Document:

Loan Agreement, dated March 29, 2007

    

    

    Date March
      29,   2007

    

    

    

    

    

    

    ARGYLE
      MARITIME CORP.

    CATON
      MARITIME CORP.

    DORCHESTER
      MARITIME CORP.

    LONGWOODS
      MARITIME CORP.

    McHENRY
      MARITIME CORP.

    SUNSWYCK
      MARITIME CORP.

    as
      Joint
      and Several Borrowers

    

    -
      and
      -

    

    THE
      BANKS AND FINANCIAL INSTITUTIONS

    listed
      in Schedule 1

    as
      Lenders

    

    -
      and
      -

    

    THE
      ROYAL BANK OF SCOTLAND plc

    as
      Mandated Lead Arranger

    

    -
      and
      -

    

    THE
      ROYAL BANK OF SCOTLAND plc

    as
      Bookrunner, Agent, Security Trustee and Swap Bank

    

    

    

    

    

    

                                                                                

     

    LOAN
      AGREEMENT

                                                                                

    

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

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    INDEX

    ClausePage

     

    1 INTERPRETATION

     

    2 LOAN
      FACILITY

     

    3 POSITION
      OF THE LENDERS AND THE SWAP BANK

     

    4 DRAWDOWN

     

    5 INTEREST

     

    6 INTEREST
      PERIODS

     

    7 DEFAULT
      INTEREST

     

    8 REPAYMENT
      AND PREPAYMENT

     

    9 CONDITIONS
      PRECEDENT

     

    10 REPRESENTATIONS
      AND WARRANTIES

     

    11 GENERAL
      UNDERTAKINGS AND FINANCIAL COVENANTS

     

    12 CORPORATE
      UNDERTAKINGS

     

    13 INSURANCE

     

    14 SHIP
      COVENANTS

     

    15 SECURITY
      COVER

     

    16 PAYMENTS
      AND CALCULATIONS

     

    17 APPLICATION
      OF RECEIPTS

     

    18 EARNINGS
      ACCOUNT AND STANDBY EARNINGS ACCOUNT

     

    19 EVENTS
      OF DEFAULT

     

    20 FEES
      AND EXPENSES

     

    21 INDEMNITIES

     

    22 NO
      SET-OFF OR TAX DEDUCTION

     

    23 ILLEGALITY,
      ETC

     

    24 INCREASED
      COSTS

     

    25 SET-OFF

     

    26 TRANSFERS
      AND CHANGES IN LENDING OFFICES

     

    27 VARIATIONS
      AND
      WAIVERS

     

    28 NOTICES

     

    29 JOINT
      AND SEVERAL LIABILITY

     

    30 SUPPLEMENTAL

     

    31 LAW
      AND JURISDICTION

     

    SCHEDULE
      1 LENDERS 

     

    SCHEDULE
      2 DRAWDOWN NOTICE 

     

    SCHEDULE
      3 CONDITION PRECEDENT DOCUMENTS 

     

    SCHEDULE
      4 TRANSFER CERTIFICATE 

     

    SCHEDULE
      5 REPAYMENT INSTALMENTS 

     

    SCHEDULE
      6 MANDATORY COST FORMULA 

     

    SCHEDULE
      7 CLASSIFICATION OF SHIPS 

     

    SCHEDULE
      8 FINANCIAL COVENANTS 

     

    SCHEDULE
      9 FORM OF COMPLIANCE CERTIFICATE 

     

    EXECUTION
      PAGE 

     

     

    
      
        
          Watson,
            Farley & Williams

          London

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    THIS
      LOAN AGREEMENT
      is made
      on March 29, 2007

    

    BETWEEN:

    

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

            

    

     

    
      	(2)  	
              THE
                BANKS AND FINANCIAL INSTITUTIONS
                listed in Schedule 1, as Lenders;

            

    

     

    
      	(3)  	
              THE
                ROYAL BANK OF SCOTLAND
                plc as Mandated
                Lead Arranger;

            

    

     

    
      	(4)  	
              THE
                ROYAL BANK OF SCOTLAND plc
                as
                Bookrunner;

            

    

     

    
      	(5)  	
              THE
                ROYAL BANK OF SCOTLAND plc
                as
                Agent;
                and

            

    

     

    
      	(6)  	
              THE
                ROYAL BANK OF SCOTLAND plc
                as
                Swap
                Bank.

            

    

     

     

    BACKGROUND

     

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

            

    

     

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

            

    

     

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

            

    

     

     

    IT
      IS AGREED as
      follows:

     

    
      	1  	
              INTERPRETATION

            

    

     

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

            

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      	(a)  	
              (i)in
                respect of Loan A, 31 May 2009 (or such later date as the Agent may,
                with
                the authorisation of the Majority Lenders, agree with the
                Borrowers);

            

    

     

    
      	 	
              (ii)

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

            

    

    

    
      	 	
              (iii)

            	
              in
                respect of Loan C, 30 April 2010 (or such later date as the Agent
                may,
                with the authorisation of the Majority Lenders, agree with the
                Borrowers);

            

    

    

    
      	 	
              (iv)

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

            

    

    

    
      	 	
              (v)

            	
              in
                respect of Loan E, 30 June 2010 (or such later date as the Agent
                may, with
                the authorisation of the Majority Lenders, agree with the
                Borrowers);

            

    

    

    
      	 	
              (vi)

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

            

    

    

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

            

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “China
      Communications”
means
      China Communications Construction Company Ltd, a corporation organised and
      existing under the laws of the People’s Republic of China, having its registered
      office at No. B88, An Ding Men Wai Street, Beijing 100011, The People’s Republic
      of China;

     

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

     

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

     

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

     

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

     

    “Contractual
      Currency”
has
      the
      meaning given in Clause 21.4;

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

            

    

     

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

            

    

     

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

     

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

     

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

     

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

     

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

            

    

     

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

            

    

     

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

            

    

     

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

     

    “Environmental
      Claim”
      means:

     

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

            

    

     

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

            

    

     

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

     

    “Environmental
      Incident”
      means:

     

    
      	(a)  	
              any
                release of Environmentally Sensitive Material from a Ship;
                or

            

    

     

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

            

    

     

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

            

    

     

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

     

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

     

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

     

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

     

    “Final
      Repayment Date”
means,
      in relation to a Loan, the date falling ten years after the Drawdown Date of
      the
      Delivery Advance in respect of such Loan;

     

    “Finance
      Documents”
means:
      

     

    
      	(a)  	
              this
                Agreement;

            

    

     

    
      	(b)  	
              the
                Agency and Trust Agreement;

            

    

     

    
      	(c)  	
              the
                Multiparty Deeds;

            

    

     

    
      	(d)  	
              the
                Mortgages;

            

    

     

    
      	(e)  	
              the
                Master Agreement;

            

    

     

    
      	(f)  	
              the
                Master Agreement Assignment;

            

    

     

    
      	(g)  	
              the
                Predelivery Security Assignments;

            

    

     

    
      	(h)  	
              the
                Corporate Guarantee;

            

    

     

    
      	(i)  	
              the
                Account Security Deed;

            

    

     

    
      	(j)  	
              the
                Fee Letter;

            

    

     

    
      	(k)  	
              the
                Intercreditor Agreement; and

            

    

     

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

            

    

     

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

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

     

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

     

    “Insurances”
means,
      in relation to a Ship: 

     

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

            

    

     

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

            

    

     

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

     

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

     

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

     

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

     

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

     

    “Issuing
      Bank”
means
      The Royal Bank of Scotland plc acting as issuing bank under the Guarantee
      Facility Agreement acting through the Shipping Business Centre, 5-10 Great
      Tower
      Street, London EC3R 3HX;

     

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

     

    “LIBOR”
      means,
      for an Interest Period:

     

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

            

    

     

    
      	(b)  	
              if
                no rate is quoted on REUTERS
                BBA Page LIBOR 01,
                the rate per annum determined by the Agent to be the arithmetic mean
                (rounded upwards, if necessary, to the nearest one-sixteenth of one
                per
                cent.) of the rates per annum notified to the Agent by each Reference
                Bank
                as the rate at which deposits in Dollars are offered to that Reference
                Bank by leading banks in the London Interbank Market at that Reference
                Bank’s request at or about 11.00 a.m. (London time) on the Quotation
                Date for that
                Interest Period for a period equal to that Interest Period and for
                delivery on the first Business Day of
                it;

            

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Majority
      Lenders”
      means:

     

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

            

    

     

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

            

    

     

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

     

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

     

    “Margin”
means
      in relation to each Loan prior to the drawdown of the Delivery Advance relating
      thereto one point seven five per cent. (1.75%) per annum and on and after the
      drawdown of the Delivery Advance relating thereto one point five per cent.
      (1.5%) per annum;

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Payment
      Currency”
has
      the
      meaning given in Clause 21.4;

     

    “Permitted
      Security Interests”
      means:

     

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

            

    

     

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

            

    

     

    
      	(c)  	
              liens
                for salvage;

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

     

    
      	(a)  	
              England
                and Wales;

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Security
      Interest”
      means:

     

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

            

    

     

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

            

    

     

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

            

    

     

    “Security
      Party”
means
      the Borrowers and the Corporate Guarantor and any person who, as a surety or
      mortgagor, as a party to any subordination or priorities arrangement, or in
      any
      similar capacity, executes a document falling within the last paragraph of
      the
      definition of “Finance Documents” but for the avoidance of doubt “Security
      Party” shall not include any Creditor Party, the Mandated Lead Arranger, the
      Bookrunner, the Issuing Bank, the Bareboat Charterer, the Time Charterer, TBS
      Pacific Liner, TBS Worldwide and the Approved Managers;

     

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

     

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

            

    

     

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

            

    

     

    
      	(c)  	
              none
                of the Borrowers nor any Security Party has any future or contingent
                liability under Clause 20,
                21
                or
                22
                or
                any other provision of this Agreement or another Finance Document;
                and

            

    

     

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

            

    

     

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

     

    “Seller”
means
      together China Communications and the Builder; 

     

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

     

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

     

    “Ship
      A”
means
      the multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No.
      NYHS200720 to be constructed and sold by the Seller and to be purchased by
      Borrower A pursuant to the relevant Shipbuilding Contract and upon delivery
      to
      be registered in the name of Borrower A with the (Panamanian registry and
      bareboat registered in the name of the Bareboat Charterer under the Philippines
      flag; 

     

    “Ship
      B”
means
      the multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No.
      NYHS200721 to be constructed and sold by the Seller and to be purchased by
      Borrower B pursuant to the relevant Shipbuilding Contract and upon delivery
      to
      be registered in the name of Borrower B with the (Panamanian registry and
      bareboat registered in the name of the Bareboat Charterer under the Philippines
      flag; 

     

    “Ship
      C”
means
      the multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No.
      NYHS200722 to be constructed and sold by the Seller and to be purchased by
      Borrower C pursuant to the relevant Shipbuilding Contract and upon delivery
      to
      be registered in the name of Borrower C with the (Panamanian registry and
      bareboat registered in the name of the Bareboat Charterer under the Philippines
      flag; 

     

    “Ship
      D”
means
      the multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No.
      NYHS200723 to be constructed and sold by the Seller and to be purchased by
      Borrower D pursuant to the relevant Shipbuilding Contract and upon delivery
      to
      be registered in the name of Borrower D with the (Panamanian registry and
      bareboat registered in the name of the Bareboat Charterer under the Philippines
      flag;

     

    “Ship
      E”
means
      the multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No.
      NYHS200724 to be constructed and sold by the Seller and to be purchased by
      Borrower E pursuant to the relevant Shipbuilding Contract and upon delivery
      to
      be registered in the name of Borrower E with the (Panamanian registry and
      bareboat registered in the name of the Bareboat Charterer under the Philippines
      flag;

     

    “Ship
      F”
means
      the multipurpose bulk carrier of about 35,000 dwt having Builder’s Hull No.
      NYHS200725 to be constructed and sold by the Seller and to be purchased by
      Borrower F pursuant to the relevant Shipbuilding Contract and upon delivery
      to
      be registered in the name of Borrower F with the (Panamanian registry and
      bareboat registered in the name of the Bareboat Charterer under the Philippines
      flag;

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	 	
              (c)

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

            

    

     

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

     

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

     

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

     

    
      	(a)  	
              the
                proposed transfer date specified in the Transfer Certificate;
                and

            

    

     

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

            

    

     

    
      	1.2  	
              Construction
                of certain terms.
                In
                this Agreement:

            

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “subsidiary”
has
      the
      meaning given in Clause 1.4;
      

     

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

     

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

     

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

            

    

     

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

            

    

     

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

            

    

     

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

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

     

    
      	1.5  	
              General
                Interpretation.
                In
                this Agreement:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	2  	
              LOAN
                FACILITy

            

    

     

    
      	2.1  	
              Amount
                of facilities.
                Subject to the other provisions of this Agreement, the Lenders shall
                make
                available to the Borrowers
                the Loan Facility in an amount of up to $150,000,000 which shall
                be made
                available in the following
                Advances:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	2.2  	
              Lenders’
                participations.
                Subject to the other provisions of this Agreement, each Lender shall
                participate
                in each Advance in the proportion which, as at the relevant Drawdown
                Date,
                its Commitment bears to the Total
                Commitments;

            

    

     

    
      	2.3  	
              Purpose
                of Advances.
                The Borrowers undertake with each Creditor Party to use each Advance
                only
                for the respective purposes stated in the preamble of this
                Agreement.

            

    

     

    
      	3  	
              POSITION
                OF THE LENDERS
                AND THE SWAP BANK 

            

    

     

    
      	3.1  	
              Interests
                of Creditor Parties several.
                The rights of the Creditor Parties under this Agreement are
                several.

            

    

     

    
      	3.2  	
              Individual
                Creditor Parties’ right of action.
                Each Lender and the Swap Bank shall be entitled to sue for any amount
                which has become due and payable by the Borrowers to it under this
                Agreement without joining the Agent, the Security Trustee or any
                other
                Creditor Party as additional parties in the
                proceedings.

            

    

     

    
      	3.3  	
              Proceedings
                by individual Creditor Party requiring Majority Lenders’
                consent.
                Except as provided in Clause 3.2,
                neither the Swap Bank nor any Lender may commence proceedings against
                the
                Borrowers or any Security Party in connection with a Finance Document
                without the prior consent of the Majority
                Lenders.

            

    

     

    
      	3.4  	
              Obligations
                of Creditor Parties several.
                The obligations of the Lenders and the Swap Bank under this Agreement
                are
                several; and a failure of a Lender or the Swap Bank to perform its
                obligations under this Agreement shall not result
                in:

            

    

     

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

            

    

     

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

            

    

     

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

     

    
      	3.5  	
              Ranking
                of Swap Facility.
                It is agreed by the Borrowers and the Creditor Parties that the Swap
                Facility and all amounts payable thereunder shall rank in priority
                after
                the Loan Facility. 

            

    

     

    
      	4  	
              DRAWDOWN

            

    

     

    
      	4.1  	
              Request
                for an Advance.
                Subject to the following conditions, a Borrower may request that
                an
                Advance be made by ensuring that the Agent receives a completed Drawdown
                Notice not later than 11.00 a.m. (London time) 3 Business Days prior
                to
                the intended Drawdown Date.

            

    

     

    
      	4.2  	
              Availability.
                The conditions referred to in Clause 4.1
                are that:

            

    

     

    
      	(a)  	
                

            

    

     

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

            

    

     

    
      	(ii)  	
              the
                aggregate amount of the Advances shall not exceed the Total
                Commitments;

            

    

     

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

            

    

     

    
      	(b)  	
                

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	4.3  	
              Notification
                to Lenders of receipt of a Drawdown Notice.
                The Agent shall promptly notify the Lenders that it has received
                a
                Drawdown Notice and shall inform each Lender
                of:

            

    

     

    
      	(a)  	
              the
                amount of the Advance and the Drawdown
                Date;

            

    

     

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

            

    

     

    
      	(c)  	
              the
                duration of the first Interest Period for the relevant
                Advance.

            

    

     

    
      	4.4  	
              Drawdown
                Notice irrevocable.
                A
                Drawdown Notice must be signed by a director, officer or, if agreed
                by the
                Agent, a duly authorised attorney-in-fact of the Borrowers; and once
                served, a Drawdown Notice cannot be revoked without the prior consent
                of
                the Agent, acting on the authority of the Majority
                Lenders.

            

    

     

    
      	4.5  	
              Lenders
                to make available Contributions.
                Subject to the provisions of this Agreement, each Lender shall, on
                and
                with value on each Drawdown Date, make available to the Agent for
                the
                account of the Borrowers the amount due from that Lender on that
                Drawdown
                Date under Clause 2.2.

            

    

     

    
      	4.6  	
              Disbursement
                of Advance.
                Subject to the provisions of this Agreement, the Agent shall on each
                Drawdown Date pay to the Borrowers the amounts which the Agent receives
                from the Lenders under Clause 4.5;
                and that payment to the Borrowers shall be
                made:

            

    

     

    
      	(a)  	
              to
                the account which the Borrowers specifies in the Drawdown Notice;
                and

            

    

     

    
      	(b)  	
              in
                the like funds as the Agent received the payments from the
                Lenders.

            

    

     

    
      	4.7  	
              Disbursement
                of an Advance to third party. The
                payment by the Agent under Clause 4.6
                shall constitute the making of the Advance and each Borrower shall
                at that
                time become indebted, as a principal and direct obligor, to each
                Lender in
                an amount equal to that Lender’s
                Contribution.

            

    

     

    
      	5  	
              INTEREST

            

    

     

    
      	5.1  	
              Payment
                of normal interest.
                Subject to the provisions of this Agreement, interest on an Advance
                in
                respect of each Interest Period applicable to it shall be paid by
                the
                Borrowers on the last day of that Interest
                Period.

            

    

     

    
      	5.2  	
              Normal
                rate of interest.
                Subject to the provisions of this Agreement, the rate of interest
                on each
                Advance in respect of an Interest Period shall be the aggregate of
                the
                Margin, the Mandatory Cost (if any) and LIBOR for that Interest
                Period.

            

    

     

    
      	5.3  	
              Payment
                of accrued interest.
                In
                the case of an Interest Period longer than 3 months, accrued interest
                shall be paid every 3 months during that Interest Period and on the
                last
                day of that Interest Period.

            

    

     

    
      	5.4  	
              Notification
                of Interest Periods and rates of normal interest.
                The Agent shall (subject to Clause 6.2(a)
                notify the Borrowers and each Lender
                of:

            

    

     

    
      	(a)  	
              each
                rate of interest; and 

            

    

     

    
      	(b)  	
              the
                duration of each Interest Period;

            

    

     

    as
      soon
      as reasonably practicable after each is determined. 

     

    
      	5.5  	
              Obligation
                of Reference Banks to quote.
                A
                Reference Bank which is a Lender shall use all reasonable efforts
                to
                supply the quotation required of it for the purposes of fixing a
                rate of
                interest under this Agreement.

            

    

     

    
      	5.6  	
              Absence
                of quotations by Reference Banks.
                If
                any Reference Bank fails to supply a quotation, the Agent shall determine
                the relevant LIBOR on the basis of the quotations supplied by the
                other
                Reference Bank or Banks; but if 2 or more of the Reference Banks
                fail to
                provide a quotation, the relevant rate of interest shall be set in
                accordance with the following provisions of this Clause 5.

            

    

     

    
      	5.7  	
              Market
                disruption.
                The following provisions of this Clause 5
                apply if:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	5.8  	
              Notification
                of market disruption.
                The Agent shall promptly notify the Borrowers and each of the Lenders
                stating the circumstances falling within Clause 5.7
                which have caused its notice to be
                given.

            

    

     

    
      	5.9  	
              Suspension
                of drawdown.
                If
                the Agent’s notice under Clause 5.8
                is
                served before an Advance is made:

            

    

     

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

            

    

     

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

            

    

     

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

     

    
      	5.10  	
              Negotiation
                of alternative rate of interest.
                If
                the Agent’s notice under Clause 5.8
                is
                served after an Advance is made, the Borrowers, the Agent and the
                Lenders
                or (as the case may be) the Affected Lender shall use reasonable
                endeavours to agree, within the 30 days after the date on which the
                Agent
                serves its notice under Clause 5.8
                (the “Negotiation
                Period”),
                an alternative interest rate or (as the case may be) an alternative
                basis
                for the Lenders or (as the case may be) the Affected Lender to fund
                or
                continue to fund their or its Contribution during the Interest Period
                concerned.

            

    

     

    
      	5.11  	
              Application
                of agreed alternative rate of interest.
                Any alternative interest rate or an alternative basis which is agreed
                during the Negotiation Period shall take effect in accordance with
                the
                terms agreed. 

            

    

     

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

            

    

     

    
      	5.13  	
              Notice
                of prepayment.
                If
                the Borrowers do not agree with an interest rate set by the Agent
                under
                Clause 5.12,
                the Borrowers may give the Agent not less than 14 Business Days’ notice of
                their intention to prepay the Loans or the Affected Lender’s Contribution
                (as the case may require) at the end of the interest period set by
                the
                Agent.

            

    

     

    
      	5.14  	
              Prepayment;
                termination of Commitments.
                A
                notice under Clause 5.13
                shall be irrevocable; the Agent shall promptly notify the Lenders
                or (as
                the case may require) the Affected Lender of the Borrowers’ notice of
                intended prepayment; and:

            

    

     

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

            

    

     

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

            

    

     

    
      	5.15  	
              Amounts
                payable upon prepayment etc.
                The provisions of Clauses 8.9
                to
                8.12
                inclusive shall apply in relation to the
                prepayment.

            

    

     

    
      	5.16  	
              Designated
                Transactions under the Master Agreement.

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	6  	
              INTEREST
                PERIODS

            

    

     

    
      	6.1  	
              Commencement
                of Interest Periods.
                The first Interest Period applicable to an Advance shall commence
                on the
                Drawdown Date for that Advance and each subsequent Interest Period
                shall
                commence on the expiry of the preceding Interest
                Period.

            

    

     

    
      	6.2  	
              Duration
                of normal Interest Periods.
                Subject to Clauses 6.3
                and 6.4,
                each Interest Period shall be: 

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	6.3  	
              Duration
                of Interest Periods for repayment instalments.
                In
                respect of an amount due to be repaid under Clause 8
                on
                a particular Repayment Date, an Interest Period shall end on that
                Repayment Date.

            

    

     

    
      	6.4  	
              Non-availability
                of matching deposits for Interest Period selected.
                If, after the Borrowers have selected and the Lenders have agreed
                an
                Interest Period longer than 6 months, any Lender notifies the Agent
                by
                11.00 a.m. (London time) on the third Business Day before the commencement
                of the Interest Period that it is not satisfied that deposits in
                Dollars
                for a period equal to the Interest Period will be available to it
                in the
                London Interbank Market when the Interest Period commences, the Interest
                Period shall be of 6 months.

            

    

     

    
      	7  	
              DEFAULT
                INTEREST

            

    

     

    
      	7.1  	
              Payment
                of default interest on overdue amounts.
                The Borrowers shall pay interest in accordance with the following
                provisions of this Clause 7 on any amount payable by the Borrowers
                under
                any Finance Document which the relevant Creditor Party does not receive
                on
                or before the relevant date, that
                is:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	7.2  	
              Default
                rate of interest.
                Interest shall accrue on an overdue amount from (and including) the
                relevant date until the date of actual payment (as well after as
                before
                judgment) at the rate per annum determined by the Agent to be 1.5
                per
                cent. above:

            

    

     

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

            

    

     

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

            

    

     

    
      	7.3  	
              Calculation
                of default rate of interest.
                The rates referred to in Clause 7.2
                are:

            

    

     

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

            

    

     

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

            

    

     

    
      	(i)  	
              LIBOR;
                or

            

    

     

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

            

    

     

    
      	7.4  	
              Notification
                of interest periods and default rates.
                The Agent shall promptly notify the Lenders and the Borrowers of
                each
                interest rate determined by the Agent under Clause 7.3
                and of each period selected by the Agent for the purposes of paragraph
                (b)
                of that Clause; but this shall not be taken to imply that the Borrowers
                are liable to pay such interest only with effect from the date of
                the
                Agent’s notification.

            

    

     

    
      	7.5  	
              Payment
                of accrued default interest.
                Subject to the other provisions of this Agreement, any interest due
                under
                this Clause shall be paid on the last day of the period by reference
                to
                which it was determined; and the payment shall be made to the Agent
                for
                the account of the Creditor Party to which the overdue amount is
                due.

            

    

     

    
      	7.6  	
              Compounding
                of default interest.
                Any such interest which is not paid at the end of the period by reference
                to which it was determined shall thereupon be
                compounded.

            

    

     

    
      	7.7  	
              Application
                to Master Agreement.
                For the avoidance of doubt, this Clause 7
                does not apply to any amount payable under the Master Agreement in
                respect
                of any continuing Designated Transaction as to which section 2(e)
                (Default
                Interest; Other Amounts) of the Master Agreement shall
                apply.

            

    

     

    
      	8  	
              REPAYMENT
                AND PREPAYMENT

            

    

     

    
      	8.1  	
              Repayment
                of Loans.
                The Borrowers shall repay the Loans in the instalments and on the
                repayment dates set out in Schedule
                5.

            

    

     

    
      	8.2  	
              Final
                Repayment Date.
                On
                the Final Repayment Date in respect of a Loan, the Borrowers shall
                additionally pay to the Agent for the account of the Creditor Parties
                all
                other sums then accrued or owing under any Finance Document in respect
                of
                that Loan.

            

    

     

    
      	8.3  	
              Voluntary
                prepayment.
                Subject to the following conditions, the Borrowers may prepay the
                whole or
                any part of a Loan. 

            

    

     

    
      	8.4  	
              Conditions
                for voluntary prepayment.
                The conditions referred to in Clause 8.3
                are that:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	8.5  	
              Effect
                of notice of prepayment.
                A
                prepayment notice may not be withdrawn or amended without the consent
                of
                the Agent, given with the authorisation of the Majority Lenders,
                and the
                amount specified in the prepayment notice shall become due and payable
                by
                the Borrowers on the date for prepayment specified in the prepayment
                notice.

            

    

     

    
      	8.6  	
              Notification
                of notice of prepayment.
                The Agent shall notify the Lenders promptly upon receiving a prepayment
                notice, and shall provide any Lender which so requests with a copy
                of any
                document delivered by the Borrowers under Clause 8.4(c).
                

            

    

     

    
      	8.7  	
              Mandatory
                prepayment upon a Sale or Total Loss of a Ship.
                Without prejudice to the provisions of Clause 15,
                the Borrowers shall be obliged to make a prepayment in respect of
                the
                Loans if a Ship is sold or becomes a Total Loss or on the occurrence
                of
                one of the events set out in Clause 8.13
                in
                relation to a Shipbuilding
                Contract:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

     

    
      	(i)  	
              the
                Loan relative to that Ship or that Shipbuilding Contract;
                and

            

    

     

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

            

    

     

    
      	8.8  	
              Mandatory
                prepayment upon a change of control.
                If
                there is a change of ownership of the shares in the Corporate Guarantor
                or
                any Borrower such that an individual or company (or group of individuals
                and/or companies acting in concert) which does not at the date of
                this
                Agreement control the Corporate Guarantor or that Borrower acquires
                control of the Corporate Guarantor or that
                Borrower:

            

    

     

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

            

    

     

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

            

    

     

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

     

    
      	8.9  	
              Amounts
                payable on prepayment.
                A
                prepayment shall be made together with accrued interest (and any
                other
                amount payable under Clause 21
                or
                otherwise) in respect of the amount prepaid and, if the prepayment
                is not
                made on the last day of an Interest Period together with any sums
                payable
                under Clause 21.1(b)
                but without premium or penalty. 

            

    

     

    
      	8.10  	
              Application
                of partial prepayment.
                Each partial prepayment of a Loan shall be applied against the repayment
                instalments of such Loan in inverse order of
                maturity.

            

    

     

    
      	8.11  	
              No
                Reborrowing.
                No
                amount of the Loans prepaid may be
                reborrowed.

            

    

     

    
      	8.12  	
              Unwinding
                of Designated Transactions.
                On
                or prior to any repayment or prepayment of the Loans under this Clause
                8
                or
                any other provision of this Agreement, the Borrowers shall wholly
                or
                partially reverse, offset, unwind or otherwise terminate one or more
                of
                the continuing Designated Transactions so that the notional principal
                amount of the continuing Designated Transactions thereafter remaining
                does
                not and will not in the future (taking into account the scheduled
                amortisation) exceed the amount of the Loans as reducing from time
                to time
                thereafter pursuant to Clause 8.1.

            

    

     

    
      	8.13  	
              Prepayment
                pursuant to events arising in respect of the Shipbuilding
                Contracts.
                The events referred to in Clause 8.7(c)
                are:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	9  	
              CONDITIONS
                PRECEDENT 

            

    

     

    
      	9.1  	
              Documents,
                fees and no default.
                Each Lender’s obligation to contribute to an Advance is subject to the
                following conditions precedent: 

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	(ii)  	
              the
                representations and warranties in Clause 10.1 and those of the Borrowers
                or any Security Party which are set out in the other Finance Documents
                would be true and not misleading if repeated on each of those dates
                with
                reference to the circumstances then existing;
                and

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	9.2  	
              Waiver
                of conditions precedent.
                If all the Lenders or, in relation to a condition which the Agent
                determines is non-material, the Majority Lenders, at their discretion,
                permit an Advance to be borrowed before certain of the conditions
                referred
                to in Clause 9.1
                are satisfied, the Borrowers shall ensure that those conditions are
                satisfied within 14 Business days after the Drawdown Date (or such
                longer
                period as the Agent may, with the authorisation of all the Lenders
                or (as
                the case may be) the Majority Lenders,
                specify).

            

    

     

    
      	9.3  	
              Pre-positioning
                of delivery instalments under Shipbuilding Contracts.
                Notwithstanding the foregoing provisions of Clause 9, in the event
                a
                Delivery Advance is required to be drawndown prior to the satisfaction
                of
                the relevant conditions precedent set out in Schedule 3 and remitted
                to
                the Seller’s bank in accordance with Article II, 2.4 of the relevant
                Shipbuilding Contract, the Agent may with the authorisation of the
                Majority Lenders agree to remit such amount to the Seller’s bank prior to
                the satisfaction of such conditions precedent provided
                that:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	10  	
              REPRESENTATIONS
                AND WARRANTIES

            

    

     

    
      	10.1  	
              General.
                Each Borrower represents and warrants to each Creditor Party as
                follows.

            

    

     

    
      	10.2  	
              Status.
                It
                is duly incorporated and validly existing and in good standing under
                the
                laws of the Marshall Islands.

            

    

     

    
      	10.3  	
              Share
                capital and ownership.
                It
                has an authorised share capital of 500 registered and/or bearer shares
                without par value all of which shares have been issued, and the legal
                title and beneficial ownership of all those shares is held, free
                of any
                Security Interest or other claim, by Westbrook Holdings
                Ltd.

            

    

     

    
      	10.4  	
              Corporate
                power.
                It
                has the corporate capacity, and has taken all corporate action and
                obtained all consents necessary for
                it:

            

    

     

    
      	(a)  	
              to
                execute the Shipbuilding Contract to which it is a party, to purchase
                and
                pay for its Ship under that Shipbuilding Contract and to register
                such
                Ship in its name in the Panamanian Ship
                Registry;

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	10.5  	
              Consents
                in force.
                All the consents referred to in Clause 10.4
                remain in force and nothing to the best of the Borrower’s knowledge and
                belief has occurred which makes any of them liable to
                revocation.

            

    

     

    
      	10.6  	
              Legal
                validity; effective Security Interests.
                The Finance Documents to which it is a party, do now or, as the case
                may
                be, will, upon execution and delivery (and, where applicable, registration
                as provided for in the Finance Documents): 

            

    

     

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

            

    

     

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

            

    

     

    subject
      to any relevant insolvency laws affecting creditors’ rights generally and
      subject to any qualifications as to matters of law which are specifically
      referred to in any legal opinion delivered to the Agent pursuant to Schedule
      3.

     

    
      	10.7  	
              No
                third party Security Interests.
                Without limiting the generality of Clause 10.6,
                at the time of the execution and delivery of each Finance
                Document: 

            

    

     

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

            

    

     

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

            

    

     

    
      	10.8  	
              No
                conflicts.
                The execution by that Borrower of each Finance Document to which
                it is a
                party, and the borrowing by that Borrower of the Loans, and its compliance
                with each Finance Document to which it is a party will not involve
                or lead
                to a contravention of:

            

    

     

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

            

    

     

    
      	(b)  	
              the
                constitutional documents of that Borrower;
                or

            

    

     

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

            

    

     

    
      	10.9  	
              No
                withholding taxes.
                No
                tax is imposed in any jurisdiction in which that Borrower is ordinarily
                resident for tax by way of withholding or deduction or otherwise
                on any
                payment to be made under this
                Agreement.

            

    

     

    
      	10.10  	
              No
                default.
                No
                Event of Default or Potential Event of Default has occurred and is
                continuing.

            

    

     

    
      	10.11  	
              Information.
                All information which has been provided in writing by or on behalf
                of the
                Borrowers or any Security Party to any Creditor Party in connection
                with
                any Finance Document was to the best of the Borrower’s knowledge and
                belief true and not misleading as at the time it was given and all
                audited
                and unaudited accounts which have been so provided satisfied the
                requirements of Clause 11.7;
                and there has been no material adverse change in the financial position
                or
                state of affairs of the Borrowers from that disclosed in the latest
                of
                those accounts.

            

    

     

    
      	10.12  	
              No
                litigation.
                No
                legal or administrative action involving the Borrowers (including
                action
                relating to any alleged or actual breach of the ISM Code or the ISPS
                Code)
                has been commenced or taken or, to that Borrower’s knowledge, is likely to
                be commenced or taken which, in either case, would be likely to have
                a
                material adverse effect on the Borrowers’ financial position or
                profitability.

            

    

     

    
      	10.13  	
              Validity
                and completeness of Shipbuilding Contracts.
                Each Shipbuilding Contract constitutes valid, binding and enforceable
                obligations of the Seller and the relevant Borrower respectively
                in
                accordance with its terms subject to any relevant insolvency laws
                attaching creditors’ rights generally
                and:

            

    

     

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

            

    

     

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

            

    

     

    
      	10.14  	
              No
                rebates etc.
                There is no agreement or understanding to allow or pay any rebate,
                premium, commission, discount or other benefit or payment (howsoever
                described) to the Borrowers, the Seller or a third party in connection
                with the purchase by the Borrowers of the Ships, other than as disclosed
                to the Agent in writing on or prior to the date of this
                Agreement.

            

    

     

    
      	10.15  	
              Compliance
                with certain undertakings.
                At
                the date of this Agreement, each Borrower is in compliance with Clause
                11.13
                and (save as described in writing to the Agent) Clauses 11.4
                and 11.9.

            

    

     

    
      	10.16  	
              Taxes
                paid.
                Each Borrower has paid all taxes applicable to, or imposed on or
                in
                relation to it, its business or its
                Ships.

            

    

     

    
      	10.17  	
              Money
                laundering.
                Without prejudice to the generality of Clause 2.3,
                in relation to the borrowing by the Borrowers of the Loan Facility,
                the
                performance and discharge of their obligations and liabilities under
                the
                Finance Documents, and the transactions and other arrangements affected
                or
                contemplated by the Finance Documents to which the Borrowers or any
                of
                them are a party, each Borrower confirms (i) that it is acting for
                its own
                account; (ii) that it will use the proceeds of the Loans for its
                own
                benefit, under its full responsibility and exclusively for the purposes
                specified in this Agreement; and (iii) that the foregoing will not
                involve
                or lead to a contravention of any law, official requirement or other
                regulatory measure or procedure implemented and in force to combat
“money
                laundering” (as defined in Article 1 of Directive (91/308/EEC) of the
                Council of the European
                Communities).

            

    

     

    
      	10.18  	
              Conformity
                of Financial Covenants and Dividend Restrictions.
                

            

    

     

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

            

    

     

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

            

    

     

    
      	10.19  	
              Charters
                with TBS Worldwide to which Borrowers are a party.
                Any charter which a Borrower shall enter into with TBS Worldwide
                shall be
                on terms comparable to, as far as charterhire is concerned, the time
                charter dated 10 May 2005, a copy of which was previously delivered
                to the Agent.

            

    

     

    
      	11  	
              GENERAL
                UNDERTAKINGS
                AND FINANCIAL COVENANTS

            

    

     

    
      	11.1  	
              General.
                Each Borrower undertakes with each Creditor Party to comply with
                the
                following provisions of this Clause 11
                at
                all times during the Security Period except as the Agent may, with
                the
                authorisation of the Majority Lenders, otherwise
                permit.

            

    

     

    
      	11.2  	
              Title;
                negative pledge.
                Each Borrower will keep its rights under the Shipbuilding Contract
                and
                Refund Guarantees to which it is a party, and with effect from the
                Delivery Date of the Ship, will hold the legal title to, and own
                the
                entire beneficial interest in its Ship, its Insurances and Earnings,
                in
                each case free from all Security Interests and other interests and
                rights
                of every kind, except for Permitted Security
                Interests.

            

    

     

    
      	11.3  	
              No
                disposal of assets.
                Save pursuant to the relevant Bareboat Charter or in the case of
                the
                disposal of a Ship or a Shipbuilding Contract where the provisions
                of
                Clause 8.7
                are complied with, no Borrower will transfer, lease or otherwise
                dispose
                of:

            

    

     

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

            

    

     

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

            

    

     

    
      	11.4  	
              No
                other liabilities or obligations to be incurred.
                No
                Borrower will incur any liability or obligation except
                

            

    

     

    
      	(a)  	
              liabilities
                and obligations under the Shipbuilding Contract, the Bareboat Charter,
                the
                First Sub-Time Charter, the Second Sub-Time Charter, the Finance
                Documents, the Guarantee Facility Agreement and the Finance Documents
                (as
                defined in the Guarantee Facility Agreement) to which it is a party;
                and
                

            

    

     

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

            

    

     

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

            

    

     

    
      	11.5  	
              Information
                provided to be accurate.
                All financial and other information which is provided in writing
                by or on
                behalf of each Borrower under or in connection with any Finance Document
                will to the best of that Borrower’s knowledge and belief be true and not
                misleading and will not omit any material fact or consideration which,
                if
                disclosed, would reasonably be expected to adversely affect the decision
                of a person considering whether to enter into this
                Agreement.

            

    

     

    
      	11.6  	
              Provision
                of financial statements.
                Each Borrower will procure that there is sent to the
                Agent:

            

    

     

    
      	(a)  	
              as
                soon as possible, but in no event later than 120 days after the end
                of
                each of the Corporate Guarantor’s financial years, the annual audited
                accounts of the Corporate Guarantor and its consolidated
                subsidiaries;

            

    

     

    
      	(b)  	
              as
                soon as possible, but in no event later than 30 days after the end
                of each
                quarter in each of the Corporate Guarantor’s financial
                years:

            

    

     

    
      	(i)  	
              the
                unaudited accounts of the Corporate Guarantor and its consolidated
                subsidiaries which are certified as to their correctness by its chief
                financial officer; and

            

    

     

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

            

    

     

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

            

    

     

    
      	11.7  	
              Form
                of financial statements.
                All accounts (audited and unaudited) delivered under Clause 11.6
                will:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	11.8  	
              Shareholder
                and creditor notices.
                Each Borrower will send the Agent, at the same time as they are
                despatched, copies of all communications which are despatched to
                its
                shareholders or creditors or any class of
                them.

            

    

     

    
      	11.9  	
              Consents.
                Each Borrower will maintain in force and promptly obtain or renew,
                and
                will promptly send certified copies to the Agent of, all consents
                required:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

     

    
      	11.10  	
              Maintenance
                of Security Interests.
                Each Borrower will:

            

    

     

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

            

    

     

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

            

    

     

    
      	11.11  	
              Notification
                of litigation.
                Each Borrower will provide the Agent with details of any legal or
                administrative action involving any Borrower, any Security Party,
                the
                Approved Managers or the Ships, their Earnings or the Insurances
                promptly
                upon becoming aware of the same where such legal or administrative
                action
                might, if adversely determined, have a material adverse effect on
                the
                ability of that Borrower to perform its obligations under any Finance
                Document to which it is a party. 

            

    

     

    
      	11.12  	
              No
                amendment to Shipbuilding Contracts.
                No
                Borrower will agree to any material amendment or supplement to, or
                waive
                or fail to enforce, the Shipbuilding Contract to which it is a party
                or
                any of its provisions (and for the purposes of this Clause 11.12
                an
                amendment of a Shipbuilding Contract will always be material if alone
                or
                with any previous variations it increases the Contract Price thereunder
                by
                more than 5%).

            

    

     

    
      	11.13  	
              Chief
                Executive Office.
                Each Borrower will maintain its chief executive office, and keep
                its
                corporate documents and records, at Suite 306, Commerce Building,
                One
                Chancery Lane, Hamilton, MH12,
                Bermuda.

            

    

     

    
      	11.14  	
              Confirmation
                of no default.
                Each Borrower will, within 2 Business Days after service by the Agent
                of a
                written request, serve on the Agent a notice which is signed by the
                representative director of such Borrower and
                which:

            

    

     

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

            

    

     

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

            

    

     

    
      	11.15  	
              Notification
                of default.
                Each Borrower will notify the Agent as soon as it becomes aware
                of:

            

    

     

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

            

    

     

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

            

    

     

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

     

    
      	11.16  	
              Provision
                of further information.
                Each Borrower will, as soon as practicable after receiving the request,
                provide the Agent with any additional financial or other information
                relating:

            

    

     

    
      	(a)  	
              to
                it, its Ship, her Earnings or Insurances;
                or

            

    

     

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

            

    

     

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

     

    
      	11.17  	
              Provision
                of copies and translation of documents.
                Each Borrower will supply the Agent with a sufficient number of copies
                of
                the documents referred to above to provide 1 copy for each Creditor
                Party;
                and if the Agent so requires in respect of any of those documents,
                such
                Borrower will provide a certified English translation prepared by
                a
                translator approved by the Agent.

            

    

     

    
      	11.18  	
              Financial
                Covenants. 

            

    

     

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

            

    

     

    
      	(ii)  	
              The
                Borrowers shall provide to the Agent within 60 days after the end
                of each
                financial quarter of the Corporate Guarantor’s financial year a compliance
                certificate in the form set out in Schedule 9 executed by the chief
                financial officer of the Corporate Guarantor and confirming that
                the
                Financial Covenants set out in Schedule 8 have been complied with
                during
                each financial quarter;

            

    

     

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

            

    

     

    
      	11.19  	
              Operational
                business of TBS Pacific Liner. The
                Borrowers undertake to procure that TBS Pacific Liner opens the Earnings
                Account with the Agent no later than 30 June 2007 and that thereafter
                and
                throughout the Security Period (i) all of the operational business
                of TBS
                Pacific Liner shall be conducted through the Earnings Account and
                (ii) TBS
                Pacific Liner does not operate accounts with any banks other than
                the
                Agent (save that the Creditor Parties agree there may be a transitional
                period of up to 6 months from the date of opening the Earnings Account
                until all operational business of TBS Pacific Liner is completely
                transferred and all other accounts of TBS Pacific Liner which are
                currently with other banks are
                closed).

            

    

     

    
      	11.20  	
              Designated
                Transactions.
                The Borrowers hereby undertake that on the Drawdown Date in respect
                of an
                Advance they shall hedge the interest rate payable in respect of
                such
                Advance for the period for which such Advance is scheduled to be
                outstanding by entering into a Designated Transaction with the Swap
                Bank
                pursuant to the Master Agreement.

            

    

     

    
      	11.21  	
              Dividends.
                The
                Borrowers shall procure that the Corporate Guarantor does not pay
                any
                dividend or make any other form of distribution except where the
                following
                conditions are met:-

            

    

     

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

            

    

     

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

            

    

     

    
      	(c)  	
              prior
                to the making of the proposed dividend or distribution the Borrowers
                have
                provided to the Agent a certificate executed by the chief financial
                officer of the Corporate Guarantor confirming that the Corporate
                Guarantor
                is in compliance with the minimum Consolidated Fixed Charge Coverage
                Ratio
                as set out in Schedule 8 for the Measurement Period immediately preceding
                the date of the proposed dividend or
                distribution.

            

    

     

    For
      the
      purpose of this Clause 11.21, “Consolidated Net Income”, “Consolidated Fixed
      Charge Coverage Ratio” and “Measurement Period” each shall have the meaning
      given to such term in Schedule 8. 

     

    
      	12  	
              CORPORATE
                UNDERTAKINGS

            

    

     

    
      	12.1  	
              General.
                Each Borrower also undertakes with each Creditor Party to comply
                with the
                following provisions of this Clause 12
                at
                all times during the Security Period except as the Agent may, with
                the
                authorisation of the Majority Lenders, otherwise
                permit.

            

    

     

    
      	12.2  	
              Maintenance
                of status.
                Each Borrower will maintain its separate corporate existence and
                remain in
                good standing under the laws of the Marshall
                Islands.

            

    

     

    
      	12.3  	
              Negative
                undertakings.
                No
                Borrower will:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	13  	
              INSURANCE

            

    

     

    
      	13.1  	
              General.
                Each Borrower also undertakes with each Creditor Party to comply
                with the
                following provisions of this Clause 13
                in
                respect of each Ship at all times during the Security Period after
                that
                Ship has been delivered to it under the relevant Shipbuilding Contract
                except as the Agent may, with the authorisation of the Majority Lenders,
                otherwise permit.

            

    

     

    
      	13.2  	
              Maintenance
                of obligatory insurances.
                Each Borrower shall keep its Ship insured at its expense
                against:

            

    

     

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

            

    

     

    
      	(b)  	
              war
                risks;

            

    

     

    
      	(c)  	
              protection
                and indemnity risks; and

            

    

     

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

            

    

     

    
      	13.3  	
              Terms
                of obligatory insurances.
                Such insurances in relation to a Ship shall be effected by the
                Borrowers:

            

    

     

    
      	(a)  	
              in
                Dollars;

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	(e)  	
              on
                approved terms; and

            

    

     

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

            

    

     

    
      	13.4  	
              Further
                protections for the Creditor Parties.
                In
                addition to the terms set out in Clause 13.3,
                each Borrower shall use its best endeavours to procure that the obligatory
                insurances shall:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	13.5  	
              Renewal
                of obligatory insurances.
                The Borrowers shall:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	13.6  	
              Copies
                of policies; letters of undertaking.
                The Borrowers shall ensure that all approved brokers provide the
                Security
                Trustee with pro forma copies of all policies relating to the obligatory
                insurances which they are to effect or renew and of a letter or letters
                or
                undertaking in a form required by the Security Trustee and including
                undertakings by the approved brokers
                that:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	13.7  	
              Copies
                of certificates of entry.
                The Borrowers shall ensure that any protection and indemnity and/or
                war
                risks associations in which a Ship is entered provides the Security
                Trustee with:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	13.8  	
              Deposit
                of original policies.
                The Borrowers shall ensure that all policies relating to obligatory
                insurances effected by it are deposited with the approved brokers
                through
                which the insurances are effected or
                renewed.

            

    

     

    
      	13.9  	
              Payment
                of premiums.
                The Borrowers shall punctually pay all premiums or other sums payable
                in
                respect of the obligatory insurances effected by it and produce all
                relevant receipts when so required by the Security
                Trustee.

            

    

     

    
      	13.10  	
              Guarantees.
                The Borrowers shall ensure that any guarantees required by a protection
                and indemnity or war risks association are promptly issued and remain
                in
                full force and effect.

            

    

     

    
      	13.11  	
              Restrictions
                on employment.
                The Borrowers shall not employ the Ships, nor permit them to be employed,
                outside the cover provided by any obligatory
                insurances.

            

    

     

    
      	13.12  	
              Compliance
                with terms of insurances.
                The Borrowers shall not do nor omit to do (nor permit to be done
                or not to
                be done) any act or thing which would or might render any obligatory
                insurance invalid, void, voidable or unenforceable or render any
                sum
                payable under an obligatory insurance repayable in whole or in part;
                and,
                in particular:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	13.13  	
              Alteration
                to terms of insurances.
                The Borrowers shall not either make or agree to any alteration to
                the
                terms of any obligatory insurance nor waive any right relating to
                any
                obligatory insurance. 

            

    

     

    
      	13.14  	
              Settlement
                of claims.
                The Borrowers shall not either settle, compromise or abandon any
                claim
                under any obligatory insurance for Total Loss or for a Major Casualty
                unless the Agent is satisfied that such release, compromise or abandonment
                will not prejudice any of the Lenders’ interests, and the Borrowers shall
                do all things necessary and provide all documents, evidence and
                information to enable the Security Trustee to collect or recover
                any
                moneys which at any time become payable in respect of the obligatory
                insurances.

            

    

     

    
      	13.15  	
              Provision
                of copies of communications.
                The Borrowers shall provide the Security Trustee, at the time of
                each such
                communication, copies of all written communications between the Borrowers
                and:

            

    

     

    
      	(a)  	
              the
                approved brokers; and

            

    

     

    
      	(b)  	
              the
                approved protection and indemnity and/or war risks associations;
                and

            

    

     

    
      	(c)  	
              the
                approved insurance companies and/or underwriters,
                

            

    

     

    which
      relate directly or indirectly to:

     

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

            

    

     

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

            

    

     

    
      	13.16  	
              Provision
                of information.
                In
                addition, the Borrowers shall promptly provide the Security Trustee
                (or
                any persons which it may designate) with any information which the
                Security Trustee (or any such designated person) reasonably requests
                for
                the purpose of:

            

    

     

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

            

    

     

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

            

    

     

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

     

    
      	13.17  	
              Mortgagee’s
                interest, additional perils.
                The Security Trustee shall be entitled from time to time to effect,
                maintain and renew a mortgagee’s interest additional perils insurance and
                a mortgagee’s interest marine insurance in relation to each Ship the
                subject of a Mortgage, in each case in an amount, which when aggregated
                with any such insurance policy taken out in relation to the other
                Ships
                then the subject of a Mortgage is equal to one hundred and ten per
                cent.
                (110%) of the Loans or part thereof at the discretion of the Security
                Trustee, on such terms, through such insurers and generally in such
                manner
                as the Security Trustee may from time to time consider appropriate
                and the
                Borrowers shall upon demand fully indemnify the Security Trustee
                in
                respect of all premiums and other expenses which are incurred in
                connection with or with a view to effecting, maintaining or renewing
                any
                such insurance or dealing with, or considering, any matter arising
                out of
                any such insurance.

            

    

     

    
      	13.18  	
              Review
                of insurance requirements. The
                Agent may and, on instruction of the Majority Lenders, shall review
                the
                requirements of this Clause 13
                from time to time in order to take account of any changes in circumstances
                after the date of this Agreement which are, in the reasonable opinion
                of
                the Agent or any Lender significant and capable of affecting the
                Borrowers
                or the Ships and their insurance (including, without limitation,
                changes
                in the availability or the cost of insurance coverage or the risks
                to
                which the Borrowers may be
                subject).

            

    

     

    
      	13.19  	
              Modification
                of insurance requirements.
                The Agent shall notify the Borrowers of any proposed modification
                under
                Clause 18.18 to the requirements of this Clause 13
                which the Agent, may or, on instruction of the Majority Lenders,
                shall
                reasonably consider appropriate, in the circumstances and, after
                consultation and taking full account of the Borrower’s opinions, such
                modification shall take effect on and from the date it is notified
                in
                writing to the Borrowers as an amendment to this Clause 13
                and shall bind the Borrowers
                accordingly.

            

    

     

    
      	14  	
              SHIP
                COVENANTS

            

    

     

    
      	14.1  	
              General.
                Each Borrower also undertakes with each Creditor Party to comply
                with the
                following provisions of this Clause 14
                in
                respect of each Ship at all times during the Security Period after
                that
                Ship has been delivered to it under the relevant Shipbuilding Contract
                except as the Agent, with the authorisation of the Majority Lenders,
                may
                otherwise permit.

            

    

     

    
      	14.2  	
              Ship’s
                name and registration.
                Each Borrower shall keep its Ship registered in its name in the Panamanian
                ship registry; shall not do or allow to be done anything as a result
                of
                which such registration might be cancelled or imperilled; and shall
                not
                change the name or port of registry of its
                Ship.

            

    

     

    
      	14.3  	
              Repair
                and classification.
                Each Borrower shall keep its Ship in a good and safe condition and
                state
                of repair:

            

    

     

    
      	(a)  	
              consistent
                with first-class ship ownership and management
                practice;

            

    

     

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

            

    

     

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

            

    

     

    
      	14.4  	
              Modification.
                The Borrowers shall not make any modification or repairs to, or
                replacement of, any Ship or equipment installed on it which would
                or might
                materially alter the structure, type or performance characteristics
                of
                that Ship or materially reduce its
                value.

            

    

     

    
      	14.5  	
              Removal
                of parts.
                The Borrowers shall not remove any material part of any Ship, or
                any item
                of equipment installed on, any Ship unless the part or item so removed
                is
                forthwith replaced by a suitable part or item which is in the same
                condition as or better condition than the part or item removed, is
                free
                from any Security Interest or any right in favour of any person other
                than
                the Security Trustee and becomes on installation on the relevant
                Ship the
                property of the relevant Borrower and subject to the security constituted
                by the relevant Mortgage Provided
                that
                the Borrowers may install equipment owned by a third party if the
                equipment can be removed without any risk of damage to the relevant
                Ship.

            

    

     

    
      	14.6  	
              Surveys.
                The Borrowers shall submit the Ships regularly to all periodical
                or other
                surveys which may be required for classification purposes and, if
                so
                required by the Security Trustee provide the Security Trustee, with
                copies
                of all survey reports.

            

    

     

    
      	14.7  	
              Inspection.
                The Borrowers shall permit the Security Trustee (by surveyors or
                other
                persons appointed by it for that purpose) to board the Ships at all
                reasonable times and without interference to their itineraries to
                inspect
                their condition or to satisfy themselves about proposed or executed
                repairs and shall afford all proper facilities for such
                inspections.

            

    

     

    
      	14.8  	
              Prevention
                of and release from arrest.
                The Borrowers shall promptly
                discharge:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

    

    
      	14.9  	
              Compliance
                with laws etc.
                The Borrowers shall:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	14.10  	
              Provision
                of information.
                The Borrowers shall promptly provide the Security Trustee with any
                information which it reasonably requests
                regarding:

            

    

     

    
      	(a)  	
              the
                Ships, their employment, position and
                engagements;

            

    

     

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

            

    

     

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

            

    

     

    
      	(d)  	
              any
                towages and salvages;

            

    

     

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

            

    

     

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

            

    

    

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

            

    

    

    
      	14.11  	
              Notification
                of certain events.
                The Borrowers shall immediately notify the Security Trustee by fax,
                confirmed forthwith by letter, of:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	(e)  	
              any
                intended dry docking of a Ship;

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

    

    
      	14.12  	
              Restrictions
                on chartering, appointment of managers etc.
                No
                Borrower shall, in relation to a
                Ship:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	14.13  	
              Notice
                of Mortgage.
                Each Borrower shall keep the relevant Mortgage registered against
                its Ship
                as a valid first priority mortgage, carry on board its Ship a certified
                copy of the relevant Mortgage and place and maintain in a conspicuous
                place in the navigation room and the Master’s cabin of its Ship a framed
                printed notice stating that its Ship is mortgaged by that Borrower
                to the
                Security Trustee.

            

    

     

    
      	14.14  	
              Sharing
                of Earnings.
                Save as disclosed to the Agent, no Borrower shall enter into any
                agreement
                or arrangement for the sharing of any
                Earnings.

            

    

     

    
      	14.15  	
              ISPS
                Code.
                The Borrowers shall comply with the ISPS Code and in particular,
                without
                limitation, shall:

            

    

     

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

            

    

     

    
      	(b)  	
              maintain
                for each Ship an ISSC; and

            

    

     

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

            

    

     

    
      	15  	
              SECURITY
                COVER

            

    

     

    
      	15.1  	
              Minimum
                required security cover. Clause
                15.2
                applies if the Agent notifies the Borrowers
                that:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

    

    
      	15.2  	
              Provision
                of additional security; prepayment.
                If
                the Agent serves a notice on the Borrowers under Clause 15.1, the
                Borrowers shall, within 1 month after the date on which the Agent’s notice
                is served, either:

            

    

     

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

            

    

     

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

            

    

     

    
      	15.3  	
              Valuation
                of Ships.
                The market value of a Ship at any date is that shown by a valuation
                prepared:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	15.4  	
              Value
                of additional vessel security.
                The net realisable value of any additional security which is provided
                under Clause 15.2
                and which consists of a Security Interest over a vessel shall be
                that
                shown by a valuation complying with the requirements of Clause
                15.3.

            

    

     

    
      	15.5  	
              Valuations
                binding.
                Any valuation under Clause 15.2,
                15.3
                or
                15.4
                shall be binding and conclusive as regards the Borrowers, as shall
                be any
                valuation which the Majority Lenders make of any additional security
                which
                does not consist of or include a Security
                Interest.

            

    

     

    
      	15.6  	
              Provision
                of information.
                The Borrowers shall promptly provide the Agent and any shipbroker
                or
                expert acting under Clause 15.3
                or
                15.4
                with any information which the Agent or the shipbroker or expert
                may
                reasonably request for the purposes of the valuation; and, if the
                Borrowers fail to provide the information by the date specified in
                the
                request, the valuation may be made on any basis and assumptions which
                the
                shipbroker or the Majority Lenders (or the expert appointed by them)
                consider prudent.

            

    

     

    
      	15.7  	
              Payment
                of valuation expenses.
                Without prejudice to the generality of the Borrowers’ obligations under
                Clauses 15.2,
                15.3
                and 15.3,
                the Borrowers shall, on demand, pay the Agent the amount of the fees
                and
                expenses of any shipbroker or expert instructed by the Agent under
                this
                Clause and all legal and other expenses incurred by any Creditor
                Party in
                connection with any matter arising out of this Clause provided however
                that prior to the occurrence of an Event of Default the Borrowers
                shall
                only be obliged to reimburse the Agent such fees and expenses in
                relation
                to one valuation of each Ship obtained pursuant to Clause 15
                per each twelve month period. The Borrowers shall also pay to the
                Agent
                the amount of all legal and other expenses incurred by any Creditor
                Party
                in connection with any matter arising out of this Clause 20.

            

    

     

    
      	15.8  	
              Application
                of prepayment.
                Clause 8
                shall apply in relation to any prepayment pursuant to Clause 15.2(b).

            

    

     

    
      	15.9  	
              Meaning
                of additional security. In
                Clause 15.1“security”
                means a Security Interest over an asset or assets (whether securing
                the
                Borrowers’ liabilities under the Finance Documents or a guarantee in
                respect of those liabilities), or a guarantee, letter of credit or
                other
                security in respect of the Borrowers’ liabilities under the Finance
                Documents.

            

    

     

    
      	15.10  	
              Requirement
                for additional documents. The
                Borrowers shall not be deemed to have complied with Clause 15.2(a)
                above until the Agent has received in connection with the additional
                security certified copies of documents of the kinds referred to in
                paragraphs 3, 4 and 5 of Part A of Schedule 3 below and such legal
                opinions in terms acceptable to the Agent from such lawyers as it
                may
                select.

            

    

     

    
      	16  	
              PAYMENTS
                AND CALCULATIONS

            

    

     

    
      	16.1  	
              Currency
                and method of payments.
                All payments to be made by the Lenders or by the Borrowers under
                a Finance
                Document shall be made to the Agent or to the Security Trustee, in
                the
                case of an amount payable to it:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	16.2  	
              Payment
                on non-Business Day.
                If
                any payment by the Borrowers under a Finance Document would otherwise
                fall
                due on a day which is not a Business
                Day:

            

    

     

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

            

    

     

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

            

    

     

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

    

    
      	16.3  	
              Basis
                for calculation of periodic payments.
                All interest and commitment fee and any other payments under any
                Finance
                Document which are of an annual or periodic nature shall accrue from
                day
                to day and shall be calculated on the basis of the actual number
                of days
                elapsed and a 360 day year.

            

    

     

    
      	16.4  	
              Distribution
                of payments to Creditor Parties.
                Subject to Clauses 16.5,
                16.6
                and 16.7:

            

    

     

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

            

    

     

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

            

    

     

    
      	16.5  	
              Permitted
                deductions by Agent.
                Notwithstanding any other provision of this Agreement or any other
                Finance
                Document, the Agent may, before making an amount available to a Lender,
                deduct and withhold from that amount any sum which is then due and
                payable
                to the Agent from that Lender under any Finance Document or any sum
                which
                the Agent is then entitled under any Finance Document to require
                or that
                Lender to pay on demand.

            

    

     

    
      	16.6  	
              Agent
                only obliged to pay when monies received.
                Notwithstanding any other provision of this Agreement or any other
                Finance
                Document, the Agent shall not be obliged to make available to the
                Borrowers or any Lender any sum which the Agent is expecting to receive
                for remittance or distribution to the Borrowers or that Lender until
                the
                Agent has satisfied itself that it has received that
                sum.

            

    

     

    
      	16.7  	
              Refund
                to Agent of monies not received.
                If
                and to the extent that the Agent makes available a sum to the Borrowers
                or
                a Lender, without first having received that sum, the Borrowers or
                the
                Lender concerned (as the case may be) shall, on
                demand:

            

    

     

    
      	(a)  	
              refund
                the sum in full to the Agent; and 

            

    

     

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

            

    

     

    
      	16.8  	
              Agent
                may assume receipt.
                Clause 16.7
                shall not affect any claim which the Agent has under the law of
                restitution, and applies irrespective of whether the Agent had any
                form of
                notice that it had not received the sum which it made
                available.

            

    

     

    
      	16.9  	
              Creditor
                Party accounts.
                Each Creditor Party shall maintain accounts showing the amounts owing
                to
                it by the Borrowers and each Security Party under the Finance Documents
                and all payments in respect of those amounts made by the Borrowers
                and any
                Security Party.

            

    

     

    
      	16.10  	
              Agent’s
                memorandum account.
                The Agent shall maintain a memorandum account showing all sums owing
                to
                the Agent, the Security Trustee, and each Lender from the Borrowers
                and
                each Security Party under the Finance Documents and all payments
                in
                respect of those amounts made by the Borrowers and any Security
                Party.

            

    

     

    
      	16.11  	
              Accounts
                prima facie evidence.
                If
                any accounts maintained under Clauses 16.9
                and 16.10
                show an amount to be owing by the Borrowers or a Security Party to
                a
                Creditor Party, those accounts shall be prima facie evidence that
                that
                amount is owing to that Creditor
                Party.

            

    

     

    
      	17  	
              APPLICATION
                OF RECEIPTS

            

    

     

    
      	17.1  	
              Normal
                order of application.
                Except as any Finance Document may otherwise provide, any sums which
                are
                received or recovered by any Creditor Party under or by virtue of
                any
                Finance Document shall be applied:-

            

    

     

    
      	(a)  	
              FIRST:
                in or towards satisfaction of any amounts then due and payable under
                the
                Finance Documents (or any of them), other than the Master Agreement,
                in
                such order of application and/or such proportions as the Agent, acting
                with the authorisation of the Majority Lenders, may specify by notice
                to
                the Borrowers, the Security Parties and the other Creditor
                Parties;

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	17.2  	
              Variation
                of order of application.
                The Agent may, with the authorisation of the Majority Lenders, by
                notice
                to the Borrowers, the Security Parties and the other Creditor Parties
                provide for a different manner of application from that set out in
                Clause
                17.1
                either as regards a specified sum or sums or as regards sums in a
                specified category or categories.

            

    

     

    
      	17.3  	
              Notice
                of variation of order of application.
                The Agent may give notices under Clause 17.2
                from time to time; and such a notice may be stated to apply not only
                to
                sums which may be received or recovered in the future, but also to
                any sum
                which has been received or recovered on or after the third Business
                Day
                before the date on which the notice is served.

            

    

     

    
      	17.4  	
              Appropriation
                rights overridden.
                This Clause 17
                and any notice which the Agent gives under Clause 17.2
                shall override any right of appropriation possessed, and any appropriation
                made, by the Borrowers or any Security
                Party.

            

    

     

    
      	18  	
              EARNINGS
                ACCOUNT AND STANDBY EARNINGS
                ACCOUNT

            

    

     

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

            

    

     

    
      	18.2  	
              Interest
                accrued on the Earnings Account and the Standby Earnings
                Account.
                Any credit balance on the Earnings Account and the Standby Earnings
                Account shall bear interest at the rate from time to time offered
                by the
                Agent to its customers for Dollar deposits of similar amounts and
                for
                periods similar to those for which such balances appear to the Agent
                likely to remain on the Earnings Account and the Standby Earnings
                Account.

            

    

     

    
      	18.3  	
              Monies
                on the Earnings Account and the Standby Earnings Account.
                Following
                the occurrence of an Event of Default which is continuing and a direction
                from the Agent under Clause 18.1
                above:-

            

    

     

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

            

    

     

    
      	(ii)  	
              any
                amounts standing to the credit of the Standby Earnings Account
                shall
                only be released with the approval of the
                Agent.

            

    

     

    
      	18.4  	
              Location
                of accounts.
                The Borrowers shall, and shall procure that TBS Pacific Liner shall,
                promptly :

            

    

     

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

            

    

     

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

            

    

     

    
      	18.5  	
              Debits
                for expenses etc.
                Following the occurrence of an Event of Default which is continuing
                and a
                direction from the Agent under Clause Error!
                Reference source not found.
                above, the Agent shall be entitled (but not obliged) from time to
                time to
                debit the Standby Earnings Account without prior notice in order
                to
                discharge any amount due and payable under Clause 20
                or
                21
                to
                a Creditor Party or payment of which any Creditor Party has become
                entitled to demand under Clause 20
                or
                21.

            

    

     

    
      	19  	
              EVENTS
                OF DEFAULT

            

    

     

    
      	19.1  	
              Events
                of Default.
                An
                Event of Default occurs if:

            

    

     

    
      	(a)  	
              any
                Borrower or any Security Party fails to pay when due or (if so payable)
                on
                demand any sum payable under a Finance Document (and so that for
                this
                purpose (i) sums payable on demand shall be treated as having been
                paid
                when due if paid within 3 Business Days of receipt of the demand
                and (ii)
                if the failure is caused by a disruption to the payments system referred
                to in Clause 16.1(b)
                which disruption is beyond the control of the Borrowers, such failure
                shall not constitute an Event of Default if payment is made within
                3
                Business Days of its due date); or

            

    

     

    
      	(b)  	
              any
                breach occurs of Clause 9.2,
                11.2,
                11.3,
                12.2,
                12.3
                or
                15.1;
                or

            

    

     

    
      	(c)  	
              any
                breach occurs of Clause 11.18(i);
                or

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    provided
      that no Event of Default will occur under this Clause 19.1(f)
      in
      relation to the Corporate Guarantor if the amount of Financial Indebtedness
      falling within paragraph (i) to (v) above is less than $2,500,000 (or its
      equivalent in any other currency or currencies)

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	(j)  	
              any
                official consent necessary to enable any Borrower to own, operate
                or
                charter its Ship or to enable any Borrower or any Security Party
                to comply
                with any provision which the Majority Lenders consider material of
                a
                Finance Document or any of the Shipbuilding Contracts is not granted,
                expires without being renewed, is revoked or becomes liable to revocation
                or any condition of such a consent is not fulfilled; or
                

            

    

     

    
      	(k)  	 

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

    

    
      	19.2  	
              Actions
                following an Event of Default.
                On, or at any time after, the occurrence of an Event of Default and
                while
                the Event of Default is continuing:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	19.3  	
              Termination
                of Commitments.
                On
                the service of a notice under Clause 19.2(a)(i),
                the Commitments and all other obligations of each Lender to the Borrower
                under this Agreement shall
                terminate.

            

    

     

    
      	19.4  	
              Acceleration
                of Liabilities.
                On
                the service of a notice under Clause 19.2(a)(ii),
                all amounts accrued or owing from the Borrowers or any Security Party
                under this Agreement and every other Finance Document shall become
                immediately due and payable or, as the case may be, payable on
                demand.

            

    

     

    
      	19.5  	
              Multiple
                notices; action without notice.
                The Agent may serve notices under Clauses 19.2(a)(i),
                or (ii)
                simultaneously or on different dates and it and/or the Security Trustee
                may take any action referred to in Clause 19.2
                if
                no such notice is served or simultaneously with or at any time after
                the
                service of both or either of such
                notices.

            

    

     

    
      	19.6  	
              Notification
                of Creditor Parties and Security Parties.
                The Agent shall send to each Lender, the Security Trustee and each
                Security Party a copy or the text of any notice which the Agent serves
                on
                the Borrowers under Clause 19.2;
                but the notice shall become effective when it is served on the Borrowers,
                and no failure or delay by the Agent to send a copy or the text of
                the
                notice to any other person shall invalidate the notice or provide
                the
                Borrowers or any Security Party with any form of claim or
                defence.

            

    

     

    
      	19.7  	
              Lender’s
                and Swap Bank’s rights unimpaired.
                Nothing in this Clause shall be taken to impair or restrict the exercise
                of any right given to individual Lenders or the Swap Bank under a
                Finance
                Document or the general law; and, in particular, this Clause is without
                prejudice to Clause 3.1.
                

            

    

     

    
      	19.8  	
              Exclusion
                of Creditor Party liability.
                No
                Creditor Party, and no receiver or manager appointed by the Security
                Trustee, shall have any liability to the Borrowers or a Security
                Party:

            

    

     

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

            

    

     

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

            

    

     

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

    

    
      	19.9  	
              Relevant
                Persons.
                In
                this Clause 19
                a
                “Relevant
                Person”
                means any Borrower and any Security
                Party.

            

    

     

    
      	19.10  	
              Interpretation.
                In
                Clause 19.1(f)
                references to an event of default or a termination event include
                any
                event, howsoever described, which is similar to an event of default
                in a
                facility agreement or a termination event in a finance lease; and
                in
                Clause 19.1(g) “petition”
                includes an application.

            

    

     

    
      	20  	
              FEES
                AND EXPENSES

            

    

     

    
      	20.1  	
              Arrangement,
                commitment and agency fees.
                The Borrowers shall pay to the
                Agent:

            

    

     

    
      	(a)  	
              on
                the date of this Agreement, an arrangement fee in the amount specified
                in
                the Fee Letter;

            

    

     

    
      	(b)  	
              quarterly
                in arrears during the period from (and including) 28 February 2007
                to the
                earlier of (i) the Drawdown Date in relation to the Loan A Delivery
                Advance and (ii) 31 May 2009 (or such later date as the Agent, in
                its sole
                and absolute discretion shall agree) and on the last day of that
                period a
                commitment fee at the rate specified in the Fee Letter on the undrawn
                balance of Loan A;

            

    

     

    
      	(c)  	
              quarterly
                in arrears during the period from (and including) 28 February 2007
                to the
                earlier of (i) the Drawdown Date in relation to the Loan B Delivery
                Advance and (ii) 30 November 2009 (or such later date as the Agent,
                in its
                sole and absolute discretion shall agree) and on the last day of
                that
                period a commitment fee at the rate specified in the Fee Letter on
                the
                undrawn balance of Loan B;

            

    

     

    
      	(d)  	
              quarterly
                in arrears during the period from (and including) 28 February 2007
                to the
                earlier of (i) the Drawdown Date in relation to the Loan C Delivery
                Advance and (ii) 30 April 2010 (or such later date as the Agent,
                in its
                sole and absolute discretion shall agree) and on the last day of
                that
                period a commitment fee at the rate specified in the Fee Letter on
                the
                undrawn balance of Loan C;

            

    

     

    
      	(e)  	
              quarterly
                in arrears during the period from (and including) 28 February 2007
                to the
                earlier of (i) the Drawdown Date in relation to the Loan D Delivery
                Advance and (ii) 31 August 2010 (or such later date as the Agent,
                in its
                sole and absolute discretion shall agree) and on the last day of
                that
                period a commitment fee at the rate specified in the Fee Letter on
                the
                undrawn balance of Loan D;

            

    

     

    
      	(f)  	
              quarterly
                in arrears during the period from (and including) 28 February 2007
                to the
                earlier of (i) the Drawdown Date in relation to the Loan E Delivery
                Advance and (ii) 30 June 2010 (or such later date as the Agent, in
                its
                sole and absolute discretion shall agree) and on the last day of
                that
                period a commitment fee at the rate specified in the Fee Letter on
                the
                undrawn balance of Loan E;

            

    

     

    
      	(g)  	
              quarterly
                in arrears during the period from (and including) 28 February 2007
                to the
                earlier of (i) the Drawdown Date in relation to the Loan F Delivery
                Advance and (ii) 31 October 2010 (or such later date as the Agent,
                in its
                sole and absolute discretion shall agree) and on the last day of
                that
                period a commitment fee at the rate specified in the Fee Letter on
                the
                undrawn balance of Loan F;

            

    

     

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

            

    

     

    
      	20.2  	
              Costs
                of negotiation, preparation etc.
                The Borrowers shall pay to the Agent on its demand the amount of
                all
                expenses reasonably incurred by the Agent or the Security Trustee
                in
                connection with the negotiation, preparation, execution or registration
                of
                any Finance Document or any related document or with any transaction
                contemplated by a Finance Document or a related
                document.

            

    

     

    
      	20.3  	
              Costs
                of variations, amendments, enforcement etc.
                The Borrowers shall pay to the Agent, on the Agent’s demand, for the
                account of the Creditor Party concerned the amount of all expenses
                incurred by a Creditor Party (in the case of paragraphs (a), (b)
                and (c),
                such expenses to be reasonably incurred) in connection with: 

            

    

     

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

            

    

     

    
      	(b)  	
              any
                consent or waiver by the Lenders, the Majority Lenders or the Creditor
                Party concerned under or in connection with a Finance Document, or
                any
                request for such a consent or
                waiver;

            

    

     

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

            

    

     

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

            

    

     

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

    

    
      	20.4  	
              Extraordinary
                management time.
                The Borrowers shall pay to the Agent on its demand compensation in
                respect
                of the reasonable and documented amount of time which the management
                of
                either Servicing Bank has spent in connection with a matter covered
                by
                Clause 20.3
                and which exceeds the amount of time which would ordinarily be spent
                in
                the performance of the relevant Servicing Bank’s routine functions. Any
                such compensation shall be based on such reasonable daily or hourly
                rates
                as the Agent may notify to the Borrowers and is in addition to any
                fee
                paid or payable to the relevant Servicing Bank. Where one bank is
                both
                Agent and Security Trustee there shall be no double charging of such
                compensation.

            

    

     

    
      	20.5  	
              Documentary
                taxes.
                The Borrowers shall promptly pay any tax payable on or by reference
                to any
                Finance Document, and shall, on the Agent’s demand, fully indemnify each
                Creditor Party against any claims, expenses, liabilities and losses
                resulting from any failure or delay by the Borrowers to pay such
                a
                tax.

            

    

     

    
      	20.6  	
              Certification
                of amounts.
                A
                notice which is signed by 2 officers of a Creditor Party, which states
                that a specified amount, or aggregate amount, is due to that Creditor
                Party under this Clause 20
                and which indicates (without necessarily specifying a detailed breakdown)
                the matters in respect of which the amount, or aggregate amount,
                is due
                shall (save in the case of manifest error) be prima facie evidence
                that
                the amount, or aggregate amount, is
                due.

            

    

     

    
      	21  	
              INDEMNITIES

            

    

     

    
      	21.1  	
              Indemnities
                regarding borrowing and repayment of Loan. The
                Borrowers shall fully indemnify the Agent and each Lender on the
                Agent’s
                demand and the Security Trustee on its demand in respect of all claims,
                expenses, liabilities and losses which are made or brought against
                or
                incurred by that Creditor Party, or which that Creditor Party reasonably
                and with due diligence estimates that it will incur, as a result
                of or in
                connection with:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

    

    
      	21.2  	
              Breakage
                costs.
                Without limiting its generality, Clause 21.1
                covers any claim, expense, liability or loss, including a loss of
                a
                prospective profit, incurred by a
                Lender:

            

    

     

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

            

    

     

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

            

    

     

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

     

    
      	21.3  	
              Miscellaneous
                indemnities.
                The Borrowers shall fully indemnify each Creditor Party severally
                on their
                respective demands in respect of all claims, expenses, liabilities
                and
                losses which may be made or brought against or incurred by a Creditor
                Party, in any country, as a result of or in connection with
                any action taken, or omitted or neglected to be taken, under or in
                connection with any Finance Document by the Agent, the Security Trustee
                or
                any other Creditor Party or by any receiver appointed under a Finance
                Document other than claims, expenses, liabilities and losses which
                are
                shown to have been directly and mainly caused by the dishonesty or
                wilful
                misconduct or the reckless action with knowledge of the probable
                consequences of the officers or employees of the Creditor Party
                concerned.

            

    

     

    

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

    

    
      	21.4  	
              Currency
                indemnity.
                If
                any sum due from the Borrowers or any Security Party to a Creditor
                Party
                under a Finance Document or under any order or judgment relating
                to a
                Finance Document has to be converted from the currency in which the
                Finance Document provided for the sum to be paid (the “Contractual
                Currency”)
                into another currency (the “Payment
                Currency”)
                for the purpose of:

            

    

     

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

            

    

     

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

            

    

     

    
      	(c)  	
              enforcing
                any such order or judgment;

            

    

     

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

    

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

    

    This
      Clause 21.4
      creates
      a separate liability of the Borrowers which is distinct from their other
      liabilities under the Finance Documents and which shall not be merged in any
      judgment or order relating to those other liabilities.

    

    
      	21.5  	
              Certification
                of amounts.
                A
                notice which is signed by 2 officers of a Creditor Party, which states
                that a specified amount, or aggregate amount, is due to that Creditor
                Party under this Clause 21
                and which indicates (without necessarily specifying a detailed breakdown)
                the matters in respect of which the amount, or aggregate amount,
                is due
                shall (save in the case of manifest error) be prima facie evidence
                that
                the amount, or aggregate amount, is
                due.

            

    

     

    
      	21.6  	
              Sums
                deemed due to a Lender.
                For the purposes of this Clause 21,
                a
                sum payable by the Borrowers to the Agent or the Security Trustee
                for
                distribution to a Lender shall be treated as a sum due to that
                Lender.

            

    

     

    
      	21.7  	
              Environmental
                Indemnity.
                The Borrowers shall indemnify the Creditor Parties on demand against
                all
                costs, expenses, liabilities and losses sustained or incurred as
                a result
                of or in connection with any Environmental Claims being made against
                the
                Creditor Parties or otherwise howsoever arising out of any Environmental
                Incident.

            

    

     

    
      	22  	
              NO
                SET-OFF OR TAX DEDUCTION

            

    

     

    
      	22.1  	
              No
                deductions.
                All amounts due from a Borrower under a Finance Document shall be
                paid:

            

    

     

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

            

    

     

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

            

    

     

    
      	22.2  	
              Grossing-up
                for taxes.
                If
                a Borrower is required by law to make a tax deduction from any
                payment:

            

    

     

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

            

    

     

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

            

    

     

    
      	(c)  	
              the
                amount due in respect of the payment shall be increased by the amount
                necessary to ensure that the relevant Creditor Parties receive and
                retain
                (free from any liability relating to the tax deduction) a net amount
                which, after the tax deduction, is equal to the full amount which
                they
                would otherwise have received.

            

    

     

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

     

    
      	22.3  	
              Evidence
                of payment of taxes.
                Within 1 month after making any tax deduction, the Borrower concerned
                shall deliver to the Agent documentary evidence satisfactory to the
                Agent
                that the tax had been paid to the appropriate taxation
                authority.

            

    

     

    
      	22.4  	
              Tax
                credits.
                A
                Creditor Party which receives for its own account a repayment or
                obtains
                relief or credit in respect of tax paid or otherwise payable by it
                in
                respect of or calculated by reference to the increased payment made
                by a
                Borrower under Clause 22.2 shall pay to the relevant Borrower a sum
                equal
                to the proportion of the repayment, relief or credit which that Creditor
                Party allocates to the amount due from that Borrower in respect of
                which
                that Borrower made the increased
                payment:

            

    

     

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

            

    

     

    
      	(b)  	
              nothing
                in this Clause 22.4
                shall oblige a Creditor Party to arrange its tax affairs in any particular
                manner, to claim any type of relief, credit, allowance or deduction
                instead of, or in priority to, another or to make any such claim
                within
                any particular time;

            

    

     

    
      	(c)  	
              nothing
                in this Clause 22.4
                shall oblige a Creditor Party to make a payment which would leave
                it in a
                worse position than it would have been in if the relevant Borrower
                had not
                been required to make a tax deduction from a payment;
                and

            

    

     

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

            

    

     

    
      	22.5  	
              Exclusion
                of tax on overall net income.
                In
                this Clause 22“tax
                deduction”
                means any deduction or withholding for or on account of any present
                or
                future tax except tax on a Creditor Party’s overall net
                income.

            

    

     

    
      	22.6  	
              Application
                of Master Agreement.
                For the avoidance of doubt, Clause 22
                does not apply in respect of sums due from the Borrowers to the Swap
                Bank
                under or in connection with the Master Agreement as to which sums
                the
                provisions of section 2(d) (Deduction or Withholding for Tax) of
                the
                Master Agreement shall apply.

            

    

     

    
      	23  	
              ILLEGALITY,
                ETC

            

    

     

    
      	23.1  	
              Illegality.
                This Clause 23
                applies if a Lender (the “Notifying
                Lender”)
                notifies the Agent that it has become, or will with effect from a
                specified date, become:

            

    

     

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

            

    

     

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

            

    

     

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

    

    
      	23.2  	
              Notification
                of illegality.
                The Agent shall promptly notify the Borrowers, the Security Parties,
                the
                Security Trustee, and the other Lenders of the notice under Clause
                23.1
                which the Agent receives from the Notifying
                Lender.

            

    

     

    
      	23.3  	
              Prepayment;
                termination of Commitment.
                On
                the Agent notifying the Borrowers under Clause 23.2,
                the Notifying Lender’s Available Commitment shall terminate by no later
                than the date specified in the Notifying Lender’s notice under Clause
                23.1
                as
                the date on which the notified event would become effective the Borrowers
                shall prepay the Notifying Lender’s Contribution in accordance with Clause
                8.

            

    

     

    
      	23.4  	
              Mitigation.
                If circumstances arise which would result in a notification under
                Clause 23.1 then, without in any way limiting the rights of the
                Notifying Lender under Clause 23.3, the Notifying Lender shall use
                reasonable endeavours to transfer its obligations, liabilities and
                rights
                under this Agreement and the Finance Documents to another office
                or
                financial institution not affected by the circumstances but the Notifying
                Lender shall not be under any obligation to take any such action
                if, in
                its opinion, to do would or might:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	24  	
              INCREASED
                COSTS

            

    

     

    
      	24.1  	
              Increased
                costs.
                This Clause 24
                applies if a Lender (the “Notifying
                Lender”)
                notifies the Agent that the Notifying Lender considers that as a
                result
                of:

            

    

     

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

            

    

     

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

            

    

     

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

    

    
      	24.2  	
              Meaning
                of “increased cost”.
                In
                this Clause 24,
                “increased
                cost”
                means, in relation to a Notifying
                Lender:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    but
      not
      an item attributable to a change in the rate of tax on the overall net income
      of
      the Notifying Lender (or a parent company of it) or an item covered by the
      indemnity for tax in Clause 21.1
      or by
      Clause 22
      or an
      item arising directly out of the implementation by the applicable authorities
      having jurisdiction over the Notifying Lender of the matters set out in the
      statement of the Basle Committee on Banking Regulations and Supervisory
      Practices dated July 1988 and entitled “International Convergence of Capital
      Measurement and Capital Standards”, to the extent and according to the timetable
      provided for in the statement.

     

    For
      the
      purposes of this Clause 24.2
      the
      Notifying Lender may in good faith allocate or spread costs and/or losses among
      its assets and liabilities (or any class of its assets and liabilities) on
      such
      basis as it considers appropriate.

     

    
      	24.3  	
              Notification
                to Borrowers of claim for increased costs.
                The Agent shall promptly notify the Borrowers and the Security Parties
                of
                the notice which the Agent received from the Notifying Lender under
                Clause
                24.1.

            

    

     

    
      	24.4  	
              Payment
                of increased costs.
                The Borrowers shall pay to the Agent, on the Agent’s demand, for the
                account of the Notifying Lender the amounts which the Agent from
                time to
                time notifies the Borrowers that the Notifying Lender has specified
                to be
                necessary to compensate the Notifying Lender for the increased cost
                (provided that such demand is accompanied by a certificate from the
                Notifying Lender confirming the amount of its increased cost and
                including
                a calculation thereof).

            

    

     

    
      	24.5  	
              Notice
                of prepayment or cancellation.
                If
                the Borrowers are not willing to continue to compensate the Notifying
                Lender for the increased cost under Clause 24.4,
                the Borrowers may give the Agent not less than 90 days’ notice of their
                intention to prepay the Notifying Lender’s Contribution at the end of an
                Interest Period and/or to cancel the Notifying Lender’s Available
                Commitment.

            

    

     

    
      	24.6  	
              Prepayment;
                termination of Commitment.
                A
                notice under Clause 24.5
                shall be irrevocable; the Agent shall promptly notify the Notifying
                Lender
                of the Borrowers’ notice of intended prepayment and/or intended
                cancellation; and:

            

    

     

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

            

    

     

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

            

    

     

    
      	24.7  	
              Application
                of prepayment.
                Save to the extent stated above Clause 8
                shall apply in relation to the
                prepayment.

            

    

     

    
      	24.8  	
              Mitigation.
                If circumstances arise which would result in a notification under
                Clause 24.1 then, without in any way limiting the rights of the
                Notifying Lender under Clause 24.3, the Notifying Lender shall use
                reasonable endeavours to transfer its obligations, liabilities and
                rights
                under this Agreement and the Finance Documents to another office
                or
                financial institution not affected by the circumstances but the Notifying
                Lender shall not be under any obligation to take any such action
                if, in
                its opinion, to do so would or
                might:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	25  	
              SET-OFF

            

    

     

    
      	25.1  	
              Application
                of credit balances.
                Each Creditor Party may without prior notice following the occurrence
                of
                an Event of Default which is
                continuing:

            

    

     

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

            

    

     

    
      	(b)  	
              for
                that purpose:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	25.2  	
              Existing
                rights unaffected.
                No
                Creditor Party shall be obliged to exercise any of its rights under
                Clause
                25.1;
                and those rights shall be without prejudice and in addition to any
                right
                of set-off, combination of accounts, charge, lien or other right
                or remedy
                to which a Creditor Party is entitled (whether under the general
                law or
                any document).

            

    

     

    
      	25.3  	
              Sums
                deemed due to a Lender.
                For the purposes of this Clause 25,
                a
                sum payable by the Borrowers to the Agent or the Security Trustee
                for
                distribution to, or for the account of, a Lender shall be treated
                as a sum
                due to that Lender; and each Lender’s proportion of a sum so payable for
                distribution to, or for the account of, the Lenders shall be treated
                as a
                sum due to such Lender.

            

    

     

    
      	25.4  	
              No
                Security Interest.
                This Clause 25
                gives the Creditor Parties a contractual right of set-off only, and
                does
                not create any equitable charge or other Security Interest over any
                credit
                balance of the Borrowers.

            

    

     

    
      	26  	
              TRANSFERS
                AND CHANGES IN LENDING
                OFFICES

            

    

     

    
      	26.1  	
              Transfer
                by Borrowers.
                No
                Borrower may, without the consent of the Agent, given on the instructions
                of all the Lenders transfer any of its rights, liabilities or obligations
                under any Finance Document.

            

    

     

    
      	26.2  	
              Transfer
                by a Lender.
                Subject to Clause 26.4,
                a
                Lender (the “Transferor
                Lender”)
                may at any time, with the prior written consent of the Borrowers
                (not to
                be unreasonably withheld or delayed) or without the consent of the
                Borrowers if an Event of Default or a Potential Event of Default
                has
                occurred and is continuing, cause: 

            

    

     

    
      	(a)  	
              its
                rights in respect of all or part of its Contribution;
                or

            

    

     

    
      	(b)  	
              its
                obligations in respect of all or part of its Commitment;
                or

            

    

     

    
      	(c)  	
              a
                combination of (a) and (b);

            

    

     

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

     

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

     

    
      	26.3  	
              Transfer
                Certificate, delivery and notification.
                As
                soon as reasonably practicable after a Transfer Certificate is delivered
                to the Agent, it shall (unless it has reason to believe that the
                Transfer
                Certificate may be defective):

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	26.4  	
              Effective
                Date of Transfer Certificate.
                A
                Transfer Certificate becomes effective on the Transfer
                Date.

            

    

     

    
      	26.5  	
              No
                transfer without Transfer Certificate.
                No
                assignment or transfer of any right or obligation of a Lender under
                any
                Finance Document is binding on, or effective in relation to, the
                Borrowers, any Security Party, the Agent or the Security Trustee
                unless it
                is effected, evidenced or perfected by a Transfer Certificate.
                

            

    

     

    
      	26.6  	
              Lender
                re-organisation; waiver of Transfer Certificate.
                However, if a Lender enters into any merger, de-merger or other
                reorganisation as a result of which all its rights or obligations
                vest in
                another person (the “successor”),
                the Agent may, if it sees fit, by notice to the successor and the
                Borrowers and the Security Trustee waive the need for the execution
                and
                delivery of a Transfer Certificate; and, upon service of the Agent’s
                notice, the successor shall become a Lender with the same Commitment
                and
                Contribution as were held by the predecessor
                Lender.

            

    

     

    
      	26.7  	
              Effect
                of Transfer Certificate.
                A
                Transfer Certificate takes effect in accordance with English law
                as
                follows:

            

    

     

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

            

    

     

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

            

    

     

    
      	(c)  	
              the
                Transferee Lender becomes a Lender with the Contribution or Commitment
                of
                an amount specified in the Transfer
                Certificate;

            

    

     

    
      	(d)  	
              the
                Transferee Lender becomes bound by all the provisions of the Finance
                Documents which are applicable to the Lenders generally, including
                those
                about pro-rata sharing and the exclusion of liability on the part
                of, and
                the indemnification of, the Agent and the Security Trustee and, to
                the
                extent that the Transferee Lender becomes bound by those provisions
                (other
                than those relating to exclusion of liability), the Transferor Lender
                ceases to be bound by them;

            

    

     

    
      	(e)  	
              any
                part of the Loans which the Transferee Lender advances after the
                Transfer
                Certificate’s effective date ranks in point of priority and security in
                the same way as it would have ranked had it been advanced by the
                transferor, assuming that any defects in the transferor’s title and any
                rights or equities of the Borrowers or any Security Party against
                the
                Transferor Lender had not existed;

            

    

     

    
      	(f)  	
              the
                Transferee Lender becomes entitled to all the rights under the Finance
                Documents which are applicable to the Lenders generally, including
                but not
                limited to those relating to the Majority Lenders and those under
                Clause
                5.7
                and Clause 20,
                and to the extent that the Transferee Lender becomes entitled to
                such
                rights, the Transferor Lender ceases to be entitled to them;
                and

            

    

     

    
      	(g)  	
              in
                respect of any breach of a warranty, undertaking, condition or other
                provision of a Finance Document or any misrepresentation made in
                or in
                connection with a Finance Document, the Transferee Lender shall be
                entitled to recover damages by reference to the loss incurred by
                it as a
                result of the breach or misrepresentation, irrespective of whether
                the
                original Lender would have incurred a loss of that kind or
                amount.

            

    

     

    The
      rights and equities of the Borrowers or any Security Party referred to above
      include, but are not limited to, any right of set off and any other kind of
      cross-claim.

     

    
      	26.8  	
              Maintenance
                of register of Lenders.
                During the Security Period the Agent shall maintain a register in
                which it
                shall record the name, the Commitment, the Contribution and administrative
                details (including the lending office) from time to time of each
                Lender
                holding a Transfer Certificate and the effective date (in accordance
                with
                Clause 26.4)
                of the Transfer Certificate; and the Agent shall make the register
                available for inspection by the Security Trustee and the Borrowers
                during
                normal banking hours, subject to receiving at least 3 Business Days
                prior
                notice.

            

    

     

    
      	26.9  	
              Reliance
                on register of Lenders.
                The entries on that register shall, in the absence of manifest error,
                be
                conclusive in determining the identities of the Lenders and the amounts
                of
                their Commitments, Contributions and the effective dates of Transfer
                Certificates and may be relied upon by the Agent and the other parties
                to
                the Finance Documents for all purposes relating to the Finance
                Documents.

            

    

     

    
      	26.10  	
              Authorisation
                of Agent to sign Transfer Certificates.
                Subject to the foregoing provisions of this Clause 26 the Borrowers,
                the
                Security Trustee and each Lender irrevocably authorise the Agent
                to sign
                Transfer Certificates on its
                behalf.

            

    

     

    
      	26.11  	
              Registration
                fee.
                In
                respect of any Transfer Certificate, the Agent shall be entitled
                to
                recover a registration fee of $2,000 from the Transferor Lender or
                (at the
                Agent’s option) the Transferee Creditor
                Party.

            

    

     

    
      	26.12  	
              Sub-participation;
                subrogation assignment.
                A
                Lender may sub-participate all or any part of its rights and/or
                obligations under or in connection with the Finance Documents without
                the
                consent of, or any notice to, the Borrowers, any Security Party,
                the
                Agent, the Security Trustee or any other Creditor Party; and the
                Lenders
                may assign, in any manner and terms agreed by the Majority Lenders,
                the
                Agent and the Security Trustee all or any part of those rights to
                an
                insurer or surety who has become subrogated to
                them.

            

    

     

    
      	26.13  	
              Disclosure
                of information.
                A
                Lender may disclose to a potential Transferee Lender or sub-participant
                any information which the Lender has received in relation to the
                Borrowers, any Security Party or their affairs under or in connection
                with
                any Finance Document.

            

    

     

    
      	26.14  	
              Change
                of lending office.
                A
                Lender may change its lending office by giving notice to the Agent
                and the
                change shall become effective on the later
                of:

            

    

     

    
      	(a)  	
              the
                date on which the Agent receives the notice;
                and

            

    

     

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

            

    

     

    
      	26.15  	
              Notification.
                On
                receiving such a notice, the Agent shall notify the Borrowers and
                the
                Security Trustee; and, until the Agent receives such a notice, it
                shall be
                entitled to assume that a Lender is acting through the lending office
                of
                which the Agent last had notice.

            

    

     

    
      	26.16  	
              Replacement
                of Reference Bank.
                If
                any Reference Bank ceases to be a Lender or is unable on a continuing
                basis to supply quotations for the purposes of Clause 5
                then, unless the Borrowers, the Agent and the Majority Lenders otherwise
                agree, the Agent, acting on the instructions of the Majority Lenders,
                and
                after consulting the Borrowers, shall appoint another bank (whether
                or not
                a Lender) to be a replacement Reference Bank; and, when that appointment
                comes into effect, the first-mentioned Reference Bank’s appointment shall
                cease to be effective.

            

    

     

    
      	26.17  	
              No
                additional costs.
                If
                a Lender transfers any part of its Contribution and/or Commitment
                or
                sub-participates any part of its rights and/or obligations under
                the
                Finance Documents or changes it lending office pursuant to this
                Clause 26
                and as a result of circumstances existing at the date the transfer,
                sub
                participation or change occurs, the Borrowers would be obliged to
                make an
                increased payment to that Lender under any applicable Clauses of
                this
                Agreement, then that Lender is only entitled to receive payment under
                those Clauses to the same extent as the Lender would have been if
                the
                transfer, sub-participation or change of lending office had not
                occurred.

            

    

     

    
      	27  	
              VARIATIONS
                AND WAIVERS

            

    

     

    
      	27.1  	
              Variations,
                waivers etc. by Majority Lenders.
                Subject to Clause 27.2,
                a
                document shall be effective to vary, waive, suspend or limit any
                provision
                of a Finance Document, or any Creditor Party’s rights or remedies under
                such a provision or the general law, only if the document is signed,
                or
                specifically agreed to by fax, by the Borrowers, by the Agent on
                behalf of
                the Majority Lenders, by the Agent and the Security Trustee in their
                own
                rights, and, if the document relates to a Finance Document to which
                a
                Security Party is party, by that Security
                Party.

            

    

     

    
      	27.2  	
              Variations,
                waivers etc. requiring agreement of all Lenders.
                However, as regards the following, Clause 27.1
                applies as if the words “by the Agent on behalf of the Majority Lenders”
                were replaced by the words “by or on behalf of every
                Lender”:

            

    

     

    
      	(a)  	
              a
                change in the Margin or in the definition of
                LIBOR;

            

    

     

    
      	(b)  	
              an
                extension of the due date for, or a decrease in the amount of, any
                payment
                of principal, interest, fees, or other sum payable under this
                Agreement;

            

    

     

    
      	(c)  	
              an
                increase in any Lender’s
                Commitment;

            

    

     

    
      	(d)  	
              an
                extension of Availability Period;

            

    

     

    
      	(e)  	
              a
                change to the definition of “Majority
                Lenders”
                or “Finance
                Documents”;

            

    

     

    
      	(f)  	
              a
                change to the preamble or to Clause 2,
                3,
                4,
                5.1,
                17,
                18
                or
                30;

            

    

     

    
      	(g)  	
              a
                change to this Clause 27;

            

    

     

    
      	(h)  	
              any
                release of, or material variation to, a Security Interest, guarantee,
                indemnity or subordination arrangement set out in a Finance Document;
                and

            

    

     

    
      	(i)  	
              any
                other change or matter as regards which this Agreement or another
                Finance
                Document expressly provides that each Lender’s consent is
                required.

            

    

     

    
      	27.3  	
              Exclusion
                of other or implied variations.
                Except for a document which satisfies the requirements of Clauses
                27.1
                and 27.2,
                no document, and no act, course of conduct, failure or neglect to
                act,
                delay or acquiescence on the part of the Creditor Parties or any
                of them
                (or any person acting on behalf of any of them) shall result in the
                Creditor Parties or any of them (or any person acting on behalf of
                any of
                them) being taken to have varied, waived, suspended or limited, or
                being
                precluded (permanently or temporarily) from enforcing, relying on
                or
                exercising:

            

    

     

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

            

    

     

    
      	(b)  	
              an
                Event of Default; or 

            

    

     

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

            

    

     

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

            

    

     

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

            

    

    

    
      	28  	
              NOTICES

            

    

     

    
      	28.1  	
              General.
                Unless otherwise specifically provided, any notice under or in connection
                with any Finance Document shall be given by letter or fax; and references
                in the Finance Documents to written notices, notices in writing and
                notices signed by particular persons shall be construed
                accordingly.

            

    

     

    
      	28.2  	
              Addresses
                for communications.
                A
                notice shall be sent:

            

    

     

    
      	(a)  	
              to
                the Borrowers:Suite
                306

            

    

    Commerce
      Building 

    One
      Chancery Lane

    Hamilton
      HM12

    Bermuda

    

    Mailing
      Address:

    P.O.
      Box
      HM 2522

    Hamilton
      HMGX

    Bermuda

    

    Attention:
          William
      J. Carr

    Fax:    +1-441-295-4957

     

    With
      a
      copy to:

    TBS
      Shipping Services Inc.

    612
      East
      Grassy Sprain Road

    Yonkers,
      NY 10710 U.S.A.

    Attention:
      Ferdinand V. Lepere

    

    Fax
      :
    +1-914-961-5121

    

    
      	(b)  	
              to
                a Lender:At
                the address below its name in Schedule 1 or (as the case may require)
                in
                the relevant Transfer Certificate.

            

    

     

    
      	(c)  	
              to
                the Agent:In
                respect of operational matters (such as drawdowns, interest rate
                fixing,
                interest/fee calculations and
                payments:

            

    

     

    The
      Royal
      Bank of Scotland plc

     

    Level
      3

     

    21⁄2
      Devonshire Square

     

    London
      EC2M 4XJ

     

    Fax
      No:
      +44 207 615 7673

     

    Attention:
      Loans Administration/LAU

     

    in
      respect of non operational matters (such as documentation, covenant compliance,
      amendments and waivers etc)

     

    The
      Royal
      Bank of Scotland plc

     

    Shipping
      Business Centre

     

    5-10
      Great Tower Street

     

    London
      EC3P 3HX

     

    Fax
      No:
      +44 2076 15012

     

    Attention:
      Ship Finance Portfolio Management

     

    
      	(d)  	
              to
                the Security Trustee:The
                Royal Bank of Scotland plc

            

    

    Level
      5

    135
      Bishopsgate

    London
      EC2M 3UR

    

    Fax
      No:
      +44 207 085 4564

    Attention:
      Syndicated Loans Agency

    

    or
      to
      such other address as the relevant party may notify the Agent or, if the
      relevant party is the Agent or the Security Trustee, the Borrowers, the Lenders,
      and the Security Parties.

    

    
      	28.3  	
              Effective
                date of notices.
                Subject to Clauses 28.4
                and 28.5:

            

    

     

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

            

    

     

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

            

    

     

    
      	28.4  	
              Service
                outside business hours.
                However, if under Clause 28.3
                a
                notice would be deemed to be
                served:

            

    

     

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

            

    

     

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

            

    

     

    the
      notice shall (subject to Clause 28.5)
      be
      deemed to be served, and shall take effect, at 9 a.m. on the next day which
      is
      such a business day.

    

    
      	28.5  	
              Illegible
                notices.
                Clauses 28.3
                and 28.4
                do
                not apply if the recipient of a notice notifies the sender within
                1 hour
                after the time at which the notice would otherwise be deemed to be
                served
                that the notice has been received in a form which is illegible in
                a
                material respect.

            

    

     

    
      	28.6  	
              Valid
                notices.
                A
                notice under or in connection with a Finance Document shall not be
                invalid
                by reason that its contents or the manner of serving it do not comply
                with
                the requirements of this Agreement or, where appropriate, any other
                Finance Document under which it is served
                if:

            

    

     

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

            

    

     

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

            

    

     

    
      	28.7  	
              English
                language.
                Any notice under or in connection with a Finance Document shall be
                in
                English.

            

    

     

    
      	28.8  	
              Meaning
                of “notice”.
                In
                this Clause 28,
                “notice”
                includes any demand, consent, authorisation, approval, instruction,
                waiver
                or other communication.

            

    

     

    
      	28.9  	
              Electronic
                communication

            

    

     

    
      	(a)  	
              Any
                communication to be made between the Agent and a Creditor Party under
                or
                in connection with the Finance Documents may be made by electronic
                mail or
                other electronic means, if the Agent and the relevant Creditor
                Party:

            

    

     

    
      	(i)  	
              agree
                that, unless and until notified to the contrary, this is to be an
                accepted
                form of communication; 

            

    

     

    
      	(ii)  	
              notify
                each other in writing of their electronic mail address and/or any
                other
                information required to enable the sending and receipt of information
                by
                that means; and

            

    

     

    
      	(iii)  	
              notify
                each other of any change to their address or any other such information
                supplied by them.

            

    

     

    
      	(b)  	
              Any
                electronic communication made between the Agent and a Creditor Party
                will
                be effective only when actually received in readable form and in
                the case
                of any electronic communication made by a Creditor Party to the Agent
                only
                if it is addressed in such a manner as the Agent shall specify for
                this
                purpose.

            

    

     

    
      	29  	
              JOINT
                AND SEVERAL LIABILITY

            

    

     

    
      	29.1  	
              General.
                All liabilities and obligations of the Borrowers under this Agreement
                shall, whether expressed to be so or not, be several and, if and
                to the
                extent consistent with Clause 29.2,
                joint.

            

    

     

    
      	29.2  	
              No
                impairment of Borrower's obligations.
                The liabilities and obligations of a Borrower shall not be impaired
                by:

            

    

     

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

            

    

     

    
      	(b)  	
              any
                Lender, Swap Bank or the Security Trustee entering into any rescheduling,
                refinancing or other arrangement of any kind with any other
                Borrower;

            

    

     

    
      	(c)  	
              any
                Lender, Swap Bank or the Security Trustee releasing any other Borrower
                or
                any Security Interest created by a Finance Document;
                or

            

    

     

    
      	(d)  	
              any
                combination of the foregoing.

            

    

     

    
      	29.3  	
              Principal
                debtors.
                Each Borrower declares that it is and will, throughout the Security
                Period, remain a principal debtor for all amounts owing under this
                Agreement and the Finance Documents and no Borrower shall in any
                circumstances be construed to be a surety for the obligations of
                any other
                Borrower under this Agreement.

            

    

     

    
      	29.4  	
              Subordination.
                Subject to Clause 29.5,
                during the Security Period, no Borrower
                shall:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	29.5  	
              Borrower's
                required action.
                If
                during the Security Period, the Agent, by notice to a Borrower, requires
                it to take any action referred to in paragraphs (a) to (d) of Clause
                29.4,
                in relation to any other Borrower, that Borrower shall take that
                action as
                soon as practicable after receiving the Agent's
                notice.

            

    

     

    
      	30  	
              SUPPLEMENTAL

            

    

     

    
      	30.1  	
              Rights
                cumulative, non-exclusive.
                The rights and remedies which the Finance Documents give to each
                Creditor
                Party are:

            

    

     

    
      	(a)  	
              cumulative;

            

    

     

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

            

    

     

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

            

    

     

    
      	30.2  	
              Severability
                of provisions.
                If
                any provision of a Finance Document is or subsequently becomes void,
                unenforceable or illegal, that shall not affect the validity,
                enforceability or legality of the other provisions of that Finance
                Document or of the provisions of any other Finance
                Document.

            

    

     

    
      	30.3  	
              Counterparts.
                A
                Finance Document may be executed in any number of
                counterparts.

            

    

     

    
      	30.4  	
              Third
                party rights.
                A
                person who is not a party to this Agreement has no right under the
                Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy
                the
                benefit of any term of this
                Agreement.

            

    

     

    
      	31  	
              LAW
                AND JURISDICTION

            

    

     

    
      	31.1  	
              English
                law.
                This Agreement shall be governed by, and construed in accordance
                with,
                English law.

            

    

     

    
      	31.2  	
              Exclusive
                English jurisdiction.
                Subject to Clause 31.3,
                the courts of England shall have exclusive jurisdiction to settle
                any
                disputes which may arise out of or in connection with this
                Agreement.

            

    

     

    
      	31.3  	
              Choice
                of forum for the exclusive benefit of the Creditor
                Parties.
                Clause 36.2 is for the exclusive benefit of the Creditor Parties,
                each of
                which reserves the right:

            

    

     

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

            

    

     

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

            

    

     

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

    

    
      	31.4  	
              Process
                agent.
                Each Borrower irrevocably appoints Curtis Davis Garrard LLP at its
                registered office for the time being, presently at Waterview House,
                Roundwood Avenue, Stockley Park, Uxbridge UB11 1AU, to act as its
                agent to
                receive and accept on its behalf any process or other document relating
                to
                any proceedings in the English courts which are connected with this
                Agreement.

            

    

     

    
      	31.5  	
              Creditor
                Party rights unaffected.
                Nothing in this Clause 31
                shall exclude or limit any right which any Creditor Party may have
                (whether under the law of any country, an international convention
                or
                otherwise) with regard to the bringing of proceedings, the service
                of
                process, the recognition or enforcement of a judgment or any similar
                or
                related matter in any jurisdiction.

            

    

     

    
      	31.6  	
              Meaning
                of “proceedings”.
                In
                this Clause 31,
                “proceedings”
                means proceedings of any kind, including an application for a provisional
                or protective measure.

            

    

     

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1

     

    

     

    LENDERS 

     

    

    

    
      	
               

              Lender

               

            	
               

              Lending
                Office

               

            	
               

              Commitment

               

            
	
               

              The
                Royal Bank of Scotland plc

               

            	
               

              Shipping
                Business Centre

               

               

              5-10
                Great Tower Street

               

               

              London
                EC3P 3HX

               

            	
               

              $150,000,000

               

            
	 	
              Fax
                No: + 44 207 283 7538

              Attention:
                Ship Finance Portfolio Management

            	 

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      2

     

    

     

    DRAWDOWN
      NOTICE

     

    

    

    To:
       The
      Royal
      Bank of Scotland plc

    Level
      3

    21⁄2
      Devonshire Square

    London
      EC2M 4XJ

    

    Attention:
      Loans Administration/LAU

    

    

    

    DRAWDOWN
      NOTICE

    

    
      	1  	
              We
                refer to the loan agreement (the “Loan
                Agreement”)
                dated [l]
                and made between Argyle Maritime Corp., Caton Maritime Corp., Dorchester
                Maritime Corp., Longwoods Maritime Corp., McHenry Maritime Corp.
                and
                Sunswyck Maritime Corp., as Borrowers, the Lenders referred to therein,
                and The Royal Bank of Scotland plc as Mandated Lead Arranger, Bookrunner,
                Agent, Security Trustee, and Swap Bank in connection with a term
                loan
                facility of US$150,000,000. Terms defined in the Loan Agreement have
                their
                defined meanings when used in this Drawdown
                Notice.

            

    

     

    
      	2  	
              We
                request to borrow an Advance under the Loan Facility as
                follows:

            

    

     

    
      	(a)  	
              Amount:
                US$[l];

            

    

     

    
      	(b)  	
              Drawdown
                Date: [l];

            

    

     

    
      	(c)  	
              [Duration
                of the first Interest Period shall be [l]
                months;]

            

    

     

    
      	(d)  	
              Payment
                instructions : account in our name and numbered [l]
                with [l]
                of [l].

            

    

     

    
      	3  	
              We
                represent and warrant that:

            

    

     

    
      	(a)  	
              the
                representations and warranties in Clause 10 of the Loan Agreement
                would
                remain true and not misleading if repeated on the date of this notice
                with
                reference to the circumstances now
                existing;

            

    

     

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

            

    

     

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

            

    

     

    
      	5  	
              We
                authorise you to deduct the fees referred to in Clause 25 and due
                to you
                for the account of the Lenders from the amount of the said
                Advance.

            

    

     

    [Name
      of Signatory]

    

    

                                                           

    for
      and
      on behalf of

    [relevant
      Borrower]

    [l]

    [l]

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      3

     

    

     

    CONDITION
      PRECEDENT DOCUMENTS

     

    

    

    PART
      A

    

    

    The
      following are the documents referred to in Clause 19.1(a)required
      before service of the first Drawdown Notice.

    

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

            

    

     

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

            

    

     

    
      	3  	
              Copies
                of resolutions of the directors of each Borrower and each Security
                Party
                and copies of resolutions of the shareholders of each Borrower, in
                each
                case authorising the execution of each of the Finance Documents to
                which
                that Borrower or that Security Party is a party and, in the case
                of each
                Borrower, authorising named officers to give the Drawdown Notices
                and
                other notices under this Agreement and ratifying the execution of
                the
                Shipbuilding Contracts.

            

    

     

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

            

    

     

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

            

    

     

    
      	6  	
              Copies
                of the Shipbuilding Contracts and the Overall
                Agreement.

            

    

     

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

            

    

     

    
      	8  	
              Documentary
                evidence that the agent for service of process named in Clause
                31
                has accepted its appointment.

            

    

     

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

            

    

     

    
      	10  	
              A
                written confirmation from the Borrowers as to which individuals are
                authorised to give verbal and/or written instructions to the Agent
                on
                behalf of the Borrowers in respect of the selection of any Interest
                Period
                pursuant to Clause 6.2 of this
                Agreement.

            

    

     

    
      	11  	
              A
                written statement from a person acceptable to the Agent confirming
                the
                identity of the ultimate beneficial owner or owners of the shares
                in the
                Borrowers, the Corporate Guarantor and each other Security Party
                and of
                the identity of the person or persons controlling the voting rights
                attached to those shares.

            

    

     

    
      	12  	
              Such
                documents and evidence as the Agent shall require in relation to
                each
                Security Party based on applicable law and regulations, and the Agent’s
                own internal guidelines, relating to the Agent’s knowledge of its
                customers.

            

    

     

    
      	13  	
              Such
                documentary evidence as the Agent and its legal advisers may require
                in
                relation to the due authorisation and execution by the parties to
                the
                Intercreditor Agreement (other than the Creditor
                Parties).

            

    

     

    
      	14  	
              If
                the Agent so requires, in respect of any of the documents referred
                to
                above, a certified English translation prepared by a translator approved
                by the Agent.

            

    

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    PART
      B

    

    

    The
      following are the documents referred to in Clause 19.1(b)
      required
      before the drawdown of a Advance (other than a Delivery Advance) in respect
      of a
      Ship to be acquired using the proceeds of such Advance:

    

    
      	1  	
              evidence
                that the relevant stage payment of the Contract Price payable under
                the
                Shipbuilding Contract in respect of such Ship payable under the relevant
                Shipbuilding Contract has fallen due for payment or, in the case
                of each
                of Ship D, Ship E and Ship F and the relevant Advance to be utilised
                to
                reimburse the relevant Borrower the second instalment of the Contract
                Price payable under the relevant Shipbuilding Contract that such
                instalment has been paid to the Seller and that the stage of steel
                cutting
                for such Ship has been completed;

            

    

     

    
      	2  	
              the
                Pre-delivery Security Assignment in respect of the Shipbuilding Contract
                relating to such Ship (and of each document to be delivered thereunder);
                and

            

    

     

    
      	3  	
              favourable
                legal opinions from lawyers appointed by the Agent on such matters
                concerning the laws of the Marshall Islands and
                China.

            

    

     

    
      	4  	
              a
                copy of the relevant Refund Guarantee together with such documentary
                evidence as the Agent, and its legal advisers may require in relation
                to
                the due authorisation and execution by the Refund Guarantor of that
                Refund
                Guarantee and that such Refund Guarantee has been registered with
                the
                State Administration of Foreign Exchange in
                China.

            

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    PART
      C

    

    

    The
      following are the documents referred to in Clause 19.1(d)
      required
      before the drawdown of a Delivery Advance in respect of a Ship to be acquired
      using the proceeds of such Delivery Advance:

    

    
      	1  	 

    

     

    
      	(a)  	
              A
                duly executed original of the Mortgage and Multiparty Deed relating
                to the
                Ship (and of each document to be delivered by each of them);
                and

            

    

     

    
      	(b)  	
              in
                relation to the First Delivery Advance a duly executed original of
                the
                Account Security Deed and the originals of any mandates or other
                documents
                required in connection with the opening and operation of the Earnings
                Account and the Standby Earnings
                Account.

            

    

     

    
      	2  	
              Documentary
                evidence that:

            

    

     

    
      	(a)  	
              the
                Ship has been or on the relevant Delivery Date will be unconditionally
                delivered by the Sellers to, and accepted by, the relevant Borrower
                under
                the relevant Shipbuilding Contract and the full purchase price payable
                under the relevant Shipbuilding Contract has been duly
                paid;

            

    

     

    
      	(b)  	
              the
                Ship is or on the relevant Delivery Date will be registered in the
                name of
                the relevant Borrower with the Panamanian ship
                registry;

            

    

     

    
      	(c)  	
              the
                Ship is or on the relevant Delivery Date will be in the absolute
                and
                unencumbered ownership of the relevant Borrower save as contemplated
                by
                the Finance Documents;

            

    

     

    
      	(d)  	
              the
                Ship has or on the relevant Delivery Date will have its Classification
                with its classification society, free of all recommendations and
                qualifications of such classification
                society;

            

    

     

    
      	(e)  	
              the
                relevant Mortgage has been or on the Delivery Date will be duly registered
                against the Ship as a valid first preferred Panamanian ship mortgage
                in
                accordance with the laws of Panama;

            

    

     

    
      	(f)  	
              the
                Ship is insured in accordance with the provisions of this Agreement
                and
                all requirements therein in respect of insurances have been complied
                with
                and a certified copy of the certificate of financial responsibility
                for
                pollution by oil or other Environmentally Sensitive Material issued
                by the
                relevant certifying authority in relation to that
                Ship;

            

    

     

    
      	(g)  	
              the
                Ship has been or on the relevant Delivery Date will be unconditionally
                delivered by the relevant Borrower to, and accepted by, the Bareboat
                Charterer under the relevant Bareboat Charter and the Ship has been
                bareboat registered under the Philippine’s flag (with details of the
                Mortgage duly noted on the Ship’s bareboat
                register);

            

    

     

    
      	(h)  	
              the
                Ship has been or on the relevant Delivery Date will be unconditionally
                delivered by the Bareboat Charter to, and accepted by, the Time Charterer
                under the relevant Time Charter;

            

    

     

    
      	3  	
              Documents
                establishing that the Ship will, as from the relevant Drawdown Date,
                be
                managed by the Approved Managers on terms acceptable to the Lenders,
                together with:

            

    

     

    
      	(a)  	
              a
                letter or letters of undertaking executed by the Approved Managers
                in
                favour of the Agent in the terms required by the Agent agreeing certain
                matters in relation to the management of that Ship and subordinating
                the
                rights of the Approved Managers against the Borrowers and that Ship
                to the
                rights of the Creditor Parties under the Finance Documents;
                and

            

    

     

    
      	(b)  	
              copies
                of the Approved Managers’ Document of Compliance and of the Ship Safety
                Management Certificate (together with any other details of the applicable
                safety management system which the Agent
                requires).

            

    

     

    
      	4  	
              A
                valuation of each Ship then the subject of a Mortgage and the Ship
                the
                subject of the said Final Sub-Advance addressed to the Agent and
                the
                Lenders stated to be for the purpose of this Agreement and dated
                not
                earlier then 30 days before the relevant Drawdown Date from an independent
                London sale and purchase shipbroker which the Agent has approved
                or
                appointed which shows a value for such Ships acceptable to the
                Agent.

            

    

     

    
      	5  	
              A
                letter from the relevant Borrower to the protection and indemnity
                association in which the Ship is or is to be entered instructing
                it to
                provide the Agent with a copy of the certificate of entry of the
                Ship and
                any information relating to the entry of the Ship in such protection
                and
                indemnity association.

            

    

     

    
      	6  	
              Favourable
                legal opinions from lawyers appointed by the Agent on such matters
                concerning the law of Marshall Islands, Panama, China and such other
                relevant jurisdictions as the Agent may
                require.

            

    

     

    
      	7  	
              A
                favourable opinion from an independent insurance consultant acceptable
                to
                the Agent on such matters relating to the insurances for the Ship
                as the
                Agent may require.

            

    

     

    
      	8  	
              Documents
                of the kind referred to in Schedule 3 Part A 2, 3 and 4 in relation
                to the
                Bareboat Charterer, the Time Charterer, the Approved Managers, TBS
                Pacific
                Liner and TBS Worldwide and their execution of the Finance Documents
                to
                which they are a party.

            

    

     

    
      	9  	
              If
                the Agent so requires, in respect of any of the documents referred
                to
                above, a certified English translation prepared by a translator approved
                by the Agent.

            

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      4

     

    

     

    TRANSFER
      CERTIFICATE

     

    

    

    The
      Transferor and the Transferee accept exclusive responsibility for ensuring
      that
      this Certificate and the transaction to which it relates comply with all legal
      and regulatory requirements applicable to them
      respectively.

    

    

    
      	
              To:

            	
              The
                Royal Bank of Scotland plc for itself and for and on behalf of the
                Borrowers, each Security Party, the Security Trustee and each Lender,
                as
                defined in the Loan Agreement referred to
                below.

            

    

    

    [l]

    

    

    

    
      	1  	
              This
                Certificate relates to a Loan Agreement (the “Loan
                Agreement”)
                dated [l]
                and made between (1) Argyle Maritime Corp., Caton Maritime Corp.,
                Dorchester Maritime Corp., Longwoods Maritime Corp., McHenry Maritime
                Corp. and Sunswyck Maritime Corp. (the “Borrowers”),
                (2) the banks and financial institutions named therein as Lenders
                and (3)
                The Royal Bank of Scotland plc as Mandated Lead Arranger, Bookrunner,
                Agent, Swap Bank, Security Trustee relating to a term loan facility
                of
                $150,000,000.

            

    

     

    
      	2  	
              In
                this Certificate, terms defined in the Loan Agreement shall, unless
                the
                contrary intention appears, have the same meanings
                and:

            

    

     

    
      	 	
              “Relevant
                Parties”
                means the Agent, the Borrowers, each Security Party, the Security
                Trustee
                and each Lender;

            

    

    

    “Transferor”
means
      [full name] of [lending office]; and

    

    “Transferee”
means
      [full name] of [lending office].

    

    
      	3  	
              The
                effective date of this Certificate is [l]
                Provided
                that
                this Certificate shall not come into effect unless it is signed by
                the
                Agent on or before that date.

            

    

     

    
      	4  	
              The
                Transferor assigns to the Transferee absolutely all rights and interests
                (present, future or contingent) which the Transferor has as Lender
                under
                or by virtue of the Loan Agreement and every other Finance Document
                in
                relation to [l]
                per cent. of its Contribution, which percentage represents $[l].

            

    

     

    
      	5  	
              By
                virtue of this Certificate and Clause 26
                of
                the Loan Agreement, the Transferor is discharged entirely from its
                Commitment which amounts to $[l]
                [from [l]
                per cent. of its Commitment, which percentage represents $[l]
                and the Transferee acquires a Commitment of $[l].

            

    

     

    
      	6  	
              The
                Transferee undertakes with the Transferor and each of the Relevant
                Parties
                that the Transferee will observe and perform all the obligations
                under the
                Finance Documents which Clause 26
                of
                the Loan Agreement provides will become binding on it upon this
                Certificate taking effect.

            

    

     

    
      	7  	
              The
                Agent, at the request of the Transferee (which request is hereby
                made)
                accepts, for the Agent itself and for and on behalf of every other
                Relevant Party, this Certificate as a Transfer Certificate taking
                effect
                in accordance with Clause 26
                of
                the Loan Agreement.

            

    

     

    
      	8  	
              The
                Transferor:

            

    

     

    
      	(a)  	
              warrants
                to the Transferee and each Relevant Party
                that:

            

    

     

    
      	(i)  	
              the
                Transferor has full capacity to enter into this transaction and has
                taken
                all corporate action and obtained all consents which are in connection
                with this transaction; and

            

    

     

    
      	(ii)  	
              this
                Certificate is valid and binding as regards the
                Transferor;

            

    

     

    
      	(b)  	
              warrants
                to the Transferee that the Transferor is absolutely entitled, free
                of
                encumbrances, to all the rights and interests covered by the assignment
                in
                paragraph 4 above; and

            

    

     

    
      	(c)  	
              undertakes
                with the Transferee that the Transferor will, at its own expense,
                execute
                any documents which the Transferee reasonably requests for perfecting
                in
                any relevant jurisdiction the Transferee’s title under this Certificate or
                for a similar purpose.

            

    

     

    
      	9  	
              The
                Transferee:

            

    

     

    
      	(a)  	
              confirms
                that it has received a copy of the Loan Agreement and each of the
                other
                Finance Documents;

            

    

     

    
      	(b)  	
              agrees
                that it will have no rights of recourse on any ground against either
                the
                Transferor, the Agent, the Security Trustee or any Lender in the
                event
                that:

            

    

     

    
      	(i)  	
              any
                of the Finance Documents prove to be invalid or
                ineffective;

            

    

     

    
      	(ii)  	
              any
                Borrower or any Security Party fails to observe or perform its
                obligations, or to discharge its liabilities, under any of the Finance
                Documents;

            

    

     

    
      	(iii)  	
              it
                proves impossible to realise any asset covered by a Security Interest
                created by a Finance Document, or the proceeds of such assets are
                insufficient to discharge the liabilities of the Borrowers or any
                Security
                Party under the Finance Documents; 

            

    

     

    
      	(c)  	
              agrees
                that it will have no rights of recourse on any ground against the
                Agent,
                the Security Trustee or any Lender in the event that this Certificate
                proves to be invalid or ineffective;

            

    

     

    
      	(d)  	
              warrants
                to the Transferor and each Relevant Party
                that:

            

    

     

    
      	(i)  	
              it
                has full capacity to enter into this transaction and has taken all
                corporate action and obtained all consents which it needs to take
                or
                obtain in connection with this transaction;
                and

            

    

     

    
      	(ii)  	
              this
                Certificate is valid and binding as regards the Transferee;
                and

            

    

     

    
      	(e)  	
              confirms
                the accuracy of the administrative details set out below regarding
                the
                Transferee.

            

    

     

    
      	10  	
              The
                Transferor and the Transferee each undertake with the Agent and the
                Security Trustee severally, on demand, fully to indemnify the Agent
                and/or
                the Security Trustee in respect of any claim, proceeding, liability
                or
                expense (including all legal expenses) which they or either of them
                may
                incur in connection with this Certificate or any matter arising out
                of it,
                except such as are shown to have been mainly and directly caused
                by the
                gross and culpable negligence or dishonesty of the Agent’s or the Security
                Trustee’s own officers or
                employees.

            

    

     

    
      	11  	
              The
                Transferee shall repay to the Transferor on demand so much of any
                sum paid
                by the Transferor under paragraph 10 as exceeds one-half of the amount
                demanded by the Agent or the Security Trustee in respect of a claim,
                proceeding, liability or expense which was not reasonably foreseeable
                at
                the date of this Certificate; but nothing in this paragraph shall
                affect
                the liability of each of the Transferor and the Transferee to the
                Agent or
                the Security Trustee for the full amount demanded by
                it.

            

    

     

    

    

    [Name
      of
      Transferor]      [Name
      of
      Transferee]

    

    By:        By:

    

    Date:        Date:

    

    

    Agent

    

    Signed
      for itself and for and on behalf of itself

    as
      Agent
      and for every other Relevant Party

    

    [Name
      of
      Agent]

    

    By:

    

    Date:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Administrative
      Details of Transferee

    

    

    Name
      of
      Transferee:

    

    Lending
      Office:

    

    Contact
      Person

    (Loan
      Administration Department):

    

    Telephone:

    

    Telex:

    

    Fax:

    

    Contact
      Person

    (Credit
      Administration Department):

    

    Telephone:

    

    Telex:

    

    Fax:

    

    Account
      for payments:

    

    

    

    

    Note: This
      Transfer Certificate alone may not be sufficient to transfer a proportionate
      share of the Transferor’s interest in the security constituted by the Finance
      Documents in the Transferor’s or Transferee’s jurisdiction. It is the
      responsibility of each Lender to ascertain whether any other documents are
      required for this purpose.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      5

     

    

     

    REPAYMENT
      INSTALMENTS

     

    Loan
      A

    

    Loan
      A
      shall be repaid by (i) 40 quarterly instalments each of $417,500 and (ii) a
      balloon instalment of $8,300,000 payable simultaneously with the last such
      quarterly instalment commencing with a first such quarterly instalment to be
      paid on the date falling three months after the Drawdown Date of the Loan A
      Delivery Advance and thereafter at three monthly intervals Provided that in
      the
      event such Loan is not drawndown in full such repayment instalments shall be
      reduced pro-rata.

    

    Loan
      B

    

    Loan
      B
      will be repaid by (i) 40 quarterly instalments each of $417,500 and (ii) a
      balloon instalment of $8,300,000 payable simultaneously with the last such
      quarterly instalment commencing with a first such quarterly instalment to be
      paid on the date falling three months after the Drawdown Date of the Loan B
      Delivery Advance and thereafter at three monthly intervals Provided that in
      the
      event such Loan is not drawndown in full such repayment instalments shall be
      reduced pro-rata.

    

    Loan
      C

    

    Loan
      C
      will be repaid by (i) 40 quarterly instalments each of $417,500 and (ii) a
      balloon instalment of $8,300,000 payable simultaneously with the last such
      quarterly instalment commencing with a first such quarterly instalment to be
      paid on the date falling three months after the Drawdown Date of the Loan C
      Delivery Advance and thereafter at three monthly intervals Provided that in
      the
      event such Loan is not drawndown in full such repayment instalments shall be
      reduced pro-rata.

    

    Loan
      D

    

    Loan
      D
      will be repaid by (i) 40 quarterly instalments each of $417,500 and (ii) a
      balloon instalment of $8,300,000 payable simultaneously with the last such
      quarterly instalment commencing with a first such quarterly instalment to be
      paid on the date falling three months after the Drawdown Date of the Loan D
      Delivery Advance and thereafter at three monthly intervals Provided that in
      the
      event such Loan is not drawndown in full such repayment instalments shall be
      reduced pro-rata.

    

    Loan
      E

    

    Loan
      E
      will be repaid by (i) 40 quarterly instalments each of $417,500 and (ii) a
      balloon instalment of $8,300,000 payable simultaneously with the last such
      quarterly instalment commencing with a first such quarterly instalment to be
      paid on the date falling three months after the Drawdown Date of the Loan E
      Delivery Advance and thereafter at three monthly intervals Provided that in
      the
      event such Loan is not drawndown in full such repayment instalments shall be
      reduced pro-rata.

    

    Loan
      F

    

    Loan
      F
      will be repaid by (i) 40 quarterly instalments each of $417,500 and (ii) a
      balloon instalment of $8,300,000 payable simultaneously with the last such
      quarterly instalment commencing with a first such quarterly instalment to be
      paid on the date falling three months after the Drawdown Date of the Loan F
      Delivery Advance and thereafter at three monthly intervals Provided that in
      the
      event such Loan is not drawndown in full such repayment instalments shall be
      reduced pro-rata.

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      6

     

    

     

    MANDATORY
      COST FORMULA

     

    

    

    
      	1  	
              The
                Mandatory Cost is an addition to the interest rate to compensate
                Lenders
                for the cost of compliance with (a) the requirements of the Financial
                Services Authority (or any other authority which replaces all or
                any of
                its functions) or (b) the requirements of the European Central
                Bank.

            

    

     

    
      	2  	
              On
                the first day of each Interest Period (or as soon as possible thereafter)
                the Agent shall calculate, as a percentage rate, a rate (the“Additional
                Cost Rate”)
                for each Lender, in accordance with the paragraphs set out below.
                The
                Mandatory Cost will be calculated by the Agent as a weighted average
                of
                the Lenders’ Additional Cost Rates (weighted in proportion to the
                percentage participation of each Lender in the relevant Advance)
                and will
                be expressed as a percentage rate per
                annum.

            

    

     

    
      	3  	
              The
                Additional Cost Rate for any Lender lending from a lending office
                in
                Participating Member State will be the percentage notified by that
                Lender
                to the Agent. This percentage will be certified by that Lender in
                its
                notice to the Agent to be its reasonable determination of the cost
                (expressed as a percentage of that Lender’s participation in all Advances
                made from that lending office) of complying with the minimum reserve
                requirements of the European Central Bank in respect of loans made
                from
                that lending office.

            

    

     

    
      	4  	
              The
                Additional Cost Rate for any Lender lending from a lending office
                in the
                United Kingdom will be calculated by the Agent as
                follows:

            

    

     

    [Missing
      Graphic Reference]per
      cent.
      per annum

    Where:

    

    
      	 	
              E

            	
              is
                designed to compensate Lenders for amounts payable under the Fees
                Rules
                and is calculated by the Agent as being the average of the most recent
                rates of charge supplied by the Reference Banks to the Agent pursuant
                to
                paragraph 6 below and expressed in pounds per
                £1,000,000.

            

    

    

    
      	5  	
              For
                the purposes of this Schedule:

            

    

     

    
      	(a)  	
              “Eligible
                Liabilities”
                and “Special
                Deposits”
                have the meanings given to them from time to time under or pursuant
                to the
                Bank of England Act 1998 or (as may be appropriate) by the Bank of
                England;

            

    

     

    
      	(b)  	
              “Fees
                Rules”
                means the rules on periodic fees contained in the FSA Supervision
                Manual
                or such other law or regulation as may be in force from time to time
                in
                respect of the payment of fees for the acceptance of
                deposits;

            

    

     

    
      	(c)  	
              “Fee
                Tariffs”
                means the fee tariffs specified in the Fees Rules under the activity
                group
                A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee
                required
                pursuant to the Fees Rules but taking into account any applicable
                discount
                rate);

            

    

     

    
      	(d)  	
              “Participating
                Member State”
                means any member state of the European Union that adopts or has adopted
                the euro as its lawful currency in accordance with legislation of
                the
                European Union relating to European Monetary Union;
                and

            

    

     

    
      	(e)  	
              “Tariff
                Base”
                has the meaning given to it in, and will be calculated in accordance
                with,
                the Fees Rules.

            

    

     

    
      	6  	
              If
                requested by the Agent, each Reference Bank shall, as soon as practicable
                after publication by the Financial Services Authority, supply to
                the
                Agent, the rate of charge payable by that Reference Bank to the Financial
                Services Authority pursuant to the Fees Rules in respect of the relevant
                financial year of the Financial Services Authority (calculated for
                this
                purpose by that Reference Bank as being the average of the Fee Tariffs
                applicable to that Reference Bank for that financial year) and expressed
                in pounds per £1,000,000 of the Tariff Base of that Reference
                Bank.

            

    

     

    
      	7  	
              Each
                Lender shall supply any information required by the Agent for the
                purpose
                of calculating its Additional Cost Rate. In particular, but without
                limitation, each Lender shall supply the following information in
                writing
                on or prior to the date on which it becomes a
                Lender:

            

    

     

    
      	(a)  	
              the
                jurisdiction of its lending office;
                and

            

    

     

    
      	(b)  	
              any
                other information that the Agent may reasonably require for such
                purpose.

            

    

     

    Each
      Lender shall promptly notify the Agent in writing of any change to the
      information provided by it pursuant to this paragraph.

     

    
      	8  	
              The
                rates of charge of each Reference Bank for the purpose of E above
                shall be
                determined by the Agent based upon the information supplied to it
                pursuant
                to paragraph 6 above and on the assumption that, unless a Lender
                notifies
                the Agent to the contrary, each Lender’s obligations in relation to cash
                ratio deposits and special Deposits are the same as those of a typical
                bank from its jurisdiction of incorporation with a lending office
                in the
                same jurisdiction as its lending
                office.

            

    

     

    
      	9  	
              The
                Agent shall have no liability to any person if such determination
                results
                in an Additional Cost Rate which over or under compensates any Lender
                and
                shall be entitled to assume that the information provided by any
                Lender or
                Reference Bank pursuant to paragraphs 3, 6 and 7 above is true and
                correct
                in all respects. 

            

    

     

    
      	10  	
              The
                Agent shall distribute the additional amounts received as a result
                of the
                Mandatory Cost to the Lenders on the basis of the Additional Cost
                Rate for
                each Lender based on the information provided by each Lender and
                each
                Reference Bank pursuant to paragraphs 3, 6 and 7
                above.

            

    

     

    
      	11  	
              Any
                determination by the Agent pursuant to this Schedule in relation
                to a
                formula, the Mandatory Cost, an Additional Cost Rate or any amount
                payable
                to a Lender shall, in the absence of manifest error, be conclusive
                and
                binding on all parties.

            

    

     

    
      	12  	
              The
                Agent may from time to time, after consultation with the Borrowers
                and the
                Lenders, determine and notify to all parties any amendments which
                are
                required to be made to this Schedule in order to comply with any
                change in
                law, regulation or any requirements from time to time imposed by
                the
                Financial Services Authority or the European Central Bank (or, in
                any
                case, any other authority which replaces all or any of its functions)
                and
                any such determination shall, in the absence of manifest error, be
                conclusive and binding on all
                parties.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      7

     

    

     

    CLASSIFICATION
      OF SHIPS

     

    

    

    
      	
               

              Ship
                

               

            	
               

              Classification

               

            
	
               

              Ship
                A

               

            	
               

              LR
                & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck
                and on Upper Deck and all hatch covers, & LMC, SCM. & IWS,
                UMS

               

            
	
               

              Ship
                B

               

            	
               

              LR
                & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck
                and on Upper Deck and all hatch covers, & LMC, SCM. & IWS,
                UMS

               

            
	
               

              Ship
                C

               

            	
               

              LR
                & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck
                and on Upper Deck and all hatch covers, & LMC, SCM. & IWS,
                UMS

               

            
	
               

              Ship
                D

               

            	
               

              LR
                & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck
                and on Upper Deck and all hatch covers, & LMC, SCM. & IWS,
                UMS

               

            
	
               

              Ship
                E

               

            	
               

              LR
                & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck
                and on Upper Deck and all hatch covers, & LMC, SCM. & IWS,
                UMS

               

            
	
               

              Ship
                F

               

            	
               

              LR
                & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck
                and on Upper Deck and all hatch covers, & LMC, SCM. & IWS,
                UMS

               

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    SCHEDULE
      8

     

    

     

    FINANCIAL
      COVENANTS

     

    Pursuant
      to Clause 11.18
      the
      Borrowers undertake to comply at all times with the following financial
      covenants: 

    

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	
               

              Trading
                4 Financial Quarters

               

            	
               

              Minimum
                Consolidated 

               

               

              Fixed
                Charge Coverage Ratio

               

            
	
               

              Closing
                Date through

               

               

              30
                September 2007

               

            	
               

              1.4
                : 1.0

               

            
	
               

              31
                December 2007 and 

               

               

              each
                fixed quarter thereafter

               

            	
               

              1.5
                : 1.0

               

            

    

    

    

    For
      the
      purposes of this Schedule 8 the following terms shall have the following
      meanings.

    

    “Cash
      Equivalents”
means
      any of the following types of Investments, to the extent owned by the Borrowers
      or any of their Subsidiaries free and clear of all Security Interests (other
      than Permitted Security Interests):

     

    
      	(a)  	
              readily
                marketable obligations issued or directly and fully guaranteed or
                insured
                by the United States of America or any agency or instrumentality
                thereof
                having maturities of not more than 360 days from the date of acquisition
                thereof; provided that the full faith and credit of the United States
                of
                America is pledged in support
                thereof;

            

    

     

    
      	(b)  	
              time
                deposits with, or insured certificates of deposit or bankers’ acceptances
                of, any commercial bank that (i) (A) is a Lender or (B) is organized
                under
                the laws of the United States of America, any state thereof or the
                District of Columbia or is the principal banking subsidiary of a
                bank
                holding company organized under the laws of the United States of
                America,
                any state thereof or the District of Columbia, and is a member of
                the
                Federal Reserve System, (ii) issues (or the parent of which issues)
                commercial paper rated as described in Clause (c) of this definition
                and
                (iii) has combined capital and surplus of at least $1,000,000,000,
                in each
                case with maturities of not more than 90 days from the date of acquisition
                thereof;

            

    

     

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

            

    

     

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

            

    

     

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

     

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

            

    

     

    
      	(b)  	
              the
                following to the extent included in calculating such Consolidated
                Net
                Income, all net gains from the sales of Vessels as permitted under
                this
                Agreement (in each case of or by Holdings and its Subsidiaries for
                such
                Measurement Period);

            

    

     

    “Consolidated
      Fixed Charge Coverage Ratio”
means,
      at any date of determination, the ratio of:

     

    
      	(a)  	
              the
                result of (i) Consolidated EBITDA, less (ii) the sum of (x) Federal,
                state, local and foreign income taxes paid in cash and (y) Restricted
                Payments made, in each case, for the most recently completed Measurement
                Period, to

            

    

     

    
      	(b)  	
              the
                sum of (i) Consolidated Interest Charges for the most recently completed
                Measurement Period, (ii) the aggregate principal amount of all regularly
                scheduled principal payments or redemptions or similar acquisitions
                for
                value of outstanding debt for borrowed money for the period of twelve
                (12)
                consecutive months following such date of determination, but excluding
                any
                principal payments scheduled to be made in respect of the Revolving
                Credit
                Facility;

            

    

     

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

     

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

            

    

     

    
      	(b)  	
              all
                purchase money Indebtedness,

            

    

     

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

            

    

     

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

            

    

     

    
      	(e)  	
              all
                Attributable Indebtedness,

            

    

     

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

            

    

     

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

            

    

     

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

     

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

            

    

     

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

            

    

     

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

            

    

     

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

     

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

            

    

     

    
      	(b)  	
              Consolidated
                EBITDA of Holdings and its Subsidiaries on a consolidated basis for
                the
                most recently completed Measurement
                Period.

            

    

     

    “Consolidated
      Net Income”
means,
      at any date of determination, the net income (or loss) of Holdings and its
      Subsidiaries on a consolidated basis for the most recently completed Measurement
      Period; provided that Consolidated Net Income shall exclude:

     

    
      	(a)  	
              extraordinary
                gains and extraordinary losses for such Measurement
                Period,

            

    

     

    
      	(b)  	
              the
                net income of any Subsidiary during such Measurement Period to the
                extent
                that the declaration or payment of dividends or similar distributions
                by
                such Subsidiary of such income is not permitted by operation of the
                terms
                of its Organisation Documents or any agreement, instrument or Law
                applicable to such Subsidiary during such Measurement Period, except
                that
                Holdings’ equity in any net loss of any such Subsidiary for
                such-Measurement
                Period shall be included in determining Consolidated Net Income,
                and

            

    

     

    
      	(c)  	
              any
                income (or loss) for such Period of any Person if such Person is
                not a
                Subsidiary, except that Holdings’ equity in the net income of any such
                Person for such Measurement Period shall be included in Consolidated
                Net
                Income up to the aggregate amount of cash actually distributed by
                such
                Person during such Period to Holdings or a Subsidiary as a dividend
                or
                other distribution (and in the case of a dividend or other distribution
                to
                a Subsidiary, such Subsidiary is not precluded from further distributing
                such amount to Holdings as described in Clause (b) of this
                proviso).

            

    

     

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

     

    “GAAP”
means
      generally accepted accounting principles in the United States set forth in
      the
      opinions and pronouncements of the Accounting Principles Board and the American
      Institute of Certified Public Accountants and statements and pronouncements
      of
      the Financial Accounting Standards Board or such other principles as may be
      approved by a significant segment of the accounting profession in the United
      States, that are applicable to the circumstances as of the date of
      determination, consistently applied.

     

    “Holdings”
means
      the Corporate Guarantor;

     

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

     

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

     

    “Qualified
      Cash”
means,
      as of any date of determination, the amount of cash and Cash Equivalents which
      is freely transferable and not subject to a Security Interest (other than a
      Permitted Security Interest) pledge, security interest, encumbrance, escrow
      or
      cash collateral arrangement or any other restriction on its use.

     

    “Shareholders’
      Equity”
means,
      as of any date of determination, consolidated shareholders’ equity of Holdings
      and its Subsidiaries as of that date determined in accordance with
      GAAP.

     

    “Subsidiary”
of
      a
      Person means a corporation, partnership, joint venture, limited liability
      company or other business entity of which a majority of the shares of securities
      or other interests having ordinary voting power for the election of directors
      or
      other governing body (other than securities or interests having such power
      only
      by reason of the happening of a contingency) are at the time beneficially owned,
      or the management of which is otherwise controlled, directly, or indirectly
      through one or more intermediaries, or both, by such Person. Unless otherwise
      specified, all references herein to a “Subsidiary”
or
      to
“Subsidiaries”
shall
      refer to a Subsidiary or Subsidiaries of Holdings.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      9

     

    

     

    FORM
      OF COMPLIANCE CERTIFICATE

     

    

     

    To: The
      Royal
      Bank of Scotland plc

    Shipping
      Business Centre

    5-10
      Great Tower Street

    London
      EC3P 3HX

    

    Attention:
      Ship Finance Portfolio Management

    

    From: TSB
      International Limited

    

    

    OFFICER’S
      CERTIFICATE

    

    This
      Certificate is rendered pursuant to clause 11.18(i)
      of the
      loan agreement dated [l]2007
      (the “Loan
      Agreement”)
      and
      entered into between (i) Argyle Maritime Corp., Caton Maritime Corp., Dorchester
      Maritime Corp., Longwoods Maritime Corp., McHenry Maritime Corp. and Sunswyck
      Maritime Corp., as joint and several Borrowers, (ii) the banks and financial
      institutions listed in Schedule 1 as Lenders, (iii) The Royal Bank of Scotland
      plc as Mandated Lead Arranger, Bookrunner, Agent, Security Trustee and Swap
      Bank, relating to a loan facility of US$150,000,000. Words and expressions
      defined in the Loan Agreement shall have the same meanings when used
      herein.

    

    I,
      the
      Chief Financial Officer of the Corporate Guarantor, hereby certify
      that:

    

    
      	1  	
              Attached
                to this Certificate are the latest [audited][unaudited] accounts
                of the
                Guarantor and its consolidated subsidiaries for the financial year
                [quarter] ending on [l].

            

    

     

    
      	2  	
              Set
                out below are the respective amounts, in US Dollars, of Cash Equivalents,
                Consolidated EBITDA, Consolidated Interest Charges, Consolidated
                Net
                Income, Consolidated Tangible Net Worth and Qualified
                Cash:

            

    

     

    
      	 	
               

              US
                Dollars

               

            
	
               

              Cash
                Equivalents

               

            	
               

              [l]

               

            
	
               

              Consolidated
                EBITDA

               

            	
               

              [l]

               

            
	
               

              Consolidated
                Interest Charges

               

            	
               

              [l]

               

            
	
               

              Consolidated
                Net Income

               

            	
               

              [l]

               

            
	
               

              Consolidated
                Tangible Net Worth

               

            	
               

              [l]

               

            
	
               

              Qualified
                Cash

               

            	
               

              [l]

               

            

    

    

    
      	3  	
              Accordingly,
                as at the date of this Certificate the financial covenants set out
                in
                Appendix 8 of the Loan Agreement [are][are not] complied with, in
                that as at [l]:

            

    

     

    
      	(a)  	
              Minimum
                Consolidated Tangible Net WorthUS$[l];

            

    

     

    
      	(b)  	
              Minimum
                Cash LiquidityUS$[l];

            

    

     

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

            

    

     

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

            

    

     

    
      	4  	
              As
                at [l]
                no Event of Default has occurred and is continuing [or, specify /
                identify
                any Event of Default]. The Borrowers are in compliance with Clause
                15.1
                of
                the Loan Agreement.

            

    

     

    [If
      not,
      specify this and what is proposed as regards Clause 15.2.]

    

    

    

    

    

    

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

    Chief
      financial officer

    TBS
      International Limited

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXECUTION
      PAGE

     

    

    

    BORROWERS

     

    SIGNED
      by 

    /s/
Anne-Laure
      Marie Roche

    Attorney-in-Fact
for
      and
      on behalf of 

    ARGYLE
      MARITIME CORP. 

    in
      the
      presence of:

    /s/

    

    

    
      SIGNEDby 

      /s/
Anne-Laure
        Marie Roche

      Attorney-in-Fact
for
        and
        on behalf of 
CATON
      MARITIME CORP. 

    in
      the
      presence of:

    /s/
 

    

    SIGNED
by

    
      /s/
Anne-Laure
        Marie Roche

      Attorney-in-Fact
for
        and
        on behalf of 

    

    DORCHESTER
      MARITIME CORP. 

    in
      the
      presence of: 

    /s/

     

    
 

    SIGNED
      by

    /s/
      Anne-Laure Marie Roche

    
      
        
          Attorney-in-Fact
for
            and on behalf of 

        

      

    

    LONGWOODS
      MARITIME CORP. 

    in
      the
      presence of: 

    /s/

    

    

    

    SIGNED
      by 

    /s/
      Anne-Laure Marie Roche

    
      
        
          
            
              Attorney-in-Fact
for
                and on behalf of 

            

          

        

      

    

    McHENRY
      MARITIME CORP. 

    in
      the
      presence of: 

    /s/

    

    

    SIGNED
      by

    
      /s/
Anne-Laure
        Marie Roche

      
        
          Attorney-in-Fact

          for
            and
            on behalf of 

        

      

    

    SUNSWYCK
      MARITIME CORP. 

    in
      the
      presence of: 

    /s/

    
 

    

    

    LENDERS

    

    SIGNED
      by 

    /s/

    for
      and
      on behalf of 

    THE
      ROYAL BANK OF SCOTLAND PLC

    in
      the
      presence of:

    /s/

     

     

    GUARANTEE
      PROVIDERS

    
 

    MANDATED
      LEAD ARRANGERS

    

    SIGNED
      by 

    /s/

    for
      and
      on behalf of 

    THE
      ROYAL BANK OF SCOTLAND PLC 

    in
      the
      presence of: 

    /s/

    
 

    BOOKRUNNER

    

    SIGNED
      by

    /s/

    for
      and
      on behalf of 

    THE
      ROYAL BANK OF SCOTLAND PLC

    in
      the
      presence of:

    /s/

    

    

    

    AGENT

    

    SIGNED
      by

    /s/

    for
      and
      on behalf of

    THE
      ROYAL BANK OF SCOTLAND PLC

    in
      the
      presence of: 

    /s/

     

    

    SECURITY
      TRUSTEE

    

    SIGNED
      by

    /s/

    for
      and
      on behalf of 

    THE
      ROYAL BANK OF SCOTLAND PLC 

    in
      the
      presence of: 

    /s/

    

     

    

    SWAP BANK

    

    SIGNED
      by 

    /s/

    for
      and
      on behalf of 

    THE
      ROYAL BANK OF SCOTLAND PLC 

    in
      the
      presence of:

    /s/Guarantee Facility Agreement, dated March 29, 2007

    

    

    

    

    

    

    Date
      March 29, 2007

    

    

    

    

    

    

    ARGYLE
      MARITIME CORP.

    CATON
      MARITIME CORP.

    DORCHESTER
      MARITIME CORP.

    LONGWOODS
      MARITIME CORP.

    McHENRY
      MARITIME CORP.

    SUNSWYCK
      MARITIME CORP.

    as
      Joint
      and Several Obligors

    

    

    

    -and-

    

    

    

    THE
      ROYAL BANK OF SCOTLAND PLC

    as
      Issuer

    

    

    

    

    

    

    ___________________________________________

    

     

    GUARANTEE
      FACILITY AGREEMENT

    ___________________________________________

    

    relating
      to

    a
      US$84,000,000 guarantee facility

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    INDEX

    

    

    ClausePage

     

    1 INTERPRETATION

     

    2 GUARANTEE
      FACILITY

     

    3 REDUCTION
      OF GUARANTEES

     

    4 SETTLEMENT
      OF GUARANTEES

     

    5 INDEMNITY
      OF THE OBLIGORS

     

    6 DEFAULT
      INTEREST

     

    7 CONDITIONS
      PRECEDENT

     

    8 REPRESENTATIONS
      AND WARRANTIES

     

    9 GENERAL
      UNDERTAKINGS AND FINANCIAL COVENANTS

     

    10 CORPORATE
      UNDERTAKINGS

     

    11 PAYMENTS
      AND CALCULATIONS

     

    12 APPLICATION
      OF RECEIPTS

     

    13 EVENTS
      OF DEFAULT

     

    14 FEES
      AND EXPENSES

     

    15 INDEMNITIES

     

    16 NO
      SET-OFF OR TAX DEDUCTION

     

    17 ILLEGALITY,
      ETC

     

    18 INCREASED
      COSTS

     

    19 SET-OFF

     

    20 TRANSFERS
      AND CHANGES IN ISSUING OFFICE

     

    21 VARIATIONS
      AND WAIVERS

     

    22 NOTICES

     

    23 JOINT
      AND SEVERAL LIABILITY

     

    24 SUPPLEMENTAL

     

    25 LAW
      AND JURISDICTION

     

    SCHEDULE
      1 GUARANTEE ISSUE REQUEST 

     

    SCHEDULE
      2 CONDITION PRECEDENT DOCUMENTS 

     

    SCHEDULE
      3 FINANCIAL COVENANTS 

     

    SCHEDULE
      4 FORM OF COMPLIANCE CERTIFICATE 

     

    EXECUTION
      PAGE 

     

    APPENDIX
      A FORM OF DELIVERY SECURITY ASSIGNMENT 

     

    APPENDIX
      B FORM OF CORPORATE GUARANTEE 

     

    APPENDIX
      C FORM OF GUARANTEE 

     

    APPENDIX
      D FORM OF INTERCREDITOR AGREEMENT 

    
 

    
      
        
          Watson,
            Farley & Williams

          London

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    THIS
      AGREEMENT
      is made
      on March 29, 2007

    

    BETWEEN

    

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

            

    

     

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

            

    

     

    BACKGROUND

    

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

    

    IT
      IS AGREED
      as
      follows:

    

    
      	1  	
              INTERPRETATION

            

    

     

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

            

    

     

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

    

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

    

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

            

    

     

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

            

    

     

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

    

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

     

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

     

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

    

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

     

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

     

    “Finance
      Documents”
      means:

    

    
      	(a)  	
              this
                Agreement;

            

    

     

    
      	(b)  	
              the
                Corporate Guarantee;

            

    

     

    
      	(c)  	
              the
                Pre-delivery Security Assignments;
                and

            

    

     

    
      	(d)  	
              the
                Fee Letter;

            

    

     

    
      	(e)  	
              the
                Intercreditor Agreement; and

            

    

     

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

            

    

     

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

    

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

            

    

     

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

            

    

     

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

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    

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

    

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

    

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

    

    “Permitted
      Security Interests”
      means:

    

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

            

    

     

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

            

    

     

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

            

    

     

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

    

    
      	(a)  	
              England
                and Wales;

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

    

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

     

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

    

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

     

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

     

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

    

    “Security
      Interest”
      means:

    

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

            

    

     

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

            

    

     

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

            

    

     

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

    

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

    

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

    

    “Seller”
means
      together China Communications and the Builder;

    

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

    

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

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Termination
      Date”
      means:

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	1.2  	
              Construction
                of certain terms.
                In
                this Agreement:

            

    

     

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

            

    

     

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

            

    

     

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

            

    

     

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

    

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

            

    

     

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

            

    

     

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

            

    

     

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

     

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

            

    

     

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

    

    
      	1.5  	
              General
                Interpretation.
                In this Agreement:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	2  	
              GUARANTEE
                FACILITY

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	3  	
              REDUCTION
                OF GUARANTEES

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	4  	
              SETTLEMENT
                OF GUARANTEES

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	5  	
              INDEMNITY
                OF THE OBLIGORS

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

    

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

            

    

     

    
      	5.2  	
              Guarantee
                payments.
                Each Obligor:

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

    

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    

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

            

    

     

    
      	(ii)  	
              the
                Outstandings.

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	5.8  	
              Negotiation
                with the Seller.
                Each Obligor: 

            

    

     

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

            

    

     

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

            

    

     

    
      	6  	
              DEFAULT
                INTEREST

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	(a)  	
              LIBOR;
                or

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	7  	
              CONDITIONS
                PRECEDENT

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	8  	
              REPRESENTATIONS
                AND WARRANTIES

            

    

     

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

            

    

     

    
      	8.2  	
              Status.
                It
                is duly incorporated and validly existing and in good standing under
                the
                laws of the Marshall Islands.

            

    

     

    
      	8.3  	
              Share
                capital and ownership.
                It
                has an authorised share capital of 500 registered and/or bearer shares
                without par value, all of which shares have been issued, and the
                legal
                title and beneficial ownership of all those shares is held, free
                of any
                Security Interest or other claim, by Westbrook Holdings
                Limited.

            

    

     

    
      	8.4  	
              Corporate
                power.
                It
                has the corporate capacity, and has taken all corporate action and
                obtained all consents necessary for
                it:

            

    

     

    
      	(a)  	
              to
                execute the Shipbuilding Contract to which it is a party and to purchase
                and pay for its Ship under that Shipbuilding
                Contract;

            

    

     

    
      	(b)  	
              to
                execute the Finance Documents to which it is a party;
                and

            

    

     

    
      	(c)  	
              to
                make all the payments contemplated by, and to comply with, those
                Finance
                Documents.

            

    

     

    
      	8.5  	
              Consents
                in force.
                All the consents referred to in Clause 8.4 remain in force and nothing
                to
                the best of the Obligors’ knowledge and belief has occurred which makes
                any of them liable to revocation.

            

    

     

    
      	8.6  	
              Legal
                validity; effective Security Interests.
                The Finance Documents to which it is a party, do now or, as the case
                may
                be, will, upon execution and delivery (and, where applicable, registration
                as provided for in the Finance Documents):

            

    

     

    
      	(a)  	
              constitute
                its legal, valid and binding obligations enforceable against it in
                accordance with their respective terms;
                and

            

    

     

    
      	(b)  	
              create
                legal, valid and binding Security Interests enforceable in accordance
                with
                their respective terms over all the assets to which they, by their
                terms,
                relate;

            

    

     

    subject
      to any relevant insolvency laws affecting creditors’ rights generally and
      subject to any qualifications as to matters of law which are specifically
      referred to in any legal opinion delivered to the Issuer pursuant to Schedule
      2.

    

    
      	8.7  	
              No
                third party Security Interests.
                Without limiting the generality of Clause 8.6, at the time of the
                execution and delivery of each Finance
                Document:

            

    

     

    
      	(a)  	
              the
                relevant Obligor or Obligors which are a party to that Finance Document
                will have the right to create all the Security Interests which that
                Finance Document purports to create;
                and

            

    

     

    
      	(b)  	
              no
                third party will to the best of the Obligors’ knowledge and belief have
                any Security Interest (except for Permitted Security Interests) or
                any
                other interest, right or claim over, in or in relation to any asset
                to
                which a Security Interest created by a Finance Document,
                relates.

            

    

     

    
      	8.8  	
              No
                conflicts.
                The execution by that Obligor of each Finance Document to which it
                is a
                party and its compliance with each Finance Document to which it is
                a party
                will not involve or lead to a contravention
                of:

            

    

     

    
      	(a)  	
              any
                law or regulation in force at the date of this Agreement;
                or

            

    

     

    
      	(b)  	
              the
                constitutional documents of that Obligor;
                or

            

    

     

    
      	(c)  	
              any
                contractual or other obligation or restriction which is binding on
                that
                Obligor or any of its assets.

            

    

     

    
      	8.9  	
              No
                withholding taxes.
                No
                tax is imposed in any jurisdiction in which that Obligor is ordinarily
                resident for tax by way of withholding or deduction or otherwise
                on any
                payment to be made under this
                Agreement.

            

    

     

    
      	8.10  	
              No
                default.
                No
                Event of Default or Potential Event of Default has occurred and is
                continuing.

            

    

     

    
      	8.11  	
              Information.
                All information which has been provided in writing by or on behalf
                of the
                Obligors or any Security Party to the Issuer in connection with any
                Finance Document was to the best of the Obligors’ knowledge and belief
                true and not misleading as at the time it was given; all audited
                and
                unaudited accounts which have been so provided satisfied the requirements
                of Clause 9.6; and there has been no material adverse change in the
                financial position or state of affairs of the Obligors from that
                disclosed
                in the latest of those accounts.

            

    

     

    
      	8.12  	
              No
                litigation.
                No
                legal or administrative action involving the Obligors has been commenced
                or taken or, to that Obligor’s knowledge, is likely to be commenced or
                taken which, in either case, would be likely to have a material adverse
                effect on the Obligors’ financial position or
                profitability.

            

    

     

    
      	8.13  	
              Validity
                and completeness of Shipbuilding Contracts.
                Each Shipbuilding Contract constitutes valid, binding and enforceable
                obligations of the Seller and the relevant Obligor respectively in
                accordance with its terms subject to any relevant insolvency laws
                affecting creditors’ rights generally
                and:

            

    

     

    
      	(a)  	
              each
                copy of the Shipbuilding Contracts delivered to the Issuer before
                the date
                of this Agreement is a true and complete copy;
                and

            

    

     

    
      	(b)  	
              no
                amendments or additions to the Shipbuilding Contracts have been agreed
                nor
                has any Obligor or the Seller waived any of their respective rights
                under
                the Shipbuilding Contracts.

            

    

     

    
      	8.14  	
              No
                rebates etc.
                There is no agreement or understanding to allow or pay any rebate,
                premium, commission, discount or other benefit or payment (howsoever
                described) to the Obligors, the Seller or a third party in connection
                with
                the purchase by the Obligors of the Ships, other than as disclosed
                to the
                Issuer in writing on or prior to the date of this
                Agreement.

            

    

     

    
      	8.15  	
              Compliance
                with certain undertakings.
                At
                the date of this Agreement, each Obligor is in compliance with Clause
                9.12
                and (save as disclosed in writing to the Issuer) Clauses 9.3 and
                9.8.

            

    

     

    
      	8.16  	
              Taxes
                paid.
                Each Obligor has paid all taxes applicable to, or imposed on or in
                relation to it or its business.

            

    

     

    
      	8.17  	
              Conformity
                of Financial Covenants. The
                financial covenants set out in Schedule 3 conform to the financial
                covenants given by the Corporate Guarantor and its subsidiaries under
                the
                Bank of America Facilities.

            

    

     

    
      	9  	
              GENERAL
                UNDERTAKINGS
                AND FINANCIAL COVENANTS

            

    

     

    
      	9.1  	
              General.
                Each Obligor undertakes with the Issuer to comply with the following
                provisions of this Clause 9 at all times during the Security Period,
                except as the Issuer may otherwise
                permit.

            

    

     

    
      	9.2  	
              No
                disposal of assets. 

            

    

     

    
      	(a)  	
              No
                Obligor will transfer or otherwise dispose
                of:

            

    

     

    
      	(i)  	
              its
                rights under the Shipbuilding Contract to which it is a party, whether
                by
                one transaction or a number of transactions, whether related or not
                save
                where the Guarantee relating thereto has been cancelled or where
                that
                Obligor has provided cash security in relation to such Guarantee
                on the
                same terms mutatis mutandis as set out in Clause 5.6;
                or

            

    

     

    
      	(ii)  	
              any
                debt payable to it or any other right (present, future or contingent
                right) to receive a payment, including any right to damages or
                compensation.

            

    

     

    
      	(b)  	
              No
                Obligor will create or permit to arise any Security Interest (except
                for
                Permitted Security Interests) over its rights under the Shipbuilding
                Contract and the Refund Guarantees to which it is a
                party.

            

    

     

    
      	9.3  	
              No
                other liabilities or obligations to be incurred.
                No
                Obligor will incur any liability or obligation
                except:

            

    

     

    
      	(a)  	
              liabilities
                and obligations under the Shipbuilding Contract, the Finance Documents,
                the Loan Agreement and the Finance Document (as defined in the Loan
                Agreement) to which it is a party;
                and

            

    

     

    
      	(b)  	
              liabilities
                or obligations incurred in the ordinary course of supervising the
                construction of, providing supplies for, operating and chartering
                its Ship
                (and for the avoidance of doubt the management fees payable by the
                Obligors to the Approved Managers shall be a permitted expense);
                and

            

    

     

    
      	(c)  	
              provided
                the terms of Clause 10.3(c) are complied with, inter-company Indebtedness
                from other companies which are in the same ultimate beneficial ownership
                as the Obligors.

            

    

     

    
      	9.4  	
              Information
                provided to be accurate.
                All financial and other information which is provided in writing
                by or on
                behalf of each Obligor under or in connection with any Finance Document
                will to the best of that Obligor’s knowledge and belief be true and not
                misleading and will not omit any material fact or consideration which,
                if
                disclosed would reasonably be expected to adversely affect the decision
                of
                a person considering whether to enter into this
                Agreement.

            

    

     

    
      	9.5  	
              Provision
                of financial statements.
                Each Obligor will procure that there is sent to the
                Issuer:

            

    

     

    
      	(a)  	
              as
                soon as possible, but in no event later than 120 days after the end
                of
                each of the Corporate Guarantor’s financial years, the annual audited
                accounts of the Corporate Guarantor and its consolidated
                subsidiaries;

            

    

     

    
      	(b)  	
              as
                soon as possible, but in no event later than 30 days after the end
                of each
                quarter in each of the Corporate Guarantor’s financial years unaudited
                accounts of the Corporate Guarantor and its consolidated subsidiaries
                which are certified as to their correctness by its chief financial
                officer.

            

    

     

    
      	9.6  	
              Form
                of financial statements.
                All accounts (audited and unaudited) delivered under Clause 9.5
                will:

            

    

     

    
      	(a)  	
              be
                prepared in accordance with all applicable laws and generally accepted
                accounting principles of the U.S.A. consistently
                applied;

            

    

     

    
      	(b)  	
              give
                a true and fair view of the financial condition of the relevant Obligor
                at
                the date of those accounts and of its profit for the period to which
                those
                accounts relate; and

            

    

     

    
      	(c)  	
              fully
                disclose or provide for all significant liabilities of the relevant
                Obligor.

            

    

     

    
      	9.7  	
              Shareholder
                and creditor notices.
                Each Obligor will send the Issuer, at the same time as they are
                despatched, copies of all communications which are despatched to
                its
                shareholders or creditors or any class of
                them.

            

    

     

    
      	9.8  	
              Consents.
                Each Obligor will maintain in force and promptly obtain or renew,
                and will
                promptly send certified copies to the Issuer of, all consents
                required:

            

    

     

    
      	(a)  	
              for
                that Obligor to perform its obligations under any Finance Document
                to
                which it is a party;

            

    

     

    
      	(b)  	
              for
                the validity or enforceability of any Finance Document to which it
                is a
                party;

            

    

     

    and
      the
      Obligor will comply with the terms of all such consents.

    

    
      	9.9  	
              Maintenance
                of Security Interests.
                Each Obligor will:

            

    

     

    
      	(a)  	
              at
                its own cost, do all that it reasonably can to ensure that any Finance
                Document validly creates the obligations and the Security Interests
                which
                it purports to create; and

            

    

     

    
      	(b)  	
              without
                limiting the generality of paragraph (a), at its own cost, promptly
                register, file, record or enrol any Finance Document with any applicable
                court or authority, pay any applicable stamp, registration or similar
                tax
                in respect of any Finance Document, give any notice or take any other
                step
                which, in the reasonable opinion of the Issuer is or has become necessary
                or desirable for any Finance Document to be valid, enforceable or
                admissible in evidence or to ensure or protect the priority of any
                Security Interest which it creates.

            

    

     

    
      	9.10  	
              Notification
                of litigation.
                Each Obligor will provide the Issuer with details of any legal or
                administrative action involving any Obligor or any Security Party
                promptly
                upon becoming aware of the same where such legal or administrative
                action
                might, if adversely determined, have a material adverse effect on
                the
                ability of that Obligor to perform its obligations under any Finance
                Document to which it is a party 

            

    

     

    
      	9.11  	
              No
                amendment to Shipbuilding Contracts.
                No
                Obligor will agree to any amendment or supplement to, or waive or
                fail to
                enforce, the Shipbuilding Contract to which it is a party or any
                of its
                provisions (and for the purposes of this Clause 9.11 an amendment
                of a
                Shipbuilding Contract will always be material if alone or with any
                previous variations it increases the Contract Price thereunder by
                more
                than 5%).

            

    

     

    
      	9.12  	
              Chief
                Executive Office.
                Each Obligor will maintain its chief executive office, and keep its
                corporate documents and records, at Suite 306, Commerce Building,
                One
                Chancery Lane, Hamilton, MH12,
                Bermuda.

            

    

     

    
      	9.13  	
              Confirmation
                of no default.
                Each Obligor will, within 2 Business Days after service by the Issuer
                of a
                written request, serve on the Issuer a notice which is signed by
                the
                representative director of such Obligor and
                which:

            

    

     

    
      	(a)  	
              states
                that no Event of Default or Potential Event of Default has occurred
                and is
                continuing; or

            

    

     

    
      	(b)  	
              states
                that no Event of Default or Potential Event of Default has occurred,
                except for a specified event or matter, of which all material details
                are
                given.

            

    

     

    
      	9.14  	
              Notification
                of default.
                Each Obligor will notify the Issuer as soon as it becomes aware
                of:

            

    

     

    
      	(a)  	
              the
                occurrence of an Event of Default or a Potential Event of Default;
                or

            

    

     

    
      	(b)  	
              any
                matter which indicates that an Event of Default or a Potential Event
                of
                Default may have occurred and is
                continuing;

            

    

     

    and
      will
      keep the Issuer fully up-to-date with all developments.

    

    
      	9.15  	
              Provision
                of further information.
                Each Obligor will, as soon as practicable after receiving the request,
                provide the Issuer with any additional financial or other information
                relating:

            

    

     

    
      	(a)  	
              to
                it and its Shipbuilding Contract;
                or

            

    

     

    
      	(b)  	
              to
                any other matter relevant to, or to any provision of, a Finance
                Document;

            

    

     

    which
      may
      be reasonably requested by the Issuer at any time.

    

    
      	9.16  	
              Financial
                Covenants.

            

    

     

    
      	(a)  	
              the
                Obligors undertake to comply at all times with the financial covenants
                set
                out in Schedule 3;

            

    

     

    
      	(b)  	
              the
                Obligors shall provide to the Issuer within 60 days after the end
                of each
                financial quarter of the Corporate Guarantor’s financial year a compliance
                certificate in the form set out in Schedule 4 executed by the chief
                financial officer of the Corporate Guarantor and confirming that
                the
                financial covenants set out in Schedule 3 have been complied with
                during
                each financial quarter; and

            

    

     

    
      	(c)  	
              a
                formal review of the financial covenants set out in Schedule 3 will
                be
                undertaken by the Issuer upon expiry and prepayment of the Bank of
                America
                Facilities whichever is earlier.

            

    

     

    
      	9.17  	
              Dividends.
                The Obligors shall procure that the Corporate Guarantor does not
                pay any
                dividend or make any other form of distribution except where the
                following
                conditions are met:

            

    

     

    
      	(a)  	
              no
                Event of Default has occurred and is continuing at the time that
                the
                proposed dividend or distribution is to be
                made;

            

    

     

    
      	(b)  	
              the
                aggregate amount of all dividends or distributions in respect of
                any
                financial year of the Corporate Guarantor shall not exceed 50% of
                the
                Consolidated Net Income for such financial
                year;

            

    

     

    
      	(c)  	
              prior
                to the making of the proposed dividend or distribution the Obligors
                have
                provided to the Issuer a certificate executed by the chief financial
                officer of the Corporate Guarantor confirming that the Corporate
                Guarantor
                is in compliance with the minimum Consolidated Fixed Charge Coverage
                Ratio
                as set out in Schedule 3 for the Measurement Period immediately preceding
                the date of the proposed dividend or
                distribution.

            

    

     

    For
      the
      purpose of this Clause 9.17, “Consolidated Net Income”, “Consolidated Fixed
      Charge Coverage Ratio” and “Measurement Period” each shall have the meaning
      given to such term in Schedule 3.

     

    
      	10  	
              CORPORATE
                UNDERTAKINGS

            

    

     

    
      	10.1  	
              General.
                Each Obligor also undertakes with the Issuer to comply with the following
                provisions of this Clause 10 at all times during the Security Period
                except as the Issuer may otherwise
                permit.

            

    

     

    
      	10.2  	
              Maintenance
                of status.
                Each Obligor will maintain its separate corporate existence and remain
                in
                good standing under the laws of the Marshall
                Islands.

            

    

     

    
      	10.3  	
              Negative
                undertakings.
                No
                Obligor will:

            

    

     

    
      	(a)  	
              carry
                on any business other than in relation to the construction, purchase
                and
                eventual ownership, chartering and operation of its Ship; or
                

            

    

     

    
      	(b)  	
              effect
                any form of redemption, purchase or return of share capital;
                or

            

    

     

    
      	(c)  	
              provide
                any form of credit or financial assistance
                to:

            

    

     

    
      	(i)  	
              a
                person who is directly or indirectly interested in that Obligor’s share or
                loan capital; or

            

    

     

    
      	(ii)  	
              any
                company in or with which such a person is directly or indirectly
                interested or connected;

            

    

     

    or
      enter
      into any transaction with or involving such a person or company on terms which
      are, in any respect, less favourable to that Obligor than those which it could
      obtain in a bargain made at arms’ length provided however that prior to an Event
      of Default which is continuing that Obligor may provide loans to or incur
      inter-company Indebtedness from other subsidiaries of the Corporate Guarantor
      and may service such inter-company Indebtedness provided that in the case of
      any
      such inter- company Indebtedness the relevant lending company has first executed
      an agreement in favour of the Issuer fully subordinating the rights of such
      lending company in respect of such Indebtedness to those of the Issuer under
      the
      Finance Documents.

    

    
      	(d)  	
              issue,
                allot or grant any person a right to any shares in its capital or
                repurchase or reduce its issued share
                capital;

            

    

     

    
      	(e)  	
              acquire
                any shares or other securities other than US or UK Treasury bills
                and
                certificates of deposit issued by major North American or European
                banks,
                or enter into any transaction in a derivative;
                or

            

    

     

    
      	(f)  	
              enter
                into any form of amalgamation, merger or de-merger or any form of
                reconstruction or reorganisation.

            

    

     

    
      	11  	
              PAYMENTS
                AND CALCULATIONS

            

    

     

    
      	11.1  	
              Currency
                and method of payments.
                All payments to be made by the Obligors to the Issuer under a Finance
                Document shall be made to the
                Issuer:

            

    

     

    
      	(a)  	
              by
                not later than 11.00 a.m. (New York City time) on the due
                date;

            

    

     

    
      	(b)  	
              in
                same day Dollar funds settled through the New York Clearing House
                Interbank Payments System (or in such other Dollar funds and/or settled
                in
                such other manner as the Issuer shall specify as being customary
                at the
                time for the settlement of international transactions of the type
                contemplated by this Agreement);
                and

            

    

     

    
      	(c)  	
              to
                the account of the Issuer at American Express Bank Limited, 3 World
                Financial Centre, 23rd Floor, New York, NY 10285-2300 USA Account
                No
                000261123 for credit to the Issuer reference “TBS : Argyle and Others :
                Guarantee Facility”, or to such other account with such other bank as the
                Issuer may from time to time notify to the
                Obligors.

            

    

     

    
      	11.2  	
              Payment
                on non-Business Day.
                If
                any payment by the Obligors under a Finance Document would otherwise
                fall
                due on a day which is not a Business
                Day:

            

    

     

    
      	(a)  	
              the
                due date shall be extended to the next succeeding Business Day;
                or

            

    

     

    
      	(b)  	
              if
                the next succeeding Business Day falls in the next calendar month,
                the due
                date shall be brought forward to the immediately preceding Business
                Day;

            

    

     

    and
      interest shall be payable during any extension under paragraph (a) at the rate
      payable on the original due date.

    

    
      	11.3  	
              Basis
                for calculation of periodic payments.
                All interest and commitment fee and any other payments under any
                Finance
                Document which are of an annual or periodic nature shall accrue from
                day
                to day and shall be calculated on the basis of the actual number
                of days
                elapsed and a 360 day year.

            

    

     

    
      	11.4  	
              Issuer
                accounts.
                The Issuer shall maintain an account showing any and all sums owing
                to the
                Issuer from the Obligors and each Security Party under the Finance
                Documents and all payments in respect of those amounts made by the
                Obligors and any Security Party.

            

    

     

    
      	11.5  	
              Accounts
                prima facie evidence.
                If
                the account maintained under Clause 11.4 shows an amount to be owing
                by
                the Obligors or a Security Party to the Issuer, that account shall
                be
                prima facie evidence that that amount is owing to the
                Issuer.

            

    

     

    
      	12  	
              APPLICATION
                OF RECEIPTS

            

    

     

    
      	12.1  	
              Normal
                order of application.
                Except as any Finance Document may otherwise provide, any sums which
                are
                received or recovered by the Issuer under or by virtue of any Finance
                Document shall be applied:

            

    

     

    
      	(a)  	
              FIRST:
                in or towards satisfaction of any amounts then due and payable under
                the
                Finance Documents (or any of them) in such order of application and/or
                such proportions as the Issuer may specify by notice to the Obligors
                and
                the Security Parties;

            

    

     

    
      	(b)  	
              SECONDLY:
                in retention of an amount equal to any amount not then due and payable
                under any Finance Document but which the Issuer, by notice to the
                Obligors
                and the Security Parties, states in its opinion will or may become
                due and
                payable in the future and, upon those amounts becoming due and payable,
                in
                or towards satisfaction of them in accordance with the provisions
                of this
                Clause; and 

            

    

     

    
      	(c)  	
              THIRDLY:
                any surplus shall be paid to the Obligors or to any other person
                appearing
                to be entitled to it.

            

    

     

    

    
      	12.2  	
              Variation
                of order of application.
                The Issuer may, by notice to the Obligors and the Security Parties,
                provide for a different manner of application from that set out in
                Clause
                12.1 either as regards a specified sum or sums or as regards sums
                in a
                specified category or categories.

            

    

     

    
      	12.3  	
              Notice
                of variation of order of application.
                The Issuer may give notices under Clause 12.2 from time to time;
                and such
                a notice may be stated to apply not only to sums which may be received
                or
                recovered in the future, but also to any sum which has been received
                or
                recovered on or after the third Business Day before the date on which
                the
                notice is served. 

            

    

     

    
      	12.4  	
              Appropriation
                rights overridden.
                This Clause 12 and any notice which the Issuer gives under Clause
                12.2
                shall override any right of appropriation possessed, and any appropriation
                made, by the Obligors or any Security
                Party.

            

    

     

    
      	13  	
              EVENTS
                OF DEFAULT

            

    

     

    
      	13.1  	
              Events
                of Default.
                An
                Event of Default
                occurs if:

            

    

     

    
      	(a)  	
              any
                Obligor or any Security Party fails to pay when due or (if so payable)
                on
                demand any sum payable under a Finance Document (and so that for
                this
                purpose (i) sums payable on demand shall be treated as having been
                paid
                when due within 3 Business Days of receipt of the demand and (ii)
                if the
                failure is caused by a disruption to the payments system referred
                to in
                Clause 11.1(b) which disruption is beyond the control of the Obligors,
                such failure shall not constitute an Event of Default if payment
                is made
                within 3 Business days of its due date);
                or

            

    

     

    
      	(b)  	
              any
                breach occurs of Clause 7.2, 9.3, 10.2 or 10.3;
                or

            

    

     

    
      	(c)  	
              any
                breach occurs of Clause 9.16(a); or

            

    

     

    
      	(d)  	
              any
                breach by any Obligor or any Security Party occurs of any provision
                of a
                Finance Document (other than a breach covered by paragraph (a) or
                (b)) and
                if, in the opinion of the Issuer, such default is capable of remedy,
                such
                default continues unremedied 10 Business days after written notice
                from
                the Issuer requesting action to remedy the same;
                or

            

    

     

    
      	(e)  	
              any
                representation, warranty or statement made by, or by an officer of,
                any
                Obligor or a Security Party in a Finance Document or in a Guarantee
                Issue
                Request or any other notice or document relating to a Finance Document
                is
                untrue or misleading in any material respect when it is made;
                or

            

    

     

    
      	(f)  	
              any
                of the following occurs in relation to any Financial Indebtedness
                of a
                Relevant Person:

            

    

     

    
      	(i)  	
              any
                Financial Indebtedness of a Relevant Person is not paid when due
                or, if so
                payable, on demand (or in either such case, within any applicable
                grace
                period); or

            

    

     

    
      	(ii)  	
              any
                Financial Indebtedness of a Relevant Person becomes due and payable
                or
                capable of being declared due and payable prior to its stated maturity
                date as a consequence of any event of default;
                or

            

    

     

    
      	(iii)  	
              a
                lease, hire purchase agreement or charter creating any Financial
                Indebtedness of a Relevant Person is terminated by the lessor or
                owner or
                becomes capable of being terminated as a consequence of any termination
                event; or

            

    

     

    
      	(iv)  	
              any
                overdraft, loan, note issuance, acceptance credit, letter of credit,
                guarantee, foreign exchange or other facility, or any swap or other
                derivative contract or transaction, relating to any Financial Indebtedness
                of a Relevant Person ceases to be available or becomes capable of
                being
                terminated as a result of any event of default, or cash cover is
                required,
                or becomes capable of being required, in respect of such a facility
                as a
                result of any event of default; or

            

    

     

    
      	(v)  	
              any
                Security Interest securing any Financial Indebtedness of a Relevant
                Person
                becomes enforceable;

            

    

     

    Provided
      that no Event of Default will occur under this Clause 13.1(f) in relation to
      the
      Corporate Guarantor if the amount of Financial Indebtedness falling within
      paragraphs (i) to (v) above is less than $2,500,000 (or its equivalent in any
      other currency or currencies),

     

    
      	(g)  	
              any
                of the following occurs in relation to a Relevant
                Person:

            

    

     

    
      	(i)  	
              a
                Relevant Person becomes, in the opinion of the Issuer, unable to
                pay its
                debts as they fall due; or

            

    

     

    
      	(ii)  	
              all
                or substantially all of the assets of a Relevant Person are subject
                to any
                form of execution, attachment, arrest, sequestration or distress
                in
                respect of a sum of, or sums aggregating, $500,000 or more or the
                equivalent in another currency and is not discharged within 1 month
                of the
                same being levied or sued out; or

            

    

     

    
      	(iii)  	
              any
                administrative or other receiver is appointed over any substantial
                part of
                the assets of a Relevant Person; or

            

    

     

    
      	(iv)  	
              an
                administrator is appointed (whether by the court or otherwise) in
                respect
                of a Relevant Person; or

            

    

     

    
      	(v)  	
              any
                formal declaration of bankruptcy or any formal statement to the effect
                that a Relevant Person is insolvent or likely to become insolvent
                is made
                by a Relevant Person or by the directors of a Relevant Person or,
                in any
                proceedings, by a lawyer acting for a Relevant Person; or
                

            

    

     

    
      	(vi)  	
              a
                provisional liquidator is appointed in respect of a Relevant Person,
                a
                winding up order is made in relation to a Relevant Person or a winding
                up
                resolution is passed by a Relevant Person; or

            

    

     

    
      	(vii)  	
              a
                resolution is passed, an administration notice is given or filed,
                an
                application or petition to a court is made or presented or any other
                step
                is taken by (aa) a Relevant Person, (bb) the members or directors
                of a
                Relevant Person, (cc) a holder of Security Interests which together
                relate
                to all or substantially all of the assets of a Relevant Person, or
                (dd) a
                government minister or public or regulatory authority of a Pertinent
                Jurisdiction having jurisdiction over that Relevant Person for or
                with a
                view to the winding up of that or another Relevant Person or the
                appointment of a provisional liquidator or administrator in respect
                of
                that or another Relevant Person, or that or another Relevant Person
                ceasing or suspending business operations or payments to creditors,
                save
                that this paragraph does not apply to a fully solvent winding up
                of a
                Relevant Person other than an Obligor which is, or is to be, effected
                for
                the purposes of an amalgamation or reconstruction previously approved
                by
                the Issuer and effected not later than 3 months after the commencement
                of
                the winding up; or

            

    

     

    
      	(viii)  	
              an
                administration notice is given or filed, an application or petition
                to a
                court is made or presented or any other step is taken by a creditor
                of a
                Relevant Person (other than a holder of Security Interests which
                together
                relate to all or substantially all of the assets of a Relevant Person)
                for
                the winding up of a Relevant Person or the appointment of a provisional
                liquidator or administrator in respect of a Relevant Person in any
                Pertinent Jurisdiction having jurisdiction over that Relevant Person,
                unless the proposed winding up, appointment of a provisional liquidator
                or
                administration is being contested in good faith, on substantial grounds
                and not with a view to some other insolvency law procedure being
                implemented instead and either (aa) the application or petition is
                dismissed or withdrawn within 30 days of being made or presented,
                or (bb)
                within 30 days of the administration notice being given or filed,
                or the
                other relevant steps being taken, other action is taken which will
                ensure
                that there will be no administration and (in both cases (aa) or (bb))
                the
                Relevant Person will continue to carry on business in the ordinary
                way and
                without being the subject of any actual, interim or pending insolvency
                law
                procedure; or

            

    

     

    
      	(ix)  	
              a
                Relevant Person or its directors take any steps (whether by making
                or
                presenting an application or petition to a court, or submitting or
                presenting a document setting out a proposal or proposed terms, or
                otherwise) with a view to obtaining, in relation to that or another
                Relevant Person, any form of moratorium, suspension or deferral of
                payments, reorganisation of debt (or certain debt) by reason of financial
                difficulties or arrangement with all or a substantial proportion
                (by
                number or value) of creditors or of any class of them or any such
                moratorium, suspension or deferral of payments, reorganisation or
                arrangement is effected by court order, by the filing of documents
                with a
                court, by means of a contract or in any other way at all;
                or

            

    

     

    
      	(x)  	
              any
                meeting of the members or directors, or of any committee of the board
                or
                senior management, of a Relevant Person is held or summoned for the
                purpose of considering a resolution or proposal to authorise or take
                any
                action of a type described in paragraphs (iv) to (ix) or a step
                preparatory to such action, or (with or without such a meeting) the
                members, directors or such a committee resolve or agree that such
                an
                action or step should be taken or should be taken if certain conditions
                materialise or fail to materialise;
                or

            

    

     

    
      	(xi)  	
              in
                a Pertinent Jurisdiction other than England or Wales or to the
                jurisdiction of whose courts any part of that Relevant Person’s assets are
                subject, any event occurs, any proceedings are opened or commenced
                or any
                step is taken which, in the opinion of the Issuer is similar to any
                of the
                foregoing; or

            

    

     

    
      	(h)  	
              any
                Obligor ceases or suspends carrying on its business or a part of
                its
                business which, in the opinion of the Issuer, is material in the
                context
                of this Agreement; or

            

    

     

    
      	(i)  	
              it
                becomes unlawful in any Pertinent Jurisdiction or
                impossible:

            

    

     

    
      	(i)  	
              for
                any Obligor or any Security Party to discharge any liability under
                a
                Finance Document or to comply with any other obligation which the
                Issuer
                considers material under a Finance Document unless provided that
                none of
                the interests of the Issuer is prejudiced in any way during the relevant
                period, the discharge of that liability or compliance with that obligation
                or exercise or enforcement of those rights ceases to be unlawful
                within 30
                days; or 

            

    

     

    
      	(ii)  	
              for
                the Issuer to exercise or enforce any right under, or to enforce
                any
                Security Interest created by, a Finance Document;
                or

            

    

     

    
      	(j)  	
              any
                official consent necessary to enable any Obligor or any Security
                Party to
                comply with any provision which the Issuer considers material of
                a Finance
                Document or any of the Shipbuilding Contracts is not granted, expires
                without being renewed, is revoked or becomes liable to revocation
                or any
                condition of such a consent is not fulfilled; or
                

            

    

     

    
      	(k)  	
              any
                provision which the Issuer considers in its reasonable opinion material
                of
                a Finance Document proves to have been or becomes invalid or
                unenforceable, or a Security Interest created by a Finance Document
                proves
                to have been or becomes invalid or unenforceable or such a Security
                Interest proves to have ranked after, or loses its priority to, another
                Security Interest or any other third party claim or interest;
                or

            

    

     

    
      	(l)  	
              the
                security constituted by a Finance Document is in any way imperilled
                or in
                jeopardy; or

            

    

     

    
      	(m)  	
              an
                Event of Default (as defined in the Loan Agreement) occurs;
                or

            

    

     

    
      	(n)  	
              any
                other event occurs or any other circumstances arise or develop including,
                without limitation a change in the financial position, state of affairs
                or
                prospects of any Obligor in the light of which the Issuer considers
                that
                there is a significant risk that any Obligor is, or will later become,
                unable to discharge its liabilities under the Finance Documents as
                they
                fall due.

            

    

     

    
      	13.2  	
              Actions
                following an Event of Default.
                On, or at any time after, the occurrence of an Event of Default and
                while
                the Event of Default is continuing the Issuer
                may:

            

    

     

    
      	(a)  	
              serve
                on the Obligors a notice stating that all obligations of the Issuer
                to the
                Obligors under this Agreement are terminated;
                and/or

            

    

     

    
      	(b)  	
              serve
                on the Obligors a notice stating that all other amounts accrued or
                owing
                under this Agreement are immediately due and payable or are due and
                payable on demand; and/or

            

    

     

    
      	(c)  	
              take
                any other action which, as a result of the Event of Default or any
                notice
                served under paragraph (a) or (b), the Issuer is entitled to take
                under
                any Finance Document or any applicable
                law.

            

    

     

    
      	13.3  	
              Termination
                of obligations.
                On
                the service of a notice under Clause 13.2(a), all the obligations
                of the
                Issuer to the Obligors under this Agreement shall terminate and the
                amount
                specified in Clause 5.6 shall become immediately due and payable
                or, as
                the case may be, payable on demand.

            

    

     

    
      	13.4  	
              Acceleration
                of liabilities.
                On
                the service of a notice under Clause 13.2(b), all amounts accrued
                or owing
                from the Obligors or any Security Party under this Agreement and
                every
                other Finance Document shall become immediately due and payable or,
                as the
                case may be, payable on demand.

            

    

     

    
      	13.5  	
              Multiple
                notices; action without notice.
                The Issuer may serve notices under Clauses 13.2(a) and (b) simultaneously
                or on different dates and it may take any action referred to in Clauses
                13.2 if no such notice is served or simultaneously with or at any
                time
                after the service of both or either of such
                notices.

            

    

     

    
      	13.6  	
              Exclusion
                of Issuer liability.
                Neither the Issuer nor any receiver or manager appointed by the Issuer,
                shall have any liability
                to
                the Obligors or a Security Party:

            

    

     

    
      	(a)  	
              for
                any loss caused by an exercise of rights under, or enforcement of
                a
                Security Interest created by, a Finance Document or by any failure
                or
                delay to exercise such a right or to enforce such a Security Interest;
                or

            

    

     

    
      	(b)  	
              as
                mortgagee in possession or otherwise, for any income or principal
                amount
                which might have been produced by or realised from any asset comprised
                in
                such a Security Interest or for any reduction (however caused) in
                the
                value of such an asset;

            

    

     

    
      	 	
              except
                that this does not exempt the Issuer or a receiver or manager from
                liability for losses shown to have been caused directly and mainly
                by the
                dishonesty or the wilful misconduct of the Issuer’s own officers and
                employees or (as the case may be) such receiver’s or manager’s own
                partners or employees.

            

    

    

    
      	13.7  	
              Relevant
                Persons.
                In
                this Clause 13 a “Relevant
                Person”
                means any Obligor and any Security
                Party.

            

    

     

    
      	13.8  	
              Interpretation.
                In
                Clause 13.1(f) references to an event of default or a termination
                event
                include any event, howsoever described, which is similar to an event
                of
                default in a facility agreement or a termination event in a finance
                lease;
                and in Clause 13.1(g) “petition”
                includes an application.

            

    

     

    
      	14  	
              FEES
                AND EXPENSES

            

    

     

    
      	14.1  	
              Arrangement
                and commitment fees. The
                Obligors shall pay to the Issuer:

            

    

     

    
      	(a)  	
              on
                Guarantee Issue Date in respect of each Guarantee an arrangement
                fee in
                respect of such Guarantee in the amount specified in the Fee Letter;
                and

            

    

     

    
      	(b)  	
              quarterly
                in arrears during the period from (and including) the first Guarantee
                Issue Date to the date of cancellation or termination of the last
                Guarantee and on the last day of that period a commitment fee at
                the rate
                specified in the Fee Letter.

            

    

     

    
      	14.2  	
              Costs
                of negotiation, preparation etc.
                The Obligors shall pay to the Issuer on its demand the amount of
                all
                expenses incurred by the Issuer in connection with the negotiation,
                preparation, execution or registration of any Finance Document or
                any
                related document or with any transaction contemplated by a Finance
                Document or a related document.

            

    

     

    
      	14.3  	
              Costs
                of variation, amendments, enforcement etc.
                The Obligors shall pay to the Issuer, on the Issuer’s demand, the amount
                of all expenses incurred by the Issuer (in the case of paragraphs
                (a) and
                (b) such expenses to be reasonably incurred) in connection with:
                

            

    

     

    
      	(a)  	
              any
                amendment or supplement to a Finance Document, or any proposal for
                such an
                amendment to be made; 

            

    

     

    
      	(b)  	
              any
                consent or waiver by the Issuer under or in connection with a Finance
                Document, or any request for such a consent or
                waiver;

            

    

     

    
      	(c)  	
              any
                step taken by the Issuer with a view to the protection, exercise
                or
                enforcement of any right or Security Interest created by a Finance
                Document or for any similar
                purpose.

            

    

     

    
      	 	
              There
                shall be recoverable under paragraph (c) the full amount of all legal
                expenses, whether or not such as would be allowed under rules of
                court or
                any taxation or other procedure carried out under such
                rules.

            

    

    

    
      	14.4  	
              Documentary
                taxes.
                The Obligors shall promptly pay any tax payable on or by reference
                to any
                Finance Document, and shall, on the Issuer’s demand, fully indemnify the
                Issuer against any claims, expenses, liabilities and losses resulting
                from
                any failure or delay by the Obligors to pay such a
                tax.

            

    

     

    
      	14.5  	
              Certification
                of amounts.
                A
                notice which is signed by 2 officers of the Issuer, which states
                that a
                specified amount, or aggregate amount, is due to the Issuer under
                this
                Clause 14 and which indicates (without necessarily specifying a detailed
                breakdown) the matters in respect of which the amount, or aggregate
                amount, is due shall (save in the case of manifest error) be prima
                facie
                evidence that the amount, or aggregate amount, is
                due.

            

    

     

    
      	15  	
              INDEMNITIES

            

    

     

    
      	15.1  	
              Indemnities
                regarding issue of Guarantees.
                Without prejudice to the Obligors’ indemnity contained in Clause 5, the
                Obligors shall fully indemnify the Issuer on its demand in respect
                of all
                claims, expenses, liabilities and losses which are made or brought
                against
                or incurred by the Issuer, or which the Issuer reasonably and with
                due
                diligence estimates that it will incur, as a result of or in connection
                with:

            

    

     

    
      	(a)  	
              a
                Guarantee not being issued on the date specified in the relevant
                Guarantee
                Issue Request for any reason other than a default by the
                Issuer;

            

    

     

    
      	(b)  	
              any
                failure (for whatever reason) by the Obligors to make payment of
                any
                amount due under a Finance Document on the due date or, if so payable,
                on
                demand (after giving credit for any default interest paid by the
                Obligors
                on the amount concerned under Clause
                6);

            

    

     

    
      	(c)  	
              the
                occurrence and/or continuance of an Event of Default or a Potential
                Event
                of Default; 

            

    

     

    
      	 	
              and
                in respect of any tax (other than tax on its overall net income)
                for which
                the Issuer is liable in connection with any amount paid or payable
                to the
                Issuer (whether for its own account or otherwise) under any Finance
                Document.

            

    

    

    
      	15.2  	
              Breakage
                costs.
                Without limiting its generality, Clause 15.1 covers any claim, expense,
                liability or loss, including a loss of a prospective profit, incurred
                by
                the Issuer in liquidating or employing deposits from third parties
                acquired or arranged to fund or maintain any overdue
                amount.

            

    

     

    
      	15.3  	
              Miscellaneous
                indemnities.
                The Obligors shall fully indemnify the Issuer on its demand in respect
                of
                all claims, expenses, liabilities and losses which may be made or
                brought
                against or incurred by the Issuer, in any country, as a result of
                or in
                connection with any action taken, or omitted or neglected to be taken,
                under or in connection with any Finance Document by the Issuer or
                by any
                receiver appointed under a Finance Document other than claims, expenses,
                liabilities and losses which are shown to have been directly and
                mainly
                caused by the dishonesty or wilful misconduct or reckless action
                with
                knowledge of the probable consequences of the officers or employees
                of the
                Issuer.

            

    

     

    
      	15.4  	
              Currency
                indemnity.
                If
                any sum due from the Obligors or any Security Party to the Issuer
                under a
                Finance Document or under any order or judgment relating to a Finance
                Document has to be converted from the currency in which the Finance
                Document provided for the sum to be paid (the “Contractual
                Currency”)
                into another currency (the “Payment
                Currency”)
                for the purpose of:

            

    

     

    
      	(a)  	
              making
                or lodging any claim or proof against the Obligors or any Security
                Party,
                whether in its liquidation, any arrangement involving it or otherwise;
                or

            

    

     

    
      	(b)  	
              obtaining
                an order or judgment from any court or other tribunal;
                or

            

    

     

    
      	(c)  	
              enforcing
                any such order or judgment;

            

    

     

    
      	 	
              the
                Obligors shall indemnify the Issuer against the loss arising when
                the
                amount of the payment actually received by the Issuer is converted
                at the
                available rate of exchange into the Contractual
                Currency.

            

    

    

    
      	 	
              In
                this Clause 15.4, the “available
                rate of exchange”
                means the rate at which the Issuer is able at the opening of business
                (London time) on the Business Day after it receives the sum concerned
                to
                purchase the Contractual Currency with the Payment
                Currency.

            

    

    

    
      	 	
              This
                Clause 15.4 creates a separate liability of the Obligors which is
                distinct
                from their other liabilities under the Finance Documents and which
                shall
                not be merged in any judgment or order relating to those other
                liabilities.

            

    

    

    
      	15.5  	
              Certification
                of amounts.
                A
                notice which is signed by 2 officers of the Issuer, which states
                that a
                specified amount, or aggregate amount, is due to the Issuer under
                this
                Clause 15 and which indicates (without necessarily specifying a detailed
                breakdown) the matters in respect of which the amount, or aggregate
                amount, is due shall (save in the case of manifest error) be prima
                facie
                evidence that the amount, or aggregate amount, is
                due.

            

    

     

    
      	16  	
              NO
                SET-OFF OR TAX DEDUCTION

            

    

     

    
      	16.1  	
              No
                deductions.
                All amounts
                due from an Obligor under a Finance Document shall be
                paid:

            

    

     

    
      	(a)  	
              without
                any form of set-off, cross-claim or condition; and
                

            

    

     

    
      	(b)  	
              free
                and clear of any tax deduction except a tax deduction which that
                Obligor
                is required by law to make.

            

    

     

    
      	16.2  	
              Grossing-up
                for taxes.
                If
                an Obligor is required by law to make a tax deduction from any
                payment:

            

    

     

    
      	(a)  	
              that
                Obligor shall notify the Issuer as soon as it becomes aware of the
                requirement;

            

    

     

    
      	(b)  	
              that
                Obligor shall pay the tax deducted to the appropriate taxation authority
                promptly, and in any event before any fine or penalty
                arises;

            

    

     

    
      	(c)  	
              the
                amount due in respect of the payment shall be increased by the amount
                necessary to ensure that the Issuer receives and retains (free from
                any
                liability relating to the tax deduction) a net amount which, after
                the tax
                deduction, is equal to the full amount which it would otherwise have
                received.

            

    

     

    No
      Obligor shall be obliged to pay any additional amount pursuant to paragraph
      (c)
      above in respect of any deduction which would not have been required if the
      Issuer had completed a declaration, claim, exemption, or other form which it
      has
      been requested by the Obligors or an applicable taxation authority to complete
      and which it is able to complete.

     

    
      	16.3  	
              Evidence
                of payment of taxes.
                Within one month after making any tax deduction, the Obligor concerned
                shall deliver to the Issuer documentary evidence satisfactory to
                the
                Issuer that the tax had been paid to the appropriate taxation
                authority.

            

    

     

    
      	16.4  	
              Tax
                credits.
                If
                the Issuer receives for its own account a repayment or obtains relief
                or
                credit in respect of tax paid or otherwise payable by it in respect
                of or
                calculated by reference to the increased payment made by an Obligor
                under
                Clause 16.2, it shall pay to the relevant Obligor a sum equal to
                the
                proportion of the repayment, relief or credit which it allocates
                to the
                amount due from that Obligor in respect of which that Obligor made
                the
                increased payment:

            

    

     

    
      	(a)  	
              the
                Issuer shall not be obliged to allocate to this transaction any part
                of a
                tax repayment, relief or credit which is referable to a class or
                number of
                transactions;

            

    

     

    
      	(b)  	
              nothing
                in this Clause 16.4 shall oblige the Issuer to arrange its tax affairs
                in
                any particular manner, to claim any type of relief, credit, allowance
                or
                deduction instead of, or in priority to, another or to make any such
                claim
                within any particular time;

            

    

     

    
      	(c)  	
              nothing
                in this Clause 16.4 shall oblige the Issuer to make a payment which
                would
                leave it in a worse position than it would have been in if the relevant
                Obligor had not been required to make a tax deduction from a payment;
                and

            

    

     

    
      	(d)  	
              any
                allocation or determination made by the Issuer under or in connection
                with
                this Clause 16.4 shall (save in the case of manifest error) be conclusive
                and binding on the Obligors.

            

    

     

    
      	16.5  	
              Exclusion
                of tax on overall net income.
                In
                this Clause 16 “tax
                deduction”
                means any deduction or withholding for or on account of any present
                or
                future tax except tax on the Issuer’s overall net
                income.

            

    

     

    
      	17  	
              ILLEGALITY,
                ETC

            

    

     

    
      	17.1  	
              Illegality.
                This Clause 17 applies if the Issuer notifies the Obligors that it
                has
                become, or will with effect from a specified
                date, become:

            

    

     

    
      	(a)  	
              unlawful
                or prohibited as a result of the introduction of a new law, an amendment
                to an existing law or a change in the manner in which an existing
                law is
                or will be interpreted or applied; or

            

    

     

    
      	(b)  	
              contrary
                to, or inconsistent with, any
                regulation,

            

    

     

    
      	 	
              for
                the Issuer to maintain or give effect to any of its obligations under
                this
                Agreement or any Guarantee in the manner contemplated by this
                Agreement.

            

    

    

    
      	17.2  	
              Notification
                and effect of illegality.
                On
                the Issuer notifying the Obligors under Clause
                17.1:

            

    

     

    
      	(a)  	
              the
                Commitment shall be cancelled;

            

    

     

    
      	(b)  	
              the
                Obligors shall use their best endeavours to procure the prompt
                cancellation of the Outstandings and the return of each Guarantee
                to the
                Issuer endorsed by the Seller to the effect that it is cancelled;
                and

            

    

     

    
      	(c)  	
              by
                no later than the date specified in the Issuer’s notice under Clause 17.1
                as the date on which the notified event would become effective, the
                Obligors shall pay to the Issuer the amount due under Clause
                5.6.

            

    

     

    
      	17.3  	
              Mitigation.
                If circumstances arise which would result in a notification under
                Clause
                17.1 then, without in any way limiting the rights of the Issuer under
                Clause 17.2, the Issuer shall notify the Obligor and shall use reasonable
                endeavours to transfer its obligations and liabilities under this
                Agreement and the Guarantees and its rights under this Agreement
                and the
                Finance Documents to another office or financial institution not
                affected
                by the circumstances but the Issuer shall not be under any obligation
                to
                take any such action if, in its opinion, to do so would or
                might:

            

    

     

    
      	(a)  	
              have
                an adverse effect on its business, operations or financial condition;
                or

            

    

     

    
      	(b)  	
              involve
                it in any activity which is unlawful or prohibited or any activity
                that is
                contrary to, or inconsistent with, any official requirement; or
                

            

    

     

    
      	(c)  	
              involve
                it in any expense (unless indemnified to its satisfaction) or tax
                disadvantage.

            

    

     

    
      	18  	
              INCREASED
                COSTS

            

    

     

    
      	18.1  	
              Increased
                costs.
                This Clause
                18
                applies if the Issuer notifies the Obligors that it considers that
                as a
                result of:

            

    

     

    
      	(a)  	
              the
                introduction or alteration after the date of this Agreement of a
                law or an
                alteration after the date of this Agreement in the manner in which
                a law
                is interpreted or applied (disregarding any effect which relates
                to the
                application to payments under this Agreement of a tax on the Issuer’s
                overall net income); or

            

    

     

    
      	(b)  	
              complying
                with any regulation (including any which relates to capital adequacy
                or
                liquidity controls or which affects the manner in which the Issuer
                allocates capital resources to its obligations under this Agreement)
                which
                is introduced, or altered, or the interpretation or application of
                which
                is altered, after the date of this
                Agreement,

            

    

     

    
      	 	
              the
                Issuer (or a parent company of it) has incurred or will incur an
                “increased
                cost”.

            

    

    

    
      	18.2  	
              Meaning
                of “increased costs”.
                In
                this Clause 18, “increased
                costs”
                means:

            

    

     

    
      	(a)  	
              an
                additional or increased cost incurred as a result of, or in connection
                with, the Issuer having entered into, or being a party to, this Agreement
                or having taken an assignment of rights under this Agreement, of
                funding
                or maintaining the Outstandings or other unpaid sums or performing
                its
                obligations under this Agreement, or of having outstanding all or
                any part
                of the Outstandings or other unpaid sums;
                or

            

    

     

    
      	(b)  	
              a
                reduction in the amount of any payment to the Issuer under this Agreement
                or in the effective return which such a payment represents to the
                Issuer
                or on its capital;

            

    

     

    
      	(c)  	
              an
                additional or increased cost of funding all or maintaining all or
                any part
                of the Outstandings or other unpaid sums or (as the case may require)
                the
                proportion of that cost attributable to the Outstandings or other
                unpaid
                sums; or

            

    

     

    
      	(d)  	
              a
                liability to make a payment, or a return foregone, which is calculated
                by
                reference to any amounts received or receivable by the Issuer under
                this
                Agreement;

            

    

     

    but
      not
      an item attributable to a change in the rate of tax on the overall net income
      of
      the Issuer (or a parent company of it) or an item covered by the indemnity
      for
      tax in Clause 15.1 or by Clause 16 or an item arising directly out of the
      implementation by the applicable authorities having jurisdiction over the Issuer
      of the matters set out in the statement of the Basle Committee on Banking
      Regulations and Supervisory Practices dated July, 1988 and entitled
“International Convergence of Capital Measurement and Capital Standards”, to the
      extent and according to the timetable provided for in the
      statement.

    

    
      	 	
              For
                the purposes of this Clause 18.2 the Issuer may in good faith allocate
                or
                spread costs and/or losses among its assets and liabilities (or any
                class
                of its assets and liabilities) on such basis as it considers
                appropriate.

            

    

    

    
      	18.3  	
              Payment
                of increased costs.
                The Obligors shall pay to the Issuer, on its demand, the amounts
                which the
                Issuer from time to time notifies the Obligors that it has specified
                to be
                necessary to compensate it for the increased cost (provided that
                such
                demand is accompanied by a certificate from the Issuer confirming
                the
                amount of its increased cost and including a calculation
                thereof).

            

    

     

    
      	18.4  	
              Notice
                of cancellation.
                If
                the Obligors are not willing to continue to compensate the Issuer
                for the
                increased cost under Clause 18.3, the Obligors may give the Issuer
                not
                less than 14 days’ notice of its intention to cancel the Commitment and
                procure the cancellation of the
                Outstandings.

            

    

     

    
      	18.5  	
              Cancellation.
                A
                notice under Clause 18.4 shall be irrevocable; and on the date specified
                in its notice of intended cancellation:
                

            

    

     

    
      	(a)  	
              the
                Commitment shall be cancelled; 

            

    

     

    
      	(b)  	
              the
                Obligors shall procure the cancellation of the Outstandings and the
                return
                of each Guarantee to the Issuer endorsed by the Seller to the effect
                that
                it is cancelled; and

            

    

     

    
      	(c)  	
              the
                Obligors shall pay to the Issuer the amount due under Clause
                5.6.

            

    

     

    
      	18.6  	
              Mitigation.
                If circumstances arise which would result in a notification under
                Clause
                18.1 then, without in any way limiting the rights of the Issuer under
                Clause 18.3, the Issuer shall notify the Obligor and shall use reasonable
                endeavours to transfer its obligations and liabilities under this
                Agreement and the Guarantees and its rights under this Agreement
                and the
                Finance Documents to another office or financial institution not
                affected
                by the circumstances but the Issuer shall not be under any obligation
                to
                take any such action if, in its opinion, to do so would or
                might:

            

    

     

    
      	(a)  	
              have
                an adverse effect on its business, operations or financial condition;
                or

            

    

     

    
      	(b)  	
              involve
                it in any activity which is unlawful or prohibited or any activity
                that is
                contrary to, or inconsistent with, any official requirement; or
                

            

    

     

    
      	(c)  	
              involve
                it in any expense (unless indemnified to its satisfaction) or tax
                disadvantage.

            

    

     

    
      	19  	
              SET-OFF

            

    

     

    
      	19.1  	
              Application
                of credit balances.
                The Issuer
                may without prior notice following the occurrence of an Event of
                Default
                which is continuing:

            

    

     

    
      	(a)  	
              apply
                any balance (whether or not then due) which at any time stands to
                the
                credit of any account in the name of any Obligors at any office in
                any
                country of the Issuer in or towards satisfaction of any sum then
                due from
                the Obligors to the Issuer under any of the Finance Documents;
                and

            

    

     

    
      	(b)  	
              for
                that purpose:

            

    

     

    
      	(i)  	
              break,
                or alter the maturity of, all or any part of a deposit of any
                Obligor;

            

    

     

    
      	(ii)  	
              convert
                or translate all or any part of a deposit or other credit balance
                into
                Dollars; 

            

    

     

    
      	(iii)  	
              enter
                into any other transaction or make any entry with regard to the credit
                balance which the Issuer considers appropriate.

            

    

     

    
      	19.2  	
              Existing
                rights unaffected.
                The Issuer shall not be obliged to exercise any of its rights under
                Clause
                19.1; and those rights shall be without prejudice and in addition
                to any
                right of set-off, combination of accounts, charge, lien or other
                right or
                remedy to which the Issuer is entitled (whether under the general
                law or
                any document).

            

    

     

    
      	19.3  	
              No
                Security Interest.
                This Clause 19 gives the Issuer a contractual right of set-off only,
                and
                does not create any equitable charge or other Security Interest over
                any
                credit balance of the Obligors.

            

    

     

    
      	20  	
              TRANSFERS
                AND CHANGES IN ISSUING
                OFFICE

            

    

     

    
      	20.1  	
              Transfer
                by Obligor.
                No
                Obligor
                may, without the consent of the Issuer transfer any of its rights,
                liabilities or obligations under any Finance
                Document.

            

    

     

    
      	20.2  	
              Transfer
                by Issuer.
                The Issuer may transfer all or any of the rights and interests which
                it
                has under or by virtue of the Finance Documents with the prior written
                consent of the Obligors, (not to be unreasonably withheld or delayed)
                or
                without the consent of the Obligors if an Event of Default or a Potential
                Event of Default has occurred and is
                continuing.

            

    

     

    
      	20.3  	
              Rights
                of transferee.
                In
                respect of any breach of a warranty, undertaking, condition or other
                provision of a Finance Document, or any misrepresentation made in
                or in
                connection with a Finance Document, a transferee of any of the Issuer’s
                rights or interests under or by virtue of the Finance Documents shall
                be
                entitled to recover damages by reference to the loss incurred by
                that
                transferee as a result of the breach or misrepresentation irrespective
                of
                whether the Issuer would have incurred a loss of that kind or
                amount.

            

    

     

    
      	20.4  	
              Sub-participation;
                subrogation assignment.
                The Issuer may sub-participate all or any part of its rights and/or
                obligations under or in connection with the Finance Documents without
                the
                consent of, or any notice to, the Obligors; and the Issuer may assign,
                in
                any manner and terms agreed by it, all or any part of those rights
                to an
                insurer or surety who has become subrogated to
                them.

            

    

     

    
      	20.5  	
              Disclosure
                of information.
                The Issuer may disclose to a potential assignee or sub-participant
                any
                information which the Issuer has received in relation to the Obligors,
                any
                Security Party or their affairs under or in connection with any Finance
                Document.

            

    

     

    
      	20.6  	
              Change
                of issuing office.
                The Issuer may change its issuing office by giving notice to the
                Obligors
                and the change shall become
                effective on the later of:

            

    

     

    
      	(a)  	
              the
                date on which the Obligors receive the notice;
                and

            

    

     

    
      	(b)  	
              the
                date, if any, specified in the notice as the date on which the change
                will
                come into effect.

            

    

     

    
      	20.7  	
              No
                additional costs.
                If
                the Issuer transfers or sub-participates any part of its rights and/or
                obligations under the Finance Documents or changes its issuing office
                pursuant to this Clause 20 and as a result of circumstances existing
                at
                the date the transfer, sub-participation or change occurs, the Obligors
                would be obliged to make an increased payment to the Issuer under
                any
                applicable Clauses of this Agreement then the Issuer is only entitled
                to
                recover payment under those Clauses to the same extent as the Issuer
                would
                have been if the transfer, sub-participation or change of issuing
                office
                had not occurred.

            

    

     

    
      	21  	
              VARIATIONS
                AND WAIVERS

            

    

     

    
      	21.1  	
              Variations,
                waivers etc. by Issuer.
                A
                document shall be effective to vary, waive, suspend or limit any
                provision
                of a Finance Document, or the Issuer’s rights or remedies under such a
                provision or the general law, only if the document is signed, or
                specifically agreed to by fax, by the Obligors and the Issuer and,
                if the
                document relates to a Finance Document to which a Security Party
                is party,
                by that Security Party.

            

    

     

    
      	21.2  	
              Exclusion
                of other or implied variations.
                Except for a document which satisfies the requirements of Clauses
                21.1, no
                document, and no act, course of conduct, failure or neglect to act,
                delay
                or acquiescence on the part of the Issuer (or any person acting on
                its
                behalf) shall result in the Issuer (or any person acting on its behalf)
                being taken to have varied, waived, suspended or limited, or being
                precluded (permanently or temporarily) from enforcing, relying on
                or
                exercising:

            

    

     

    
      	(a)  	
              a
                provision of this Agreement or another Finance Document;
                or

            

    

     

    
      	(b)  	
              an
                Event of Default; or 

            

    

     

    
      	(c)  	
              a
                breach by any Obligor or a Security Party of an obligation under
                a Finance
                Document or the general law; or

            

    

     

    
      	(d)  	
              any
                right or remedy conferred by any Finance Document or by the general
                law;

            

    

     

    
      	 	
              and
                there shall not be implied into any Finance Document any term or
                condition
                requiring any such provision to be enforced, or such right or remedy
                to be
                exercised, within a certain or reasonable
                time.

            

    

    

    
      	22  	
              NOTICES

            

    

     

    
      	22.1  	
              General.
                Unless otherwise specifically provided, any notice under or in connection
                with any Finance Document shall be given by letter or fax and references
                in the Finance Documents to written notices, notices in writing and
                notices signed by particular persons shall be construed
                accordingly.

            

    

     

    
      	22.2  	
              Addresses
                for communications.
                A
                notice
                shall be sent:

            

    

     

    
      	(a)  	
              to
                the Obligors:Suite
                306

            

    

    Commerce
      Building 

    One
      Chancery Lane

    Hamilton
      HM12

    Bermuda

    

    Mailing
      Address:

    P.O.
      Box
      HM 2522

    Hamilton
      HMGX

    Bermuda

    

    Attention:
         William
      J. Carr

    Fax:   +1-441-295-4957

     

    With
      a
      copy to:

    TBS
      Shipping Services Inc.

    612
      East
      Grassy Sprain Road

    Yonkers,
      NY 10710 U.S.A.

    Attention:
      Ferdinand V. Lepere

    

    Fax
      :
   +1-914-961-5121

    

    

    
      	(b)  	
              to
                the Issuer:The
                Royal Bank of Scotland plc

            

    

    Shipping
      Business Centre

    5-10
      Great Tower Street

    London
      EC3R 3HX

    

    Fax
      No:
 +44
      207
      283 7538

    

    Attention:
      Ship Finance Portfolio Management

    

    or
      to
      such other address as the relevant party may notify the other.

    

    
      	22.3  	
              Effective
                date of notices.
                Subject to Clauses
                22.4 and 22.5:

            

    

     

    
      	(a)  	
              a
                notice which is delivered personally or posted shall be deemed to
                be
                served, and shall take effect, at the time when it is
                delivered;

            

    

     

    
      	(b)  	
              a
                notice which is sent by fax shall be deemed to be served, and shall
                take
                effect, 2 hours after its transmission is completed.
                

            

    

     

    
      	22.4  	
              Service
                outside business hours. However,
                if under Clause 22.3 a notice would be deemed to be
                served:

            

    

     

    
      	(a)  	
              on
                a day which is not a business day in the place of receipt;
                or

            

    

     

    
      	(b)  	
              on
                such a business day, but after 5 p.m. local
                time;

            

    

     

    
      	 	
              the
                notice shall (subject to Clause 22.5) be deemed to be served, and
                shall
                take effect, at 9 a.m. on the next day which is such a business
                day.

            

    

    

    
      	22.5  	
              Illegible
                notices.
                Clauses 22.3 and 22.4 do not apply if the recipient of a notice notifies
                the sender within 1 hour after the time at which the notice would
                otherwise be deemed to be served that the notice has been received
                in a
                form which is illegible in a material
                respect.

            

    

     

    
      	22.6  	
              Valid
                notices.
                A
                notice under or in connection with a Finance Document shall not be
                invalid
                by reason that its contents or the manner of serving it do not comply
                with
                the requirements of this Agreement or, where appropriate, any other
                Finance Document under which it is served
                if:

            

    

     

    
      	(a)  	
              the
                failure to serve it in accordance with the requirements of this Agreement
                or other Finance Document, as the case may be, has not caused any
                party to
                suffer any significant loss or prejudice;
                or

            

    

     

    
      	(b)  	
              in
                the case of incorrect and/or incomplete contents, it should have
                been
                reasonably clear to the party on which the notice was served what
                the
                correct or missing particulars should have
                been.

            

    

     

    
      	22.7  	
              English
                language.
                Any notice under or in connection with a Finance Document shall be
                in
                English.

            

    

     

    
      	22.8  	
              Meaning
                of “notice”.
                In
                this Clause 22 “notice”
                includes any demand, consent, authorisation, approval, instruction,
                waiver
                or other communication. 

            

    

     

    
      	23  	
              JOINT
                AND SEVERAL LIABILITY

            

    

     

    
      	23.1  	
              General.
                All liabilities and obligations of the Obligors under this Agreement
                shall, whether expressed to be so or not, be several and, if and
                to the
                extent consistent with Clause 23.2,
                joint.

            

    

     

    
      	23.2  	
              No
                impairment of Obligor's obligations.
                The liabilities and obligations of an Obligor shall not be impaired
                by:

            

    

     

    
      	(a)  	
              this
                Agreement being or later becoming void, unenforceable or illegal
                as
                regards any other Obligor;

            

    

     

    
      	(b)  	
              the
                Issuer entering into any rescheduling, refinancing or other arrangement
                of
                any kind with any other Obligor;

            

    

     

    
      	(c)  	
              the
                Issuer releasing any other Obligor or any Security Interest created
                by a
                Finance Document; or

            

    

     

    
      	(d)  	
              any
                combination of the foregoing.

            

    

     

    
      	23.3  	
              Principal
                debtors.
                Each Obligor declares that it is and will, throughout the Security
                Period,
                remain a principal debtor for all amounts owing under this Agreement
                and
                the Finance Documents and no Obligor shall in any circumstances be
                construed to be a surety for the obligations of any other Obligor
                under
                this Agreement.

            

    

     

    
      	23.4  	
              Subordination.
                Subject to Clause 23.5, during the Security Period, no Obligor
                shall:

            

    

     

    
      	(a)  	
              claim
                any amount which may be due to it from any other Obligor whether
                in
                respect of a payment made, or matter arising out of, this Agreement
                or any
                Finance Document, or any matter unconnected with this Agreement or
                any
                Finance Document; or

            

    

     

    
      	(b)  	
              take
                or enforce any form of security from any other Obligor for such an
                amount,
                or in any other way seek to have recourse in respect of such an amount
                against any asset of any other Obligor;
                or

            

    

     

    
      	(c)  	
              set
                off such an amount against any sum due from it to any other Obligor;
                or

            

    

     

    
      	(d)  	
              prove
                or claim for such an amount in any liquidation, administration,
                arrangement or similar procedure involving any other Obligor or other
                Security Party; or

            

    

     

    
      	(e)  	
              exercise
                or assert any combination of the
                foregoing.

            

    

     

    
      	23.5  	
              Obligor's
                required action.
                If
                during the Security Period, the Issuer, by notice to a Obligor, requires
                it to take any action referred to in paragraphs (a) to (d) of Clause
                23.4,
                in relation to any other Obligor, that Obligor shall take that action
                as
                soon as practicable after receiving the Issuer’s
                notice.

            

    

     

    
      	24  	
              SUPPLEMENTAL

            

    

     

    
      	24.1  	
              Rights
                cumulative, non-exclusive.
                The rights and remedies which the Finance Documents give to the Issuer
                are:

            

    

     

    
      	(a)  	
              cumulative;

            

    

     

    
      	(b)  	
              may
                be exercised as often as appears expedient;
                and

            

    

     

    
      	(c)  	
              shall
                not, unless a Finance Document explicitly and specifically states
                so, be
                taken to exclude or limit any right or remedy conferred by any
                law.

            

    

     

    
      	24.2  	
              Severability
                of provisions.
                If
                any provision of a Finance Document is or subsequently becomes void,
                unenforceable or illegal, that shall not affect the validity,
                enforceability or legality of the other provisions of that Finance
                Document or of the provisions of any other Finance
                Document.

            

    

     

    
      	24.3  	
              Counterparts.
                A
                Finance Document may be executed in any number of
                counterparts.

            

    

     

    
      	24.4  	
              Third
                party rights.
                A
                person who is not a party to this Agreement has no right under the
                Contracts (of Third Parties) Act 1999 to enforce or to enjoy the
                benefit
                of any term of this Agreement.

            

    

     

    
      	25  	
              LAW
                AND JURISDICTION

            

    

     

    
      	25.1  	
              English
                law.
                This Agreement shall be governed by, and construed in accordance
                with,
                English law.

            

    

     

    
      	25.2  	
              Exclusive
                English jurisdiction.
                Subject to Clause 25.3, the courts of England shall have exclusive
                jurisdiction to settle any disputes which may arise out of or in
                connection with this Agreement.

            

    

     

    
      	25.3  	
              Choice
                of forum for the exclusive benefit of the Issuer.
                Clause 25.2 is for the exclusive benefit of the Issuer, which reserves
                the rights:

            

    

     

    
      	(a)  	
              to
                commence proceedings in relation to any matter which arises out of
                or in
                connection with this Agreement in the courts of any country other
                than
                England and which have or claim jurisdiction to that matter;
                and

            

    

     

    
      	(b)  	
              to
                commence such proceedings in the courts of any such country or countries
                concurrently with or in addition to proceedings in England or without
                commencing proceedings in England.

            

    

     

    No
      Obligor shall commence any proceedings in any country other than England in
      relation to a matter which arises out of or in connection with this
      Agreement.

    

    
      	25.4  	
              Process
                agent.
                Each Obligor irrevocably appoints Curtis Davis Garrard LLP at its
                registered office for the time being, presently at Waterview House,
                Roundwood Avenue, Stockley Park, Uxbridge UB11 1AU, to act as its
                agent to
                receive and accept on its behalf any process or other document relating
                to
                any proceedings in the English courts which are connected with this
                Agreement.

            

    

     

    
      	25.5  	
              Issuer’s
                rights unaffected.
                Nothing in this Clause 25 shall exclude or limit any right which
                the
                Issuer may have (whether under the law of any country, an international
                convention or otherwise) with regard to the bringing of proceedings,
                the
                service of process, the recognition or enforcement of a judgment
                or any
                similar or related matter in any
                jurisdiction.

            

    

     

    
      	25.6  	
              Meaning
                of “proceedings”.
                In
                this Clause 25, “proceedings”
                means proceedings of any kind, including an application for a provisional
                or protective measure.

            

    

     

    THIS
      AGREEMENT
      has been
      entered into on the date stated at the beginning of this
      Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1

     

    

     

    GUARANTEE
      ISSUE REQUEST

     

    

    

    To: The
      Royal
      Bank of Scotland plc

    5-10
      Great Tower Street

    London
      EC3R 3HX

    

    Attention:
      [l]

    

    

    [l]
      2007

    

    

    GUARANTEE
      ISSUE REQUEST

    

    
      	1  	
              We
                refer to the facility agreement (the “Facility
                Agreement”)
                dated [l]
                and made between Argyle Maritime Corp., Caton Maritime Corp., Dorchester
                Maritime Corp., Longwoods Maritime Corp., McHenry Maritime Corp.
                and
                Sunswyck Maritime Corp., as Obligors, and yourselves, as Issuer,
                in
                connection with a guarantee facility of up to US$84,000,000. Terms
                defined
                in the Facility Agreement have their defined meanings when used in
                this
                Guarantee Issue Request.

            

    

     

    2  We
      request the issue of a Guarantee in the form attached as follows:

     

    
      	(a)  	
              Amount
                of the Guarantee: [l];

            

    

     

    
      	(b)  	
              Guarantee
                Issue Date: [l];

            

    

     

    
      	(c)  	
              Expiry
                date of the Guarantee: [l];

            

    

     

    
      	(d)  	
              Delivery
                Instructions: [l].

            

    

     

    3  We
      represent and warrant that:

     

    
      	(a)  	
              the
                representations and warranties in Clause 8 of the Facility Agreement
                would
                remain true and not misleading if repeated on the date of this notice
                with
                reference to the circumstances now
                existing;

            

    

     

    
      	(b)  	
              no
                Event of Default or Potential Event of Default has occurred and is
                continuing or will result from the issue of the
                Guarantee.

            

    

     

    4  This
      notice cannot be revoked without the prior consent of the Issuer.

     

    

    [Name
      of
      Signatory]

    

    For
      and
      on behalf of

    [relevant
      Obligor]

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      2

     

    

     

    CONDITION
      PRECEDENT DOCUMENTS

     

    PART
      A

    

    

    

    The
      following are the documents referred to in Clause 7.1(a) required before service
      of the first Guarantee Issue Request

    

    
      	1  	
              A
                duly executed original of each Finance Document (and of each document
                required to be delivered by each Finance Document) other than those
                referred to in Part B

            

    

     

    
      	2  	
              Copies
                of the certificate of incorporation and constitutional documents
                and
                evidence of the goodstanding (or its equivalent) of each Obligor
                and each
                Security Party.

            

    

     

    
      	3  	
              Copies
                of resolutions of the directors of each Obligor and each Security
                Party
                and copies of the resolutions of the shareholders of each Obligor,
                in each
                case authorising the execution of each of the Finance Documents to
                which
                that Obligor or that Security Party is a party and, in the case of
                each
                Obligor, authorising named officers to make Guarantee Issue Requests
                and
                ratifying execution of the Shipbuilding
                Contracts.

            

    

     

    
      	4  	
              The
                original of any power of attorney under which any Finance Document
                is
                executed on behalf of the Obligor or a Security
                Party.

            

    

     

    
      	5  	
              Copies
                of all consents which any Obligor or any Security Party requires
                to enter
                into, or make any payment under, any Finance Document or the Shipbuilding
                Contracts.

            

    

     

    
      	6  	
              Copies
                of the Shipbuilding Contracts of the Overall
                Agreement.

            

    

     

    
      	7  	
              Such
                documentary evidence as the Issuer and its legal advisers may require
                in
                relation to the due authorisation and execution by the Seller of
                the
                Shipbuilding Contracts of the Overall
                Agreement.

            

    

     

    
      	8  	
              Documentary
                evidence that the agent for service of process named in Clause 28
                has
                accepted its appointment.

            

    

     

    
      	9  	
              Favourable
                legal opinions from lawyers appointed by the Issuer on such matters
                concerning the laws of Bermuda and Marshall
                Islands.

            

    

     

    
      	10  	
              A
                written statement from a person acceptable to the Issuer confirming
                the
                identity of the ultimate beneficial owner or owners of the shares
                in the
                Obligors, the Corporate Guarantor and each other Security Party and
                of the
                identity of the person or persons controlling the voting rights attached
                to those shares.

            

    

     

    
      	11  	
              Such
                documents and evidence as the Issuer shall require in relation to
                each
                Security Party based on applicable law and regulations, and the Issuer’s
                owner internal guidelines, relating to the Issuer’s knowledge of its
                customers.

            

    

     

    
      	12  	
              Such
                documentary evidence as the Issuer and its legal advisers may require
                in
                relation to the due authorisation and execution by the parties to
                the
                Intercreditor Agreement (other than the
                Issuer).

            

    

     

    
      	13  	
              If
                the Issuer so requires, in respect of any of the documents referred
                to
                above, a certified English translation prepared by a translator approved
                by the Issuer.

            

    

     

    
      	 	
              Each
                of the documents specified in paragraphs 2, 3, 5, 6 and every other
                copy
                document delivered under this Schedule shall be certified as a true
                and up
                to date copy by a director, representative director or the secretary
                (or
                equivalent officer) of the relevant
                Obligor.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    PART
      B

    

    

    

    The
      following are the documents referred to in Clause 7.1(b) required before the
      issue of a Guarantee:

    

    
      	1  	
              the
                Pre-delivery Security Assignment in respect of the Shipbuilding Contract
                relating to such Ship (and of each document to be delivered thereunder);
                and

            

    

     

    
      	2  	
              favourable
                legal opinions from lawyers appointed by the Issuer on such matters
                concerning the laws of the Marshall Islands and
                China.

            

    

     

    
      	3  	
              a
                copy of the relevant Refund Guarantee together with such documentary
                evidence as the Agent, and its legal advisers may require in relation
                to
                the due authorisation and execution by the Refund Guarantor of that
                Refund
                Guarantee and that such Refund Guarantee has been registered with
                the
                State Administration of Foreign Exchange in
                China;

            

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      3

     

    

     

    FINANCIAL
      COVENANTS

     

    

    

    Pursuant
      to Clause 9.16 the Obligors undertake to comply at all times with the following
      financial covenants: 

    

    
      	(a)  	
              Minimum
                Consolidated Tangible Net Worth. Permit Consolidated Tangible Net
                Worth at
                any time to be less than the sum of (i) $170,000,000, plus (ii) an
                amount
                equal to 75% of the Consolidated Net Income earned in each full fiscal
                quarter ending after 30 June 2006 (with no deduction for a net loss
                in any
                such fiscal quarter) and (iii) an amount equal to 100% of the aggregate
                increases in Shareholders’ Equity of Holdings and its Subsidiaries after
                the date hereof by reason of the issuance and sale of Equity Interests
                of
                Holdings or any Subsidiary (other than issuances to Holdings or a
                wholly-owned Subsidiary), including upon any conversion of debt securities
                of Holdings into such Equity
                Interests.

            

    

     

    
      	(b)  	
              Minimum
                Cash Liquidity. For each calendar month ending on or after the date
                hereof, Qualified Cash, plus Availability in an average daily amount
                during such calendar month not less than
                $10,000,000.

            

    

     

    
      	(c)  	
              Maximum
                Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio
                at any
                time during any period of four fiscal quarters of Holdings and its
                Subsidiaries to be greater than
                2.50:1.00.

            

    

     

    
      	(d)  	
              Minimum
                Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated
                Fixed
                Charge Coverage Ratio as of the end of any fiscal quarter of Holdings
                to
                be less than the ratio set forth below opposite such fiscal
                quarter:

            

    

     

    
      	
               

              Trading
                4 Financial Quarters

               

            	
               

              Minimum
                Consolidated 

               

               

              Fixed
                Charge Coverage Ratio

               

            
	
               

              Closing
                Date through

               

               

              30
                September 2007

               

            	
               

              1.4
                : 1.0

               

            
	
               

              31
                December 2007 and 

               

               

              each
                fixed quarter thereafter

               

            	
               

              1.5
                : 1.0

               

            

    

    

    For
      the
      purposes of this Schedule 3 the following terms shall have the following
      meanings.

    

    “Cash
      Equivalents”
means
      any of the following types of Investments, to the extent owned by the Obligors
      or any of their Subsidiaries free and clear of all Security Interests (other
      than Permitted Security Interests):

     

    
      	(a)  	
              readily
                marketable obligations issued or directly and fully guaranteed or
                insured
                by the United States of America or any agency or instrumentality
                thereof
                having maturities of not more than 360 days from the date of acquisition
                thereof; provided that the full faith and credit of the United States
                of
                America is pledged in support
                thereof;

            

    

     

    
      	(b)  	
              time
                deposits with, or insured certificates of deposit or bankers’ acceptances
                of, any commercial bank that (i) (A) is a Lender or (B) is organized
                under
                the laws of the United States of America, any state thereof or the
                District of Columbia or is the principal banking subsidiary of a
                bank
                holding company organized under the laws of the United States of
                America,
                any state thereof or the District of Columbia, and is a member of
                the
                Federal Reserve System, (ii) issues (or the parent of which issues)
                commercial paper rated as described in Clause (c) of this definition
                and
                (iii) has combined capital and surplus of at least $1,000,000,000,
                in each
                case with maturities of not more than 90 days from the date of acquisition
                thereof;

            

    

     

    
      	(c)  	
              commercial
                paper issued by any Person organised under the laws of any state
                of the
                United States of America and rated at least “Prime-1” (or the then
                equivalent grade) by Moody’s or at least “A-1” (or the then equivalent
                grade) by S&P, in each case with maturities of not more than 180 days
                from the date of acquisition thereof;
                and

            

    

     

    
      	(d)  	
              Investments,
                classified in accordance with GAAP as current assets of the Obligors
                or
                any of their Subsidiaries, in money market investment programs registered
                under the Investment Company Act of 1940, which are administered
                by
                financial institutions that have the highest rating obtainable from
                either
                Moody’s or S&P, and the portfolios of which are limited solely to
                Investments of the character, quality and maturity described in Clauses
                (a), (b) and (c) of this
                definition;

            

    

     

    “Consolidated
      EBITDA”
means,
      at any date of determination, an amount equal to Consolidated Net Income of
      Holdings and its Subsidiaries on a consolidated basis for the most recently
      completed Measurement Period, plus

     

    
      	(a)  	
              the
                following to the extent deducted in calculating such Consolidated
                Net
                Income (and without duplication): (i) Consolidated Interest Charges,
                (ii)
                the provision for Federal, state, local and foreign income taxes
                payable,
                (iii) depreciation and amortisation expense and (iv) prepayment of
                fees
                and write-offs of deferred financing fees in connection with the
                refinancing of the Existing Credit Agreements, (v) consulting fees
                in
                respect of the business re-engineering incurred in the second and
                third
                fiscal quarters of the 2006 fiscal year in an aggregate amount not
                to
                exceed $2,500,000 and (vi) net losses from the sales of Vessels as
                permitted under this Agreement (in each case of or by Holdings and
                its
                Subsidiaries for such Measurement Period) and
                minus

            

    

     

    
      	(b)  	
              the
                following to the extent included in calculating such Consolidated
                Net
                Income, all net gains from the sales of Vessels as permitted under
                this
                Agreement (in each case of or by Holdings and its Subsidiaries for
                such
                Measurement Period);

            

    

     

    “Consolidated
      Fixed Charge Coverage Ratio”
means,
      at any date of determination, the ratio of:

     

    
      	(a)  	
              the
                result of (i) Consolidated EBITDA, less (ii) the sum of (x) Federal,
                state, local and foreign income taxes paid in cash and (y) Restricted
                Payments made, in each case, for the most recently completed Measurement
                Period, to

            

    

     

    
      	(b)  	
              the
                sum of (i) Consolidated Interest Charges for the most recently completed
                Measurement Period, (ii) the aggregate principal amount of all regularly
                scheduled principal payments or redemptions or similar acquisitions
                for
                value of outstanding debt for borrowed money for the period of twelve
                (12)
                consecutive months following such date of determination, but excluding
                any
                principal payments scheduled to be made in respect of the Revolving
                Credit
                Facility;

            

    

     

    “Consolidated
      Funded Indebtedness”
means,
      as of any date of determination, for Holdings and its Subsidiaries on a
      consolidated basis, the sum of:

     

    
      	(a)  	
              the
                outstanding principal amount of all obligations, whether current
                or
                long-term, for borrowed money (including Obligations hereunder) and
                all
                obligations evidenced by bonds, debentures, notes, loan agreements
                or
                other similar instruments,

            

    

     

    
      	(b)  	
              all
                purchase money Indebtedness,

            

    

     

    
      	(c)  	
              all
                direct obligations arising under letters of credit (including standby
                and
                commercial), bankers’ acceptances, bank guaranties, surety bonds and
                similar instruments,

            

    

     

    
      	(d)  	
              all
                obligations in respect of the deferred purchase price of property
                or
                services (other than trade accounts payable in the ordinary course
                of
                business),

            

    

     

    
      	(e)  	
              all
                Attributable Indebtedness,

            

    

     

    
      	(f)  	
              without
                duplication, all Guarantees with respect to outstanding Indebtedness
                of
                the types specified in Clauses (a) through (e) above of Persons other
                than
                the Obligors or any Subsidiary, and

            

    

     

    
      	(g)  	
              all
                Indebtedness of the types referred to in Clauses (a) through (f)
                above of
                any partnership or joint venture (other than a joint venture that
                is
                itself a corporation or limited liability company) in which a Obligor
                or a
                Subsidiary is a general partner or joint venturer, unless such
                Indebtedness is expressly made non-recourse to such Obligor or such
                Subsidiary; provided, however, for purposes of calculating the
                “Consolidated Leverage Ratio”, Consolidated Funded Indebtedness shall not
                include any portion of Permitted New Vessel Construction Indebtedness
                in
                an aggregate amount up to $75,000,000 at any time outstanding and
                used to
                finance a multi-purpose tweendeck or bulk carrier shipping vessel
                so long
                as such vessel remains in the construction phase (i.e., such vessel
                has
                not been delivered to Holdings or its Subsidiaries ready for fleet
                service
                and operation).

            

    

     

    “Consolidated
      Interest Charges”
means,
      for any Measurement Period, the sum of:

     

    
      	(a)  	
              all
                interest, premium payments, debt discount, fees, charges and related
                expenses in connection with borrowed money (including capitalized
                interest
                but excluding capitalized interest on Permitted New Vessel Construction
                Indebtedness) or in connection with the deferred purchase price of
                assets,
                in each case to the extent treated as interest in accordance with
                GAAP,

            

    

     

    
      	(b)  	
              all
                interest paid or payable with respect to discontinued operations
                and,

            

    

     

    
      	(c)  	
              the
                portion of rent expense under Capitalized Leases that is treated
                as
                interest in accordance with GAAP, in each case, of or by Holdings
                and its
                Subsidiaries on a consolidated basis for the most recently completed
                Measurement Period.

            

    

     

    “Consolidated
      Leverage Ratio”
means,
      as of any date of determination, the ratio of:

     

    
      	(a)  	
              Consolidated
                Funded Indebtedness as of such date
                to,

            

    

     

    
      	(b)  	
              Consolidated
                EBITDA of Holdings and its Subsidiaries on a consolidated basis for
                the
                most recently completed Measurement
                Period.

            

    

     

    “Consolidated
      Net Income”
means,
      at any date of determination, the net income (or loss) of Holdings and its
      Subsidiaries on a consolidated basis for the most recently completed Measurement
      Period; provided that Consolidated Net Income shall exclude:

     

    
      	(a)  	
              extraordinary
                gains and extraordinary losses for such Measurement
                Period,

            

    

     

    
      	(b)  	
              the
                net income of any Subsidiary during such Measurement Period to the
                extent
                that the declaration or payment of dividends or similar distributions
                by
                such Subsidiary of such income is not permitted by operation of the
                terms
                of its Organisation Documents or any agreement, instrument or Law
                applicable to such Subsidiary during such Measurement Period, except
                that
                Holdings’ equity in any net loss of any such Subsidiary for
                such-Measurement
                Period shall be included in determining Consolidated Net Income,
                and

            

    

     

    
      	(c)  	
              any
                income (or loss) for such Period of any Person if such Person is
                not a
                Subsidiary, except that Holdings’ equity in the net income of any such
                Person for such Measurement Period shall be included in Consolidated
                Net
                Income up to the aggregate amount of cash actually distributed by
                such
                Person during such Period to Holdings or a Subsidiary as a dividend
                or
                other distribution (and in the case of a dividend or other distribution
                to
                a Subsidiary, such Subsidiary is not precluded from further distributing
                such amount to Holdings as described in Clause (b) of this
                proviso).

            

    

     

    “Consolidated
      Tangible Net Worth”
means,
      as of any date of determination, for Holdings and its Subsidiaries on a
      consolidated basis, Shareholders’ Equity of Holdings and its Subsidiaries on
      that date minus the Intangible Assets of Holdings and its Subsidiaries on that
      date.

     

    “GAAP”
means
      generally accepted accounting principles in the United States set forth in
      the
      opinions and pronouncements of the Accounting Principles Board and the American
      Institute of Certified Public Accountants and statements and pronouncements
      of
      the Financial Accounting Standards Board or such other principles as may be
      approved by a significant segment of the accounting profession in the United
      States, that are applicable to the circumstances as of the date of
      determination, consistently applied.

     

    “Holdings”
means
      the Corporate Guarantor;

     

    “Intangible
      Assets”
means
      assets that are considered to be intangible assets under GAAP, including
      customer lists, goodwill, computer software, copyrights, trade names,
      trademarks, patents, franchises, licenses, unamortized deferred charges,
      unamortized debt discount and capitalized research and development
      costs.

     

    “Measurement
      Period”
means,
      at any date of determination, the most recently completed four fiscal quarters
      of Holdings.

     

    “Qualified
      Cash”
means,
      as of any date of determination, the amount of cash and Cash Equivalents which
      is freely transferable and not subject to a Security Interest (other than a
      Permitted Security Interest) pledge, security interest, encumbrance, escrow
      or
      cash collateral arrangement or any other restriction on its use.

     

    “Shareholders’
      Equity”
means,
      as of any date of determination, consolidated shareholders’ equity of Holdings
      and its Subsidiaries as of that date determined in accordance with
      GAAP.

     

    “Subsidiary”
of
      a
      Person means a corporation, partnership, joint venture, limited liability
      company or other business entity of which a majority of the shares of securities
      or other interests having ordinary voting power for the election of directors
      or
      other governing body (other than securities or interests having such power
      only
      by reason of the happening of a contingency) are at the time beneficially owned,
      or the management of which is otherwise controlled, directly, or indirectly
      through one or more intermediaries, or both, by such Person. Unless otherwise
      specified, all references herein to a “Subsidiary”
or
      to
“Subsidiaries”
shall
      refer to a Subsidiary or Subsidiaries of Holdings.

     

    SCHEDULE
      4

     

    

     

    FORM
      OF COMPLIANCE CERTIFICATE

     

    

    

    

    To: The
      Royal
      Bank of Scotland plc

    Shipping
      Business Centre

    5-10
      Great Tower Street

    London
      EC3P 3HX

    

    Attention:
      Ship Finance Portfolio Management

    

    From: TSB
      International Limited

    

    

    OFFICER’S
      CERTIFICATE

    

    This
      Certificate is rendered pursuant to clause 9.16(b) of the facility agreement
      dated [l]
      2007
      (the “Facility
      Agreement”)
      and
      entered into between (i) Argyle Maritime Corp, Caton Maritime Corp, Dorchester
      Maritime Corp, Longwood Maritime Corp, McHenry Maritime Corp and Sunswyck
      Maritime Corp and (ii) The Royal Bank of Scotland plc as Issuer relating to
      a
      guarantee facility of US$84,000,000. Words and expressions defined in the
      Facility Agreement shall have the same meanings when used herein.

    

    I,
      the
      Chief Financial Officer of the Corporate Guarantor, hereby certify
      that:

    

    
      	1  	
              Attached
                to this Certificate are the latest [audited][unaudited] accounts
                of the
                Guarantor and its consolidated subsidiaries for the financial year
                [quarter] ending on [l].

            

    

     

    
      	2  	
              Set
                out below are the respective amounts, in US Dollars, of Cash Equivalents,
                Consolidated EBITDA, Consolidated Interest Charges, Consolidated
                Net
                Income, Consolidated Tangible Net Worth and Qualified
                Cash:

            

    

     

    
      	 	
               

              US
                Dollars

               

            
	
               

              Cash
                Equivalents

               

            	
               

              [l]

               

            
	
               

              Consolidated
                EBITDA

               

            	
               

              [l]

               

            
	
               

              Consolidated
                Interest Charges

               

            	
               

              [l]

               

            
	
               

              Consolidated
                Net Income

               

            	
               

              [l]

               

            
	
               

              Consolidated
                Tangible Net Worth

               

            	
               

              [l]

               

            
	
               

              Qualified
                Cash

               

            	
               

              [l]

               

            

    

    

    
      	3  	
              Accordingly,
                as at the date of this Certificate the financial covenants set out
                in
                Appendix 8 of the Loan Agreement [are][are not] complied with, in
                that as at [l]:

            

    

     

    
      	(a)  	
              Minimum
                Consolidated Tangible Net WorthUS$[l];

            

    

     

    
      	(b)  	
              Minimum
                Cash LiquidityUS$[l];

            

    

     

    
      	(c)  	
              Maximum
                Consolidated Leverage Ratio[x.xx]

            

    

     

    
      	(d)  	
              Minimum
                Consolidated Fixed Charge Coverage Ratio[x.xx]

            

    

     

    
      	4  	
              As
                at [l]
                no Event of Default has occurred and is continuing [or, specify /
                identify
                any Event of Default]. 

            

    

     

    

     

    

    

    

    

    

    

    ...................................

    Chief
      financial officer

    TBS
      International Limited

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXECUTION
      PAGE

     

    

    

    OBLIGORS

    

    SIGNED
      by 

    

      /s/Anne-Laure
        Marie Roche

      Attorney-in-Fact

    

    for
      and
      on behalf of

    ARGYLE
      MARITIME CORP. 

    in
      the
      presence of:

    /s/

    

    

    SIGNED
      by 

    

      /s/Anne-Laure
        Marie Roche

      Attorney-in-Fact

    

    for
      and
      on behalf of 

    CATON
      MARITIME CORP.

    in
      the
      presence of:

    /s/
 

     

    SIGNED
      by 

    

      /s/Anne-Laure
        Marie Roche

      Attorney-in-Fact

    

    for
      and
      on behalf of 

    DORCHESTER
      MARITIME CORP. 

    in
      the
      presence of:

    /s/

    

    

    SIGNED
      by 

    

      /s/Anne-Laure
        Marie Roche

      Attorney-in-Fact

    

    for
      and
      on behalf of

    LONGWOODS
      MARITIME CORP. 

    in
      the
      presence of:

    /s/
 

     

    SIGNED
      by 

    

      /s/Anne-Laure
        Marie Roche

      Attorney-in-Fact

    

    for
      and
      on behalf of 

    MCHENRY
      MARITIME CORP. 

    in
      the
      presence of:

    /s/

    

    

    SIGNED
      by 

    

      /s/Anne-Laure
        Marie Roche

      Attorney-in-Fact

    

    for
      and
      on behalf of

    SUNSWYCK
      MARITIME CORP.

    in
      the
      presence of:

    /s/

    
 

    ISSUER

    

    SIGNED
      by 

    /s/

    for
      and
      on behalf of

    THE
      ROYAL BANK OF SCOTLAND PLC

    in
      the
      presence of: 

    /s/

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    APPENDIX
      A

     

    

     

    FORM
      OF DELIVERY SECURITY ASSIGNMENT

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    APPENDIX
      B

     

    

     

    FORM
      OF CORPORATE GUARANTEE

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    APPENDIX
      C

     

    

     

    FORM
      OF GUARANTEE

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    APPENDIX
      D

     

    

     

    FORM
      OF INTERCREDITOR AGREEMENT

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