LOAN AGREEMENT

(1)

BEDFORD MARITIME CORP., BRIGHTON MARITIME CORP., HARI MARITIME CORP., PROSPECT NAVIGATION CORP., HANCOCK NAVIGATION CORP., COLUMBUS MARITIME CORP. and WHITEHALL MARINE TRANSPORT CORP., each a corporation organized and existing under the law of the Republic of The Marshall Islands, as joint and several borrowers (each, a “ Borrower ” and together, the “ Borrowers ”);

(2)

TBS INTERNATIONAL LIMITED, a company organized and existing under the law of Bermuda, as guarantor (the “ Guarantor ”);

(3)

THE BANKS AND FINANCIAL INSTITUTIONS NAMED ON SCHEDULE 1 HERETO, as lenders (together with any bank or financial institution which becomes a Lender pursuant to Clause 18 hereof, the “ Lenders ”, and each separately a “ Lender ”);

(4)

DVB GROUP MERCHANT BANK (ASIA) LTD., acting through its office at 77 Robinson Road 30-02, Singapore, as facility agent (in such capacity, the “ Facility Agent ”) for the Lenders and as security trustee (in such capacity, the “ Security Trustee ”) for the Lenders and the Swap Banks;

(5)

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND, acting through its office at Head Office, Building A3, Lower Baggot Street, Dublin 2, Ireland, as payment agent (the “ Payment Agent ”) for the Lenders;

(6)

DVB BANK AG, acting through its office at Friedrich-Ebert-Anlage 2-14, 600325 Frankfurt am Main, Federal Republic of Germany, THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND, acting through its office at Head Office, Building A3, Lower Baggot Street, Dublin 2, Ireland, and NATIXIS, acting through its office at BP 4 - F-75060, Paris Cedex 02, France, as swap banks (each, a “ Swap Bank ” and together, the “ Swap Banks ”); and

(7)

MOUNT WASHINGTON LLC, c/o AER Holding N.V., Zeelandia Office Park, Kaya W.F.G. Mensing 14, Curacao, Netherlands Antilles, as arranger (the “ Arranger ”).

(a)

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

(b)

its purpose is to hedge the Borrowers’ exposure under this Agreement to fluctuations in the interest rate arising from the funding of the Loan (or any part thereof) for a period expiring no later than the Maturity Date; and

(c)

the notional principal amount of such Transaction, together with all other continuing Designated Transactions, does not and in the future (taking into account the scheduled amortization thereof) will not exceed the aggregate amount of the Loan scheduled to be outstanding from time to time;

(a)

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

(b)

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

(c)

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

(a)

any commercial bank organized under the laws of the United States, or any State thereof, and having total assets in excess of $1,000,000,000;

(b)

any commercial bank organized under the laws of any other country that is a member of the OECD or has concluded special lending arrangements with the International Monetary Fund Associated with its General Arrangements to Borrow, or a political subdivision of any such country, and having total assets in excess of $1,000,000,000, so long as such bank is acting through a branch or agency located in the United States or in the country in which it is organized or another country that is described in this clause (b);

(d)

any finance company, insurance company or other financial institution or fund (whether a corporation, partnership, trust or other entity) that (i) is not an Affiliate of any of the Obligors, (ii) is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and (iii) has total assets in excess of $1,000,000,000; and

(e)

any other Person (other than an Affiliate of any of the Obligors) whose primary business is not owning, managing or chartering vessels approved by the Facility Agent and the Obligors and having assets in excess of $1,000,000,000, such approval not to be unreasonably withheld;

(g)

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

(a)

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

(c)

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

(d)

under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;

(e)

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

(f)

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

(a)

all policies and contracts of insurance, including entries of the Ship in any protection and indemnity or war risks association, which are effected in respect of the Ship, her Earnings or otherwise in relation to her (except for any loss of hire insurance); and

(b)

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

(a)

‘The International Management Code for the Safe Operation of Ships and for Pollution Prevention’, currently known or referred to as the ‘ISM Code’ (including the guidelines on its implementation), adopted by the International Maritime Organization (“ IMO ”) as Resolution A.741(18) and Resolution A.913(22) (superseding Resolution A.788(19)) (and the terms “safety management system” , “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code); and

(b)

all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the IMO or any other entity with responsibility for implementing the ISM Code;

(a)

the Document of Compliance and Safety Management Certificate issued pursuant to the ISM Code in relation to such Ship within the periods specified by the ISM Code;

(b)

all other documents and data which are relevant to the safety management system and its implementation and verification which the Facility Agent may require; and

(c)

any other documents which are prepared or which are otherwise relevant to establish and maintain such Ship’s compliance or the compliance of the relevant Borrower or relevant Approved Manager with the ISM Code which the Facility Agent may require;

(a)

each and every person who has assumed responsibility for the operation of such Ship and has agreed to take over or is required to assume responsibility for the performance or observance of the duties and responsibilities imposed by the ISM Code; and

(b)

each and every person ashore who is a ‘designated person’ for the purposes of the ISM Code with direct access to the highest level of management of such Ship’s owner or operator and who, in that capacity, has under the ISM Code responsibility and authority which includes:

(i)

monitoring the safety and pollution prevention aspects of the operation of such Ship; and

(ii)

ensuring that adequate resources and shore-based support are supplied, as required, in each case, under the ISM Code;

(b)

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

(c)

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

(d)

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

(e)

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

(a)

a mortgage, charge or pledge, any maritime or other lien or any other security interest of any kind;

(b)

the rights of the plaintiff under an action in rem in which the vessel concerned has been arrested or a writ has been issued or similar steps taken; and

(c)

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

(a)

all amounts which have become due for payment by either Obligor under the Finance Documents have been paid;

(b)

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

(c)

no Obligor has any future or contingent liability under any provision of any Finance Document; and

(d)

no Credit Party believes that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of an Obligor or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document;

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;

1.4

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

(a)

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

(b)

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

(c)

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

(d)

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

(i)

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

(ii)

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

(iv)

Clauses 1.1 to 1.4 and paragraph (a) of this Clause 1.5 apply unless the contrary intention appears;

(b)

References in Clause 1.1 to a document being in the form of a particular Appendix include references to that form with any modifications to that form which the Facility Agent approves or reasonably requires; and

4.11

Prepayment; termination of Commitments.   A notice under Clause 4.10 shall be irrevocable.  The Facility Agent shall promptly notify the Lenders or (as the case may be) the Affected Lender of the Borrowers’ notice of intended prepayment and:

(a)

on the date on which the Facility Agent so notifies the Lenders or (as the case may be) the Affected Lender, the Total Commitments or (as the case may be) the Commitment of the Affected Lender shall be cancelled; and

(b)

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

4.12

Application of prepayment.   The relevant provisions of Clause 7 in respect of a voluntary prepayment shall apply in relation to the prepayment.

4.13

Designated Transactions.   The Borrowers shall enter into Designated Transactions with the Swap Banks in an aggregate notional principal amount of up to or equal to the aggregate principal amount of the Loan outstanding from time to time on such terms as the Swap Banks and the Borrowers shall agree.  The Borrowers hereby agree and undertake throughout the Security Period not to conclude Designated Transactions which would result, at any time during the Security Period, in the notional principal amount of all Designated Transactions then remaining exceeding the amount of the Loan.

5.1

Duration of normal Interest Periods.   Subject to Clause 5.2, each Interest Period in relation to the Outstanding Indebtedness shall be:

(a)

3, 6, 9 or 12 months, but no more than three one-month periods per year, as notified by the Borrowers to the Facility Agent not later than 11:00 a.m. (New York time) three (3) Business Days before the commencement of the Interest Period; or

(b)

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

5.2

Duration of Interest Periods overrunning Repayment Date.   If the Borrowers have selected an Interest Period which would overrun a Repayment Date or Repayment Dates, then:

(a)

in the case of the final Repayment Date, the Interest Period shall end on the final Repayment Date; and

(i)

the amount of each repayment installment (or, as the case may be, the aggregate amount of installments payable on the same date pursuant to Clause 7.2) falling due before the end of the Interest Period selected shall have an Interest Period ending on the Repayment Date on which it falls (or, as the case may be, they fall) due; and

(ii)

the balance of the Loan from time to time outstanding during such Interest Period shall have an Interest Period ascertained in accordance with the provisions of Clause 5.1;

6.1

Payment of default interest on overdue amounts.   The Borrowers shall pay interest in accordance with the following provisions of this Clause 6 on any amount payable by the Borrowers under any Finance Document which the Facility Agent, the Security Trustee or a Lender, as the case may be, does not receive on or before the relevant date, that is:

(a)

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

(b)

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

(c)

if such amount has become immediately due and payable under Clause 13.2, the date on which it became immediately due and payable.

6.2

Rate of default interest.   Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Facility Agent to be 2 percent plus the Margin plus LIBOR for a period of 1 month (determined by the Facility Agent on the first Business Day of each calendar month).

6.3

Notification of rates of default interest.   The Facility Agent shall promptly notify the Borrowers of each interest rate determined by the Facility Agent under Clause 6.2; but this shall not be taken to imply that the Borrowers are liable to pay such interest only with effect from the date of the Facility Agent’s notification.

6.4

Payment of accrued default interest.   Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on demand.

6.5

Compounding of default interest.   Any such interest which is not paid on the date on which it is due for payment shall thereupon be compounded daily.

6.6

Application to Master Agreements.   For the avoidance of doubt, this Clause 6 does not apply to any amount payable under a Master Agreement in respect of any continuing Designated Transaction as to which Section 2(e) (Default Interest; Other Amounts) of that Master Agreement shall apply.

7.1

Amount and dates of repayment installments.   The Borrowers shall repay the Loan in 20 consecutive quarterly installments of $4,892,000 each for installments 1 through 10, and $2,608,000 each for installments 11 through 20.

7.2

Repayment Dates.   The first repayment installment in respect of the Advance shall be made on the date falling three (3) months after the Actual Drawdown Date of the Advance.  Each subsequent repayment installment in respect of the Advance shall be repaid quarterly thereafter and the last repayment installment shall be repaid on the Maturity Date, together with all other sums then accrued or owing under any Finance Document.

7.3

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

(a)

that a partial prepayment shall be in an amount not less than $1,000,000 and increments of an integral multiple of $1,000,000;

(b)

that the Facility Agent has received from the Borrowers at least ten (10) Business Days’ prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made; and

(c)

the Borrowers have provided evidence satisfactory to the Facility Agent that any consent required by the Borrowers in connection with the prepayment has been obtained and remains in force, and that any regulation relevant to this Agreement which affects the Borrowers has been complied with (which may be satisfied by the Borrowers certifying that no consents are required and that no regulations need to be complied with).

7.5

Effect of notice of prepayment.   A prepayment notice may not be withdrawn or amended without the consent of the Facility Agent and the amount specified in the prepayment notice shall become due and payable by the Borrowers on the date for prepayment specified in the prepayment notice.

7.6

Notification to Lenders of notice of prepayment.   The Facility Agent shall notify the Lenders promptly upon receiving a prepayment notice, and shall provide any Lender which so requests with a copy of any document delivered by the Borrowers under Clause 7.4(c).

7.7

Mandatory prepayment.   If a Ship is sold or becomes a Total Loss, the Borrowers shall prepay the Loan in an amount equal to the net sale or insurances proceeds (as the case may be) received for such Ship:

(a)

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

(b)

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

(a)

accrued interest (and any other amount payable under Clause 15.1 below or otherwise) in respect of the amount prepaid;

(c)

but without premium or penalty except in the case of a voluntary prepayment, for which the Borrowers shall pay a prepayment penalty equal to:

(i)

1.0% of the amount prepaid if the voluntary prepayment is made prior to or the first anniversary of the Actual Drawdown Date; or

(ii)

0.5% of the amount prepaid if the voluntary prepayment is made after the first anniversary of the Actual Drawdown Date but prior to or on the second anniversary of the Actual Drawdown Date.

7.9

Application of prepayment.   Each prepayment shall be applied as required by Clause 12.1 hereof, provided that prepayments shall be applied to the remaining repayment installments of principal and interest in inverse order of maturity.

7.11

Unwinding of Designated Transactions.   On or prior to any repayment or prepayment under this Clause 7, the Borrowers shall wholly or partially reverse, offset, unwind or otherwise terminate one or more of the continuing Designated Transactions to the extent necessary to ensure that the aggregate notional principal amount of the continuing Designated Transactions thereafter remaining does not and will not in the future (taking into account the scheduled amortization thereof) exceed the aggregate amount of the Loan scheduled to be outstanding from time to time hereunder.

7.12

Repayment of Swap Benefit .  If a Designated Transaction is terminated in circumstances where the Swap Banks would be obliged to pay an amount to the Borrowers under the Master Agreement, the Borrowers hereby agree that such payment shall be applied in prepayment of the Loan under Clause 7.9 and authorizes Swap Banks to pay such amount to the Payment Agent for such purpose.

8.1

Documents, fees and no default.   Each Lender’s obligation to make its Ratable Portion of the Advance is subject to the following conditions precedent:

(a)

that on or before the service of the Drawdown Notice, the Facility Agent shall have received:

(ii)

such documentation and other evidence as is reasonably requested by the Facility Agent, a Lender or a Swap Bank in order for each Lender or Swap Bank, as the case may be, to carry out and be satisfied with the results of all necessary “know your customer” or other checks which it is required to carry out in relation to the transactions contemplated by this Agreement and the other Finance Documents, including without limitation obtaining, verifying and recording certain information and documentation that will allow the Facility Agent, each of the Lenders and the Swap Banks to identify each of the Obligors in accordance with the requirements of the USA PATRIOT Act (Title III of Pub.: 107-56 (signed into law October 26, 2001)) (the “ PATRIOT Act ”);

(b)

that on or before the Expected Drawdown Date of the Advance, the Facility Agent shall have received (i) the documents described in Schedule 3, each to be in form and substance satisfactory to the Facility Agent and its lawyers, and (ii) payment of all accrued commitment fees and all other fees and expenses referred to in Clause 14 that are payable at that time;

(c)

that at the date of the Drawdown Notice, at the Expected Drawdown Date and at the Actual Drawdown Date:

(i)

no Event of Default or Potential Event of Default has occurred and is continuing or would result from the borrowing of the Loan or any part thereof;

(ii)

the representations and warranties in Clause 9 and those of any Obligor which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing;

(iii)

there has been no material adverse change in the financial condition, operations or business prospects of any of the Obligors since the date on the Obligors provided information concerning those topics to the Facility Agent and/or any Lender; and

(iv)

none of the circumstances contemplated by Clause 4.5 has occurred and is continuing;

(h)

that, if the Collateral Maintenance Ratio were applied immediately following the making of the Advance, the Borrowers would not be obliged to provide additional Collateral or prepay part of the Loan (and if the Borrowers would be so obliged the amount of the Advance shall be correspondingly reduced); and

(i)

that the Facility Agent shall have received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Facility Agent may reasonably request by notice to the Borrowers prior to the relevant Expected Drawdown Date.

8.2

Waiver of conditions precedent.   If the Facility Agent, acting upon the instructions of the Majority Lenders, permits the Loan to be borrowed before certain of the conditions referred to in Clause 8.1 are satisfied, the Borrowers shall ensure that those conditions are satisfied within five (5) Business Days after the Actual Drawdown Date (or such longer period as the Facility Agent may specify).

9.2

Status.   Each Obligor is:

(a)

duly formed and validly existing and in good standing under the law of its jurisdiction of formation; and

(b)

duly qualified and in good standing as a foreign company in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where, in each case, the failure to so qualify or be licensed and be in good standing could not reasonably be expected to have a material adverse effect on its business, assets or financial condition or which may affect the legality, validity, binding effect or enforceability of the Finance Documents.

and there are no proceedings or actions pending or contemplated by any Obligor, or to the knowledge of the Obligors contemplated by any third party, to dissolve, wind-up or terminate any Obligor.

9.3

Company power; consents.   Each Obligor has the capacity and has taken all action, and no consent of any person is required, for:

(a)

it to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted;

(b)

it to execute the Bareboat Charter, Memorandum of Three Party Agreement and the Finance Documents to which it is or is to become a party;

(c)

it to borrow under this Agreement and for it to make all payments contemplated by, and to comply with, the obligations of the Finance Documents to which it is or is to become a party;

(d)

it to comply with its obligations under the under the Bareboat Charter and Memorandum of Three Party Agreement to which it is a party;

(e)

it to grant the liens granted by it pursuant to the Finance Documents to which it is a party;

(f)

the perfection or maintenance of the liens created by the Finance Documents (including the first priority nature thereof); and

(g)

the exercise by the Facility Agent, Security Trustee, any Swap Bank or any Lender of their rights under any of the Finance Documents or the remedies in respect of the Collateral pursuant to the Finance Documents;

9.4

Consents not liable to revocation.   Nothing has occurred which makes any of the consents referred to in Clause 9.3 liable to revocation, and each Obligor is in compliance with all applicable laws.

9.5

Legal validity; effective Security Interests.

(a)

Each Bareboat Charter and Finance Document to which each Obligor is a party do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents) constitute such Obligor’s legal, valid and binding obligations enforceable against it in accordance with their respective terms (subject, in the case of each Bareboat Charter, to the relevant Memorandum of Three Party Agreement); and

(b)

The Finance Documents to which each Obligor is a party do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents) create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate;

9.6

No conflicts; no liens.   The execution by each Obligor of each Finance Document and the respective Bareboat Charter and Memorandum of Three Party Agreement to which it is a party, the borrowing by the Borrowers of the Loan, the compliance by each Obligor with its obligations under the respective Bareboat Charter and Memorandum of Three Party Agreement and under each Finance Document to which it is a party, will not:

(a)

involve or lead to a contravention of (i) any law or regulation or order, writ, judgment, injunction, decree, determination or award applicable to such Obligor; (ii) the constitutional documents of such Obligor; or (iii) any contractual or other obligation or restriction which is binding on such Obligor or any of its assets; and

(b)

except for liens created by the Finance Documents, result in or require the creation or imposition of any lien upon or with respect to any of the properties of such Obligor.

9.7

Taxes.

(a)

All payments which an Obligor is liable to make under the Finance Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.

(b)

Each Obligor has filed or has caused to be filed all tax returns and other reports that it is required by law or regulation to file in any Pertinent Jurisdiction, and has paid or caused to be paid all taxes, assessments and other similar charges that are due and payable in any Pertinent Jurisdiction, other than taxes and charges (i) which are (x) not yet delinquent or (y) being contested in good faith by appropriate proceedings and for which adequate reserves have been established and in a manner that does not involve any risk of sale, forfeiture, loss, confiscation or seizure of any of the Ships, or (ii) the non-payment of which could not reasonably be expect to have a material adverse effect on such Obligor.  The charges, accruals, and reserves on the books of each Obligor respecting taxes are adequate in accordance with applicable accounting principles and practices.

(c)

No material claim for any tax has been asserted against any of the Obligors or any of their Affiliates by any Pertinent Jurisdiction or other taxing authority other than claims that are included in the liabilities for taxes in the most recent balance sheet of such Obligor or disclosed in the notes thereto, if any.

(d)

The execution, delivery, filing and registration or recording (if applicable) of the Finance Documents, each Bareboat Charter, and the consummation of the transactions contemplated thereby, will not cause any of the Credit Parties to be required to make any registration with, give any notice to, obtain any license, permit or other authorization from, or file any declaration, return, report or other document with any governmental authority in New York, the Marshall Islands, Liberia, the Philippines or any Pertinent Jurisdiction.

(e)

No taxes are required by any governmental authority in New York, the Marshall Islands, Liberia, the Philippines or any Pertinent Jurisdiction to be paid with respect to or in connection with the execution, delivery, filing, recording, performance or enforcement of any Finance Document.

(f)

The execution, delivery, filing, registration, recording, performance and enforcement of the Finance Documents by any Credit Party will not cause such Credit Party to be deemed to be resident, domiciled or carrying on business in or subject to taxation under any law or regulation of any governmental authority in the Marshall Islands, Liberia, the Philippines or any Pertinent Jurisdiction.

(g)

Other than the recording of each Mortgage in accordance with the laws of the relevant Approved Primary Flag and the filing of Uniform Commercial Code Financing Statements in Washington, D.C. in respect of certain of the Finance Documents, and fees consequent thereto, it is not necessary for the legality, validity, enforceability or admissibility into evidence of this Agreement or any other Finance Document that any of them or any document relating thereto be registered, filed recorded or enrolled with any court or authority in any relevant jurisdiction or that any stamp, registration or similar taxes be paid on or in relation to this Agreement or any of the other Finance Documents.

9.8

No default.   No Event of Default or Potential Event of Default has occurred and is continuing and there are no incipient or other defaults under any other agreements of any Obligor.

9.9

Information.   All financial and other information which has been provided in writing by or on behalf of each of the Obligors to any of the Credit Parties in connection with any Finance Document was true and accurate at the time it was given, there are no other facts or matters the omission of which would have made or make any such information false or misleading and there has been no material adverse change in the financial condition, operations or business prospects of any of the Obligors since the date on which such information was provided.

9.10

No litigation.   No legal or administrative action involving any Obligor (including any action relating to any alleged or actual breach of the ISM Code or ISPS Code or any Environmental Law) has been commenced or taken or, to any Obligor’s knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on the business, assets or financial condition of any Obligor or which may affect the legality, validity, binding effect or enforceability of the Finance Documents.

9.11

ISM Code and ISPS Code compliance.   Each Borrower has obtained or will obtain or will cause the Approved Manager (technical) to obtain all necessary ISM Code Documentation in connection with the Ship owned by it and its operation and will be or will cause the Ship owned by it and the Approved Manager to be in full compliance with the ISM Code and the ISPS Code.

9.12

Validity and completeness of each Bareboat Charter; delivery of each Ship under the relevant Bareboat Charter.

(a)

Each Borrower has entered into the Bareboat Charter to which it is a party, and to the best knowledge of such Borrower, each such Bareboat Charter is in full force and effect (subject to the delivery of the relevant Ship under the relevant Bareboat Charter and the relevant Memorandum of Three Party Agreement), and true and complete copies thereof, together with all agreements, instruments and other documents delivered in connection therewith and amendments thereto (including the relevant Memorandum of Three Party Agreement), have been furnished to the Facility Agent and the Lenders.

(b)

Subject to the terms of the relevant Memorandum of Three Party Agreement, each Bareboat Charter constitutes valid, binding and enforceable obligations of the parties thereto in accordance with its terms.

(c)

Except for the relevant Memorandum of Three Party Agreement in respect of each Bareboat Charter, no amendments or additions to the Bareboat Charters have been or will be agreed nor have the parties thereto waived any of their respective rights thereunder save as notified to the Facility Agent in writing.

(d)

There is no default on the part of the relevant Borrower or, to the best knowledge of such Borrower, on the part of the relevant Bareboat Charterer with respect to the relevant Bareboat Charter, and there is no accrued right of any party thereto to terminate any Bareboat Charter.

(e)

Each Ship will on the Actual Drawdown Date be delivered by the relevant Borrower to and accepted by the relevant Bareboat Charterer under the relevant Bareboat Charter.

9.14.

Margin Stock.   None of the Obligors is engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock and no proceeds of the Loan will be used to buy or carry any Margin Stock or to extend credit to others for the purpose of buying or carrying any Margin Stock.

9.15.

Compliance with Environmental Law; Environmentally Sensitive Material.   Except to the extent the following could not reasonably be expected to have a material adverse effect on the business, assets or financial condition of the Obligors or which may affect the legality, validity, binding effect or enforceability of the Finance Documents:

(a)

the operations and properties of each Obligor complies with all Environmental Law, all necessary Environmental Permits have been obtained and are in effect for the operations and properties of the Obligors and each Obligor is in compliance in all material respects with all such Environmental Permits; and

(b)

none of the Obligors has been notified in writing by any person that it or any of its Affiliates is potentially liable for the remedial or other costs with respect to treatment, storage, disposal, release, arrangement for disposal or transportation of any Environmentally Sensitive Material, except for costs incurred in the ordinary course of business with respect to treatment, storage, disposal or transportation of such Environmentally Sensitive Material.

9.16.

Subsidiaries; Ownership of Borrowers; Ownership of Westbrook.   None of the Borrowers has any subsidiaries.  All of the outstanding equity of the Borrowers has been validly issued, is fully paid, non-assessable and free and clear of all liens and is owned beneficially and of record by Westbrook.  All of the outstanding equity of Westbrook has been validly issued, is fully paid, non-assessable and free and clear of all liens and is owned beneficially and of record by the Guarantor.

9.17.

Investment Company, Holding Company, etc.   None of the Obligors is (i) an “investment company,” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended, or (ii) a “holding company” or a “subsidiary company” of a “holding company” or an affiliate of a “holding company” or of a “subsidiary company” of a “holding company” or a “public utility” within the meaning of the Public Utility Holding Company of 1935, as amended, or (iii) a “public utility” within the meaning of the Federal Power Act of 1920, as amended.

9.18.

Asset Control None of the Obligors is a “national” of any “designated foreign country”, within the meaning of the Foreign Assets Control Regulations or the Cuban Asset Control Regulations of the U.S. Treasury Department, 31 C.F.R., Subtitle B, Chapter V, as amended, or a “specially designated national” listed by the Office of Foreign Assets Control (“ OFAC ”), the U.S. Department of the Treasury, or any regulations or rulings issued thereunder.  Neither the making of the Advance nor the use of the proceeds thereof nor the performance by the Obligors of their obligations under any of the Finance Documents to which it is a party violates any statute, regulation or executive order restricting loans to, investments in, or the export of assets to, foreign countries or entities doing business there.

9.19.

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

9.20.

Use of Proceeds.   The Borrowers are using the proceeds of the Loan only for the purposes stated in the preamble to this Agreement.

9.21.

Ownership of the Ships.   The Borrowers   are or will be on the Actual Drawdown Date the sole owner of the whole of the Ships.

9.22

Place of Business.   The chief place of business of each Obligor and the office where the records of each Obligor are kept is located at:

(a)

each Obligor shall duly observe and perform its obligations under this Agreement, the other Finance Documents to which it is a party, and the Bareboat Charter and Memorandum of Three Party Agreement to which it is a party, and each Obligor shall promptly notify the Agent of (i) any material default by any party to the Bareboat Charter or Memorandum of Three Party Agreement to which it is a party, (ii) any material interruption in the performance of the Bareboat Charter to which it is a party, whether or not the same constitutes a default thereunder, and (iii) any significant damage or injury caused by or to a Ship;

(b)

each Obligor shall promptly inform the Facility Agent, upon becoming aware of the same, of the occurrence of an Event of Default or of any Potential Event of Default or any other event (including any litigation) which might adversely affect its ability to perform its obligations under this Agreement or any of the other Finance Documents to which it is a party or its respective Bareboat Charter and Memorandum of Three Party Agreement;

(c)

each Borrower shall be duly qualified and in goodstanding as a foreign maritime entity under the law of the Republic of Liberia for so long as the Ship owned by it is registered under Liberian flag;

(d)

each Obligor shall obtain or cause to be obtained, maintain in full force and effect and comply with the conditions and restrictions (if any) imposed in connection with, every consent and do all other acts and things, which may from time to time be necessary or required for the continued due performance of all their obligations under this Agreement and the other Finance Documents to which it is a party or its respective Bareboat Charter and Memorandum of Three Party Agreement, and shall deliver a copy of all such consents to the Facility Agent promptly upon its request;

(e)

each Obligor shall comply in all material respects with all applicable federal, state, local and foreign laws, ordinances, rules, orders and regulations now in force or hereafter enacted, including, without limitation, all Environmental Laws and regulations relating to thereto, the failure to comply with which would be likely to have a material adverse effect on the business, assets or financial condition of such Obligor or affect the legality, validity, binding effect or enforceability of the Finance Documents to which such borrower is a party;

(f)

each Obligor shall keep proper books of record and account, in which full and materially correct entries shall be made of all financial transactions and the assets and business of such Obligor in accordance with accounting principles and practices acceptable to the Facility Agent, and the Facility Agent shall have the right to examine the books and records of the Obligors wherever the same may be kept from time to time as it sees fit, in its sole discretion, or to cause an examination to be made by a firm of accountants selected by it;

(g)

[intentionally omitted];

(h)

the Guarantor shall deliver to the Facility Agent:

(i)

its quarterly and annual financial statements and other reports of material events as soon as practicable but not later than 10 Business Days after the Guarantor files such financial statements on Forms 10-Q and 10-K and reports on Form 8-K with the United States Securities and Exchange Commission (but in no event later than: (1) 120 days after the end of its fiscal year with respect to its annual financial statements and (2) 90 days after the end of each fiscal quarter);

(ii)

together with its annual financial statements, reports of and/or updates on all off-balance sheet financings and time charter hire commitments of the Guarantor;

(iii)

together with its quarterly and annual financial statements, a Compliance Certificate; and

(iv)

such other financial statements, annual budgets, projections and reports as may be reasonably requested by the Facility Agent, each to be in such form as the Facility Agent may reasonably request;

(i)

each Obligor shall prepare and timely file all tax returns required to be filed by it and pay and discharge all taxes imposed upon it or in respect of any of its property and assets before the same shall become in default, as well as all lawful claims (including, without limitation, claims for labor, materials and supplies) which, if unpaid, might become a lien or charge upon the Collateral or any part thereof, except in each case, for any such taxes (i) as are being contested in good faith by appropriate proceedings or (ii) the failure of which to pay or discharge would not be likely to have a material adverse effect on the business, assets or financial condition of such Obligor or to affect the legality, validity, binding effect or enforceability of the Finance Documents;

(j)

each Borrower shall permit any person designated by the Facility Agent for that purpose to visit and inspect the Ship owned by it, at the cost of the Borrowers, at such times and so often as the Facility Agent may reasonably require, provided that (i) any visitation and inspection shall be done without undue interference with the operation of the Ships, (ii) so long as no Event of Default has occurred and is continuing, the Facility Agent shall not exercise such visitation and inspection right more than one time per year for the Ship and (iii) the person designated by the Facility Agent to visit and inspect the Ship shall execute a release and waiver satisfactory in form and substance to such Borrower, the relevant Bareboat Charterer and the Facility Agent;

(k)

each Borrower shall procure that the Ship owned by it shall at all times be (i) kept in a good and safe condition and state of repair that is consistent with first-class ship ownership and management practice, (ii) in compliance with all laws and regulations applicable to vessels (A) registered under the law of the Approved Primary Flag and the Approved Bareboat Flag in which the Ship is registered and (B) trading to any jurisdiction to which the Ship may trade from time to time, (iii) managed by the Approved Managers in accordance with vessel management agreements acceptable to the Facility Agent, (iv) registered under the law of an Approved Primary Flag and, so long as such Ship is subject to the Bareboat Charter, registered under the law of the Approved Bareboat Flag, and (v) classed with the Classification Society in the highest classification and rating for vessels of the same age and type without any outstanding conditions or recommendations affecting class (other than those for which the time prescribed for curing the condition or recommendation has not passed);

(l)

each Borrower shall procure that the operator of the Ship owned by it will comply, in all material respects within the requisite applicable time limits for vessels of the same type, size, age and flag as the Ship, with the ISM Code and, in particular, without prejudice to the generality of the foregoing, as and when required to do so by the ISM Code and at all times thereafter, (i) procure that the operator of its Ship holds a valid Document of Compliance and Safety Management Certificate, (ii) provide the Facility Agent with copies of any such Document of Compliance and Safety Management Certificate promptly following the issuance thereof and after every renewal and (iii) procure that there is kept, on board its Ship a copy of any such Document of Compliance and the original of any such Safety Management Certificate;

(m)

each Borrower shall procure that:

(i)

the Ship owned by it maintains for the duration of the Security Period a valid International Ship Security Certificate;

(ii)

its Ship’s security system and associated security equipment complies with the applicable requirements of Chapter XI-2 of SOLAS and Part A of the ISPS Code; and

(iii)

an approved ship security plan is in place;

(n)

each Obligor shall do or cause to be done all things necessary to preserve and keep its corporate existence in full force and effect and in goodstanding;

(o)

each Borrower shall maintain insurance on the Ship owned by it as required by the terms of the relevant Mortgage;

(p)

each Borrower shall maintain insurance on any of its properties other than the Ship owned by it, payable in United States Dollars, with responsible companies, in such amounts and against such risks as is usually carried by owners of similar businesses and properties in the same general areas in which it operates, and as shall be satisfactory to the Majority Lenders;

(q)

except to the extent the failure to do so could not reasonably be expected to have a material adverse effect on the business, assets or financial condition of the Obligors or which may affect the legality, validity, binding effect or enforceability of the Finance Documents, each Obligor shall maintain and preserve all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted;

(r)

the Borrowers shall use the proceeds of the Loan solely for the purposes stated in the preamble to this Agreement;

(s)

each Obligor shall notify promptly the Facility Agent of any change in the location of its chief place(s) of business or the office(s) where it keeps records;

(t)

each Borrower shall furnish promptly to the Facility Agent each material amendment or other modification to the Bareboat Charter and Memorandum of Three Party Agreement in respect of the Ship owned by it;

(u)

each Obligor shall take, or cause to be taken, such actions as may be reasonably required to mitigate potential liability to it arising out of pollution incidents or as may be reasonably required to protect the interests of the Credit Parties with respect thereto;

(v)

each Borrower shall cause all loans made by the Guarantor to it and all sums and other obligations (financial or otherwise) owed by it to the relevant Bareboat Charterer or the Approved Managers to be fully subordinated to all Secured Liabilities of such Borrower;

(w)

the Borrowers shall procure and deliver to the Facility Agent an annual written appraisal report and such other interim valuations as the Facility Agent may request, prepared by Broker, at the expense of the Borrowers, setting forth the Fair Market Value of the Ships;

(x)

the Guarantor shall be in compliance with the TBS Credit Facility Financial Covenants regardless of whether the TBS Credit Facility is in effect or not or whether the TBS Credit Facility Financial Covenants are in effect or not (in which case the TBS Credit Facility Financial Covenants shall apply in their last form before removal from the TBS Credit Facility), and shall evidence such compliance by means of delivery of a quarterly compliance certificate to the Facility Agent; and

(y)

from time to time, at its expense, each Obligor shall duly execute and deliver to the Facility Agent and the Security Trustee, such further documents and assurances as the Majority Lenders, the Facility Agent or the Security Trustee may request to effectuate the purposes of this Agreement, the other Finance Documents or obtain the full benefit of any of the Collateral.

10.2

Negative covenants.   Without the prior written consent of the Majority Lenders, which consent shall not be unreasonably withheld:

(a)

none of the Borrowers will create, assume or permit to exist any Security Interest whatsoever upon any of its properties or assets, whether now owned or hereafter acquired, except for (i) any Security Interest created by the Finance Documents to which it is a party, and (ii) any liens that arise by operation of law in the ordinary course of business, the failure of which to pay or discharge would not be likely to have a material adverse effect on the business, assets or financial condition of such Borroweror to affect the legality, validity, binding effect or enforceability of the Finance Documents to which such Borrower is a party;

(b)

none of the Borrowers will sell, transfer or lease (except for its respective Bareboat Charter), all of or a substantial portion of its properties and assets, or enter into any transaction of merger or consolidation or liquidate, windup or dissolve itself (or suffer any liquidation or dissolution), unless:

(i)

immediately after giving effect to such transaction, no Event of Default shall have occurred and be continuing; and

(ii)

with respect to any such sale, transfer, lease or disposition or transaction of merger or consolidation, the purchaser, transferee or surviving company (as the case may be) is reasonably acceptable to the Majority Lenders and assumes all obligations and liabilities (including, without limitation, any obligations or liabilities under the Finance Documents) of the seller, transferor or non-surviving entity (as the case may be), such assumption of obligations and liabilities to be in form and substance satisfactory to the Majority Lenders;

(c)

none of the Borrowers will enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate, other than on terms and conditions substantially as favorable to such person as would be obtainable by such person at the time in a comparable arm’s-length transaction with a person other than an Affiliate, provided that the foregoing shall not prohibit or prevent the pooling and sharing of Earnings by the Borrowers;

(d)

none of the Borrowers will change the nature of its business or commence any business otherwise than in connection with, or for the purpose of, operating the Ship owned by it;

(e)

none of the Borrowers will transfer or change or permit the transfer or change of the flag of the Ship owned by it from the Approved Primary Flag in which such Ship is registered on the Actual Drawdown Date ( provided that each Ship may be bareboat registered under the Approved Bareboat Flag by the relevant Bareboat Charterer pursuant to the terms of the relevant Bareboat Charter), change the classification or the Classification Society of the Ship owned by it, or do or allow to be done anything as a result of which such registration or classification might be imperiled or cancelled;

(f)

none of the Borrowers will change or permit a change of the Approved Managers for the Ship owned by it or agree or consent to any material amendment or other modification of the terms of any of technical or commercial management agreements relating to the Ship owned by it, including any increase in the rate of compensation payable thereunder;

(g)

none of the Borrowers will permit any act, event or circumstance that would result in Westbrook holding directly less than 100% of such Borrower’s equity and the Guarantor will not permit any act, event or circumstance that would result in the Guarantor holding directly less than 100% of Westbrook;

(h)

none of the Borrowers will incur any Financial Indebtedness other than (i) the Loan, (ii) in the usual course of business, (iii) as permitted by the Finance Documents, and (iv) Financial Indebtedness that is fully subordinated to the Loan;

(i)

if an Event of Default shall have occurred and so long as such Event of Default shall be continuing, none of the Borrowers shall declare or pay any dividends or return any capital to any equity holder or authorize or make any other distribution, payment or delivery of property or cash to any equity holder as such, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for value, any share of any class of its capital stock or other form of equity interest (or require any rights, options or warrants relating thereto but not including convertible debt) now or hereafter outstanding, or repay any subordinated loans or set aside any funds for any of the foregoing purposes;

(j)

none of the Borrowers will increase its capital by way of the creation of preference securities, further common or ordinary securities or otherwise howsoever, or create any new class of equity; none of the Borrowers will permit any act, event or circumstance that would result in Westbrook owning beneficially and of record less than 100% of the equity of each of the Borrowers; and the Guarantor shall not sell, transfer, pledge, assign or otherwise convey or dispose of any of the share capital of Westbrook;

(k)

none of the Borrowers shall permit any material amendment of or other modification to the Bareboat Charter or Memorandum of Three Party Agreement to which it is a party;

(l)

none of the Borrowers will make any loan or advance to, make any investment in, or enter into any working capital maintenance or similar agreement with respect to any person, whether by acquisition of stock or indebtedness, by loan, guarantee or otherwise;

(m)

none of the Borrowers will acquire any capital assets (including any vessel other than the Ship owned by it) by purchase, charter or otherwise; provided that for the avoidance of doubt nothing in this Clause 10.2(m) shall prevent or be deemed to prevent capital improvements being made to the Ship owned by it;

(n)

none of the Borrowers will enter into any arrangements, directly or indirectly, with any person whereby it shall sell or transfer any property, whether real or personal, and used and useful in its business, whether now owned or hereafter acquired, if it, at the time of such sale or disposition, intends to lease or otherwise acquire the right to use or possess (except by purchase) such property or like property for a substantially similar purpose;

(o)

none of the Borrowers shall make or permit any change in accounting policies affecting (i) the presentation of financial statements or (ii) reporting practices, except in either case in accordance with accounting principles and practices acceptable to the Facility Agent;

(p)

none of the Obligors shall change the jurisdiction of its formation or amend its constitutional documents except in connection with a merger or consolidation that is not prohibited by the terms of Clause 10.2(b); or

(q)

none of the Borrowers shall permit the Ship owned by such Borrower to be employed by a person (other than an Affiliate) if the net time charter equivalent rate of such employment is less than $14,000 per day and the Ship is contracted for such employment for a period equal to or in excess of 18 months.

(a)

If, at any time, the aggregate Fair Market Value of the Ships shall be less than 135% of the unpaid principal amount of the Loan (the “ Collateral Maintenance Ratio ”), the Facility Agent shall have the right to require the Borrowers, within 30 Business Days of the date of the written demand of the Facility Agent, to either (x) prepay the Loan in such amount as may be necessary to cause such aggregate Fair Market Value of the Ships to equal or exceed 135% of the unpaid principal amount of the Loan or (y) provide such additional Collateral as may be acceptable to the Facility Agent in its sole reasonable discretion so that aggregate Fair Market Value of the Ships and such additional Collateral equals or exceeds 135% of the unpaid principal amount of the Loan, and the Borrowers hereby agree to comply with any such written demand made by the Facility Agent.

(b)

Any prepayment made pursuant to this Clause 10.3 shall be applied to the remaining repayment installments of principal and interest in inverse order of maturity, may not be re-borrowed, and shall be subject to the requirements of Clause 7.8, provided that any prepayment made pursuant to this Clause 10.3 shall not be subject to a prepayment penalty under Clause 7.8(c).

10.4

Recognition by Philippine Maritime Industry Authority.   Each Borrower shall with respect to the Ship owned by it:

(a)

cause a cautionary notice with respect to the existence of the Mortgage on such Ship to be filed on the Actual Drawdown Date, or as soon thereafter as is feasible, in the bareboat registry of the Philippine Maritime Industry Authority (the “ Bareboat Registry ”), such notice to be in form and substance acceptable to the Facility Agent; and

(b)

deliver to the Facility Agent as soon as possible, but in no event later than 60 days, following the Actual Drawdown Date, evidence acceptable to the Facility Agent that the Philippine Maritime Industry Authority has recognized the existence of the Mortgage with respect such Ship and that such Mortgage is governed by the law of the Republic of Liberia, and has duly noted the same in the Bareboat Registry.

10.5

Deletion from Philippine Bareboat Registry.   Unless the Facility Agent, acting upon the instruction of the Majority Lenders, shall otherwise agree, upon termination of a Bareboat Charter, the Borrower that owns the affected Ship shall:

(a)

cause the cancellation and deletion of such Ship from the Philippine flag, and the Facility Agent shall be entitled to do all such acts and things in the name of the Borrower that owns such Ship and the relevant Bareboat Charterer, or either of them, as may be required to effect such cancellation and deletion and to comply with any requirements of the Philippine Maritime Industry Authority for the purpose of ensuring that the registration of such Ship under Liberian law is valid in every respect; and

(i)

a certificate of deletion in respect of such Ship from the Philippine Maritime Industry Authority;

(ii)

the original Temporary Certificate of Vessel Registry issued for such Ship by the Philippine Maritime Industry Authority;

(iii)

the original of each certificate issued by any governmental entity of the Republic of the Philippines, including the certificate of the National Telecommunications Commission of the Republic of the Philippines on such Ship’s call sign and all SOLAS certificates;

(iv)

an original certificate issued the Bureau of Internal Revenue of the Republic of the Philippines that all applicable withholding taxes shall have been paid; and

(v)

such other documents and instruments as may be necessary or advisable to effect such cancellation and deletion and to comply with any requirements of the Philippine Maritime Industry Authority for the purpose of ensuring that the registration of such Ship under Liberian law is valid in every respect.

11.1

Currency and method of payments.   All payments to be made by the Borrowers under the Finance Documents to which it is a party shall be made to the Payment Agent:

(b)

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

(c)

at JP Morgan Chase Manhattan Bank, New York, ABA No. 021000021, SWIFT: CHASUS33, for credit to Bank of Ireland Global Markets (Account No. 0011015815), SWIFT: BIGTIE2D, Reference: Corporate Loans Administration – TBS Int., or to such other account with such other bank as the Payment Agent may from time to time notify to the Borrowers.

11.2

Payment on non-Business Day.   If any payment by a Borrower under the Finance Documents to which it is a party would otherwise fall due on a day which is not a Business Day:

(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;

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.

(a)

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

(b)

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

11.5

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

11.6

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

11.7

Refund to Payment Agent of monies not received. Except as is otherwise provided in Clause 3.4(b) of this Agreement, if and to the extent that the Payment Agent makes available a sum to the Borrowers or a Credit Party, without first having received that sum, the Borrowers or (as the case may be) the Credit Party concerned shall, on demand:

(b)

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

11.8

Payment Agent may assume receipt.   Clause 11.7 shall not affect any claim which the Payment Agent has under the law of restitution, and applies irrespective of whether the Payment Agent had any form of notice that it had not received the sum which it made available (except an express notice from a Lender that it will not fund its Ratable Portion of the Advance).

11.9

Credit Party accounts.   Each Credit Party (other than the Swap Banks) shall maintain accounts showing the amounts owing to it by the Borrowers under the Finance Documents and all payments in respect of those amounts made by the Borrowers.

11.10

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

11.11

Accounts prima facie evidence.   If any accounts maintained under Clauses 12.9 and 12.10 show an amount to be owing by the Borrowers to a Credit Party, those accounts shall be prima facie evidence that that amount is owing to that Credit Party.

12.1

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

12.2

Application of credit balances.   A Lender may with seven (7) days prior notice or without prior notice if an Event of Default has occurred and is continuing:

(a)

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

(ii)

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

(iii)

enter into any other transaction or make any entry with regard to the credit balance which such Lender considers appropriate.

12.3

Existing rights unaffected.   A Lender shall not be obliged to exercise any of its rights under Clause 12.2; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which such Lender is entitled (whether under the general law or any document).

12.4

Payments in excess of ratable share.   If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, counterclaim or otherwise) on account of its portion of the Loan and in excess of its ratable share of payments on account of the Loan obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participation in their respective portions of the Loan as shall be necessary to share the excess payment ratably with each of them; provided that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (a) the amount of such Lender’s required repayment to (b) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered.  Each Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Clause 12.4 may, to the fullest extent permitted by law, exercise all of its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrowers in the amount of such participation.  Notwithstanding the preceding sentences of this Clause 12.4, any Lender which shall have commenced or joined (as a plaintiff) in an action or proceeding in any court to recover sums due to it under this Agreement or any other Finance Document and pursuant to a judgment obtained therein or a settlement or compromise of that action or proceeding shall have received any amount, shall not be required to share any proportion of that amount with a Lender which has the legal right to, but does not, join such action or proceeding or commence and diligently prosecute a separate action or proceeding to enforce its rights in the same or another court.  Each Lender exercising or contemplating exercising any rights giving rise to a receipt or receiving any payment of the type referred to in this Clause 12.4 or instituting legal proceedings to recover sums owing to it under this Agreement shall, as soon as reasonably practicable thereafter, give notice thereof to the Facility Agent who shall give notice to the other Lenders.

(a)

any sum payable under this Agreement or any of the other Finance Documents is not paid when due or, only in the case of sums payable on demand, when first demanded; or

(b)

an Obligor or any other party (other than a Credit Party) commits any material breach of or fails to observe any of its material obligations, covenants or undertakings under this Agreement or any of the other Finance Documents, or an event of default, or an event or circumstance which, with the giving of any notice, the lapse of time or both would constitute an event of default, has occurred under any of the other Finance Documents, and such default continues unremedied for 10 Business Days after written notice from the Facility Agent requesting action to remedy the same; or

(c)

any Financial Indebtedness of an Obligor is not paid when due or, only in the case of sums payable on demand, when first demanded, and such default remains uncured for 30 days, except for any such Financial Indebtedness which is being contested by such Obligor in good faith and through appropriate proceedings; or

(d)

any representation or warranty made by an Obligor or any other party (other than a Credit Party) in or pursuant to this Agreement or any of the other Finance Documents or in a Bareboat Charter or Memorandum of Three Party Agreement shall prove to have been incorrect in any material respect when made or deemed made or confirmed;

(e)

any of the consents referred to in Clause 9.3 is modified in a manner unacceptable to the Majority Lenders or is not granted or is revoked or terminated or expires and is not renewed or otherwise ceases to be in full force and effect; or

(f)

an Obligor suspends payment of its debts or is unable or admits inability to pay its debts as they fall due or shall make a general assignment for the benefit of creditors or any proceeding shall be instituted by or against an Obligor seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law of any relevant jurisdiction relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 45 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or an Obligor shall take any company action to authorize any of the actions set forth above in this Clause 13.1(f); or

(g)

the occurrence of any act, event or circumstance which results in the Guarantor owning, beneficially and of record, directly or indirectly, less than 100% of the issued and outstanding equity of Westbrook or Westbrook owning, beneficially and of record, directly or indirectly, less than 100% of the issued and outstanding equity of a Borrower; or

(h)

an Obligor ceases or threatens to cease to carry on its business; or

(i)

all or a material part of the undertakings, assets, rights or revenues of, or shares or other ownership interest in, an Obligor are seized, nationalized, expropriated or compulsorily acquired by or under authority of any government; or

(j)

a creditor attaches or takes possession of, or a distress, execution, sequestration or process (each an “arrest or attachment” ) is levied or enforced upon or sued out against, a material part of the undertakings, assets, rights or revenues (the “assets” ) of an Obligor in relation to a claim by such creditor where such Obligor does not or does not procure that such arrest or attachment is lifted, released or expunged within 30 Business Days of such action being (A) instituted and (B) notified to the Obligor; or

(k)

a Ship becomes a Total Loss and insurance proceeds are not collected or received by the Security Trustee from the underwriters within 120 days of the Total Loss Date; or

(l)

in the reasonable determination of the Majority Lenders, it becomes impossible or unlawful for an Obligor or any other party thereto (other than a Credit Party) to fulfill any of the covenants and obligations required to be fulfilled as contained in any Finance Document or any of the instruments granting or creating rights in any of the Collateral in any material respect, or for a Credit Party to exercise any of the rights or remedies vested in it under any Finance Document, any of the Collateral or any of such instruments in any material respect;

(m)

there occurs, in the reasonable opinion of the Majority Lenders, a material adverse change in the financial condition of an Obligor; or

(n)

any other event occurs or circumstance arises which, in the reasonable opinion of the Majority Lenders, is likely materially and adversely to affect:

(i)

the ability of an Obligor or any other party (other than a Credit Party) to perform all or any of its respective obligations under or otherwise to comply with the terms of this Agreement or any of the other Finance Documents to which it is a party; or

(o)

any party to a Bareboat Charter or a Memorandum of Three Party Agreement commits any material breach of or fails to observe any of its material obligations, covenants or undertakings under such Bareboat Charter or Memorandum of Three Party Agreement, or an event of default, or an event or circumstance which, with the giving of any notice, the lapse of time or both would constitute an event of default, has occurred under such Bareboat Charter or Memorandum of Three Party Agreement; or

(p)

the results of any inspection of a Ship are deemed unsatisfactory by the Facility Agent in its sole, reasonable discretion; or

(q)

the Guarantor fails to comply with the TBS Credit Facility Financial Covenants; or

(r)

an event of default, or an event or circumstance which, with the giving of any notice, the lapse of time or both would constitute an event of default, has occurred under any contract or agreement (other than the Finance Documents) to which an Obligor is a party.

13.2

Actions following an Event of Default.   On, or at any time after, the occurrence of an Event of Default the Facility Agent may:

(a)

serve on the Borrowers a notice stating that all obligations of the Lenders to the Borrowers under this Agreement are terminated; and/or

(b)

serve on the Borrowers a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; provided that in the case of an Event of Default under any of Clauses 13.1 (f), the Loan and all accrued interest and other amounts accrued or owing hereunder shall be deemed immediately due and payable without notice or demand therefor; and/or

(c)

change the Approved Managers; and/or

(d)

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

13.3

Termination of obligations.   On the service of a notice under paragraph (a) of Clause 13.2, all the obligations of the Lenders to the Borrowers under this Agreement shall terminate.

13.4

Acceleration of Loan.   On the service of a notice under paragraph (b) of Clause 13.2, the Loan, all accrued interest and all other amounts accrued or owing from the Borrowers under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand, and the Security Trustee shall forthwith be entitled to enforce the Security Interests created by this Agreement and any other Finance Document in any manner available to it and in such sequence as the Security Trustee may, in its absolute discretion, determine.

13.5

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

(b)

to the Security Trustee, a Security Trustee’s fee of $7,500 per annum, which shall be non-refundable and payable upon the execution of this Agreement and annually upon the anniversary of the execution of this Agreement;

(c)

to the Payment Agent, a Payment Agent’s fee of $10,000 per annum, which shall be non-refundable and payable upon the execution of this Agreement and annually upon the anniversary of the execution of this Agreement; and

(d)

to each Lender, a commitment fee equal to 0.75% per annum of the undrawn portion of the Commitment, payable monthly in arrears during the period from (and including) the date of execution of this Agreement to the Actual Drawdown Date.

14.2

Costs of negotiation, preparation etc.   The Borrowers shall pay to the Facility Agent on its demand the amount of all expenses incurred by the Facility Agent or any other Credit Party in connection with the negotiation, preparation, execution, registration or enforcement of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document, including, without limitation, the reasonable fees and disbursements of the Facility Agent’s legal counsel and any local counsel retained by them.

14.3

Costs of variations, amendments, enforcement etc.   The Borrowers shall pay to the Facility Agent, on the Facility Agent’s demand, the amount of all expenses incurred by the Facility Agent in connection with:

(a)

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

(b)

any consent or waiver by any Credit Party under or in connection with a Finance Document, or any request for such a consent or waiver;

(c)

the valuation of or any other matter relating to the Collateral; or

(d)

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

14.4

Documentary taxes.   The Borrowers shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on demand, fully indemnify any Credit Party against any liabilities and expenses resulting from any failure or delay by the Borrowers to pay such a tax.

15.1

Indemnities regarding borrowing and repayment of Loan.   The Borrowers shall fully indemnify a Credit Party on such Credit Party’s first demand in respect of all reasonable expenses, liabilities and losses which are incurred by such Credit Party, or which such Credit Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

(a)

the Advance not being borrowed on the Expected Drawdown Date specified in the Drawdown Notice for any reason other than a default by the affected Lender;

(b)

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

(c)

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

(d)

the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 13;

15.2

Breakage costs.   Without limiting its generality, Clause 15.1 covers any liability, expense or loss incurred by a Credit Party:

(a)

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

(b)

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

It is understood and agreed that unless an Event of Default has occurred and is continuing any gain realized by a Credit Party under Clause 15.2(b) shall be for credit against the amount then due from the Borrowers to such Credit Party.

15.3

Miscellaneous indemnities.   The Borrowers shall fully indemnify each Credit Party in respect of all claims, demands, proceedings, liabilities, taxes, losses and expenses of every kind (“liability items” ) which may be made or brought against, or incurred by, such Credit Party, in any country, in relation to:

(a)

any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by such Credit Party or by any receiver appointed under a Finance Document;

(b)

any other event, matter or question which occurs or arises at any time during the Security Period and which has any connection with any payment or other transaction relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created (or intended to be created) by a Finance Document;

15.4

Other indemnities.   The Borrowers further agree to fully indemnify each Credit Party on any such Credit Party’s first demand in respect of all reasonable expenses, liabilities and losses which are incurred by such Credit Party, or which such Credit Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of the Finance Documents and any other document to be delivered hereunder.

15.5

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

(a)

making or lodging any claim or proof against the Borrowers, whether in its liquidation, any arrangement involving it or otherwise; or

15.6

Increased costs.   If a Lender reasonably determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental or monetary authority in regard to capital adequacy (whether or not having the force of law) including, without limitation, any guideline contemplated by the report dated July 1988 entitled “International Convergence of Capital Management and Capital Standards” issued by the Bank Committee on Banking Regulations and Supervisory Practices, in any case in which such law, regulation, guideline or request became effective or was made after the date hereof, has or would have the effect of reducing the rate of return on the capital of, or maintained by, such Lender or any corporation controlling such Lender as a consequence of such Lender making its Ratable Portion of the Advance or Commitment hereunder and other commitments of this type, by increasing the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender, to a level below that which such Lender or any corporation controlling such Lender could have achieved but for such adoption, effectiveness, change or compliance (taking into account such Lender’s or such corporation’s policies with respect to capital adequacy) then the Borrowers shall, from time to time, pay such Lender, upon demand by such Lender made within 60 days after the first date on which such Lender has actual knowledge that it is entitled to make demand for payment under this Clause 15.6 of such reduction in return, such additional amount as may be specified by such Lender as being sufficient to compensate such Lender for such reduction in return, to the extent that such Lender reasonably determines such reduction to be attributable to the existence of such Lender’s commitment to lend hereunder; provided that if such Lender fails to so notify the Borrowers within such 60-day period, such amounts shall commence accruing on such later date on which such Lender notifies the Borrowers.  A certificate as to such amounts submitted to the Borrowers by a Lender shall be conclusive and binding for all purposes, absent manifest error.

(b)

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

16.2

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

(a)

that Obligor shall notify the Facility Agent as soon as it becomes aware of the requirement;

(b)

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

(c)

the amount due in respect of the payment shall be increased by the amount necessary to ensure that each of the Lenders receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax