (US) LLC
		

		
			609 Fifth Avenue, 5th Floor
		

		
			New York, New York 10017, USA
		

		
			Facsimile: +1 212 858 2664/+ 1 917 369 2196 Attention: Christoph Clauss/Matthew Galici  christoph.clauss@dvbbank.com/  matthew.galici@dvbbank.com
		

		
			EAST GULF SHIPHOLDING, INC. (the “Owner”) Dear Sirs:
		

		
			We refer to that certain credit agreement dated as of April __, 2015 (the "Credit Agreement"), made by and among (1) the Owner, as borrower, (2) INTERNATIONAL SHIPHOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware, as guarantor (the "Guarantor"), (3) the banks and financial institutions listed on Schedule I of the Credit Agreement, as lenders (together with any bank or financial institution which becomes a Lender pursuant to Section 12 of the Credit Agreement, the “Lenders” and each a “Lender”), (4) DVB BANK SE (“DVB”), as facility agent for the Lenders and security trustee for the Lenders (in such capacities, the “Facility Agent” and the "Security Trustee", respectively) and (5) DVB, as mandated lead arranger, the Lenders have agreed to make available to the Owner a secured term loan facility in the amount of up to Thirty Two Million Dollars ($32,000,000).
		

		
			We hereby confirm that we have been appointed as the [commercial][technical] manager of the Marshall Islands flag vessel [GLOVIS COUNTESS, IMO No. 9476721][GREEN BAY, IMO No. 9339818] (the “Vessel”), pursuant to a management agreement (the “Management Agreement”),
		

		
			dated as of__, 20__, between the Owner and ourselves. We hereby represent and 
warrant that the copy of the Management Agreement attached hereto is a true and complete copy of the Management Agreement, and that there have been no amendments or variations thereto or defaults thereunder by us or, to the best of our knowledge and belief, the Owner.
		

		
			In consideration of the Creditors (as defined in the Credit Agreement) granting their approval to our appointment as manager of the Vessel, we hereby irrevocably and unconditionally undertake with the Creditors as follows that:
		

		
			 
		

		 

 

			
	
			
				 (a)
			

			
	
			
			all claims of whatsoever nature which we have or may at any time hereafter have against or in connection with the Vessel, its earnings, insurances or requisition compensation, or against the Owner, shall rank after and be in all respects subordinate to all of the rights and claims of the Creditors against such property or persons; provided, however, so long as no Event of Default (as defined in the Credit Agreement) shall have occurred or be continuing, any amount due to us under the Management Agreement may be paid by the Owner;

			
	
			
				 (b)
			

			
	
			
			we shall not institute any legal or quasi-legal proceedings under any jurisdiction at any time hereafter against the Vessel, its earnings, insurances or requisition compensation, or against the Owner in any capacity without the Facility Agent’s express, prior written consent;

			
	
			
				 (c)
			

			
	
			
			we shall upon the Facility Agent’s written request deliver to the Facility Agent all documents of whatever nature held by us or any sub-manager appointed by us in connection with the Owner or the Vessel, its earnings, insurances or requisition compensation;

			
	
			
				 (d)
			

			
	
			
			we shall not do, or omit to do, or cause anything to be done or omitted, which might be contrary to or incompatible with the obligations undertaken by the Owner under the Credit Agreement and the other Transaction Documents (as defined in the Credit Agreement);

			
	
			
				 (e)
			

			
	
			
			we shall not agree or purport to agree to any material amendment or variation or termination of the Management Agreement without the prior written consent of the Lenders, except where the amendment or variation is required to comply with applicable laws or regulations;

			
	
			
				 (f)
			

			
	
			
			we shall (i) direct and procure that all moneys payable to us or through us with respect to any charter or other contract of employment with respect to the Vessel (“Charter Revenue”)

		
			shall be paid directly into (A) our account at DVB BANK SE (Account No.)  
(the “[EGS] Account”), or (B) the Owner’s Earnings Account (as defined in the Credit Agreement), and (ii) direct and procure that all aforesaid moneys received into the [EGS] Account shall be remitted from such account to the Owner’s Earnings Account (as defined in the Credit Agreement) as soon as possible after receipt thereof;
		

			
	
			
				 (g)
			

			
	
			
			we shall ensure that no Charter Revenue shall be paid into or through any account which is pledged or assigned to, or otherwise encumbered or subject to any rights of setoff in favor of, any entity or person other than the Security Trustee;

			
	
			
				 (h)
			

			
	
			
			we shall procure that any sub-manager appointed by us will, on or before the date of such appointment, enter into an undertaking in favor of the Creditors in substantially the same form as this letter;

			
	
			
				 (i)
			

			
	
			
			we shall advise the Facility Agent in writing prior to our ceasing to be the manager of the Vessel; and

			
	
			
				 (j)
			

			
	
			
			we shall immediately advise the Facility Agent in writing if the Vessel’s Safety Management Certificate is withdrawn.

		
			Upon satisfaction of the indebtedness of the Owner to the Creditors under the Credit Agreement and the other applicable Transaction Documents, our obligations hereunder shall terminate.
		

		
			 
		

		

		

		 

 

		The provisions of this letter shall be governed by, and construed in accordance with, the laws of the State of New York.
		

		
			Any legal action or proceeding with respect to this letter may be brought in any New York State court or Federal court of the United States of America sitting in New York City and any appellate court from any thereof or such other courts having jurisdiction over such action or proceeding as the Lender may select. By execution and delivery of this letter and for the exclusive benefit of the Lenders, we irrevocably and generally and unconditionally accept the jurisdiction of such courts.
		

		
			[Signature page follows]
		

		
			 
		

		

		

		 

 

		[MANAGER]
		

		
			By:___
		

		
			Name: Title:
		

		
			 
		

		
			 
		

		

		

		 

 

		COPY OF MANAGEMENT AGREEMENT
		

		
			 
		

		
			 
		

		

		

		 

 

		EXHIBIT K
		

		
			FORM OF ASSET MAINTENANCE COMPLIANCE CERTIFICATE
		

		
			CERTIFICATE OF THE CHIEF FINANCIAL OFFICER
		

		
			OF
		

		
			INTERNATIONAL SHIPHOLDING CORPORATION
		

		
			FOR THE PERIOD ENDED [JUNE 30]/[DECEMBER 31], 20__
		

		
			The undersigned, being the chief financial officer of INTERNATIONAL SHIPHOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware (“ISH”), hereby certifies, on behalf of the Borrower (as defined below), to DVB BANK SE (“DVB”), as facility agent for the Lenders, in connection with that certain credit agreement, dated as of April ___, 2015 (the “Credit Agreement”), by and among (1) EAST GULF SHIPHOLDING, INC., a corporation organized under the laws of the Republic of the Marshall Islands, as borrower (together with any successor thereto, the “Borrower”), (2) ISH, as guarantor, (3) the banks and financial institutions listed on Schedule I of the Credit Agreement, as lenders (together with any bank or financial institution which becomes a Lender pursuant to Section 12 of the Credit Agreement, the “Lenders” and each a “Lender”), (4) DVB, as facility agent for the Lenders and security trustee for the Lenders and (5) DVB, as mandated lead arranger, providing for a secured term loan to be made available to the Borrower, in the amount of up to Thirty Two Million Dollars (US$32,000,000) (the “Facility”), that the Borrower is in compliance with the covenant contained in Section 9.4 of the Credit Agreement and Annex A attached hereto shows the calculation thereof in reasonable detail.
		

		
			Capitalized terms used herein without definition have the meaning ascribed thereto in the Credit Agreement.
		

		
			IN WITNESS WHEREOF, the undersigned has executed this Certificate as of this [30th/31st] day of [June/December], 20__.
		

		
			INTERNATIONAL SHIPHOLDING CORPORATION
		

		
			By:___________________________________________________
		

		
			Name: Title:
		

		
			 
		

		

		

		 

 

		ANNEX A
		

		
			Section 9.4 - Fair Market Value
		

		
			The Fair Market Value of the Vessel shall not be less than [INSERT the applicable Required Percentage] of the outstanding amount of the Facility.
		

			
	
			
				 A.
			Fair Market Value of GLOVIS COUNTESS Actual = $

			
	
			
				 B.
			Amount of Facility outstanding_________________________________________________________Actual = $

		
			A expressed as a percentage of BActual = _________________________%
		

		
			Requirement pursuant to Credit Agreement: not less than []%
		

		
			 
		

		

		

		 

 

		EXHIBIT L
		

		
			 
		

		
			PARI PASSU INTERCREDITOR AGREEMENT
		

		
			DVB BANK SE,
		

		
			as Glovis Countess Agent
		

		
			AND
		

		
			DVB BANK SE, 
as Green Bay Agent
		

		
			AND
		

		
			EAST GULF SHIPHOLDING, INC., 
as Borrower
		

		
			AND
		

		
			INTERNATIONAL SHIPHOLDING CORPORATION, 
as Guarantor
		

		
			[  ], 2015
		

		
			 
		

		
			 
		

		

		

		 

 

		THIS AGREEMENT is dated [], 2015 and made by and among:
		

			
	
			
				 (1)
			

			
	
			
			DVB BANK SE as facility agent and security trustee (the "Glovis Countess Agent") and lender under the Glovis Countess Credit Agreement;

			
	
			
				 (2)
			

			
	
			
			DVB BANK SE as facility agent and security trustee (the "Green Bay Agent") and lender under the Green Bay Credit Agreement;

			
	
			
				 (3)
			

			
	
			
			EAST GULF SHIPHOLDING, INC., a corporation organized and existing under the laws of the Republic of the Marshall Islands (the "Borrower"); and

			
	
			
				 (4)
			

			
	
			
			INTERNATIONAL SHIPHOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware (the “Guarantor”).

		
			IT IS AGREED as follows:
		

		
			1.DEFINITIONS AND INTERPRETATION
		

		
			1.1Definitions
		

		
			In this Agreement:
		

		
			"Business Day" means any day that is not a Saturday, Sunday or other day on which banks in London, England, Frankfurt, Germany or New York, New York are authorized or required by law to remain closed.
		

		
			"Cash Proceeds" means:
		

			
	
			
				 (a)
			

			
	
			
			proceeds of the Security Property which are in the form of cash; and

			
	
			
				 (b)
			

			
	
			
			any cash which is generated by holding, managing, exploiting, collecting, realizing or disposing of any proceeds of the Security Property which are in the form of Non-Cash Consideration.

		
			“Controlling Agent” means the Glovis Countess Agent.
		

		
			"Creditors" means the Glovis Countess Creditors and the Green Bay Creditors.
		

		
			"Debt Document" means each of this Agreement, the Glovis Countess Transaction Documents and the Green Bay Transaction Documents.
		

		
			"Distress Event" means any of:
		

			
	
			
				 (a)
			

			
	
			
			an Event of Default; or

			
	
			
				 (b)
			

			
	
			
			an Enforcement Action.

			
	
			
				 
			

			
	
			
			"Enforcement Action" means:

		
			(a)in relation to any Liabilities:
		

			
	
			
				 (i)
			

			
	
			
			the acceleration of any Liabilities or the making of any declaration that any Liabilities are prematurely due and payable (other than as a result of any voluntary prepayment arising under the Debt Documents);

			
	
			
				 (ii)
			

			
	
			
			the making of any declaration that any Liabilities are payable on demand;

		
			 
		

		

		

		 

 

		demand;
		

			
	
			
				 (iv)
			

			
	
			
			the exercise of any right of set-off, account combination or payment netting against any Obligor in respect of any Liabilities other than the exercise of any such right which is otherwise expressly permitted under the Glovis Countess Credit Agreement or the Green Bay Credit Agreement to the extent that the exercise of that right gives effect to a Permitted Payment; and

			
	
			
				 (v)
			

			
	
			
			the suing for, commencing or joining of any legal or arbitration proceedings against either Obligor to recover any Liabilities;

			
	
			
				 (b)
			

			
	
			
			the taking of any steps to enforce or require the enforcement of any Transaction Security;

			
	
			
				 (c)
			

			
	
			
			the entering into of any composition, compromise, assignment or arrangement with either Obligor which owes any Liabilities, or has given any Security, guarantee or indemnity or other assurance against loss in respect of the Liabilities (other than any action permitted under Clause 9 (Changes to the Parties); or

			
	
			
				 (d)
			

			
	
			
			the petitioning, applying or voting for, or the taking of any steps (including the appointment of any liquidator, receiver, administrator or similar officer) in relation to, the winding up, dissolution, administration or reorganization of either Obligor which owes any Liabilities, or has given any Security, guarantee, indemnity or other assurance against loss in respect of any of the Liabilities, or any of such Obligor’s assets or any suspension of payments or moratorium of any indebtedness of any such Obligor, or any analogous procedure or step in any jurisdiction,

		
			except that the taking of any action falling within paragraphs (a)(v) or (d) above which is necessary (but only to the extent necessary) to preserve the validity, existence or priority of claims in respect of Liabilities, including the registration of such claims before any court or governmental authority and the bringing, supporting or joining of proceedings to prevent any loss of the right to bring, support or join proceedings by reason of applicable limitation periods shall not constitute Enforcement Action.
		

		
			"Event of Default" means any event or circumstance specified as such in either the Glovis Countess Credit Agreement or the Green Bay Credit Agreement.
		

		
			"Facility Agreement" means each of the Glovis Countess Credit Agreement and the Green Bay Credit Agreement.
		

		
			"Final Discharge Date" means the later to occur of the Glovis Countess Discharge Date and the Green Bay Discharge Date.
		

		
			"Financial Adviser" means any:
		

			
	
			
				 (a)
			

			
	
			
			independent internationally recognized investment bank;

			
	
			
				 (b)
			

			
	
			
			independent internationally recognized accounting firm;

			
	
			
				 (c)
			

			
	
			
			other independent internationally recognized professional services firm which is regularly engaged in providing valuations of businesses or financial assets or, where applicable, advising on competitive sales processes; or

		
			 
		

		

		

		 

 

		in the Glovis Countess Credit Agreement.
		

		
			"Glovis Countess Credit Agreement" means the credit agreement made by and among, inter alios, the Borrower, the Guarantor and the Glovis Countess Agent, dated April [ ], 2015, as such document is amended, amended and restated, supplemented or otherwise modified from time to time.
		

		
			"Glovis Countess Creditors" means the “Creditors” as defined in the Glovis Countess Credit Agreement.
		

		
			"Glovis Countess Discharge Date" means the first date on which all Glovis Countess Liabilities have been fully and finally discharged to the satisfaction of the Glovis Countess Agent, whether or not as the result of an enforcement, and the Glovis Countess Agent is under no further obligation to provide financial accommodation to the Borrower under the Debt Documents.
		

		
			"Glovis Countess Liabilities" means the Liabilities owed by the Obligors to the Glovis Countess Creditors under or in connection with the Glovis Countess Transaction Documents.
		

		
			"Glovis Countess Transaction Documents" has the meaning given to the term "Transaction Documents" in the Glovis Countess Credit Agreement.
		

		
			"Green Bay Credit Agreement" means the credit agreement made originally by and among, inter alios, Waterman Steamship Corporation, as original borrower, the Guarantor, and the Green Bay Agent, dated August 26, 2014, as such document has been and is amended, amended and restated, supplemented or otherwise modified from time to time.
		

		
			“Green Bay Creditors” means the “Creditors” as defined in the Green Bay Credit Agreement.
		

		
			"Green Bay Discharge Date" means the first date on which all Green Bay Liabilities have been fully and finally discharged to the satisfaction of the Green Bay Agent, whether or not as a result of an enforcement, and the Green Bay Agent is under no further obligation to provide financial accommodation to the Borrower under the Debt Documents.
		

		
			"Green Bay Liabilities" means the Liabilities owed by the Obligors to the Green Bay Creditors under or in connection with the Green Bay Transaction Documents.
		

		
			"Green Bay Transaction Documents" has the meaning given to the term "Transaction Documents" in the Green Bay Credit Agreement.
		

		
			"Insolvency Event" means, in relation to any Obligor:
		

			
	
			
				 (a)
			

			
	
			
			any resolution is passed or order made for the suspension of payments, winding up, dissolution, administration or reorganization of that Obligor, a moratorium is declared in relation to any indebtedness of that Obligor or an administrator is appointed to that Obligor;

			
	
			
				 (b)
			

			
	
			
			any composition, compromise, assignment or arrangement is made with any of its creditors;

		
			 
		

		 

 

			
	
			
				 (c)
			

			
	
			
			the appointment of any liquidator, receiver, administrative receiver, administrator, compulsory manager or other similar officer in respect of that Obligor or any of its assets;

			
	
			
				 (d)
			

			
	
			
			enforcement of any Security over any assets of any Obligor; or

			
	
			
				 (e)
			

			
	
			
			any analogous procedure or step is taken in any jurisdiction.

		
			"Instructing Group" means at any time the “Majority Lenders” as defined in the Glovis Countess Credit Agreement.
		

		
			"Liabilities" means all present and future liabilities and obligations at any time of the Obligors to any Creditor under the Debt Documents, both actual and contingent and whether incurred solely or jointly or as principal or surety or in any other capacity together with any of the following matters relating to or arising in respect of those liabilities and obligations:
		

			
	
			
				 (a)
			

			
	
			
			any refinancing, novation, deferral or extension;

			
	
			
				 (b)
			

			
	
			
			any claim for breach of representation, warranty or undertaking or on an event of default or under any indemnity given under or in connection with any document or agreement evidencing or constituting any other liability or obligation falling within this definition;

			
	
			
				 (c)
			

			
	
			
			any claim for damages or restitution; and

			
	
			
				 (d)
			

			
	
			
			any claim as a result of any recovery by any Debtor of a Payment on the grounds of preference or otherwise,

		
			and any amounts which would be included in any of the above but for any discharge, non-provability, unenforceability or non-allowance of those amounts in any insolvency or other proceedings.
		

		
			"Non-Cash Consideration" means consideration in a form other than cash.
		

		
			"Non-Cash Recoveries" means any amount distributed to the Controlling Agent pursuant to Clause 5 .1 (Turnover by the Creditors), which are, or is, in the form of Non-Cash Consideration.
		

		
			"Obligor" shall mean each of the Borrower and/or the Guarantor. "Party" means a party to this Agreement.
		

		
			"Payment" means, in respect of any Liabilities (or any other liabilities or obligations), a payment, prepayment, repayment, redemption, defeasance or discharge of those Liabilities (or other liabilities or obligations).
		

		
			"Permitted Payment" means a Permitted Glovis Countess Payment or a Permitted Green Bay Payment.
		

		
			"Permitted Glovis Countess Payments" means the Payments permitted by Clause 3.1 (Payment of Glovis Countess Liabilities).
		

		
			"Permitted Green Bay Payments" means the Payments permitted by Clause 3.2 (Payment of Green Bay Liabilities).
		

		
			"Recoveries" has the meaning given to that term in Clause 7.1 (Order of Application).
		

		
			 
		

		

		

		 

 

		"Relevant Liabilities" means Liabilities for which a payment or distribution has been received.
		

		
			"Secured Obligations" means all the Liabilities and all other present and future liabilities and obligations at any time due, owing or incurred by any Obligor to any Creditor under the Debt Documents, both actual and contingent and whether incurred solely or jointly and as principal or surety or in any other capacity.
		

		
			"Security" means a mortgage, charge, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.
		

		
			"Security Documents" means the "Security Documents" under and as defined in the Glovis Countess Credit Agreement and the "Security Documents" under and as defined in the Green Bay Credit Agreement.
		

		
			"Security Property" means:
		

			
	
			
				 (a)
			

			
	
			
			the Transaction Security and all proceeds of that Transaction Security; and

			
	
			
				 (b)
			

			
	
			
			all obligations expressed to be undertaken by an Obligor to pay amounts in respect of the Liabilities to the Creditors and secured by the Transaction Security together with all representations and warranties expressed to be given by an Obligor in favor of either Creditor.

		
			“Taxes” has the meaning assigned to such term in the Glovis Countess Credit Agreement.
		

		
			"Transaction Security" means the Security created or evidenced or expressed to be created or evidenced under or pursuant to the Security Documents.
		

		
			1.2Construction
		

		
			(a)Unless a contrary indication appears, a reference in this Agreement to:
		

			
	
			
				 (i)
			

			
	
			
			The "Borrower", "Guarantor", "Glovis Countess Agent", "Green Bay Agent", “Controlling Agent” or any "Creditor" or "Obligor" shall be construed to be a reference to it in its capacity as such and not in any other capacity;

			
	
			
				 (ii)
			

			
	
			
			any "Creditor" or "Obligor" or any other person shall be construed so as to include its successors in title, permitted assigns and permitted transferees to, or of, its rights and/or obligations under the Debt Documents;

			
	
			
				 (iii)
			

			
	
			
			an "amount" includes an amount of cash and an amount of Non-Cash Consideration;

			
	
			
				 (iv)
			

			
	
			
			"assets" includes present and future properties, revenues and rights of every description;

			
	
			
				 (v)
			

			
	
			
			a "Debt Document" or any other agreement or instrument is a reference to that Debt Document, or other agreement or instrument, as amended, novated, supplemented, extended or restated as permitted by this Agreement;

			
	
			
				 (vi)
			

			
	
			
			a "distribution" of or out of the assets of an Obligor, includes a distribution of cash and a distribution of Non-Cash Consideration;

		
			 
		

		 

 

			
	
			
				 (vii)
			

			
	
			
			"enforcing" (or any derivation) the Transaction Security includes the appointment of an administrator (or any analogous officer in any jurisdiction) of an Obligor by a Creditor;

			
	
			
				 (viii)
			

			
	
			
			"indebtedness" includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

			
	
			
				 (ix)
			

			
	
			
			a "person" includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium, partnership or other entity (whether or not having separate legal personality);

			
	
			
				 (x)
			

			
	
			
			a "regulation" includes any regulation, rule, official directive, request or guideline (whether or not having the force of law but if not having the force of law one with which companies customarily comply) of any governmental, intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation; and

			
	
			
				 (xi)
			

			
	
			
			a provision of law is a reference to that provision as amended or reenacted.

		
			(b)Section, Clause and Schedule headings are for ease of reference only.
		

			
	
			
				 2.
			RANKING AND PRIORITY

		
			2.1Creditor Liabilities
		

		
			Each of the Parties agrees that the Liabilities owed by the Obligors to the Creditors shall rank in right and priority of payment pari passu and without any preference between them.
		

		
			2.2Transaction Security
		

		
			Each of the Parties agrees, acknowledges and stipulates that all Liabilities owed by the Obligors to the Creditors are intended to be secured by the Transaction Security and that the priorities in the Transaction Security, as between the Glovis Countess Creditors and the Green Bay Creditors, shall be equal and that each shall share and be equal in priority and rights with the other, subject to the terms of this Agreement, in each case, regardless of the time, method or order of attachment or perfection of any Transaction Security, or the lien priorities which might apply as a matter of law, and in each case, notwithstanding that any Transaction Security is not actually granted or improperly granted, unperfected, avoided, a fraudulent transfer or otherwise unenforceable or ineffective.
		

			
	
			
				 3.
			CREDITOR LIABILITIES

		
			3.1Payment of Glovis Countess Liabilities
		

		
			The Obligors may make Payments of the Glovis Countess Liabilities at any time and in accordance with the Glovis Countess Transaction Documents.
		

		
			3.2Payment of Green Bay Liabilities
		

		
			The Obligors may make Payments of the Green Bay Liabilities at any time and in accordance with the Green Bay Transaction Documents.
		

		
			 
		

		

		

		 

 

		4.EFFECT OF INSOLVENCY EVENT
		

		
			4.1Distributions
		

			
	
			
				 (a)
			

			
	
			
			After the occurrence of an Insolvency Event in relation to either Obligor, either Creditor entitled to receive a distribution out of the assets of that Obligor in respect of Liabilities owed to that Creditor shall, to the extent it is able to do so, direct the person responsible for the distribution of the assets of that Obligor to make that distribution to the Controlling Agent (or to such other person as the Controlling Agent shall direct).

			
	
			
				 (b)
			

			
	
			
			The Controlling Agent shall apply distributions made to it under paragraph (a) above, including any distributions made directly to it from the assets of either Obligor, in accordance with Clause 7 (Application of Proceeds).

		
			4.2Set-Off
		

		
			To the extent that any Obligor’s Liabilities are discharged by way of set off (mandatory or otherwise) after the occurrence of an Insolvency Event in relation to that Obligor, any Creditor which benefited from that set-off shall pay an amount equal to the amount of the Liabilities owed to it which are discharged by that set-off to the Controlling Agent for application in accordance with Clause 7 (Application of Proceeds).
		

		
			4.3Non cash distributions
		

		
			If either Creditor receives a distribution in the form of Non-Cash Consideration in respect of any of the Liabilities (other than any distribution of Non-Cash Recoveries), the Liabilities will not be reduced by that distribution until and except to the extent that the realization proceeds are actually applied towards the Liabilities.
		

		
			4.4Filing of claims
		

		
			After the occurrence of an Insolvency Event in relation to either Obligor, each Creditor shall be authorized to:
		

			
	
			
				 (a)
			

			
	
			
			take any Enforcement Action (in accordance with the terms of this Agreement) against that Obligor;

			
	
			
				 (b)
			

			
	
			
			demand, sue, prove and give receipt for any or all of that member of the Obligor's Liabilities;

			
	
			
				 (c)
			

			
	
			
			collect and receive all distributions on, or on account of, any or all of that Obligor's Liabilities; and

			
	
			
				 (d)
			

			
	
			
			file claims, take proceedings and do all other things the Controlling Agent considers reasonably necessary to recover that Obligor's Liabilities.

		
			5.TURNOVER OF RECEIPTS
		

		
			5.1Turnover by the Creditors
		

		
			Subject to Clause 5.2, if at any time prior to the Final Discharge Date, any Creditor receives or recovers:
		

		
			(a)any Payment or distribution of, or on account of or in relation to, any of the
		

		
			Liabilities which is not either:
		

		
			(i)a Permitted Payment; or
		

		
			 
		

		

		

		 

 

		(ii)made in accordance with Clause 7 (Application of Proceeds);
		

		
			(b)other than where Clause 4.2 (Set-Off) applies, any amount by way of set off in
		

		
			respect of any of the Liabilities owed to it which does not give effect to a Permitted Payment;
		

		
			(c)notwithstanding paragraphs (a) and (b) above, and other than where Clause 4.2
		

		
			(Set-Off) applies, any amount:
		

		
			(i)on account of, or in relation to, any of the Liabilities:
		

			
	
			
				 (A)
			

			
	
			
			after the occurrence of a Distress Event; or

			
	
			
				 (B)
			

			
	
			
			as a result of any other litigation or proceedings against either Obligor (other than after the occurrence of an Insolvency Event in respect of that Obligor); or

		
			(ii)by way of set off in respect of any of the Liabilities owed to it after the
		

		
			occurrence of a Distress Event,
		

		
			other than, in each case, any amount received or recovered in accordance with Clause 7 (Application of Proceeds);
		

		
			(d)the proceeds of any enforcement of any Transaction Security except in
		

		
			accordance with Clause 7 (Application of Proceeds); or
		

		
			(e)other than where Clause 4.2 (Set-Off) applies, any distribution or Payment of, or
		

		
			on account of or in relation to, any of the Liabilities owed by any Obligor which is not in accordance with Clause 7 (Application of Proceeds) and which is made as a result of, or after, the occurrence of an Insolvency Event in respect of that Obligor,
		

		
			that Creditor will:
		

		
			(i)in relation to receipts and recoveries not received or recovered by way
		

		
			of set-off:
		

			
	
			
				 (A)
			

			
	
			
			hold an amount of that receipt or recovery equal to the Relevant Liabilities (or if less, the amount received or recovered) on trust for the Controlling Agent and promptly pay or distribute that amount to the Controlling Agent for application in accordance with the terms of this Agreement; and

			
	
			
				 (B)
			

			
	
			
			promptly pay or distribute an amount equal to the amount (if any) by which the receipt or recovery exceeds the Relevant Liabilities to the Controlling Agent for application in accordance with the terms of this Agreement; and

		
			(ii)in relation to receipts and recoveries received or recovered by way of
		

		
			set-off, promptly pay an amount equal to that recovery to the Controlling Agent for application in accordance with the terms of this Agreement.
		

		
			5.2Turnover of Non-Cash Consideration
		

		
			For the purposes of this Clause 5, if any Creditor receives or recovers any amount or distribution in the form of Non-Cash Consideration which is subject to Clause 5.1
		

		
			 
		

		

		

		 

 

		(Turnover by the Creditors) the cash value of that Non-Cash Consideration shall be
		

		
			determined in accordance with Clause 7.7 (Cash value of Non-Cash Recoveries).
		

			
	
			
				 6.
			ENFORCEMENT OF TRANSACTION SECURITY

		
			6.1Enforcement Instructions
		

		
			The Transaction Security shall only be enforced by the Controlling Agent upon the instruction of the Instructing Group. No other Creditor shall have any independent power to enforce, or have recourse to, any of the Transaction Security or to exercise any right, power, authority or discretion arising under the Security Documents except through the Controlling Agent.
		

		
			6.2Waiver of rights
		

		
			To the extent permitted under applicable law and subject to Clause 6.1 (Enforcement Instructions) and Clause 7 (Application of Proceeds), each of the Creditors and the Obligors waives all rights it may otherwise have to require that the Transaction Security be enforced in any particular order or manner or at any particular time or that any amount received or recovered from any person, or by virtue of the enforcement of any of the Transaction Security or of any other security interest, which is capable of being applied in or towards discharge of any of the Secured Obligations is so applied.
		

			
	
			
				 7.
			APPLICATION OF PROCEEDS

		
			7.1Order of Application
		

		
			Subject to Clause 7.2 (Prospective liabilities), all amounts from time to time received or recovered by either Creditor pursuant to the terms of any Debt Document (unless such recovery is a Permitted Payment) or in connection with the realization or enforcement of all or any part of the Transaction Security (for the purposes of this Clause 7, the "Recoveries") shall be held by the Controlling Agent on trust to apply them at any time as the Controlling Agent (in its discretion) sees fit, to the extent permitted by applicable law (and subject to the provisions of this Clause 7), in the following order of priority:
		

			
	
			
				 (a)
			

			
	
			
			first, on a pro rata basis, in or towards the payment or reimbursement of any expenses or liabilities incurred by (i) any of the Creditors in connection with the ascertainment, protection or enforcement of their rights and remedies under the Debt Documents or (ii) the Account Bank in relation to the Earnings Account and Retention Account (as such terms are defined in the respective Facility Agreement);

			
	
			
				 (b)
			

			
	
			
			second, on a pro rata basis, in or towards payment of any interest owing in respect of the Facilities;

			
	
			
				 (c)
			

			
	
			
			third, on a pro rata basis, in or towards repayment of the principal of the Facilities;

			
	
			
				 (d)
			

			
	
			
			fourth, on a pro rata basis, in or towards payment of all other sums which may be owing to any of the Creditors under the Debt Documents; and

			
	
			
				 (e)
			

			
	
			
			fifth, the balance, if any, in payment or distribution to the relevant Obligor.

		
			7.2Prospective liabilities
		

		
			Following a Distress Event, the Controlling Agent may, in its discretion:
		

		
			 
		

		 

 

			
	
			
				 (a)
			

			
	
			
			hold any amount of the Recoveries which is in the form of cash, and any cash which is generated by holding, managing, exploiting, collecting, realizing or disposing of any Non-Cash Consideration; and

			
	
			
				 (b)
			

			
	
			
			hold, manage, exploit, collect and realize any amount of the Recoveries which is in the form of Non-Cash Consideration,

		
			in each case for so long as the Controlling Agent shall think fit for later application under Clause 7.1 (Order of Application) in respect of:
		

			
	
			
				 (i)
			

			
	
			
			any sum to any Creditor; and

			
	
			
				 (ii)
			

			
	
			
			any part of the Liabilities,

		
			that the Controlling Agent reasonably considers, in each case, might become due or owing at any time in the future.
		

		
			7.3Investment of Cash Proceeds
		

		
			Prior to the application of the proceeds of the Security Property in accordance with Clause 7.1 (Order of Application) the Controlling Agent may, in its discretion, hold all or part of any Cash Proceeds in one or more suspense or impersonal account in the name of the Controlling Agent with such financial institution (including itself) and for so long as the Controlling Agent shall think fit (the interest being credited to the relevant account) pending the application from time to time of those monies in the Controlling Agent’s discretion in accordance with the provisions of this Clause 7.
		

		
			7.4Permitted Deductions
		

		
			The Controlling Agent shall be entitled, in its discretion, (a) to set aside by way of reserve amounts required to meet and (b) to make and pay, any deductions and withholdings (on account of Taxes or otherwise) which it is or may be required by any law or regulation to make from any distribution or payment made by it under this Agreement, and to pay all Taxes which may be assessed against it in respect of any of the Security Property, or as a consequence of performing its duties or exercising its rights, powers, authorities and discretions.
		

		
			7.5Good Discharge
		

		
			(a)Any distribution or payment made in respect of the Secured Obligations shall
		

		
			be a good discharge, to the extent of that payment or distribution, by the Controlling Agent:
		

			
	
			
				 (i)
			

			
	
			
			in the case of a payment made in cash, to the extent of that payment; and

			
	
			
				 (ii)
			

			
	
			
			in the case of a distribution of Non-Cash Recoveries, as determined by Clause 7.7 (Cash value of Non-Cash Recoveries).

		
			7.6Calculation of Amounts
		

		
			For the purpose of calculating any person's share of any amount payable to or by it, the Controlling Agent shall be entitled to assume that all amounts received or recovered as a result of the enforcement or realization of the Security Property are applied in discharge of the Liabilities in accordance with the terms of the Debt Documents under which those Liabilities have arisen.
		

		
			 
		

		

		

		 

 

		7.7Cash value of Non-Cash Recoveries
		

			
	
			
				 (a)
			

			
	
			
			The cash value of any Non-Cash Recoveries shall be determined by reference to a valuation obtained by the Controlling Agent from a Financial Adviser appointed by the Controlling Agent on such terms as it may consider appropriate.

			
	
			
				 (b)
			

			
	
			
			If any Non-Cash Recoveries are distributed pursuant to Clause 7 (Application of Proceeds), the extent to which such distribution is treated as discharging the Liabilities shall be determined by reference to the cash value of those Non-Cash Recoveries determined pursuant to paragraph (a) above.

		
			8.THE CONTROLLING AGENT
		

		
			8.1Authority
		

			
	
			
				 (a)
			

			
	
			
			Notwithstanding any other provision of this Agreement, nothing herein shall be construed to impose any fiduciary or other duty on the Controlling Agent to any other Party.

			
	
			
				 (b)
			

			
	
			
			Each Party acknowledges and agrees that the Controlling Agent shall be entitled, for the benefit of the Creditors, to sell, transfer or otherwise dispose of or deal with any Transaction Security as provided herein and the Security Documents, as applicable, without regard to any rights to which the other Creditors would otherwise be entitled as a result of the Liabilities held by such other Creditors. Without limitation of the foregoing, each Party agrees that the Controlling Agent shall not have any duty or obligation first to marshal or realize upon any type of the Transaction Security, or to sell, dispose of or otherwise liquidate all or any portion of the Transaction Security in any manner that would maximize the return to the Creditors, notwithstanding that the order and timing of any such realization, sale, disposition or liquidation may affect the amount of proceeds actually received by the Creditors from such realization, sale, disposition or liquidation. Each of the Creditors waives any claim it may now or hereafter have against the Controlling Agent or the Instructing Group arising out of any actions which the Controlling Agent or the Instructing Group take or omit to take in respect of the Transaction Security.

			
	
			
				 (c)
			

			
	
			
			Each of the Creditors authorizes the Controlling Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Controlling Agent under or in connection with the Debt Documents together with any other incidental rights, powers, authorities and discretions.

		
			8.2Exclusion of liability
		

		
			(a)Without limiting paragraph (b) below (and without prejudice to any other
		

		
			provision of any Debt Document excluding or limiting the liability of the
		

		
			Controlling Agent), the Controlling Agent will not be liable for:
		

			
	
			
				 (i)
			

			
	
			
			any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Debt Document or the Security Property unless directly caused by its gross negligence or wilful misconduct;

			
	
			
				 (ii)
			

			
	
			
			exercising or not exercising any right, power, authority or discretion given to it by, or in connection with, any Debt Document, the Security Property or any other agreement, arrangement or document entered

		
			 
		

		

		

		 

 

		into, made or executed in anticipation of, under or in connection with, any Debt Document or the Security Property;
		

			
	
			
				 (iii)
			

			
	
			
			any shortfall which arises on the enforcement or realization of the Security Property; or

			
	
			
				 (iv)
			

			
	
			
			without prejudice to the generality of paragraphs (i) to (iii) above, any damages, costs, losses, any diminution in value or any liability whatsoever arising as a result of:

			
	
			
				 (A)
			

			
	
			
			any act, event or circumstance not reasonably within its control; or

			
	
			
				 (B)
			

			
	
			
			the general risks of investment in, or the holding of assets in, any jurisdiction,

		
			including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of: nationalization, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets; breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.
		

			
	
			
				 (b)
			

			
	
			
			No Party (other than the Controlling Agent) may take any proceedings against any officer, employee or agent of the Controlling Agent in respect of any claim it might have against the Controlling Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Debt Document or any Security Property.

			
	
			
				 (c)
			

			
	
			
			Nothing in this Agreement shall oblige the Controlling Agent to carry out:

			
	
			
				 (i)
			

			
	
			
			any "know your customer" or other checks in relation to any person; or

			
	
			
				 (ii)
			

			
	
			
			any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any Creditor,

		
			on behalf of any Creditor and each Creditor confirms to the Controlling Agent that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Controlling Agent.
		

		
			8.3Creditors' indemnity to the Controlling Agent
		

		
			(a)Each Creditor shall (in the proportion that the Liabilities due to it bear to the
		

		
			aggregate of the Liabilities due to all the Creditors for the time being (or, if the Liabilities due to the Creditors are zero, immediately prior to their being reduced to zero)), indemnify the Controlling Agent, within three Business Days of demand, against any cost, loss or liability incurred by any of them (otherwise than by reason of the relevant Controlling Agent's gross negligence or wilful misconduct) in acting as Controlling Agent under, or exercising any authority conferred under, the Debt Documents (unless the relevant Controlling Agent, Receiver or Delegate has been reimbursed by an Obligor pursuant to a Debt Document).
		

		
			 
		

		

		

		 

 

		(b)The Obligors shall immediately on demand reimburse any Creditor for any
		

		
			payment that Creditor makes to the Controlling Agent pursuant to paragraph (a) above.
		

		
			9.CHANGES TO THE PARTIES
		

		
			9.1Assignments and transfers
		

		
			No Party may:
		

			
	
			
				 (a)
			assign any of its rights; or

			
	
			
				 (b)
			transfer any of its rights and obligations,

		
			in respect of any Debt Documents or the Liabilities except as permitted by this Clause 9 or otherwise by the Debt Documents.
		

		
			9.2Change of Creditor
		

		
			A Creditor may assign any of its rights in respect of any Debt Documents or the Liabilities if:
		

			
	
			
				 (i)
			

			
	
			
			that assignment or transfer is in accordance with the terms of the Facility Agreement to which it is a party; and

			
	
			
				 (ii)
			

			
	
			
			any assignee or transferee has (if not already a Party as a Creditor (as the case may be)) acceded to this Agreement, as a Creditor.

		
			10. NOTICES
		

		
			10.1 Communications in writing
		

		
			Any communication to be made under or in connection with this Agreement shall be made in writing and, unless otherwise stated, may be made electronically or by letter.
		

		
			10.2 Addresses
		

		
			The contact information (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with this Agreement is that identified with its name in the respective Facility Agreement.
		

		
			10.3 Delivery
		

		
			(a)Any communication or document made or delivered by one person to another
		

		
			under or in connection with this Agreement will only be effective:
		

			
	
			
				 (i)
			

			
	
			
			if by way of electronic means, when received in legible form; or

			
	
			
				 (ii)
			

			
	
			
			if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address,

		
			and, if a particular department or officer is specified as part of its address details provided under Clause 10.2 (Addresses), if addressed to that department or officer.
		

		
			 
		

		

		

		 

 

		(b)Any communication or document which becomes effective, in accordance with
		

		
			paragraphs (a) above, after 5:00 p.m. in the place of receipt shall be deemed only to become effective on the following day.
		

		
			11. PRESERVATION
		

		
			11.1Partial invalidity
		

		
			If, at any time, any provision of a Debt Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of that provision under the law of any other jurisdiction will in any way be affected or impaired.
		

		
			11.2 No impairment
		

		
			If, at any time after its date, any provision of a Debt Document (including this Agreement) is not binding on or enforceable in accordance with its terms against a person expressed to be a party to that Debt Document, neither the binding nature nor the enforceability of that provision or any other provision of that Debt Document will be impaired as against the other party(ies) to that Debt Document.
		

		
			11.3 Remedies and waivers
		

		
			No failure to exercise, nor any delay in exercising, on the part of any Party, any right or remedy under a Debt Document shall operate as a waiver of any such right or remedy or constitute an election to affirm any Debt Document. No election to affirm any Debt Document on the part of a Creditor shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in each Debt Document are cumulative and not exclusive of any rights or remedies provided by law.
		

		
			11.4 Waiver of defenses
		

		
			The provisions of this Agreement or any Transaction Security will not be affected by an act, omission, matter or thing which, but for this Clause 11.4, would reduce, release or prejudice the subordination and priorities expressed to be created by this Agreement including (without limitation and whether or not known to any Party):
		

			
	
			
				 (a)
			

			
	
			
			any time, waiver or consent granted to, or composition with, either Obligor or other person;

			
	
			
				 (b)
			

			
	
			
			the release of either Obligor or any other person under the terms of any composition or arrangement with any creditor of any affiliate;

			
	
			
				 (c)
			

			
	
			
			the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, either Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realize the full value of any Security;

			
	
			
				 (d)
			

			
	
			
			any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of either Obligor or other person;

			
	
			
				 (e)
			

			
	
			
			any amendment, supplement, extension (whether of maturity or otherwise) or restatement (in each case, however fundamental and of whatsoever nature, and

		
			 
		

		

		

		 

 

		whether or not more onerous) or replacement of a Debt Document or any other document or security;
		

			
	
			
				 (f)
			

			
	
			
			any unenforceability, illegality or invalidity of any obligation of any person under any Debt Document or any other document or security;

			
	
			
				 (g)
			

			
	
			
			any intermediate Payment of any of the Liabilities owing to the Creditors in whole or in part; or

			
	
			
				 (h)
			

			
	
			
			any insolvency or similar proceedings.

			
	
			
				 12.
			CONSENTS, AMENDMENTS AND OVERRIDE

		
			12.1Required consents
		

		
			This Agreement may be amended or waived only with the consent of each Party; provided, that the Glovis Countess Agent (for itself and on behalf of the Glovis Countess Creditors who hereby authorizes the Glovis Countess Agent) and the Green Bay Agent (for itself and on behalf of the Green Bay Creditors who hereby authorize the Green Bay Agent) may enter into an amendment, supplement, termination or other modification of this Agreement without the consent of the Obligors, so long as such amendment, supplement, termination or other modification does not impose any duty or responsibility on the Obligors that materially adversely affects them.
		

		
			12.2 Amendments to transaction documents
		

		
			Neither Creditor shall agree to any amendment to the Facility Agreement or Debt Documents to which it is a party without the express written consent of the other Creditor.
		

		
			12.3 Agreement to override
		

		
			Unless expressly stated otherwise in this Agreement, this Agreement overrides anything in the Debt Documents to the contrary.
		

			
	
			
				 13.
			Counterparts

		
			This Agreement may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.
		

		
			14.Governing Law
		

		
			This Agreement and any non-contractual obligations arising out of or in connection with it are governed by the laws of the State of New York.
		

		
			15.Enforcement
		

		
			15.1Jurisdiction
		

		
			(a)The courts of the State of New York sitting in the Borough of Manhattan in
		

		
			New York City or of the United States for the Southern District of such State sitting in the Borough of Manhattan in New York City have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a "Dispute").
		

		
			 
		

		 

 

			
	
			
				 (b)
			

			
	
			
			The Parties agree that the courts of State of New York sitting in the Borough of Manhattan in New York City or of the United States for the Southern District of such State sitting in the Borough of Manhattan in New York City are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

			
	
			
				 (c)
			

			
	
			
			This Clause 15.1 is for the benefit of the Creditors only. As a result, no Creditor shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Creditors may take concurrent proceedings in any number of jurisdictions.

		
			[Signature Page Follows]
		

		
			 
		

		

		

		 

 

		IN WITNESS whereof the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives as of the day and year first above written.
		

		
			DVB BANK SE,
		

		
			as Glovis Countess Agent and as Creditor
		

		
			By:_____________________________________________
		

		
			Name: Title:
		

		
			By:_____________________________________________
		

		
			Name:
		

		
			DVB BANK SE,
		

		
			as Green Bay Agent and as Creditor
		

		
			By:_____________________________________________
		

		
			Name: Title:
		

		
			By:_____________________________________________
		

		
			Name: Title:
		

		
			EAST GULF SHIPHOLDING, INC., as Obligor
		

		
			By:_____________________________________________
		

		
			Name: Title:
		

		
			INTERNATIONAL SHIPHOLDING CORPORATION, as Obligor
		

		
			By:_____________________________________________
		

		
			Name:
		

		
			 
		

		

		

		 

 

		EXHIBIT M
		

		
			LOAN ADMINISTRATION FORM
		

		
			To:DVB BANK SE
		

		
			Park House,
		

		
			16-18 Finsbury Circus
		

		
			London EC2M 7EB
		

		
			E-mail: tls.london@dvbbank.com 
		

		
			Fax: +44 207 256 4352
		

		
			Attention: Peter Attridge
		

		
			Department: Transaction and Loan Services
		

		
			April ____, 2015
		

		
			Re: Providing financing to EAST GULF SHIPHOLDING, INC. (the “Company”) in relation to the Vessel “GLOVIS COUNTESS” (the “Financing”).
		

		
			We refer to the Financing and a term loan credit agreement (the “Credit Agreement”) dated as of April ____, 2015 and entered into between, inter alia, us, as borrower and DVB Bank SE as Facility Agent for and on behalf of the Lenders in relation to the Financing. Terms and expressions not otherwise defined herein shall have the same meaning as defined in the Credit Agreement.
		

		
			We hereby appoint the following persons to act as our point of contact with regards to any issue arising in connection with the administration of the Credit Agreement or any other documents related to the Financing:
		

		
			1. [Manuel G. Estrada - Vice President and Chief Financial Officer
		

		
			2. David B. Drake - Vice President and Treasurer
		

		
			3. Donna L. Johnson - Assistant Treasurer]1
		

		
			No other persons (other than the Senior Officers of the Company listed above (the “Authorized Persons”)) are hereby authorized to request any information from you regarding the Credit Agreement or any other matter related to the Financing or the Company or communicate with you in any way regarding the forgoing in and under any circumstances.
		

		
			For the avoidance of doubt, the following are the Senior Officers of the Company:
		

			
	
			
				 1.
			[Niels M. Johnsen - Chairman

			
	
			
				 2.
			Erik L. Johnsen – President

		
			4. Manuel G. Estrada – Vice-President and Chief Financial Officer
		

		
			5. David B. Drake – Vice-President and Treasurer
		

		
			6. Donna L. Johnson, Assistant Treasurer]2
		

		
			1 Please confirm.
		

		
			2 Please confirm.
		

		
			 
		

		

		

		 

 

		This list of authorized persons may only be amended, modified or varied in writing by an Authorized Person with copy to the other Authorized Persons. We agree to indemnify you and hold you harmless in relation to any information you provide to any Authorized Person. This letter shall be governed and construed in accordance with New York law.
		

		
			Yours sincerely,
		

		
			EAST GULF SHIPHOLDING, INC., as Borrower
		

		
			By:_________________________________________________________________________
		

		
			Name: Title:

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