DATED 2 November 2004 ARLINGTON TANKERS LTD. (AS BORROWER) - AND - FORTIS BANK (NEDERLAND) N.V. AND HSBC BANK PLC (AS MANDATED LEAD ARRANGERS) - AND - FORTIS BANK NEDERLAND N.V. (AS AGENT AND SECURITY TRUSTEE) - AND - FORTIS BANK (NEDERLAND) N.V. AND HSBC BANK PLC AND OTHERS (AS LENDERS) - AND - FORTIS BANK (NEDERLAND) N.V. AND HSBC BANK PLC (AS SWAP PROVIDERS) ----------------------------------- US$135,000,000 SECURED LOAN FACILITY AGREEMENT ----------------------------------- STEPHENSON HARWOOD ONE ST. PAUL'S CHURCHYARD LONDON EC4M 8SH TEL: 020 7329 4422 FAX: 020 7329 7100 REF: 819/1162 CONTENTS PAGE 1 Definitions and Interpretation.........................................2 2 The Loan and its Purpose..............................................18 3 Conditions Precedent and Subsequent...................................20 4 Representations and Warranties........................................24 5 Repayment and Prepayment..............................................28 6 Interest..............................................................28 7 The Master Agreements.................................................30 8 Fees..................................................................31 9 Security Documents....................................................32 10 Agency and Trust......................................................32 11 Covenants.............................................................42 12 Earnings Account and Cash Collateral Account..........................49 13 Events Of Default and Event of Mandatory Prepayment...................50 14 Set-Off, Lien and Application.........................................55 15 Assignment and Sub-Participation......................................55 16 Payments, Mandatory Prepayment, Reserve Requirements and Illegality...58 17 Communications........................................................62 18 General Indemnities...................................................63 19 Miscellaneous.........................................................65 20 Law and Jurisdiction..................................................69 SCHEDULE 1..................................................................71 The Guarantors and the Vessels.........................................71 SCHEDULE 2..................................................................72 The Banks and the Commitments..........................................72 SCHEDULE 3..................................................................73 Calculation of the Mandatory Cost......................................73 APPENDIX A..................................................................76 Form of Drawdown Notice................................................76 APPENDIX B..................................................................77 Form of Transfer Certificate...........................................77 LOAN AGREEMENT DATED: 2 November 2004 BETWEEN:- (1) ARLINGTON TANKERS LTD., a company incorporated under the laws of Bermuda with its registered office at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda ("THE BORROWER"); and (2) FORTIS BANK (NEDERLAND) N.V. acting through its office at Haakon VII's gt 10, 0161 Oslo, Norway and HSBC BANK PLC acting through its office at 8 Canada Square, London E14 5HQ, United Kingdom as mandated lead arrangers (the "ARRANGERS"); and (3) FORTIS BANK (NEDERLAND) N.V., acting as agent and security trustee through its office at Haakon VII's gt 10, 0161 Oslo, Norway (in that capacity "THE AGENT"); and (4) the banks listed in Schedule 2, each acting through its office at the address indicated against its name in Schedule 2 (together "THE BANKS" and each a "BANK"); and (5) FORTIS BANK (NEDERLAND) N.V. acting through its office at Haakon VII's gt 10, 0161 Oslo, Norway and HSBC BANK PLC acting through its office at 8 Canada Square, London E14 5HQ, United Kingdom as swap providers (each a "SWAP PROVIDER" and together the "SWAP PROVIDERS"). WHEREAS:- (A) Each of the Guarantors is or will be the registered owner of the Vessel listed against its name in Schedule 1. (B) Each of the Vessels is or will be registered in the ownership of her Owner under the flag of the country indicated against its name in Schedule 1. (C) Each of the Banks has agreed to advance to the Borrower its respective Commitment of an aggregate amount not exceeding one hundred and thirty five million Dollars ($135,000,000) in order to allow the Borrower to downstream such sums to the Guarantors to assist the Guarantors in financing the acquisition of the Vessels. (D) Each of the Swap Providers has entered or will enter into a Master Agreement with the Borrower on or around the date of this Agreement. IT IS AGREED as follows:- 1 DEFINITIONS AND INTERPRETATION 1.1 DEFINITIONS In this Agreement:- 1.1.1 "THE ACCOUNT SECURITY DEED" means the Account Security Deed referred to in Clause 9.4. 1.1.2 "THE ADDRESS FOR SERVICE" means c/o Conyers Dill & Pearman, 34 Threadneedle Street, London EC2R 8AY or, in relation to any of the Security Parties, such other address in England and Wales as that Security Party may from time to time designate by no fewer than ten days' written notice to the Agent. 1.1.3 "THE ADMINISTRATION" has the meaning given to it in paragraph 1.1.3 of the ISM Code. 1.1.4 the "ADVANCE DATE", in relation to the Drawing, means the date on which the Drawing is advanced by the Banks to the Borrower pursuant to Clause 2. 1.1.5 "AFFILIATES" means, in respect of a specified Person, any Person that directly or indirectly controls, is controlled by, or is under common control with, the specified Person, and for this purpose "control" means the ownership of more than fifty percent (50%) of the voting share capital (or equivalent rights of ownership) of such Person. 1.1.6 "APPROVED BROKERS" means Fearnleys AS, Barry Rogliano Salles and any other broker so designated by the Borrower and the Agent. 1.1.7 "ARLINGTON CHARTER GUARANTEES" means the guarantees and indemnities executed by the Borrower in favour of each of the Charterers in respect of the Owners' obligations under the Charters (each an "ARLINGTON CHARTER GUARANTEE"). 1.1.8 "ARLINGTON MANAGEMENT GUARANTEE" means the guarantee and indemnity executed by the Borrower in favour of the Manager in respect of each of the Owners obligations under the relevant Management Agreements. 1.1.9 "THE ASSIGNMENTS" means the deeds of assignment of (inter alia) the Insurances, Earnings, Requisition Compensation, Management Agreements, Charters and Charter Guarantees referred to in Clause 9.2 (each an "ASSIGNMENT"). 1.1.10 "ATTRIBUTABLE PERCENTAGE" means, in respect of each Vessel, the percentage set out against such Vessel in Schedule 1. 1.1.11 "THE AVAILABILITY TERMINATION DATE" means 31 December 2004 or such later date as the Banks may in their discretion agree. 1.1.12 "BREAK COSTS" means all costs, losses, premiums or penalties incurred by the Agent or any Bank in the circumstances contemplated by Clause 18.4, or as a result of it receiving any prepayment of all or any part of the Loan (whether pursuant to Clause 5 or otherwise), or any other payment under or in relation to the Security Documents on a day other than the due date for payment of the sum in question, and includes (without limitation) any losses or costs incurred in liquidating or re-employing deposits from third parties acquired to effect or maintain the Loan, and any liabilities, expenses or losses incurred by the Agent or any Bank in terminating or reversing, or otherwise in connection with, any Transaction or any other interest rate and/or currency swap, transaction or arrangement entered into by the Agent or any Bank to hedge any exposure arising under this Agreement, or in terminating or reversing, or otherwise in connection with, any open position arising under this Agreement. 1.1.13 "BUSINESS DAY" means a day on which banks are open for the transaction of business of the nature contemplated by this Agreement (and not authorised by law to close) in New York, United States of America; London, England; Rotterdam, the Netherlands and any other financial centre which any Bank may consider appropriate for the operation of the provisions of this Agreement. 1.1.14 "CASH COLLATERAL ACCOUNT" means a bank account opened or to be opened in the name of the Borrower with the Agent and designated "Arlington - Cash Collateral Account". 1.1.15 "CASH COLLATERAL" means cash standing to the credit of the Cash Collateral Account. 1.1.16 "CASH EQUIVALENTS" means the following where the Borrower has free, immediate and direct access: (a) any security issued directly or fully guaranteed or insured by the United States of America or any OECD government whose securities are readily marketable in London, Paris, Frankfurt or New York City, or any agency or instrumentality thereof; (b) other readily marketable securities or other easily realisable investments having a rating of at least A from Standard and Poor's Ratings Group or Moody's Investors Service, Inc; (c) any Eurodollar time deposit, overnight deposit or banker's acceptance, issued by, or time deposit of a commercial banking institution which has, on a combined basis, capital, surplus and undivided profit of not less than $250,000,000 and has a Moody's Agent Credit Service rating for short term Agent deposits of at least P2; (d) repurchase obligations with a term of not more than ninety (90) days for underlying securities of the types described in paragraph (a) above entered into with any commercial banking institution meeting the qualifications specified in paragraph (c) above; (e) short term commercial paper issued by any person, having one of the top two investment ratings from either Standard & Poor's Ratings Group or Moody's Investors Service, Inc; (f) investments in money market funds substantially all of whose assets are comprised of securities of the types described in paragraphs (a) to (e) above; (g) deposits which are unrestricted as to withdrawal with commercial banking institutions meeting the criteria set forth in paragraph (c) above; and (h) undrawn committed credit lines. 1.1.17 "CHARTERS" means in respect of each Vessel, the time charters entered into or to be entered into between the relevant Owner and the relevant Charterer (each a "CHARTER" and together the "CHARTERS"). 1.1.18 "CHARTERERS" means: (a) in respect of the V-MAX Vessels, CM V-MAX I Limited and CM V-MAX II Limited or, at any stage following a change of charterer as contemplated by Clause 11.2.2(iii), Stena Bulk AB; and (b) in respect of the Stena Vessels, Stena Bulk AB, (each a "CHARTERER" and together the "CHARTERERS") 1.1.19 "CHARTER GUARANTEES" means: (a) in respect of each of the V-MAX Vessels, a performance guarantee issued or to be issued by Concordia Maritime AB in favour of the relevant Owner or, at any stage following a change of charterer as contemplated by Clause 11.2.2(iii), Stena AB; and (b) in respect of each of the Stena Vessels, a performance guarantee issued or to be issued by Stena AB in favour of the relevant Owner. 1.1.20 "CHARTER SUBSTITUTION AGREEMENTS" means the agreements entered into or to be entered into between Stena AB and each Owner of a V-MAX Vessel pursuant to which Stena AB has agreed that in the event that the Charter for that Vessel terminates Stena AB will procure that Stena Bulk AB will, in certain circumstances, enter into a replacement charter for the remainder of the Facility Period and that Stena AB will guarantee the obligations of Stena Bulk AB as charterer thereunder. 1.1.21 "COMMERCIAL DOCUMENTS" means the Charters, the Management Agreements, the Intercompany Funding Agreement, the Sun Charters, the Management Agreement Guarantees, the V-Max Charter Side Letters, the V-Max Management Side Letters, the Charter Substitution Agreements, the Arlington Charter Guarantees and the Arlington Management Guarantee. 1.1.22 "COMMERCIAL PARTIES" means the Charterers, Concordia Maritime AB, Stena AB and the Managers. 1.1.23 "COMMITMENT" means, in relation to each Bank, the amount of the Loan which that Bank agrees to advance to the Borrower as its several liability as indicated against the name of that Bank in Schedule 2 and/or, where the context permits, the amount of the Loan advanced by that Bank and remaining outstanding. 1.1.24 a "COMMUNICATION" means any notice, approval, demand, request or other communication from one party to this Agreement to any other party to this Agreement. 1.1.25 "THE COMMUNICATIONS ADDRESS" means First Floor, The Hayward Building, 22 Bermudiana Road, Hamilton HM11 Bermuda (fax no: + 44 1 292 4258) marked for the attention of The President. 1.1.26 "THE COMPANY" means, at any given time and in relation to any Vessel, the company responsible for the Vessel's compliance with the ISM Code pursuant to paragraph 1.1.2 of the ISM Code. 1.1.27 "CONFIRMATION" means a Confirmation exchanged, or deemed exchanged, between a Swap Provider and the Borrower as contemplated by a Master Agreement. 1.1.28 "CREDIT SUPPORT DOCUMENT" means any document described as such in either of the Master Agreements and, where the context permits, any other document referred to in any Credit Support Document which has the effect of creating an Encumbrance in favour of a Swap Provider. 1.1.29 "CREDIT SUPPORT PROVIDER" means any person (other than the Borrower) described as such in a Master Agreement. 1 1.1.30 "CURRENCY OF ACCOUNT" means, in relation to any payment to be made to the Finance Parties under or pursuant to any of the Security Documents, the currency in which that payment is required to be made by the terms of the relevant Security Document. 1.1.31 "THE DEEDS OF COVENANTS" means the deeds of covenants referred to in Clause 9.1 (each a "DEED OF Covenants"). 1.1.32 "DEFAULT RATE" means the rate of three per centum (3%) per annum above the cost to the Agent of obtaining funds in amount similar to the amount of the Indebtedness or any relevant part of the Indebtedness for such periods as the Agent shall determine in accordance with Clause 6.4. 1.1.33 "DOC" means, in relation to each Company, a valid Document of Compliance issued for the Company by the Administration pursuant to paragraph 13.2 of the ISM Code. 1.1.34 "DOLLARS" and "$" each means available and freely transferable and convertible funds in lawful currency of the United States of America. 1.1.35 "DRAWDOWN NOTICE" means a notice complying with Clause 2.3. 1.1.36 "DRAWING" means the Loan advanced by the Banks to the Borrower in accordance with Clause 2.3. 1.1.37 "EARNINGS", in relation to a Vessel, means all hires, freights, pool income and other sums payable to or for the account of the Owner in respect of that Vessel including (without limitation) all remuneration for salvage and towage services, demurrage and detention moneys, contributions in general average, compensation in respect of any requisition for hire and damages and other payments (whether awarded by any court or arbitral tribunal or by agreement or otherwise) for breach, termination or variation of any contract for the operation, employment or use of the Vessel. 1.1.38 "THE EARNINGS ACCOUNT" means a bank account to be opened in the name of the Borrower with the Agent and designated "Arlington - Earnings Account". 1.1.39 "ENCUMBRANCE" means any mortgage, charge (fixed or floating), pledge, lien, assignment, hypothecation, preferential right, option, title retention or trust arrangement or any other agreement or arrangement which has the effect of creating security or payment priority. 1.1.40 "EVENT OF DEFAULT" means any of the events set out in Clause 13.2. 1.1.41 "EVENT OF MANDATORY PAYMENT" means the event set out in Clause 13.3. 1.1.42 "THE FACILITY PERIOD" means the period beginning on the date of this Agreement and ending on the date when the whole of the Indebtedness has been repaid in full and the Borrower has ceased to be under any further actual or contingent liability to the Finance Parties under or in connection with the Security Documents. 1.1.43 "THE FEE LETTER" means a letter from the Agent to the Borrower setting out certain fees, commissions and other sums payable by the Borrower to the Agent in connection with the Loan. 1.1.44 "FINAL MATURITY DATE" means the date which is five (5) calendar years from the Advance Date. 1.1.45 "FINANCE PARTIES" means each of the Agent, the Banks and the Swap Providers and "FINANCE PARTY" means any one of them. 1.1.46 "GAAP" means generally accepted accounting principles and procedures in the USA. 1.1.47 "THE GUARANTEE" means the joint and several guarantee and indemnity of the Guarantors referred to in Clause 9.3. 1.1.48 "THE GUARANTORS" means each of the companies listed in Schedule 1, each of which is a company incorporated under the laws of Bermuda with its registered office at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda (together the "GUARANTORS" and each a "GUARANTOR") and/or (where the context permits) any other person or company who shall at any time during the Facility Period give to the Finance Parties a guarantee and/or indemnity for the repayment of all or part of the Indebtedness. 1.1.49 a "HEDGING TRANSACTION" means a Transaction entered into between a Swap Provider and the Borrower pursuant to a Master Agreement for the purpose of hedging all or part of the Borrower's interest rate risk pursuant to this Agreement. 1.1.50 "THE INDEBTEDNESS" means the Loan; any Master Agreement Liabilities; all other sums of any nature (together with all interest on any of those sums) which from time to time may be payable by the Borrower to the Finance Parties pursuant to the Security Documents; any damages payable as a result of any breach by any Security Party of any of the Security Documents; and any damages or other sums payable as a result of any of the obligations of any Security Party under or pursuant to any of the Security Documents being disclaimed by a liquidator or any other person, or, where the context permits, the amount thereof for the time being outstanding. 1.1.51 an "INSTRUCTING GROUP" means any one or more Banks whose combined Proportionate Shares exceed sixty six point six per centum (66.6%). 1.1.52 "INSURANCES", in relation to a Vessel, means all policies and contracts of insurance (including all entries in protection and indemnity or war risks associations) which are from time to time taken out or entered into in respect of or in connection with that Vessel or her increased value or her Earnings and (where the context permits) all benefits thereof, including all claims of any nature and returns of premium. 1.1.53 "THE INTERCOMPANY FUNDING AGREEMENT" means the agreement made between the Borrower and the Guarantors under which (amongst other things) the Borrower will provide funding to the Guarantors. 1.1.54 "INTEREST PAYMENT DATE" means each date for the payment of interest in accordance with Clause 6. 1.1.55 "INTEREST PERIOD" means each interest period selected by the Borrower or agreed by the Agent pursuant to Clause 6. 1.1.56 "THE ISM CODE" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention, as adopted by the Assembly of the International Maritime Organisation on 4 November 1993 by resolution A.741 (18) and incorporated on 19 May 1994 as chapter IX of the Safety of Life at Sea Convention 1974. 1.1.57 "LAW" means any law, statute, treaty, convention, regulation, instrument or other subordinate legislation or other legislative or quasi-legislative rule or measure, or any order or decree of any government, judicial or public or other body or authority, or any directive, code of practice, circular, guidance note or other direction issued by any competent authority or agency (whether or not having the force of law). 1.1.58 "LEVERAGE RATIO" means the ratio of the amount of the Loan to the aggregate of the Market Values (as most recently determined at the date of determination of the Leverage Ratio) of those of the Vessels which remain subject to the Mortgages and which have not become a Total Loss, and in the case of any Vessel which has been or may be declared a Total Loss but for which no mandatory prepayment has yet fallen due pursuant to Clause 13.3 the Market Value of such Vessel shall be determined as if such Vessel had not become or been declared a Total Loss. 1.1.59 "LIBOR" means the rate, rounded to the nearest four decimal places downwards (if the digit displayed in the fifth decimal place is 1,2,3 or 4) or upwards (if the digit displayed in the fifth decimal place is 5,6,7,8 or 9) displayed as the British Bankers' Association Interest Settlement Rate on any information service selected by the Agent on which that rate is displayed, for deposits in Dollars of amounts equal to the amount of the Loan or any relevant part of the Loan for a period equal in length to the relevant Interest Period, or (if the Agent is for any reason unable to ascertain that rate) the rate (rounded upwards to the nearest whole multiple of one-sixteenth of one per centum) at which deposits in Dollars of amounts comparable to the amount of the Loan (or any relevant part of the Loan) are offered to the Agent in the London Interbank market for a period equal in length to the relevant Interest Period. 1.1.60 "THE LOAN" means the aggregate amount from time to time advanced by the Banks to the Borrower pursuant to Clause 2 or, where the context permits, the amount advanced and for the time being outstanding. 1.1.61 "THE MANAGERS" means in respect of the technical management of the Vessels, Northern Marine Management Ltd., or such other technical managers of the Vessels nominated by the Borrower as the Finance Parties may approve. 1.1.62 "THE MANAGEMENT AGREEMENTS" means the management agreements entered into between the Owners and the Managers relating to the Vessels. 1.1.63 "MANAGEMENT AGREEMENT GUARANTEES" means the guarantees and indemnities executed by Stena AB in favour of each of the Owners guaranteeing and indemnifying the Owner in respect of the off-hire and reduced-hire payment obligations of the Managers pursuant to the Management Agreements (each a "MANAGEMENT AGREEMENT GUARANTEE"). 1.1.64 "MANDATORY COST" means, for each Bank to which it applies, the cost imputed to that Bank of compliance with the mandatory liquid asset requirements of the Bank of England and/or the banking supervision or other costs imposed by the Financial Services Authority, determined in accordance with Schedule 3. 1.1.65 "THE MARGIN" means: (a) where on the first Business Day of any Interest Period the Leverage Ratio (calculated by reference to the then most recent Market Value of the Vessels) is more than fifty per centum (50%), the margin for that Interest Period will be one point two five per centum (1.25%) per annum; and (b) where on the first Business Day of any Interest Period the Leverage Ratio (calculated by reference to the then most recent Market Value of the Vessels) is less than or equal to fifty per centum (50%), the margin for that Interest Period will be one point zero per centum (1.00%) per annum. PROVIDED ALWAYS that the Margin may not change more than once in any three month period. 1.1.66 "MARKET VALUE" means in respect of a valuation of a Vessel the arithmetic average of three valuations provided by two Approved Brokers (or other independent sale and purchase brokers appointed by the Agent and acceptable to the Borrower) and by a third broker appointed by the Borrower and approved by the Agent. Any such valuations shall, unless otherwise required by the Banks, be made on the basis of a charter free sale for prompt delivery for cash at arms length on normal commercial terms as between a willing seller and a willing buyer. In the case of any Vessel which has been or may be declared a Total Loss, but for which no mandatory prepayment has yet fallen due pursuant to Clause 13.3, the Market Value of such Vessel shall be determined as if such Vessel had not become or been declared a Total Loss. 1.1.67 "MASTER AGREEMENTS" means any ISDA Master Agreement (or any other form of master agreement relating to interest or currency exchange transactions) entered into between a Swap Provider and the Borrower during the Facility Period, including each Schedule to any Master Agreement and each Confirmation exchanged pursuant to any Master Agreement (each of which shall be referred to as a "MASTER AGREEMENT"). 1.1.68 "THE MASTER AGREEMENT LIABILITIES" means, at any relevant time, all liabilities of the Borrower to the Swap Providers under or pursuant to the Master Agreements, whether actual or contingent, present or future. 1.1.69 "MATERIAL ADVERSE EFFECT" means a material adverse effect on the business or financial condition of any Security Party, the ability of any Security Party to perform its obligations under any Security Document, or the validity or enforceability of any Security Document. 1.1.70 "THE MAXIMUM LOAN AMOUNT" means, subject to Clause 2.8, one hundred and thirty five million Dollars ($135,000,000). 1.1.71 "THE MORTGAGEES' INSURANCES" means all policies and contracts of mortgagees' interest insurance, mortgagees' additional perils (oil pollution) insurance and any other insurance which is or becomes customarily taken out by banks or other financial institutions in respect of vessels of similar age and type and under similar management arrangements to the Vessels, from time to time taken out by the Agent on behalf of the Finance Parties in relation to the Vessels. 1.1.72 "THE MORTGAGES" means the first priority mortgages referred to in Clause 9.1 (each a "MORTGAGE"). 1.1.73 "NOTIONAL AMOUNT", in respect of any Hedging Transaction, means the Notional Amount as defined in the Confirmation relating to that Hedging Transaction. 1.1.74 "OWNER" means, in relation to a Vessel, the Guarantor against whose name the name of that Vessel appears in Schedule 1. 1.1.75 "PERSON" means any individual or entity. 1.1.76 "PERMITTED ENCUMBRANCES" means any Encumbrance which has the prior written approval of the Agent, or any Encumbrance arising either by the operation of law or in the ordinary course of business of the Borrower or an Owner which is promptly discharged. 1.1.77 "POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice and/or the passage of time and/or the satisfaction of any materiality test, would constitute an Event of Default. 1.1.78 "PROCEEDINGS" means any suit, action or proceedings begun by a Finance Party arising out of or in connection with the Security Documents. 1.1.79 "PROPORTIONATE SHARE" means, at any time, the proportion which that Bank's Commitment (whether or not advanced) then bears to the aggregate Commitments of all the Banks (whether or not advanced). 1.1.80 "QUIET ENJOYMENT AGREEMENTS" means the agreements, one for each Vessel, entered or to be entered into between the relevant Owner, the relevant Charterer, the Manager and the Agent. 1.1.81 "REPAYMENT DATE" means the date for payment of any Repayment Instalment in accordance with Clause 5. 1.1.82 "REPAYMENT INSTALMENT" means any instalment of the Loan to be repaid by the Borrower pursuant to Clause 5. 1.1.83 "REQUISITION COMPENSATION", in relation to a Vessel, means all compensation or other money which may from time to time be payable to the Owner as a result of the Vessel being requisitioned for title or in any other way compulsorily acquired (other than by way of requisition for hire). 1.1.84 "THE SECURITY DOCUMENTS" means this Agreement, the Mortgages, the Deeds of Covenants, the Assignments, the Guarantee, the Account Security Deed, the Share Charge, the Master Agreements and any other Credit Support Documents or (where the context permits) any one or more of them, and any other agreement or document which may at any time be executed by any person as security for the payment of all or any part of the Indebtedness. 1.1.85 "SECURITY PARTIES" means the Borrower, the Guarantors, any other Credit Support Providers, and any other person or company who may at any time during the Facility Period be liable for, or provide security for, all or any part of the Indebtedness, and "SECURITY PARTY" means any one of them PROVIDED ALWAYS that any Guarantor that is released pursuant to Clause 5.7 of the Guarantee shall cease to be a Security Party with effect from the date of such release. 1.1.86 "SELLERS" means, in relation to a Vessel, the companies named as such in Schedule 1 to this Agreement, and "Seller" means any one of them. 1.1.87 "THE SHARE CHARGE" means the charge over the issued share capital of each of the Guarantors referred to in Clause 9.5 (each a "SHARE CHARGE"). 1.1.88 "SMC" means, in relation to each Vessel, a valid safety management certificate issued for that Vessel by or on behalf of the relevant Administration pursuant to paragraph 13.4 of the ISM Code. 1.1.89 "SMS" means, in relation to each Vessel, a safety management system for that Vessel developed and implemented in accordance with the ISM Code and including the functional requirements, duties and obligations required by the ISM Code. 1.1.90 "STENA VESSELS" means (a) the two panamax tankers known as "Stena Companion" and "Stena Compatriot" and (b) the two product tankers known as "Stena Concord" and "Stena Consul", each as identified in Schedule 1. 1.1.91 "SUN CHARTERS" means, in respect of each V-MAX Vessel, the sub time charter entered into between Stena Bulk AB (as agent for the relevant Charterer) and Sun International Limited, and shall include any extension thereof or any replacement thereof between the same parties on terms conforming to the requirements of Clause 11.2.2. 1.1.92 "TAXES" means all taxes, levies, imposts, duties, charges, fees, deductions and withholdings (including any related interest, fines, surcharges and penalties) and any restrictions or conditions resulting in any charge, other than taxes on the overall net income of any of the Finance Parties and "TAX" and "TAXATION" shall be interpreted accordingly. 1.1.93 "TOTAL LOSS", in relation to a Vessel, means:- (a) an actual, constructive, arranged, agreed or compromised total loss of that Vessel; or (b) the requisition for title or compulsory acquisition of that Vessel by or on behalf of any government or other authority (other than by way of requisition for hire); or (c) the capture, seizure, arrest, detention or confiscation of that Vessel, unless the Vessel is released and returned to the possession of the Owner within one month after the capture, seizure, arrest, detention or confiscation in question. 1.1.94 "TRANSACTION" means a transaction entered into between either of the Swap Providers and the Borrower governed by the Master Agreements. 1.1.95 "TRANSFER CERTIFICATE" means a certificate materially in the form of Appendix B. 1.1.96 "TRANSFER DATE", in relation to a transfer of any of a Bank's rights and/or obligations under or pursuant to this Agreement, means the fifth Business Day after the date of delivery of the relevant Transfer Certificate to the Agent, or such later Business Day as may be specified in the relevant Transfer Certificate. 1.1.97 "TRANSFEREE" means any bank or financial institution to which a Bank transfers any of its rights and/or obligations under or pursuant to this Agreement. 1.1.98 "THE TRUST PROPERTY" means:- (a) the benefit of the covenant contained in Clause 10; and (b) all benefits arising under (including, without limitation, all proceeds of the enforcement of) each of the Security Documents (other than this Agreement), with the exception of any benefits arising solely for the benefit of the Agent. 1.1.99 "VALUE ADJUSTED EQUITY" means the amount which is equal to the Value Adjusted Total Assets of the Borrower less the total liabilities of the Borrower as shown in the Borrower's latest audited consolidated balance sheet. 1.1.100 "VALUE ADJUSTED TOTAL ASSETS" means the amount which is equal to the total consolidated assets of the Borrower as shown in the Borrower's latest audited consolidated balance sheet less the goodwill (if any) of the Borrower as shown in the Borrower's latest audited balance sheet, as adjusted (in the case of the Vessels) to reflect the current Market Values of the Vessels. 1.1.101 "THE VESSELS" means the vessels listed in Schedule 1 and everything now or in the future belonging to them on board and ashore (each a "VESSEL"). 1.1.102 "V-MAX CHARTER SIDE LETTERS" means the letters issued by Stena AB addressed to each of the V-Max Vessel Owners confirming that in the event that a V-Max Vessel Owner terminates the Charter of its Vessel, Stena AB will (i) procure that Stena Bulk AB enters into a new time charter for the Vessel for the duration of the original Charter, and (ii) guarantee the obligations of Stena Bulk AB under such replacement charters (each a "V-MAX CHARTER SIDE LETTER"). 1.1.103 "V-MAX MANAGEMENT SIDE LETTERS" means the agreements entered into by the Manager and the relevant Charterer relating to the V-Max Vessels pursuant to which the relevant Charterer agrees to indemnify the Manager in the event that the Manager's costs under the relevant Management Agreement for a V-Max Vessel exceed a certain amount (each a "V-MAX MANAGEMENT SIDE LETTER"). 1.1.104 "V-MAX VESSELS" means the two V-MAX tankers "Stena Vision" and Stena Victory" identified in Schedule 1. 1.1.105 "WORKING CAPITAL" means current assets less current liabilities (but ignoring for this purpose any repayments of principal herunder). 1.2 INTERPRETATION In this Agreement:- 1.2.1 words denoting the plural number include the singular and vice versa; 1.2.2 words denoting persons include corporations, partnerships, associations of persons (whether incorporated or not) or governmental or quasi-governmental bodies or authorities and vice versa; 1.2.3 references to Recitals, Clauses, Schedules and Appendices are references to recitals and clauses of, and schedules and appendices to, this Agreement; 1.2.4 references to this Agreement include the Recitals, the Schedules and the Appendices; 1.2.5 the headings and contents page(s) are for the purpose of reference only, have no legal or other significance, and shall be ignored in the interpretation of this Agreement; 1.2.6 references to any document (including, without limitation, to all or any of the Security Documents) are, unless the context otherwise requires, references to that document as amended, supplemented, novated or replaced from time to time; 1.2.7 references to statutes or provisions of statutes are references to those statutes, or those provisions, as from time to time amended, replaced or re-enacted; 1.2.8 words and expressions defined in the Master Agreements, unless the context otherwise requires, have the same meaning; 1.2.9 references to a Finance Party include its successors, transferees and assignees; 1.2.10 references to times of day are to London time. 1.3 OFFER LETTER Unless otherwise specifically agreed in writing between the Borrower and the Arrangers, this Agreement supersedes the terms and conditions contained in any correspondence relating to the subject matter of this Agreement exchanged between a Finance Party and the Borrower or their representatives prior to the date of this Agreement. 2 THE LOAN AND ITS PURPOSE 2.1 AGREEMENT TO LEND Subject to the terms and conditions of this Agreement, and in reliance on each of the representations and warranties made or to be made in or in accordance with each of the Security Documents, each of the Banks agrees to advance to the Borrower its Commitment of an aggregate amount not exceeding the Maximum Loan Amount to be used by the Borrower for the purposes referred to in Recital (C). 2.2 DRAWINGS Subject to satisfaction by the Borrower of the conditions set out in Clause 3.1, and subject to Clause 2.3, the Loan shall be advanced to the Borrower in one Drawing by the Agent transferring the amount of the Drawing to the Borrower by such method of funds transfer as the Agent and the Borrower shall agree. 2.3 ADVANCE OF DRAWINGS The Drawing shall be advanced in Dollars on a Business Day provided that the Borrower shall have given to the Agent not more than ten and not fewer than two (2) Business Days' notice (to be given no later than 10.00 am) in writing materially in the form set out in Appendix A of the required Advance Date of the Drawing. The Drawdown Notice once given shall be irrevocable and shall constitute a warranty by the Borrower that:- 2.3.1 all conditions precedent to the advance of the Drawing requested in that Drawdown Notice will have been satisfied on or before the Advance Date requested; 2.3.2 no Event of Default or Potential Event of Default will then have occurred; 2.3.3 no Event of Default or Potential Event of Default will result from the advance of the Drawing in question; and 2.3.4 there has been no material adverse change in the business, affairs or financial condition of any of the Security Parties from that pertaining at the date of this Agreement. The Agent shall promptly notify each Bank of the receipt of each Drawdown Notice, following which each Bank will make its Proportionate Share of the amount of the requested Drawing available to the Borrower through the Agent on the Advance Date requested. 2.4 AVAILABILITY TERMINATION DATE No Bank shall be under any obligation to advance all or any part of its Commitment after the Availability Termination Date. 2.5 SEVERAL OBLIGATIONS The obligations of the Banks under this Agreement are several. The failure of a Bank to perform its obligations under this Agreement shall not affect the obligations of the Borrower to any of the Finance Parties nor shall the Finance Parties be liable for the failure of a Bank to perform any of its obligations under or in connection with this Agreement. 2.6 APPLICATION OF LOAN Without prejudice to the obligations of the Borrower under this Agreement, the Finance Parties shall not be obliged to concern themselves with the application of the Loan by the Borrower. 2.7 LOAN AND CONTROL ACCOUNTS The Borrower will open and maintain with the Agent such loan and control accounts as the Agent shall consider necessary or desirable. 2.8 TOTAL LOSS OF VESSEL If a Vessel shall become a Total Loss prior to drawdown, or is not tendered to the relevant Owner for delivery or is rejected by the relevant Owner when tendered for delivery, it is agreed that the Maximum Loan Amount and each Bank's Commitment shall be reduced by the relevant Attributable Percentage, but otherwise shall be available for drawing. In such circumstances the conditions precedent relating to such Vessel shall be deemed waived. 3 CONDITIONS PRECEDENT AND SUBSEQUENT 3.1 CONDITIONS PRECEDENT Before any Bank shall have any obligation to advance any part of the Drawing, the Borrower shall deliver or cause to be delivered to or to the order of the Agent the following documents and evidence to the satisfaction of the Agent (and the Agent shall notify the Borrower and the Banks upon being so satisfied): 3.1.1 EVIDENCE OF INCORPORATION Such evidence as the Agent may reasonably require that each Security Party and each Commercial Party was duly incorporated in its country of incorporation and remains in existence and, where appropriate, in good standing, with power to enter into, and perform its obligations under, those of the Security Documents to which it is, or is intended to be, a party, including (without limitation) a copy, certified by a director or the secretary of the Security Party or Commercial Party in question as true, complete, accurate and unamended, of all documents establishing or limiting the constitution of each Security Party or Commercial Party. 3.1.2 CORPORATE AUTHORITIES A copy, certified by a director or the secretary of the Security Party or Commercial Party in question as true, complete, accurate and neither amended nor revoked, of a resolution of the directors of each Security Party and each Commercial Party (together, where appropriate, with signed waivers of notice of any directors' meetings) approving, and authorising or ratifying the execution of, those of the Security Documents to which that Security Party or that Commercial Party (as the case may be) is or is intended to be a party and all matters incidental thereto. 3.1.3 OFFICER'S CERTIFICATE A certificate signed by a duly authorised officer of each of the Security Parties and each Commercial Party setting out the names of the directors, officers and (except in the case of the Borrower) shareholders of that Security Party or that Commercial Party (as the case may be) together with such evidence of the identity of each signatory to a Security Document (other than the Finance Parties) as the Agent may require. 3.1.4 POWER OF ATTORNEY The power of attorney of each of the Security Parties and each Commercial Party under which any documents are to be executed or transactions undertaken by that Security Party or that Commercial Party. 3.1.5 VESSEL DOCUMENTS Photocopies, certified as true, accurate and complete by a director or the secretary or other officer of the Borrower, of (in respect of each Vessel):- (a) the protocols of delivery and acceptance relating to that Vessel between the relevant Seller and the Owner; (b) that Vessel's current Safety Construction, Safety Equipment, Safety Radio and Load Line Certificates; (c) that Vessel's current Certificate of Financial Responsibility issued pursuant to the United States Oil Pollution Act 1990; (d) that Vessel's current SMC; (e) that Vessel's current ISSC; (f) the relevant Company's current DOC; and (g) if applicable, the Owner's current Carrier Initiative Agreement with the United States' Custom Service; in each case together with all addenda, amendments or supplements. 3.1.6 EVIDENCE OF OWNERSHIP Transcripts of register (or equivalent) issued by the Registrar of Ships (or equivalent official) at the Vessel's port of registry confirming that each Vessel is on the Advance Date owned by her Owner and free of registered Encumbrances other than these for which discharges are available for immediate registration upon drawdown of the Loan. 3.1.7 EVIDENCE OF INSURANCE Evidence that each Vessel is insured in the manner required by the Security Documents and that letters of undertaking will be issued in the manner required by the Security Documents. 3.1.8 CONFIRMATION OF CLASS A Certificate of Confirmation of Class for hull and machinery confirming that each Vessel is classed in accordance with the requirements of the relevant Deed of Covenants. 3.1.9 THE SECURITY DOCUMENTS The Security Documents, together with all notices and other documents required by any of them, duly executed and, in the case of the Mortgages, in a form capable of immediate registration with first priority through the Registrar of Ships (or equivalent official) at the port of registry of the Vessel concerned. 3.1.10 THE CHARGE DOCUMENTS The documents required by the Share Charges. 3.1.11 DRAWDOWN NOTICE A Drawdown Notice. 3.1.12 PROCESS AGENTS A letter from Conyers Dill & Pearman accepting their appointment by each of the Security Parties as agent for service of Proceedings pursuant to the Security Documents, and a letter from Stena (UK) Limited accepting their appointment by each of the Charterers and the Manager as agent for service of Proceedings under each of the Quiet Enjoyment Agreements. 3.1.13 PASSPORTS Copies of the passports of each of the directors of the Borrower. 3.1.14 MANDATES Such duly signed forms of mandate, and/or other evidence of the opening of the Earnings Account and the Cash Collateral Account, as the Agent may require. 3.1.15 THE FEE LETTER The Fee Letter countersigned on behalf of the Borrower by way of acceptance of its terms and such evidence as the Agent may reasonably require that the fees and expenses payable pursuant to the Fee Letter have been paid in full. 3.1.16 LEGAL OPINIONS Confirmation satisfactory to the Agent that legal opinions required by the Agent on the laws of England and Wales, Bermuda, The Netherlands, Scotland and Sweden will be given substantially in the form required by the Agent. 3.1.17 CONSENTS A certificate from the Borrower that all (if any) consents, licences, approvals and authorisations of, or registrations with or declarations to, any governmental authority, bureau or agency which may be required in connection with the Security Documents have been made or obtained and remain in full force and effect. 3.1.18 CASH COLLATERAL ACCOUNT The sum of one Dollar ($1) shall have been deposited in the Cash Collateral Account. 3.1.19 INTEREST RATE SWAPS The Borrower shall have entered into Transactions which give the Borrower fixed interest rate exposure for the whole of the Loan for the Facility Period. 3.1.20 EVIDENCE OF FUNDS Such evidence as the Agent may reasonably require that the Borrower or the Guarantors have sufficient funds available to pay the balance of the purchase price of the Vessels. 3.1.21 COMMERCIAL DOCUMENTS Photocopies, certified as true, accurate and complete by a director, secretary or other officer of a party thereto, of each of the Commercial Documents. 3.1.22 QUIET ENJOYMENT AGREEMENTS The Quiet Enjoyment Agreements, duly executed. 3.1.23 LETTERS FROM NORTHERN MARINE MANAGEMENT USA LLC AND STENA BULK AB A duly executed letter from each of Northern Marine Management USA LLC and Stena Bulk AB confirming its agreement to the terms of the loss payable clauses for the Vessels. 3.2 CONDITIONS SUBSEQUENT The Borrower undertakes to deliver or to cause to be delivered to the Agent on, or as soon as practicable after, the Advance Date, the following additional documents and evidence:- 3.2.1 EVIDENCE OF REGISTRATION Evidence of registration of the Mortgages, in each case with first priority, with the Registrar of Ships (or equivalent official) at the port of registry of the Vessel concerned. 3.2.2 LETTERS OF UNDERTAKING Letters of undertaking as required by the Security Documents in form and substance acceptable to the Agent. 3.2.3 LEGAL OPINIONS The legal opinions referred to in Clause 3.1.16. 3.2.4 COMPANIES ACT REGISTRATIONS Evidence that the prescribed particulars of the Security Documents have been delivered to the Registrar of Companies of Bermuda. 3.3 NO WAIVER If the Banks in their sole discretion agree to advance any part of the Loan to the Borrower before all of the documents and evidence required by Clause 3.1 have been delivered to or to the order of the Agent, the Borrower undertakes to deliver all outstanding documents and evidence to or to the order of the Agent no later than the date specified by the Agent and the advance of any part of the Loan shall not be taken as a waiver of the Agent's right to require production of all the documents and evidence required by Clause 3.1. 3.4 FORM AND CONTENT All documents and evidence delivered to the Agent pursuant to this Clause shall:- 3.4.1 be in form and substance acceptable to the Agent acting reasonably; 3.4.2 be accompanied, if required by the Agent, by translations into the English language, certified in a manner acceptable to the Agent; 3.4.3 if reasonably required by the Agent, be certified, notarised, legalised or attested in a manner acceptable to the Agent. 3.5 EVENT OF DEFAULT No Bank shall be under any obligation to advance any part of its Commitment nor to act on any Drawdown Notice if, at the date of the Drawdown Notice or at the date on which the advance of the Drawing is requested in the Drawdown Notice, an Event of Default or Potential Event of Default shall have occurred, or if an Event of Default or Potential Event of Default would result from the advance of the Drawing. 4 REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants to each of the Finance Parties at the date of this Agreement and (by reference to the facts and circumstances then pertaining) at the date of the Drawdown Notice, at the Advance Date and (in relation only to Clauses 4.1, 4.3, 4.4, 4.5, 4.15 and 4.16) at each Interest Payment Date as follows: 4.1 INCORPORATION AND CAPACITY Each of the Security Parties is a body corporate duly constituted and existing and (where applicable) in good standing under the law of its country of incorporation, in each case with perpetual corporate existence and the power to sue and be sued, to own its assets and to carry on its business, and all of the corporate shareholders (if any) of each Security Party (other than the Borrower) are duly constituted and existing under the laws of their countries of incorporation with perpetual corporate existence and the power to sue and be sued, to own their assets and to carry on their business. 4.2 SOLVENCY None of the Security Parties is insolvent or in liquidation or administration or subject to any other insolvency procedure, and no receiver, administrative receiver, administrator, liquidator, trustee or analogous officer has been appointed in respect of any of the Security Parties or all or any part of their assets. 4.3 BINDING OBLIGATIONS The Security Documents when duly executed and delivered will constitute the legal, valid and binding obligations of the Security Parties enforceable in accordance with their respective terms subject to laws affecting creditors' rights generally. 4.4 SATISFACTION OF CONDITIONS All acts, conditions and things required to be done and satisfied and to have happened prior to the execution and delivery of the Security Documents in order to constitute the Security Documents the legal, valid and binding obligations of the Security Parties in accordance with their respective terms have been done, satisfied and have happened in compliance with all applicable laws. 4.5 REGISTRATIONS AND CONSENTS All (if any) consents, licences, approvals and authorisations of, or registrations with or declarations to, any governmental authority, bureau or agency which may be required in connection with the execution, delivery, performance, validity or enforceability of the Security Documents have been obtained or made and remain in full force and effect and the Borrower is not aware of any event or circumstance which could reasonably be expected adversely to affect the right of the relevant Security Parties to hold and/or obtain renewal of any such consents, licences, approvals or authorisations. The provisions of this Clause 4.5 shall not apply to the registrations set out in Clause 3.2 until such time as those registrations have been completed. 4.6 DISCLOSURE OF MATERIAL FACTS The Borrower is not aware of any material facts or circumstances which have not been disclosed to the Agent and which might, if disclosed, have adversely affected the decision of a person considering whether or not to make loan facilities of the nature contemplated by this Agreement available to the Borrower. 4.7 MATERIAL ADVERSE CHANGE The Borrower is not aware of any event of series of events which is likely to have a Material Adverse Effect. 4.8 NO MATERIAL LITIGATION There is no action, suit, arbitration or administrative proceeding pending or to its knowledge about to be pursued before any court, tribunal or governmental or other authority which would, or would be likely to, have a materially adverse effect on the business, assets, financial condition or creditworthiness of any of the Security Parties. 4.9 NO BREACH OF LAW OR CONTRACT The execution, delivery and performance of the Security Documents will not contravene any contractual restriction or any law binding on any of the Security Parties or (except in relation to the Borrower) on any shareholder (whether legal or beneficial) of any of the Security Parties, or the constitutional documents of any of the Security Parties, nor result in the creation of, nor oblige any of the Security Parties to create, any Encumbrance over all or any of its assets, with the exception of the Encumbrances created by or pursuant to the Security Documents, and, in entering into those of the Security Documents to which it is, or is to be, a party, and in borrowing the Loan, the Borrower is acting for its own account. 4.10 NO DEDUCTIONS The Borrower is not required to make any deduction or withholding from any payment which it may be obliged to make to the Finance Parties under or pursuant to the Security Documents. 4.11 NO ESTABLISHED PLACE OF BUSINESS IN THE UNITED KINGDOM OR UNITED STATES None of the Security Parties has, nor will any of them have during the Facility Period, an established place of business in the United Kingdom or the United States of America. 4.12 PARI PASSU RANKING The payment obligations of each of the Security Parties under the Security Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies incorporated in the relevant Security Party's country of incorporation. 4.13 NO DEFAULT No Event of Default is continuing or might reasonably be expected to result from the advance of the Loan, and no other event or circumstance is outstanding which constitutes a default under any other document which is binding on any of the Security Parties or to which its assets are subject which might have a Material Adverse Effect. 4.14 NO STAMP TAXES Under the law of jurisdiction of incorporation of each relevant Security Party it is not necessary that any stamp, registration or similar tax be paid on or in relation to the Security Documents or the transactions contemplated by the Security Documents. 4.15 GOVERNING LAW AND ENFORCEMENT The choice of English law as the governing law of any of the Security Documents expressed to be governed by English law will be recognised and enforced in the jurisdiction of incorporation of each relevant Security Party, and any judgment obtained in England in relation to any such Security Document will be recognised and enforced in the jurisdiction of incorporation of each relevant Security Party. 4.16 IMMUNITY IN LEGAL PROCEEDINGS None of the Security Parties has any immunity in any legal proceedings. 4.17 ADVERSE CONSEQUENCES To the best of the Borrower's knowledge the execution, delivery and subsequent performance by each of the Security Parties and Finance Parties of the Security Documents will not have any adverse consequences for the Finance Parties. 4.18 USE OF LOAN The Loan will be used for the purposes specified in Recital (C). 5 REPAYMENT AND PREPAYMENT 5.1 REPAYMENT The Borrower agrees to repay the Loan to the Agent as agent for the Banks by one single Repayment Instalment payable on the Final Maturity Date. 5.2 PREPAYMENT The Borrower may prepay the Loan in whole or in part in an amount equal to an integral multiple of five million Dollars ($5,000,000) (or as otherwise may be agreed by the Agent) provided that it has first given to the Agent not fewer than five (5) Business Days' prior written notice expiring on a Business Day of its intention to do so. Any notice pursuant to this Clause once given shall be irrevocable and shall oblige the Borrower to make the prepayment referred to in the notice on the Business Day specified in the notice, together with all interest accrued on the amount prepaid up to and including that Business Day. 5.3 PREPAYMENT INDEMNITY If the Borrower shall, subject always to Clause 5.2, make a prepayment on a Business Day other than the last day of an Interest Period in respect of the whole of the Loan, they shall, in addition to the amount prepaid and accrued interest, pay to the Agent on behalf of the Banks any amount which the Agent may certify is necessary to compensate the Banks for any Break Costs incurred by the Agent or any of the Banks as a result of the making of the prepayment in question. 5.4 APPLICATION OF PREPAYMENTS Any voluntary prepayment in an amount less than the Indebtedness shall be applied in satisfaction or reduction first of any costs and other amounts outstanding; secondly of all interest outstanding; and thirdly against the Repayment Instalments on a pro rata basis and all amounts due under the Master Agreements arising as a consequence of the operation of Clause 7 in relation to such payment. Any involuntary prepayments as a result of the sale or total loss of a Vessel shall be applied in accordance with clause 14.2. 5.5 NO REBORROWING No amount repaid or prepaid pursuant to this Agreement may in any circumstances be reborrowed. 6 INTEREST 6.1 INTEREST PERIODS The period during which the Loan shall be outstanding pursuant to this Agreement shall be divided into consecutive Interest Periods of one, two, three, or six months' duration, as selected by the Borrower by written notice to the Agent not later than 11.00 a.m. on the third Business Day (or, in the case of the first Interest Period, the second Business Day) before the beginning of the Interest Period in question, or such other duration as may be agreed by the Banks in their discretion. 6.2 BEGINNING AND END OF INTEREST PERIODS The first Interest Period shall begin on the Advance Date. Notwithstanding Clause 6.1 the final Interest Period shall end on the Final Maturity Date. 6.3 INTEREST RATE During each Interest Period interest shall accrue on the Loan at the rate determined by the Agent to be the aggregate of (a) the Margin, (b) LIBOR determined at or about 11.00 a.m. on the second Business Day prior to the beginning of that Interest Period and (c) the Mandatory Cost. 6.4 FAILURE TO SELECT INTEREST PERIOD If the Borrower at any time fails to select or agree an Interest Period in accordance with Clause 6.1, the interest rate applicable after the expiry of the then current Interest Period shall be the rate determined by the Agent in accordance with Clause 6.3 for consecutive Interest Periods each of one (1) month's duration. 6.5 ACCRUAL AND PAYMENT OF INTEREST Interest shall accrue from day to day, shall be calculated on the basis of a 360 day year and the actual number of days elapsed (or, in any circumstance where market practice in the London Interbank market differs, in accordance with the prevailing market practice) and shall be paid by the Borrower to the Agent on behalf of the Banks on the last day of each Interest Period and additionally, during any Interest Period exceeding six months, on the last day of each successive six month period after the beginning of that Interest Period. 6.6 ENDING OF INTEREST PERIODS Each Interest Period shall, subject to Clauses 6.2 and 6.3, end on the date which numerically corresponds to the date on which the immediately preceding Interest Period ended (or, in the case of the first Interest Period, to the Advance Date) in the calendar month which is the number of months selected or agreed after the calendar month in which the immediately preceding Interest Period ended (or, in the case of the first Interest Period, in which the Advance Date occurred), except that:- 6.6.1 if there is no numerically corresponding date in the calendar month in which the Interest Period ends, the Interest Period shall end on the last Business Day in that calendar month; and 6.6.2 if any Interest Period would end on a day which is not a Business Day, that Interest Period shall end on the next succeeding Business Day (unless the next succeeding Business Day falls in the next calendar month, in which event the Interest Period in question shall end on the next preceding Business Day). Any adjustment made pursuant to Clause 6.6.1 or 6.6.2 shall be ignored for the purpose of determining the date on which any subsequent Interest Period shall end. 6.7 DEFAULT RATE If the Borrower fails to pay any amount payable by it under the Security Documents, such amount shall bear interest up to the date of actual payment (both before and after judgment) at the Default Rate, compounded at such intervals of not less than one month as the Agent shall determine, which interest shall be payable from time to time by the Borrower to the Agent on behalf of the Banks on demand. 6.8 DETERMINATIONS CONCLUSIVE Each determination of an interest rate made by the Agent in accordance with Clause 6 shall (save in the case of manifest error or on any question of law) be final and conclusive. 7 THE MASTER AGREEMENTS 7.1 PURPOSE The Swap Providers and the Borrower have entered, and/or may during the Facility Period enter, into one or more Transactions pursuant to a Master Agreement, the terms and conditions of each of which are or will be specified in a Confirmation sent by a Swap Provider to the Borrower. 7.2 ADDITIONAL TERMINATION EVENT If the Loan is for any reason not advanced to the Borrower on or before the Availability Termination Date, and the Swap Provider and the Borrower have entered into any Transactions on or before the Availability Termination Date, for the purposes of the relevant Master Agreement an Additional Termination Event (with the Swap Provider as the Affected Party) shall be deemed to have occurred on the Availability Termination Date. 7.3 ADJUSTMENT OF NOTIONAL AMOUNTS If the aggregate amount of the Loan actually advanced by the Banks to the Borrower is less than the Notional Amount (or the aggregate Notional Amounts) of the Hedging Transactions entered into on or before the last Advance Date, the obligations of the Borrower in respect of those Hedging Transactions shall, unless otherwise agreed by the Swap Provider, be calculated, so far as the Swap Provider considers it practicable to do so, by reference to a Notional Amount (or aggregate Notional Amounts) equal to the amount of the Loan actually advanced. 7.4 EFFECT OF PREPAYMENT If the Borrower, subject always to Clause 5, prepays part of the Loan (whether pursuant to Clause 5, Clause 11.2.2 or any other provision of this Agreement), and the amount of the Loan remaining outstanding after application of that prepayment is less than the Notional Amount (or the aggregate Notional Amounts) of the Hedging Transactions then in effect (reduced, if appropriate, in accordance with the Confirmations relating to those Hedging Transactions), the obligations of the Borrower in respect of those Hedging Transactions shall, unless otherwise agreed by the Swap Provider, be calculated, so far as the Swap Provider considers it practicable to do so, by reference to a Notional Amount (or aggregate Notional Amounts) equal to the amount of the Loan remaining outstanding after application of the prepayment in question. 7.5 AUTHORITY In order and to the extent necessary to give effect to Clauses 7.3 and 7.4, or in the event of voluntary or mandatory prepayment by the Borrower of the whole of the Loan, the Borrower irrevocably authorises the Swap Provider to amend, restructure, unwind, cancel, net out, terminate, liquidate, transfer or assign any of the rights and/or obligations created pursuant to the Master Agreement in respect of those Hedging Transactions, and/or to enter into any other interest rate exchange and/or hedging transaction or commitment with the Borrower or with any other counterparty approved by the Swap Provider for the purpose of terminating that part of the Hedging Transaction attributable to the amount by which such Notional Amount is reduced under such Clause. 8 FEES The Borrower shall pay to or to the order of the Agent the fees, commissions and other sums referred to in the Fee Letter in the amounts and on the dates set out in the Fee Letter. 9 SECURITY DOCUMENTS As security for the repayment of the Indebtedness, the Borrower shall execute and deliver to the Agent or cause to be executed and delivered to the Agent, on or before the Advance Date, the following Security Documents in such forms and containing such terms and conditions as the Agent shall require:- 9.1 THE MORTGAGES a first priority statutory mortgage over each Vessel together in each case with a collateral deed of covenants; 9.2 THE ASSIGNMENTS a deed of assignment of (inter alia) the Charter, Charter Guarantee, Management Agreement, Insurances, Earnings and Requisition Compensation of each Vessel; 9.3 THE GUARANTEE the joint and several guarantee and indemnity of the Guarantors; 9.4 THE ACCOUNT SECURITY DEED an account security deed in respect of all amounts from time to time standing to the credit of the Earnings Account and the Cash Collateral Account; and 9.5 THE SHARE CHARGE a charge over all the issued shares of each of the Guarantors. 10 AGENCY AND TRUST 10.1 APPOINTMENT Each of the Finance Parties appoints the Agent its agent for the purpose of administering the Loan and the Security Documents. 10.2 AUTHORITY Each of the Finance Parties irrevocably authorises the Agent (subject to Clauses 10.4 and 10.19):- 10.2.1 to execute the Security Documents (other than this Agreement) and the Quiet Enjoyment Agreements on its behalf; 10.2.2 to collect, receive, release or pay any money on its behalf; 10.2.3 acting on the instructions from time to time of an Instructing Group or the Finance Parties (as the case may be) to give or withhold any waivers, consents or approvals under or pursuant to any of the Security Documents; 10.2.4 acting on the instructions from time to time of and Instructing Group to exercise, or refrain from exercising, any discretions under or pursuant to any of the Security Documents; and 10.2.5 to enforce the Security Documents on its behalf. The Agent shall have no duties or responsibilities as agent or as security trustee other than those expressly conferred on it by the Security Documents and shall not be obliged to act on any instructions from the Finance Parties or an Instructing Group if to do so would, in the opinion of the Agent, be contrary to any provision of the Security Documents or to any law, or would expose the Agent to any actual or potential liability to any third party. 10.3 TRUST The Agent agrees and declares, and each of the Finance Parties acknowledges, that, subject to the terms and conditions of this Clause, the Agent holds the Trust Property on trust for the Finance Parties, in accordance with their respective Proportionate Shares, absolutely. Each of the Finance Parties agrees that the obligations, rights and benefits vested in the Agent in its capacity as security trustee shall be performed and exercised in accordance with this Clause. The Agent in its capacity as security trustee shall have the benefit of all of the provisions of this Agreement benefiting it in its capacity as agent for the Finance Parties, and all the powers and discretions conferred on trustees by the Trustee Act 1925 (to the extent not inconsistent with this Agreement). In addition: 10.3.1 the Agent (and any attorney, agent or delegate of the Agent) may indemnify itself or himself out of the Trust Property against all liabilities, costs, fees, damages, charges, losses and expenses sustained or incurred by him or it in relation to the taking or holding of any of the Trust Property or in connection with the exercise or purported exercise of the rights, trusts, powers and discretions vested in the Agent or any other such person by or pursuant to the Security Documents or in respect of anything else done or omitted to be done in any way relating to the Security Documents; and 10.3.2 the Finance Parties acknowledge that the Agent shall be under no obligation to insure any property nor to require any other person to insure any property and shall not be responsible for any loss which may be suffered by any person as a result of the lack or insufficiency of any insurance; and 10.3.3 the Finance Parties agree that the perpetuity period applicable to the trusts declared by this Agreement shall be the period of eighty years from the date of this Agreement. 10.4 LIMITATIONS ON AUTHORITY Except with the prior written consent of each of the Finance Parties, the Agent shall not be entitled to :- 10.4.1 release or vary any security given for the Borrower' obligations under this Agreement; nor 10.4.2 waive the payment of any sum of money payable by any of the Security Parties under the Security Documents; nor 10.4.3 change the meaning of the expressions "INSTRUCTING GROUP" or "MARGIN"; nor 10.4.4 exercise, or refrain from exercising, any discretion, or give or withhold any consent, the exercise or giving of which is, by the terms of this Agreement, expressly reserved to the Banks or the Swap Providers; nor 10.4.5 extend the due date for the payment of any sum of money payable by any of the Security Parties under the Security Documents; nor 10.4.6 take or refrain from taking any step if the effect of such action or inaction may lead to the increase of the obligations of a Bank or the Swap Providers under any of the Security Documents; nor 10.4.7 agree to change the currency in which any sum is payable under the Security Documents (other than in accordance with the terms of the Security Documents); nor 10.4.8 agree to amend this Clause 10.4. 10.5 LIABILITY Neither the Agent nor any of its directors, officers, employees or agents shall be liable to the Finance Parties for anything done or omitted to be done by the Agent under or in connection with the Security Documents unless as a result of the Agent's gross negligence or wilful misconduct. 10.6 ACKNOWLEDGEMENT Each of the Finance Parties acknowledges that:- 10.6.1 it has not relied on any representation made by the Agent or any of the Agent's directors, officers, employees or agents or by any other person acting or purporting to act on behalf of the Agent to induce it to enter into any of the Security Documents; 10.6.2 it has made and will continue to make without reliance on the Agent, and based on such documents and other evidence as it considers appropriate, its own independent investigation of the financial condition and affairs of the Security Parties in connection with the making and continuation of the Loan; 10.6.3 it has made its own appraisal of the creditworthiness of the Security Parties; 10.6.4 the Agent shall not have any duty or responsibility at any time to provide it with any credit or other information relating to any of the Security Parties unless that information is received by the Agent pursuant to the express terms of the Security Documents. Each of Finance Parties agrees that it will not assert nor seek to assert against any director, officer, employee or agent of the Agent or against any other person acting or purporting to act on behalf of the Agent any claim which it might have against them in respect of any of the matters referred to in this Clause. 10.7 LIMITATIONS ON RESPONSIBILITY The Agent shall have no responsibility to any of the Security Parties or to the Finance Parties on account of:- 10.7.1 the failure of a Finance Party or of any of the Security Parties to perform any of their respective obligations under the Security Documents; 10.7.2 the financial condition of any of the Security Parties; 10.7.3 the completeness or accuracy of any statements, representations or warranties made in or pursuant to any of the Security Documents, or in or pursuant to any document delivered pursuant to or in connection with any of the Security Documents; 10.7.4 the negotiation, execution, effectiveness, genuineness, validity, enforceability, admissibility in evidence or sufficiency of any of the Security Documents or of any document executed or delivered pursuant to or in connection with any of the Security Documents. 10.8 THE AGENT'S RIGHTS The Agent may: 10.8.1 assume that all representations or warranties made or deemed repeated by any of the Security Parties in or pursuant to any of the Security Documents are true and complete, unless, in its capacity as the Agent, it has acquired actual knowledge to the contrary; and 10.8.2 assume that no Event of Default or Potential Event of Default has occurred unless, in its capacity as the Agent, it has acquired actual knowledge to the contrary; and 10.8.3 rely on any document or Communication believed by it to be genuine; and 10.8.4 rely as to legal or other professional matters on opinions and statements of any legal or other professional advisers selected or approved by it; and 10.8.5 rely as to any factual matters which might reasonably be expected to be within the knowledge of any of the Security Parties on a certificate signed by or on behalf of that Security Party; and 10.8.6 refrain from exercising any right, power, discretion or remedy unless and until instructed to exercise that right, power, discretion or remedy and as to the manner of its exercise by the Finance Parties (or, where applicable, by an Instructing Group) and unless and until the Agent has received from the Finance Parties any payment which the Agent may require on account of, or any security which the Agent may require for, any costs, claims, expenses (including legal and other professional fees) and liabilities which it considers it may incur or sustain in complying with those instructions. 10.9 THE AGENT'S DUTIES The Agent shall:- 10.9.1 if requested in writing to do so by a Finance Party make enquiry and advise the Finance Parties as to the performance or observance of any of the provisions of the Security Documents by any of the Security Parties or as to the existence of an Event of Default; and 10.9.2 inform the Finance Parties promptly of any Event of Default of which the Agent has actual knowledge. 10.10 NO DEEMED KNOWLEDGE The Agent shall not be deemed to have actual knowledge of the falsehood or incompleteness of any representation or warranty made or deemed repeated by any of the Security Parties or actual knowledge of the occurrence of any Event of Default or Potential Event of Default unless a Finance Party or any of the Security Parties shall have given written notice thereof to the Agent in its capacity as the Agent. Any information acquired by the Agent other than specifically in its capacity as the Agent shall not be deemed to be information acquired by the Agent in its capacity as the Agent. 10.11 OTHER BUSINESS The Agent may, without any liability to account to the Finance Parties generally engage in any kind of banking or trust business with any of the Security Parties or any of their respective subsidiaries or associated companies or with a Finance Party as if it were not the Agent. 10.12 INDEMNITY The Finance Parties shall, promptly on the Agent's request, reimburse the Agent in their respective Proportionate Shares, for, and keep the Agent fully indemnified in respect of:- 10.12.1 all amounts payable by the Borrower to the Agent pursuant to Clause 18 to the extent that those amounts are not paid by the Borrower; 10.12.2 all liabilities, damages, costs and claims sustained or incurred by the Agent in connection with the Security Documents, or the performance of its duties and obligations, or the exercise of its rights, powers, discretions or remedies under or pursuant to any of the Security Documents; or in connection with any action taken or omitted by the Agent under or pursuant to any of the Security Documents, unless in any case those liabilities, damages, costs or claims arise solely from the Agent's wilful misconduct. 10.13 EMPLOYMENT OF AGENTS In performing its duties and exercising its rights, powers, discretions and remedies under or pursuant to the Security Documents, the Agent shall be entitled to employ and pay agents to do anything which the Agent is empowered to do under or pursuant to the Security Documents (including the receipt of money and documents and the payment of money) and to act or refrain from taking action in reliance on the opinion of, or advice or information obtained from, any lawyer, banker, broker, accountant, valuer or any other person believed by the Agent in good faith to be competent to give such opinion, advice or information. 10.14 DISTRIBUTION OF PAYMENTS The Agent shall pay promptly to the order of each of the Banks that Bank's Proportionate Share of every sum of money received by the Agent pursuant to the Security Documents or the Mortgagees' Insurances (with the exception of any amounts payable pursuant to Clause 8 and/or the Fee Letter and any amounts which, by the terms of the Security Documents, are paid to the Agent for the account of the Agent alone or specifically for the account of one or more Banks and except for amounts in respect of the Master Agreement which shall be paid to the Swap Provider) and until so paid such amount shall be held by the Agent on trust absolutely for that Bank. 10.15 REIMBURSEMENT The Agent shall have no liability to pay any sum to a Finance Party until it has itself received payment of that sum. If, however, the Agent does pay any sum to a Finance Party on account of any amount prospectively due to that Finance Party pursuant to Clause 10.14 before it has itself received payment of that amount, and the Agent does not in fact receive payment within five Business Days after the date on which that payment was required to be made by the terms of the Security Documents or the Mortgagees' Insurances, each Finance Party receiving any such payment will, on demand by the Agent, refund to the Agent an amount equal to the amount received by it, together with an amount sufficient to reimburse the Agent for any amount which the Agent may certify that it has been required to pay by way of interest on money borrowed to fund the amount in question during the period beginning on the date on which that amount was required to be paid by the terms of the Security Documents or the Mortgagees' Insurances and ending on the date on which the Agent receives reimbursement. 10.16 REDISTRIBUTION OF PAYMENTS Unless otherwise agreed between the Banks and the Agent, if at any time a Bank receives or recovers by way of set-off, the exercise of any lien or otherwise (other than from any assignee or transferee of or sub-participant in that Bank's Commitment), an amount greater than that Bank's Proportionate Share of any sum due from any of the Security Parties under the Security Documents (the amount of the excess being referred to in this Clause as the "EXCESS AMOUNT") then:- 10.16.1 that Bank shall promptly notify the Agent (which shall promptly notify each other Bank); 10.16.2 that Bank shall pay to the Agent an amount equal to the Excess Amount within ten days of its receipt or recovery of the Excess Amount; and 10.16.3 the Agent shall treat that payment as if it were a payment by the Security Party in question on account of the sum owed to the Banks as aforesaid and shall account to the Banks in respect of the Excess Amount in accordance with the provisions of this Clause. However, if a Bank has commenced any Proceedings to recover sums owing to it under the Security Documents and, as a result of, or in connection with, those Proceedings has received an Excess Amount, the Agent shall not distribute any of that Excess Amount to any other Bank which had been notified of the Proceedings and had the legal right to, but did not, join those Proceedings or commence and diligently prosecute separate Proceedings to enforce its rights in the same or another court. 10.17 RESCISSION OF EXCESS AMOUNT If all or any part of any Excess Amount is rescinded or must otherwise be restored to any of the Security Parties or to any other third party, the Banks which have received any part of that Excess Amount by way of distribution from the Agent pursuant to this Clause shall repay to the Agent for the account of the Bank which originally received or recovered the Excess Amount, the amount which shall be necessary to ensure that the Banks share rateably in accordance with their Proportionate Shares in the amount of the receipt or payment retained, together with interest on that amount at a rate equivalent to that (if any) paid by the Bank receiving or recovering the Excess Amount to the person to whom that Bank is liable to make payment in respect of such amount, and Clause 11.16.3 shall apply only to the retained amount. 10.18 PROCEEDINGS Each of the Finance Parties shall notify one another of the proposed commencement of any Proceedings under any of the Security Documents prior to their commencement. 10.19 INSTRUCTIONS Other than in the circumstances set out in clauses 10.2.3 and 10.2.4, for which no further instructions are required, where the Agent is authorised or directed to act or refrain from acting in accordance with the instructions of the Banks or of an Instructing Group each of the Banks shall provide the Agent with instructions within three Business Days of the Agent's request (which request may be made orally or in writing). If a Bank does not provide the Agent with instructions within that period, that Bank shall be bound by the decision of the Agent. Nothing in this Clause shall limit the right of the Agent to take, or refrain from taking, any action without obtaining the instructions of the Banks or an Instructing Group if the Agent in its discretion considers it necessary or appropriate to take, or refrain from taking, such action in order to preserve the rights of the Banks under or in connection with the Security Documents. In that event, the Agent will notify the Banks of the action taken by it as soon as reasonably practicable, and the Banks agree to ratify any action taken by the Agent pursuant to this Clause. 10.20 COMMUNICATIONS Any Communication under this Clause shall be given, delivered, made or served, in the case of the Agent (in its capacity as Agent or as one of the Banks), and in the case of the other Banks, at the address or fax number indicated in Schedule 2 and in the case of the Swap Providers the communication details set forth in clause 17.1.2. 10.21 PAYMENTS All amounts payable to a Finance Party under this Clause shall be paid to such account at such bank as that Bank or that Swap Provider may from time to time direct in writing to the Agent. 10.22 RETIREMENT Subject to a successor being appointed in accordance with this Clause, the Agent (a) may retire as agent and/or security trustee at any time without assigning any reason by giving to the Borrower, the Banks and the Swap Providers notice of its intention to do so and (b) must retire when instructed to do so in writing by an Instructing Group, in which event the following shall apply: 10.22.1 the Finance Parties may within thirty days after the date of the Agent's notice appoint a successor to act as agent and/or security trustee or, if they fail to do so, the Agent may appoint any other bank or financial institution as its successor; 10.22.2 the resignation of the Agent shall take effect simultaneously with the appointment of its successor on written notice of that appointment being given to the Borrower and the Finance Parties; 10.22.3 the Agent shall thereupon be discharged from all further obligations as agent and/or security trustee but shall remain entitled to the benefit of the provisions of this Clause; 10.22.4 the Agent's successor and each of the other parties to this Agreement shall have the same rights and obligations amongst themselves as they would have had if that successor had been a party to this Agreement. 10.23 NO FIDUCIARY RELATIONSHIP Except as provided in Clauses 10.3 and 10.14, the Agent shall not have any fiduciary relationship with or be deemed to be a trustee of or for a Finance Party and nothing contained in any of the Security Documents shall constitute a partnership between any two or more Finance Parties or between the Agent and any Finance Party. 10.24 THE AGENT AS A BANK The expression "THE BANKS" when used in the Security Documents includes the Agent in its capacity as one of the Banks. The Agent shall be entitled to exercise its rights, powers, discretions and remedies under or pursuant to the Security Documents in its capacity as one of the Banks in the same manner as any other Bank and as if it were not also the Agent. 10.25 THE AGENT AS A "FINANCE PARTY" The expression "THE FINANCE PARTIES" when used in the Security Documents includes the Agent in its capacity as one of the Finance Parties. The Agent shall be entitled to exercise its rights, powers, discretions and remedies under or pursuant to the Security Documents in its capacity as one of the Finance Parties in the same manner as any other Finance Party and as if it were not also the Agent. 10.26 THE AGENT AS SECURITY TRUSTEE Unless the context otherwise requires, the expression "THE AGENT" when used in the Security Documents includes the Agent acting in its capacities both as agent and security trustee. 11 COVENANTS The Borrower covenants with the Finance Parties in the following terms. 11.1 NEGATIVE COVENANTS The Borrower will not without the Agent's prior written consent: 11.1.1 NO DISPOSALS OR THIRD PARTY RIGHTS dispose of or create or permit to arise or continue any Encumbrance or other third party right on or over all or any part of its present or future assets or undertaking (including, without limitation, any of its rights under or in connection with the Master Agreements and any amount at any time payable by it to the Agent under or pursuant to the Master Agreements) or permit any Encumbrance or other third party right on or over all or any of the Guarantors' present or future assets or undertaking other than Permitted Encumbrances; nor 11.1.2 NO BORROWINGS except from the Guarantors, borrow any money or incur any obligations under leases other than office premises and office equipment for their own use; nor 11.1.3 NO SUBSTANTIAL LIABILITIES except in the ordinary course of business, incur any liability to any third party which is of a substantial nature; nor 11.1.4 NO DEALINGS WITH MASTER AGREEMENTS assign, novate or in any other way transfer any of its rights or obligations under or pursuant to either of the Master Agreements, nor enter into any interest rate exchange or hedging agreement with anyone other than a Swap Provider, nor any other agreement or commitment the effect of which is materially to prejudice the hedging of the Borrower's interest rate risk effected by the Hedging Transactions from time to time entered into between the Borrower and a Swap Provider; nor 11.1.5 NO OTHER BUSINESS engage in no other business other than acting as the holding company of the Guarantors and will procure that the Guarantors engage in no business other than the ownership, operation, chartering and management of the Vessel owned by them; nor 11.1.6 NO LOANS OR OTHER FINANCIAL COMMITMENTS make any loan nor enter into any guarantee or indemnity or otherwise voluntarily assume any actual or contingent liability in respect of any obligation of any other person other than loans to the Guarantors and guarantees by the Borrower of the obligations of each Owner under the Charter and the Management Agreement in respect of its Vessel on an unsecured basis; nor 11.1.7 NO DIVIDENDS (i) pay any dividends or make any other distributions to shareholders or enter into any transaction which has the same commercial effect as a distribution to shareholders during the continuance of an Event of Default or Potential Event of Default; and (ii) prior to the occurrence of an Event of Default or Potential Event of Default, pay any dividends or make any other distributions to shareholders or enter into any transaction which has the same commercial effect as a distribution to shareholders unless the ratio of the aggregate of the Market Values of those Vessels which remain subject to the Mortgages and which have not become a Total Loss to the amount of the Loan (expressed as a percentage) is not less than one hundred and forty per centum (140%); nor 11.1.8 DE-LISTING permit its shares to be de-listed from the New York Stock Exchange; nor 11.1.9 MERGER enter into any amalgamation, demerger, merger or corporate reconstruction; nor 11.1.10 ARMS LENGTH TRANSACTIONS enter into transactions with Affiliates (other than the Guarantors) other than on an arms-length basis. 11.2 POSITIVE COVENANTS 11.2.1 REGISTRATION OF VESSELS The Borrower undertakes to procure that the registration of the Vessels under the flags indicated in Schedule 1 is maintained by the Guarantors for the duration of the Facility Period. A change of flag shall only be permitted with the Agent's prior written consent, such consent not to be unreasonably withheld. 11.2.2 CHARTERS AND MANAGEMENT AGREEMENTS Any changes to the Charters and the Management Agreements may only be made with the Agent's prior written consent acting on the instructions of the Banks (not to be unreasonably withheld). On expiration of the relevant Sun Charters, unless they are extended at a time charter rate at least equal to the basic hire payable under the Charter of such Vessel, or if either Sun Charter should otherwise terminate during the Facility Period, the Borrower undertakes to procure that the relevant Charterer (or, in the case of (iii) below, the relevant Owner), within a period of thirty (30) days from any such expiration or termination, either (i) enters in to a new charter for that Vessel at a time charter rate at least equal to the basic hire payable under the relevant Charter, with a company having a credit rating of at least BBB with Standard & Poors or Baa 2 from Moody's; or (ii) provides cash collateral initially in an amount of seven million five hundred thousand Dollars ($7,500,000) decreasing quarterly thereafter pro rata as security for its payment obligations under the relevant Charter; or (iii) enters into a new time charter for such Vessel with Stena Bulk AB for a period at least equal to the balance of the Facility Period and at a rate at least equal to the basic hire payable under the relevant Charter, such charter to be guaranteed by Stena AB and that first priority security will be granted to the Agent on behalf of the Finance Parties over any such replacement charters, charter guarantees and/or cash deposits standing as security for charter obligations to the extent within the control of the Borrower or the Owners, and that reasonable endeavours will be used to obtain the same security (and any relevant acknowledgements to notices of assignment) from other parties to such documentation. 11.2.3 ADDITIONAL SECURITY The Vessels shall be valued at least once per year and on such other occasions as the Agent may require. One valuation each year during the Facility Period, any valuations following an Event of Default and any valuations conducted when the Leverage Ratio is equal to or more than seventy five per centum (75%) shall be at the Borrower's expense. Any other valuations shall be at the expense of the Banks. If and so often as the aggregate of the Market Values of the Vessels (determined in accordance with clause 1.1.66) plus the value of any additional security (other than Cash Collateral or Cash Equivalents) for the time being provided to the Finance Parties pursuant to this Clause shall be less than one hundred and twenty five per centum (125%) of the amount of the Loan less any Cash Collateral or Cash Equivalents provided as security under this Clause, the Borrower will, within thirty days of the request of the Agent to do so, at the Borrower's option:- (a) pay to the Agent for credit to the Cash Collateral Account a cash deposit in the amount of the shortfall to be secured in favour of the Finance Parties as additional security for the payment of the Indebtedness; or (b) give to Agent as security trustee for the Finance Parties other additional security in amount and form acceptable to the Finance Parties in their discretion (with Cash Collateral or Cash Equivalents being automatically deemed acceptable); or (c) prepay the amount of the Indebtedness which will ensure that the aggregate of the Market Values of the Vessels (determined as aforesaid) plus the value of any such additional security is not less than one hundred and twenty five per centum (125%) of the amount of the Loan less any Cash Collateral or Cash Equivalents. Clauses 5.4, 5.5 and 5.6 shall apply, mutatis mutandis, to any prepayment made pursuant to this Clause and the value of any additional security provided pursuant to this Clause shall be determined by the Agent in its discretion, other than Cash Collateral or Cash Equivalents which shall be given face value on a Dollar for Dollar basis. Where the Borrower has provided additional security pursuant to this Clause, the Borrower may request that the Agent obtain new valuations on a date falling not earlier than three months after the date such additional security was provided. If the aggregate amount of the Market Values of the Vessels plus the value of any additional security (other than Cash Collateral or Cash Equivalents) (the "NEW SECURITY Amount") is greater than one hundred and thirty five per centum (135%) of the amount of the Loan (less any Cash Collateral or Cash Equivalents) then provided that no Event of Default has occurred and is continuing, the Agent shall release to the Borrower, upon the Borrower's written request and at the Borrower's expense, any such additional security such that after its release the New Security Amount will be at least equal to one hundred and thirty five per centum (135%) of the amount of the Loan (less any Cash Collateral or Cash Equivalents). The Agent shall also release any Cash Collateral if and to the extent that the Borrower simultaneously makes a voluntary prepayment of the Loan in an equivalent amount. 11.2.4 FINANCIAL STATEMENTS The Borrower will supply to the Agent, without request: (a) the annual consolidated financial statements of the Borrower for each financial year of the Borrower ending during the Facility Period, containing (amongst other things) the Borrower's profit and loss account for, and balance sheet at the end of, each such financial year, prepared in accordance with GAAP consistently applied, and audited by a firm of chartered accountants (or equivalent) acceptable to the Agent, in each case as soon as these are available and in any event within one hundred and twenty (120) days of the end of the financial year to which they relate; and (b) the interim unaudited financial statements of the Borrower for each quarter-year ending during the Facility Period, prepared in accordance with generally accepted accounting principles and practices applicable to companies incorporated in the Borrower's country of incorporation consistently applied, in each case as soon as these are available and in any event within sixty (60) days of the end of the quarter to which they relate. 11.2.5 COMPLIANCE CERTIFICATE The Borrower will promptly supply to the Agent a at the same time as delivering to the Agent its interim unaudited financial statements pursuant to Clause 11.2.4(b) above a compliance certificate demonstrating its compliance with the financial covenants contained in Clause 11.3. 11.2.6 OTHER INFORMATION The Borrower will promptly supply to the Agent details of any change to its board of directors, copies of all financial and other information from time to time given by the Borrower to its shareholders and creditors and such information and explanations as the Agent may from time to time require in connection with the operation of the Vessels and the Borrower's profit and liquidity, and will procure that the Agent be given the like information and explanations relating to all other Security Parties. 11.2.7 EVIDENCE OF GOODSTANDING The Borrower will from time to time on the request of the Agent provide the Agent with evidence in form and substance satisfactory to the Agent that the Security Parties and all corporate shareholders of any of the Security Parties (except the Borrower) remain in good standing. 11.2.8 EVIDENCE OF CURRENT COFR Without limiting the Borrower's obligations under Clause 11.2.6, the Borrower will from time to time on the request of the Agent provide the Agent with such evidence as the Agent may reasonably require that each Vessel (whilst subject to a Mortgage) has a valid and current Certificate of Financial Responsibility pursuant to the United States Oil Pollution Act 1990. 11.2.9 ISM CODE COMPLIANCE The Borrower will:- (a) procure that each of the Vessels remains for the duration of the Facility Period subject to a SMS; (b) maintain a valid and current SMC for each of the Vessels throughout the Facility Period; (c) procure that each Company maintains a valid and current DOC throughout the Facility Period; (d) immediately notify the Agent in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the SMC of any Vessel or of the DOC of any Company; (e) immediately notify the Agent in writing of any "accident" or "major non-conformity", as each of those terms is defined in the Guidelines on the Implementation of the International Safety Management Code by Administrations adopted by the Assembly of the International Maritime Organisation pursuant to Resolution A.788(19), and of the steps being taken to remedy the situation; and (f) not without the prior written consent of the Agent (which will not be unreasonably withheld) change the identity of any Company. 11.2.10 INSPECTION OF RECORDS The Borrower will permit the inspection of financial records and accounts at reasonable times by the Agent or its nominee on reasonable notice. 11.2.11 PARI PASSU OBLIGATIONS The Borrower will ensure that, throughout the Facility Period, the obligations of the Security Parties under or pursuant to the Security Documents rank at least pari passu with all other existing or future unsecured indebtedness, obligations or liabilities of the Security Parties, other than any mandatorily preferred by law. 11.2.12 NOTIFICATION OF EVENT OF DEFAULT The Borrower will notify the Agent in writing of the occurrence of any Event of Default or Potential Event of Default promptly upon becoming aware of the same. 11.2.13 OTHER INFORMATION The Borrower shall provide the Agent with such other information concerning the business and financial condition of the Borrower and the Guarantors as the Agent may reasonably require. 11.3 FINANCIAL COVENANTS The Borrower covenants that throughout the Facility Period (with such covenants being assessed on a group basis to include all subsidiaries of the Borrower whose results are consolidated into the results of the Borrower): 11.3.1 the Leverage Ratio (expressed as a percentage) will be not less than eighty per centum (80%); 11.3.2 its Value Adjusted Equity (expressed as a percentage)will be not less than thirty per centum (30%) of its Value Adjusted Total Assets; and 11.3.3 it will maintain a positive Working Capital at all times. 12 EARNINGS ACCOUNT AND CASH COLLATERAL ACCOUNT 12.1 MAINTENANCE OF ACCOUNTS The Borrower shall maintain the Earnings Account, the Cash Collateral Account and any other accounts it may have (other than one account to be held at Bank of Bermuda, which shall have a balance of under one hundred thousand Dollars ($100,000) at all times) with the Agent for the duration of the Facility Period free of Encumbrances and rights of set off other than as created by or pursuant to the Security Documents. 12.2 EARNINGS The Borrower shall procure that all Earnings are credited to the Earnings Account. 12.3 RELEASE OF SURPLUS Any amount remaining to the credit of the Earnings Account shall (unless an Event of Default or Potential Event of Default shall have occurred and be continuing) be released to or to the order of the Borrower. Amounts standing to the credit of the Cash Collateral Account shall be released to or to the order of the Borrower in accordance with Clause 11.2.3. 12.4 RESTRICTION ON WITHDRAWAL During the Facility Period no sum may be withdrawn from the Earnings Account (except in accordance with this Clause) without the prior written consent of the Agent. 12.5 RELOCATION OF EARNINGS ACCOUNT At any time following the occurrence and during the continuation of an Event of Default, the Agent may without the consent of the Borrower relocate the Earnings Account to any other branch of the Agent, without prejudice to the continued application of this Clause and the rights of the Finance Parties under or pursuant to the Security Documents. 13 EVENTS OF DEFAULT AND EVENT OF MANDATORY PREPAYMENT 13.1 THE AGENT'S RIGHTS If any of the events set out in Clause 13.2 occurs, the Agent may (and, if instructed to do so by an Instructing Group, shall) by notice to the Borrower declare the Banks to be under no further obligation to the Borrower under or pursuant to this Agreement and may (and, if instructed to do so by an Instructing Group shall) declare all or any part of the Indebtedness (including such unpaid interest as shall have accrued) to be immediately payable, in which event the Indebtedness (or the part of the Indebtedness referred to in the Agent's notice) shall immediately become due and payable without any further demand or notice of any kind. 13.2 EVENTS OF DEFAULT The events referred to in Clause 13.1 are:- 13.2.1 PAYMENT DEFAULT if the Borrower defaults in the payment of any part of the Indebtedness when due (except as a result of banking error, provided the payment default is remedied within two (2) Business Days of the Borrower being made aware of the non-payment); or 13.2.2 OTHER DEFAULT if any of the Security Parties fails to observe or perform any of the covenants, conditions, undertakings, agreements or obligations on its part contained in any of the Security Documents in any material respect or shall in any other way be in breach of or do or cause to be done any act repudiating or evidencing an intention to repudiate any of the Security Documents and such breach (if capable of remedy) is not remedied within fourteen (14) days after the Agent has given the Borrower notice thereof; or 13.2.3 MISREPRESENTATION OR BREACH OF WARRANTY if any representation or warranty made or repeated by any of the Security Parties to any of the Finance Parties in any of the Security Documents, or in or pursuant to any notice delivered to the Agent under or pursuant to any of the Security Documents, is false or incorrect or misleading in any material respect; or 13.2.4 EXECUTION if a distress or execution or other process of a court or authority is levied on any of the property of any of the Security Parties before or after final judgment or by order of any competent court or authority and is not satisfied within seven days of levy; or 13.2.5 INSOLVENCY EVENTS if any of the Security Parties:- (a) resolves to appoint, or applies for, or consents to, the appointment of a receiver, administrative receiver, trustee, administrator or liquidator of itself or of all or part of its assets; or (b) is unable or admits its inability to pay its debts as they fall due; or (c) makes a general assignment for the benefit of creditors or enters into a moratorium on payment of any of its indebtedness; or (d) ceases trading or threatens to cease trading; or (e) has appointed an Inspector under the Companies Act 1985 or any statutory provision analogous thereto; or 13.2.6 INSOLVENCY PROCEEDINGS if any order or judgment is given by any court, for the bankruptcy, liquidation, winding up, administration or re-organisation of any of the Security Parties or for the appointment of a receiver, administrative receiver, administrator, liquidator or trustee of any of the Security Parties or of all or part of the assets of any of the Security Parties, or if any of the Security Parties appoints or purports to appoint such receiver, administrative receiver, administrator, liquidator or trustee; or 13.2.7 IMPOSSIBILITY OR ILLEGALITY if any event occurs which would, or would with the passage of time, render performance of any of the Security Documents by any of the Security Parties impossible, unlawful or unenforceable by the Finance Parties; or 13.2.8 CONDITIONS SUBSEQUENT if any of the conditions set out in Clause 3.2 is not satisfied in accordance with that Clause; or 13.2.9 REVOCATION OR MODIFICATION OF CONSENTS ETC. if any consent, licence, approval, authorisation, filing, registration or other requirement of any governmental, judicial or other public body or authority which is now, or which at any time during the Facility Period becomes, necessary to enable any of the Security Parties to comply with any of their obligations in or pursuant to any of the Security Documents is not obtained or is revoked, suspended, withdrawn or withheld, or is modified in a manner which is, or is likely to be, prejudicial to the interests of the Finance Parties, or ceases to remain in full force and effect; or 13.2.10 CURTAILMENT OF BUSINESS if the business of any of the Security Parties is wholly or partially curtailed or suspended by any intervention by or under authority of any government, or if all or a substantial part of the undertaking, property or assets of any of the Security Parties is seized, nationalised, expropriated or compulsorily acquired by or under authority of any government; or 13.2.11 MASTER AGREEMENT TERMINATION if a notice is sent by either of the Swap Providers under section 6(a) of a Master Agreement, or by any person under section 6(b)(iv) of a Master Agreement, in either case designating an Early Termination Date for the purpose of a Master Agreement, or if either of the Master Agreements are for any other reason terminated, cancelled, suspended, rescinded, revoked or otherwise ceases to remain in full force and effect unless promptly replaced by alternative Master Agreements and Confirmations giving the Borrower fixed interest rate exposure for the Loan for the remainder of the Facility Period; or 13.2.12 ACCELERATION OF OTHER INDEBTEDNESS if any obligation for borrowed money or other financial indebtedness of any of the Security Parties which is in excess of one million Dollars ($1,000,000) becomes due or capable of being declared due prior to its stated maturity by reason of default on the part of that Security Party, or is not repaid or satisfied at maturity, or any commitment for financial indebtedness in excess of one million Dollars ($1,000,000) is cancelled or suspended by reason of default of a Security Party; or 13.2.13 CHALLENGE TO REGISTRATION if the registration of any Vessel or any Mortgage is contested by the relevant Guarantor or becomes void or voidable or liable to cancellation or termination, or if the validity or priority of any Mortgage is contested by the relevant Guarantor; or 13.2.14 WAR if the country of registration of any Vessel becomes involved in war (whether or not declared) or civil war or is occupied by any other power and the Agent in its discretion considers that, as a result, the security conferred by the Security Documents is materially prejudiced; or 13.2.15 MATERIAL ADVERSE CHANGE ETC. if (a) anything is done or permitted or omitted to be done by any of the Security Parties which in the reasonable opinion of the Agent jeopardises or imperils (or may jeopardise or imperil) the rights conferred on the Finance Parties by the Security Documents in a material respect; or (b) there occurs (in the reasonable opinion of the Agent) any change in the business, affairs or financial condition of any of the Security Parties or any of the Commercial Parties from that pertaining at the date of this Agreement; or (c) if any of the Charters are for any reason terminated, cancelled, suspended, rescinded, revoked or otherwise cease to remain in full force and effect other than due to effluxion of time or Total Loss (or, in the case of a V-MAX Vessel, alternative arrangements being put in place within the periods, and in conformity with the requirements of, Clause 11.2.2), where the occurrence of such event or circumstances has a Material Adverse Effect; or 13.2.16 DE-LISTING if the shares in the Borrower are de-listed from the New York Stock Exchange; or 13.2.17 CHANGE OF OWNERSHIP any Guarantor ceases to be wholly owned (either legally and/or beneficially) by the Borrower or (while it is the manager of a Vessel) Northern Marine Management Ltd. ceases to be a wholly owned (directly or indirectly) subsidiary of Stena AB; or 13.2.18 ANALOGOUS EVENTS if any event which (in the reasonable opinion of the Agent) is analogous to any of the events set out in Clauses 13.2.4, 13.2.5 and/or 13.2.6 above shall occur. 13.3 EVENT OF MANDATORY PREPAYMENT if any Vessel or any other vessel which may from time to time be mortgaged to the Finance Parties as security for the repayment of all or any part of the Indebtedness is sold, destroyed, abandoned, confiscated, forfeited, condemned as prize or becomes a Total Loss the Borrower shall prepay such amount as is equal to: B (i) A x - C together with accrued interest and any Break Costs on the amount being prepaid, where A = the Loan outstanding at the relevant date; B = the Market Value of the relevant Vessel; and C = the aggregate Market Values of the relevant Vessel and of all remaining Vessels. For the purposes of this Clause, the Market Value shall be determined by reference to the then most recent valuations (if within three (3) months of the relevant date) or (in all other circumstances) by a further valuation carried out in accordance with Clause 11.2.3; and (ii) any additional amount as may be required to ensure that, after such application, the Loan (less any Cash Collateral or Cash Equivalents) shall be less than sixty per centum (60%) of the Market Value of the remaining Vessels and any additional security provided under Clause 11.2.3, and any balance shall, subject to no Event of Default or Potential Event of Default then being in existence, be released to the Owner. The Borrower's obligation to make such Mandatory Prepayment shall fall due, in the case of a sale, on the date of completion of such sale, and in the case of a Total Loss on the earlier of (a) receipt of the insurance proceeds relating thereto and (b) the date falling one hundred and eighty (180) days after such Total Loss. For the avoidance of doubt any such sale and release or the Total Loss of a Vessel and the resulting mandatory prepayment in accordance with the terms of this Clause 13.3 will not constitute a Credit Event Upon Merger under the Master Agreements. 14 SET-OFF, LIEN AND APPLICATION 14.1 SET-OFF The Borrower irrevocably authorises the Finance Parties at any time while an Event of Default is in existence to set off without notice any liability of any of the Borrower to any of Finance Parties (whether present or future, actual or contingent, and irrespective of the branch or office, currency or place of payment) against any credit balance from time to time standing on any account of any of the Borrower (whether current or otherwise and whether or not subject to notice) with any branch of the Finance Parties in or towards satisfaction of the Indebtedness and, in the name of that Finance Party, to do all acts (including, without limitation, converting or exchanging any currency) and execute all documents which may be required to effect such application. 14.2 APPLICATION Save as otherwise provided by the Security Documents or the Quiet Enjoyment Agreements, the Borrower irrevocably authorises the Agent to apply all sums which the Agent may receive arising under or in connection with any of the Security Documents executed by the Borrower in or towards satisfaction, or by way of retention on account, of the Indebtedness, in such manner as the Agent may determine. 14.3 MASTER AGREEMENT RIGHTS The rights conferred on the Agent by this Clause shall be in addition to, and without prejudice to or limitation of, the rights of netting and set off conferred on the Swap Providers by the Master Agreements. The Borrower acknowledges that the Swap Providers shall be under no obligation to make any payment to the Borrower under or pursuant to the Master Agreements if, at the time that payment becomes due, there shall have occurred an Event of Default or Potential Event of Default, or an Event of Default or Termination Event (as those terms are respectively defined in the Master Agreements), but shall pay any such sums (and are hereby authorised to make such payments) to the Agent on behalf of the Borrower to be applied in accordance with Clause 14.2, with any balance thereafter to be paid to the Borrower or as it may direct. 15 ASSIGNMENT AND SUB-PARTICIPATION 15.1 RIGHT TO ASSIGN Each of the Banks may assign or transfer any of its rights and/or obligations under or pursuant to this Agreement to any other branch of that Bank or to another Bank or an Affiliate of another Bank or, subject to the approval of the Borrower which shall not be unreasonably withheld or delayed and which shall be deemed given after five (5) Business Days if no response is received by the Agent, to any other bank or financial institution, and may grant sub-participations in all or any part of its Commitment PROVIDED ALWAYS that no consent of the Borrower shall be required for any transfer or assignment during the continuance of an Event of Default. 15.2 BORROWER'S CO-OPERATION The Borrower will co-operate fully with the Banks in connection with any assignment, transfer or sub-participation; will execute and procure the execution of such documents as the Banks may require in connection therewith; irrevocably authorises the Agent to sign any Transfer Certificate on its behalf; and irrevocably authorises the Agent and the Banks (subject to receipt of an appropriate confidentiality undertaking from the proposed recipient of the information) to disclose to any proposed assignee, transferee or sub-participant (whether before or after any assignment, transfer or sub-participation and whether or not any assignment, transfer or sub-participation shall take place) all information relating to the Security Parties, the Loan or the Security Documents which the Agent or the Bank may in its discretion consider necessary or desirable. 15.3 RIGHTS OF ASSIGNEE Any assignee or transferee of a Bank shall (unless limited by the express terms of the assignment or transfer) take the full benefit of every provision of the Security Documents benefitting that Bank. 15.4 TRANSFER CERTIFICATES If any Bank wishes to transfer any of its rights and/or obligations under or pursuant to this Agreement, it may do so by delivering to the Agent a duly completed Transfer Certificate, in which event on the Transfer Date:- 15.4.1 to the extent that that Bank seeks to transfer its rights and/or obligations, the Borrower (on the one hand) and the Bank in question (on the other) shall be released from all further obligations towards the other(s); 15.4.2 the Borrower (on the one hand) and the Transferee (on the other) shall assume obligations towards the other(s) identical to those released pursuant to Clause 15.4.1; 15.4.3 the Agent, each of the Banks and the Transferee shall have the same rights and obligations between themselves as they would have had if the Transferee had been an original party to this Agreement as a Bank; and 15.4.4 the Transferee shall pay to the Agent for its own account a transfer fee of two thousand Dollars ($2,000). Each Bank irrevocably authorises the Agent to sign on its behalf any Transfer Certificate relating to the transfer of any of the rights and/or obligations of any other Bank. 15.5 COSTS RESULTING FROM CHANGE OF BANK OR FACILITY OFFICE If: (a) a Bank assigns or transfers any of its rights and obligations hereunder or changes its facility office; and (b) as a result of circumstances existing at the date the assignment, transfer or change occurs, the Borrower would be obliged to pay an additional or increased cost under this Agreement. then, unless the assignment, transfer or change is made by a Bank to mitigate any circumstance giving rise to the additional or increased cost and/or cancelled by reason of illegality, the Borrower need only pay that additional or increased cost to the same extent that it would have been obliged to if no assignment, transfer or change had occurred. 15.6 SECURITY DOCUMENTS Unless otherwise expressly provided in any Security Document or otherwise expressly agreed between a Bank and any proposed Transferee and notified by that Bank to the Agent on or before the relevant Transfer Date, there shall automatically be assigned to the Transferee with any transfer of a Bank's rights and/or obligations under or pursuant to this Agreement the rights of that Bank under or pursuant to the Security Documents (other than this Agreement) which relate to the portion of the Bank's rights and/or obligations transferred by the relevant Transfer Certificate. 16 PAYMENTS, MANDATORY PREPAYMENT, RESERVE REQUIREMENTS AND ILLEGALITY 16.1 PAYMENTS All amounts payable by the Borrower under or pursuant to any of the Security Documents shall be paid to such accounts at such banks as the Agent may from time to time direct to the Borrower, and (unless payable in any other Currency of Account) shall be paid in Dollars in same day funds (or such funds as are required by the authorities in the United States of America for settlement of international payments for immediate value). Payments shall be deemed to have been received by the Agent on the date on which the Agent receives authenticated advice of receipt, unless that advice is received by the Agent on a day other than a Business Day or at a time of day (whether on a Business Day or not) when the Agent in its discretion considers that it is impossible or impracticable for the Agent to utilise the amount received for value that same day, in which event the payment in question shall be deemed to have been received by the Agent on the Business Day next following the date of receipt of advice by the Agent. 16.2 NO DEDUCTIONS OR WITHHOLDINGS All payments (whether of principal or interest or otherwise) to be made by the Borrower pursuant to the Security Documents shall, subject only to Clause 16.3, be made free and clear of and without deduction for or on account of any Taxes or other deductions, withholdings, restrictions, conditions or counterclaims of any nature. 16.3 GROSSING-UP If at any time any law requires (or is interpreted to require) the Borrower to make any deduction or withholding from any payment, or to change the rate or manner in which any required deduction or withholding is made, the Borrower will promptly notify the Agent and, simultaneously with making that payment, will pay to the Agent whatever additional amount (after taking into account any additional Taxes on, or deductions or withholdings from, or restrictions or conditions on, that additional amount) is necessary to ensure that, after making the deduction or withholding, the Agent and the Finance Parties receive a net sum equal to the sum which they would have received had no deduction or withholding been made. 16.4 EVIDENCE OF DEDUCTIONS If at any time the Borrower is required by law to make any deduction or withholding from any payment to be made by it pursuant to any of the Security Documents, the Borrower will pay the amount required to be deducted or withheld to the relevant authority within the time allowed under the applicable law and will, no later than thirty days after making that payment, deliver to the Agent an original receipt issued by the relevant authority, or other evidence acceptable to the Agent acting reasonably, evidencing the payment to that authority of all amounts required to be deducted or withheld. 16.5 ADJUSTMENT OF DUE DATES If any payment or transfer of funds to be made under any of the Security Documents, other than a payment of interest on the Loan or a payment pursuant to the Master Agreements, shall be due on a day which is not a Business Day, that payment shall be made on the next succeeding Business Day (unless the next succeeding Business Day falls in the next calendar month in which event the payment shall be made on the next preceding Business Day). Any such variation of time shall be taken into account in computing any interest in respect of that payment. 16.6 CHANGE IN LAW If, by reason of the introduction of any law, or any change in any law, or the interpretation or administration of any law, or in compliance with any request or requirement from any central bank or any fiscal, monetary or other authority:- 16.6.1 any Bank or the Agent (or the holding company of any Bank or the Agent) shall be subject to any Tax (other than Tax on its overall net income) with respect to payments of all or any part of the Indebtedness; or 16.6.2 the basis of Taxation of payments to any Bank or to the Agent in respect of all or any part of the Indebtedness shall be changed save where a deduction or withholding for or on account of Tax from a payment under a Security Document is required by law to be made by the Borrower; or 16.6.3 any reserve requirements shall be imposed, modified or deemed applicable against assets held by or deposits in or for the account of or loans by any branch of any Bank except to the extent included in the Mandatory Cost; or 16.6.4 the manner in which any Finance Party allocates capital resources to its obligations under this Agreement or any ratio (whether cash, capital adequacy, liquidity or otherwise) which any Finance Party is required or requested to maintain shall be affected; or 16.6.5 there is imposed on any Finance Party (or on the holding company of any Finance Party) any other condition in relation to the Indebtedness or the Security Documents; and the result of any of the above shall be to increase the cost to any Bank (or to the holding company of any Bank) of that Bank making or maintaining its Commitment or to cause any Finance Party to suffer (in its opinion) a material reduction in the rate of return on its overall capital below the level which it reasonably anticipated at the date of this Agreement and which it would have been able to achieve but for its entering into this Agreement and/or performing its obligations under this Agreement unless such an increase of cost is attributable to the wilful breach by any Bank or its Affiliate of any law or regulation, or is compensated for by any other provision hereunder or would have been compensated for under another provision hereunder but was not compensated solely because an exception contained therein; the Bank affected shall notify the Agent and the Borrower shall from time to time pay to the Agent on demand for the account of the Bank affected the amount which shall compensate that Bank or the Agent (or the relevant holding company) for such additional cost or reduced return. A certificate signed by an authorised signatory of the Finance Party affected setting out the amount of that payment and the basis of its calculation shall be submitted to the Borrower and shall be conclusive evidence of such amount save for manifest error or on any question of law. 16.7 ILLEGALITY Notwithstanding anything contained in the Security Documents, the obligations of the Banks to advance or maintain the Loan shall terminate in the event that a change in any law or in the interpretation of any law by any authority charged with its administration shall make it unlawful for that Bank to advance or maintain its Commitment. In that event the Bank affected shall notify the Agent and the Agent shall, by written notice to the Borrower, declare that Bank's obligations to be immediately terminated. If all or any part of the Loan shall have been advanced by the Banks to the Borrower, the Indebtedness (including all accrued interest) shall be prepaid within thirty days from the date of such notice. Clause 5.3 shall apply to that prepayment if it is made on a day other than the last day of an Interest Period. 16.8 If (i) at or about 11 am on the second Business Day prior to the beginning of an Interest Period LIBOR is not available and none or only one of the Banks supplies a rate to the Agent to determine LIBOR for the relevant Interest Period or (2) if at or about 11 am on the second Business Day prior to the beginning of an Interest Period the Agent receives notification from at least two Banks (whose participation in the Loan exceeds fifty per cent of the Loan) that the cost to them of obtaining matching deposits in the relevant interbank market would be in excess of LIBOR, 16.8.1 the Agent shall give notice to the Borrower of the occurrence of such event; and 16.8.2 the Agent shall as soon as reasonably practicable certify to the Borrower in writing the effective cost to the Banks of maintaining the Loan for such further period as shall be selected by the Banks and the rate of interest payable by the Borrower for that period; or, if that is not acceptable to the Borrower, 16.8.3 the Agent on behalf of the Banks will negotiate with the Borrower in good faith with a view to modifying this Agreement to provide a substitute basis for the Loan which is financially a substantial equivalent to the basis provided for in this Agreement. If, within thirty days of the giving of the notice referred to in Clause 16.8.1, the Borrower and the Agent fail to agree in writing on a substitute basis for the Loan, the Borrower will immediately prepay the Indebtedness. Clause 5.3 shall apply to that prepayment if it is made on a day other than the last day of an Interest Period. 16.9 16.9.1 (a) Each Finance Party shall, in consultation with the Borrower take all reasonable steps to mitigate any circumstances which would arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 16.3, Clause 16.6, Clause 16.7 or Clause 16.8 including (but not limited to) transferring its rights and obligations under the Security Documents. (b) Paragraph (a) above does not in any way limit the obligations of the Borrower or Guarantors under the Security Documents. 16.9.2 (a) The Borrower shall indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 16.9.1. (b) A Finance Party is not obliged to take any steps under Clause 16.9.1 if in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it. 17 COMMUNICATIONS 17.1 METHOD Any Communication may be given, delivered, made or served (as the case may be) under or in relation to this Agreement by letter or fax and shall be in the English language and sent addressed:- 17.1.1 in the case of the Banks or the Agent to the Agent in accordance with the details set out in Schedule 2; and 17.1.2 in the case of the Swap Providers to the relevant Swap Provider in accordance with the details set out in Schedule 2; 17.1.3 in the case of the Borrower to the Communications Address; or to such other address or fax number as the Banks, the Swap Providers, the Agent or the Borrower may designate for themselves by written notice to the others. 17.2 TIMING A Communication shall be deemed to have been duly given, delivered, made or served to or on, and received by, the Borrower:- 17.2.1 in the case of a fax when the sender receives one or more transmission reports showing the whole of the Communication to have been transmitted to the correct fax number; or 17.2.2 if delivered to an officer of any of the Borrower or left at the Communications Address at the time of delivery or leaving. A Communication shall only be deemed to have been duly given, delivered, made or served to or on, and received by, the Banks, or the Agent on actual receipt of the whole of that Communication by the Agent and by a Swap Provider on actual receipt of the whole of that Communication by that Swap Provider. 17.3 INDEMNITY The Borrower shall indemnify the Finance Parties against any cost, claim, liability, loss or expense (including legal fees and any Value Added Tax or any similar or replacement tax (if applicable)) which the Finance Parties may sustain or incur as a consequence of any Communication sent by or on behalf of the Borrower by fax not being received by its intended recipient, or being received incomplete, or by reason of any Communication purportedly having been sent by or on behalf of the Borrower having been sent fraudulently. 18 GENERAL INDEMNITIES 18.1 CURRENCY In the event of a Finance Party receiving or recovering any amount payable under any of the Security Documents in a currency other than the Currency of Account, and if the amount received or recovered is insufficient when converted into the Currency of Account at the date of receipt to satisfy in full the amount due, the Borrower shall, on the Agent's written demand, pay to the Agent such further amount in the Currency of Account as is sufficient to satisfy in full the amount due and that further amount shall be due to the Agent on behalf of the Finance Parties as a separate debt under this Agreement. 18.2 COSTS AND EXPENSES The Borrower will, within fourteen days of the Agent's written demand, reimburse the Agent (on behalf of the Finance Parties) for all costs and expenses (including Value Added Tax or any similar or replacement tax if applicable) of and incidental to:- 18.2.1 the negotiation, preparation, execution and registration of the Security Documents (whether or not any of the Security Documents are actually executed or registered and whether or not all or any part of the Loan is advanced); 18.2.2 any amendments, addenda or supplements to any of the Security Documents (whether or not completed); 18.2.3 any other documents which may at any time be required by any Finance Party to give effect to any of the Security Documents or which any Finance Party is entitled to call for or obtain pursuant to any of the Security Documents; and 18.2.4 the exercise of the rights, powers, discretions and remedies of the Finance Parties under or pursuant to the Security Documents. 18.3 EVENTS OF DEFAULT The Borrower shall indemnify the Finance Parties from time to time on demand against all losses and costs incurred or sustained by any Finance Party as a consequence of any Event of Default, including (without limitation) any Break Costs. 18.4 FUNDING COSTS The Borrower shall indemnify the Finance Parties from time to time on demand against all losses and costs incurred or sustained by any Finance Party if, for any reason, any Drawing is not advanced to the Borrower after the relevant Drawdown Notice has been given to the Agent, or is advanced on a date other than that requested in the Drawdown Notice (unless, in either case, as a result of any default by the Finance Parties) including (without limitation) any Break Costs. 18.5 PROTECTION AND ENFORCEMENT The Borrower shall indemnify the Finance Parties from time to time on demand against all losses, costs and liabilities which any Finance Party may from time to time sustain, incur or become liable for in or about the protection, maintenance or enforcement of the rights conferred on the Finance Parties by the Security Documents or in or about the exercise or purported exercise by the Finance Parties of any of the rights, powers, discretions or remedies vested in them under or arising out of the Security Documents, including (without limitation) any losses, costs and liabilities which any Finance Party may from time to time sustain, incur or become liable for by reason of the Finance Party being mortgagees of any Vessel and/or a lender to the Borrower, or by reason of any Finance Party being deemed by any court or authority to be an operator or controller, or in any way concerned in the operation or control, of any Vessel other than if caused by its gross negligence or wilful misconduct. 18.6 LIABILITIES OF FINANCE PARTIES The Borrower will from time to time reimburse the Finance Parties on demand for all sums which any Finance Party may pay or become actually or contingently liable for on account of the Borrower or in connection with any Vessel (whether alone or jointly or jointly and severally with any other person) including (without limitation) all sums which any Finance Party may pay or guarantees which any Finance Party may give in respect of the Insurances, any expenses incurred by any Finance Party in connection with the maintenance or repair of any Vessel or in discharging any lien, bond or other claim relating in any way to any Vessel, and any sums which any Finance Party may pay or guarantees which they may give to procure the release of any Vessel from arrest or detention. 18.7 TAXES The Borrower shall pay all Taxes (other than Taxes on the overall net income of any of the Finance Parties) to which any of the Security Documents may be at any time subject and shall indemnify the Finance Parties on demand against all liabilities, costs, claims and expenses resulting from any omission to pay or delay in paying any such Taxes. 19 MISCELLANEOUS 19.1 WAIVERS No failure or delay on the part of the Finance Party in exercising any right, power, discretion or remedy under or pursuant to any of the Security Documents, nor any actual or alleged course of dealing between the Finance Parties and the Borrower, shall operate as a waiver of, or acquiescence in, any default on the part of any Security Party, unless expressly agreed to do so in writing by the Agent, nor shall any single or partial exercise by a Finance Party of any right, power, discretion or remedy preclude any other or further exercise of that right, power, discretion or remedy, or the exercise by that Finance Party of any other right, power, discretion or remedy. 19.2 NO ORAL VARIATIONS No variation or amendment of any of the Security Documents shall be valid unless in writing and signed on behalf of the Banks and the Agent. 19.3 SEVERABILITY If at any time any provision of any of the Security Documents is invalid, illegal or unenforceable in any respect that provision shall be severed from the remainder and the validity, legality and enforceability of the remaining provisions shall not be affected or impaired in any way. 19.4 SUCCESSORS ETC. The Security Documents shall be binding on the Security Parties and on their successors and permitted transferees and assignees, and shall inure to the benefit of the Finance Parties and their respective successors, transferees and assignees. The Borrower may not assign nor transfer any of its rights under or pursuant to any of the Security Documents without the prior written consent of the Agent. 19.5 FURTHER ASSURANCE If any provision of the Security Documents shall be invalid or unenforceable in whole or in part by reason of any present or future law or any decision of any court, or if the documents at any time held by the Finance Parties are considered by the Finance Parties for any reason insufficient to carry out the terms of this Agreement, then from time to time the Borrower will promptly, on demand by the Agent, execute or procure the execution of such further documents as in the opinion of the Finance Parties are necessary to provide adequate security for the repayment of the Indebtedness. 19.6 OTHER ARRANGEMENTS The Finance Parties may, without prejudice to their rights under or pursuant to the Security Documents, at any time and from time to time, on such terms and conditions as they may in their discretion determine, and without notice to the Borrower, grant time or other indulgence to, or compound with, any other person liable (actually or contingently) to the Finance Parties in respect of all or any part of the Indebtedness, and may release or renew negotiable instruments and take and release securities and hold funds on realisation or suspense account without affecting the liabilities of the Borrower or the rights of the Finance Parties under or pursuant to the Security Documents. 19.7 ADVISERS The Borrower irrevocably authorises the Agent, at any time and from time to time during the Facility Period, to consult insurance advisers on any matters relating to the Insurances, including, without limitation, the collection of insurance claims, and from time to time to consult or retain advisers or consultants to monitor or advise on any other claims relating to the Vessels. The Borrower will provide such advisers and consultants with all information and documents which they may from time to time require and will reimburse the Agent on demand for all costs and expenses incurred by the Agent in connection with the consultation or retention of such advisers or consultants. 19.8 DELEGATION The Finance Parties may at any time and from time to time delegate to any person any of their rights, powers, discretions and remedies pursuant to the Security Documents on such terms as they may consider appropriate (including the power to sub-delegate). 19.9 RIGHTS ETC. CUMULATIVE Every right, power, discretion and remedy conferred on the Finance Parties under or pursuant to the Security Documents shall be cumulative and in addition to every other right, power, discretion or remedy to which they may at any time be entitled by law or in equity. The Finance Parties may exercise each of their rights, powers, discretions and remedies as often and in such order as they deem appropriate. The exercise or the beginning of the exercise of any right, power, discretion or remedy shall not be interpreted as a waiver of the right to exercise that or any other right, power, discretion or remedy either simultaneously or subsequently. 19.10 NO ENQUIRY The Finance Parties shall not be concerned to enquire into the powers of the Security Parties or of any person purporting to act on behalf of any of the Security Parties, even if any of the Security Parties or any such person shall have acted in excess of their powers or if their actions shall have been irregular, defective or informal, whether or not any Finance Party had notice thereof. 19.11 CONTINUING SECURITY The security constituted by the Security Documents shall be continuing and shall not be satisfied by any intermediate payment or satisfaction until the Indebtedness shall have been repaid in full and Finance Parties shall not be under any further actual or contingent liability to any third party in relation to the Vessels, the Insurances, Earnings or Requisition Compensation or any other matter referred to in the Security Documents. 19.12 SECURITY CUMULATIVE The security constituted by the Security Documents shall be in addition to any other security now or in the future held by the Finance Parties for or in respect of all or any part of the Indebtedness, and shall not merge with or prejudice or be prejudiced by any such security or any other contractual or legal rights of the Finance Parties, nor affected by any irregularity, defect or informality, or by any release, exchange or variation of any such security. Section 93 of the Law of Property Act 1925 and all provisions which the Agent considers analogous thereto under the law of any other relevant jurisdiction shall not apply to the security constituted by the Security Documents. 19.13 NO LIABILITY None of the Finance Parties, nor any agent or employee of any Finance Party, nor any receiver and/or manager appointed by the Agent, shall be liable for any losses which may be incurred in or about the exercise of any of the rights, powers, discretions or remedies of the Finance Parties under or pursuant to the Security Documents nor liable as mortgagee in possession for any loss on realisation or for any neglect or default of any nature for which a mortgagee in possession might otherwise be liable other than if caused by its gross negligence or wilful misconduct. 19.14 RESCISSION OF PAYMENTS ETC. Any discharge, release or reassignment by the Finance Parties of any of the security constituted by, or any of the obligations of any Security Party contained in, any of the Security Documents shall be (and be deemed always to have been) void if any act (including, without limitation, any payment) as a result of which such discharge, release or reassignment was given or made is subsequently wholly or partially rescinded or avoided by operation of any law. 19.15 RELEASES If any Finance Party shall at any time release any party from all or any part of any of the Security Documents, the liability of any other party to the Security Documents shall not be varied or diminished. 19.16 DISCRETIONS Unless otherwise expressly indicated, where any Finance Party is stated in the Security Documents to have a discretion and/or where the opinion of any Finance Party is referred to and/or where the consent, agreement or approval of any Finance Party is required for any course of action, or where anything is required to be acceptable to any Finance Party, the Finance Party shall have a sole, absolute and unfettered discretion and/or may give or withhold their consent, agreement or approval at their sole, absolute and unfettered discretion. 19.17 CERTIFICATES Any certificate or statement signed by an authorised signatory of the Agent purporting to show the amount of the Indebtedness (or any part of the Indebtedness) or any other amount referred to in any of the Security Documents shall, save for manifest error or on any question of law, be conclusive evidence as against the Borrower of that amount. 19.18 SURVIVAL OF REPRESENTATIONS AND WARRANTIES The representations and warranties on the part of the Borrower contained in this Agreement shall survive the execution of this Agreement and the advance of the Loan. 19.19 COUNTERPARTS This Agreement may be executed in any number of counterparts each of which shall be original but which shall together constitute the same instrument. 19.20 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999 No term of this Agreement is enforceable by a person who is not a party to it. 20 LAW AND JURISDICTION 20.1 GOVERNING LAW This Agreement shall in all respects be governed by and interpreted in accordance with English law. 20.2 JURISDICTION For the exclusive benefit of the Finance Parties, the parties to this Agreement irrevocably agree that the courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with this Agreement and that any Proceedings may be brought in those courts. 20.3 ALTERNATIVE JURISDICTIONS Nothing contained in this Clause shall limit the right of the Finance Parties to commence any Proceedings against the Borrower in any other court of competent jurisdiction nor shall the commencement of any Proceedings against the Borrower in one or more jurisdictions preclude the commencement of any Proceedings in any other jurisdiction, whether concurrently or not. 20.4 WAIVER OF OBJECTIONS The Borrower irrevocably waives any objection which it may now or in the future have to the laying of the venue of any Proceedings in any court referred to in this Clause, and any claim that those Proceedings have been brought in an inconvenient or inappropriate forum, and irrevocably agrees that a judgment in any Proceedings commenced in any such court shall be conclusive and binding on it and may be enforced in the courts of any other jurisdiction. 20.5 SERVICE OF PROCESS Without prejudice to the right of the Finance Parties to use any other method of service permitted by law, the Borrower irrevocably agrees that any writ, notice, judgment or other legal process shall be sufficiently served on it if addressed to it and left at or sent by post to the Address for Service, and in that event shall be conclusively deemed to have been served at the time of leaving or, if posted, at 9.00 a.m. on the Business Day after posting by prepaid first class post. 20.6 REPLACEMENT AGENT FOR SERVICE If any person appointed as process agent is unable for any reason to act as agent for service of process, the Borrower (on behalf of the relevant Security Parties) must immediately (and in any event within ten days of such event taking place) appoint another agent on terms acceptable to the Agent. Failing this, the Agent may appoint another agent for this purpose. IN WITNESS of which the parties to this Agreement have executed this Agreement the day and year first before written. SCHEDULE 1 THE GUARANTORS AND THE VESSELS ---------------------------------------------------------------------------------------------------------------------------------- NAME OF COUNTRY OF SELLER REGISTERED NAME OF VESSEL FLAG ATTRIBUTABLE GUARANTOR INCORPORATION OFFICE VESSEL PERCENTAGE ---------------------------------------------------------------------------------------------------------------------------------- Vision Ltd. Bermuda CM V-MAX I Clarendon House "Stena Vision" Bermuda 28.2% Limited 2 Church Street Hamilton HM11 Bermuda ---------------------------------------------------------------------------------------------------------------------------------- Victory Ltd. Bermuda CM V-MAX II Clarendon House "Stena Victory" Bermuda 28.2% Limited 2 Church Street Hamilton HM11 Bermuda ---------------------------------------------------------------------------------------------------------------------------------- Companion Ltd. Bermuda Panisland Ltd. Clarendon House "Stena Companion" Bermuda 11.5% 2 Church Street Hamilton HM11 Bermuda ---------------------------------------------------------------------------------------------------------------------------------- Compatriot Ltd. Bermuda Panocean Ltd. Clarendon House "Stena Compatriot" Bermuda 11.5% 2 Church Street Hamilton HM11 Bermuda ---------------------------------------------------------------------------------------------------------------------------------- Concord Ltd. Bermuda Oceanspirit Ltd. Clarendon House "Stena Concord" Bermuda 10.3% 2 Church Street Hamilton HM11 Bermuda ---------------------------------------------------------------------------------------------------------------------------------- Consul Ltd. Bermuda Oceansong Ltd. Clarendon House "Stena Consul" Bermuda 10.3% 2 Church Street Hamilton HM11 Bermuda ---------------------------------------------------------------------------------------------------------------------------------- SCHEDULE 2 THE BANKS AND THE COMMITMENTS THE BANKS THE COMMITMENTS (IN $) Fortis Bank (Nederland) N.V. 67,500,000 For credit matters: Haakon VII's gate 10 N-0161 Oslo Norway Attn: Global Shipping Group Fax: +47 23 114940 For administrative matters: Coolsingel 93 PO Box 749 NL-3000 AS Rotterdam The Netherlands Attn: Global Shipping Group Fax: +31 10 401 5323 HSBC Bank plc 67,500,000 8 Canada Square London E14 5HQ Attn: Process Manager, Loans Administration Fax: +44 207 992 4680 SCHEDULE 3 CALCULATION OF THE MANDATORY COST (a) The Mandatory Cost for the Loan for each Interest Period is the rate determined by the Agent to be equal to the arithmetic mean (rounded upwards, if necessary, to four decimal places) of the respective rates notified to it by each of the Banks and calculated in accordance with the following formulae: F x 0.01 % per annum = Mandatory Cost -------- 300 where on the day of application of the formula: F is the charge payable by the Bank to the Financial Services Authority under paragraph 2.02 or 2.03 (as appropriate) of the Fees Regulations or the equivalent provisions in any replacement regulations (with, for this purpose, the figure for the minimum amount in paragraph 2.02b or such equivalent provision deemed to be zero), expressed in pounds per (pound)1 million of the fee base of the Bank. (b) For the purpose of this Schedule: (ii) "FEE BASE" has the meaning given to it in the Fees Regulations; (iii) "FEES REGULATIONS" means:- (A) up to and including 31 March 2002, the Banking Supervision (Fees) Regulations 2001; and (B) after that date any regulations governing the payment of fees for banking supervision; (iv) "RELEVANT PERIOD" in relation to each Interest Period, means:- (A) if it is three months or less, that Interest Period; or (B) if it is more than three months, three months. (d) (i) The formula is applied on the first day of each relevant period comprised in the relevant Interest Period. (ii) Each rate calculated in accordance with the formula is, if necessary, rounded upward to four decimal places. (e) If a Bank does not supply a rate to the Agent when requested to do so, the applicable Mandatory Cost shall be determined on the basis of the rate(s) supplied by the remaining Banks. (f) If a change in circumstances has rendered, or will render, the formula inappropriate, the Agent shall notify the Borrower of the manner in which the Mandatory Cost will subsequently be calculated. The manner of calculation so notified by the Agent shall, in the absence of manifest error, be binding on the Borrower. SIGNED by Michael Drayton ) for and on behalf ) of ARLINGTON TANKERS LTD. ) /s/ Michael K. Drayton pursuant to a power of attorney ) dated 1 November 2004 ) in the presence of:- ) SIGNED by Mark Russell ) duly authorised for and on behalf ) /s/ Mark Russell of FORTIS BANK (NEDERLAND) N.V. ) Attorney in fact (as Arranger, Bank and Swap Provider) ) SIGNED by Mark Russell ) duly authorised for and on behalf ) /s/ Mark Russell of FORTIS BANK (NEDERLAND) N.V. ) Attorney in fact (as Agent and security trustee) ) SIGNED by Mark Heptinstall ) duly authorised for and on behalf ) /s/ Mark Heptinstall of HSBC BANK PLC ) (as Arranger, Bank and Swap Provider) ) APPENDIX A FORM OF DRAWDOWN NOTICE To: Fortis Bank (Nederland) N.V. From: Arlington Tankers Ltd. 2004 Dear Sirs, DRAWDOWN NOTICE We refer to the Loan Agreement dated 2004 made between, amongst others, ourselves and yourselves ("THE AGREEMENT"). Words and phrases defined in the Agreement have the same meaning when used in this Drawdown Notice. Pursuant to Clause 2.3 of the Agreement, we irrevocably request that you advance a Drawing of [ ] to us on 2004, which is a Business Day, by paying the amount of the Drawing to [ ]. We warrant that the representations and warranties contained in Clause 4 of the Agreement are true and correct at the date of this Drawdown Notice and will be true and correct on 2004; that no Event of Default nor Potential Event of Default has occurred and is continuing, and that no Event of Default or Potential Event of Default will result from the advance of the Drawing requested in this Drawdown Notice. [We select the period of [ ] months as the first Interest Period]. Yours faithfully ....................... For and on behalf of ARLINGTON TANKERS LTD. APPENDIX B FORM OF TRANSFER CERTIFICATE TRANSFER CERTIFICATE To: Fortis Bank (Nederland) N.V. This transfer certificate relates to a secured loan facility agreement (as from time to time amended, varied, supplemented or novated "THE LOAN AGREEMENT") dated 2004, on the terms and subject to the conditions of which a secured loan facility of up to $135,000,000 was made available to Arlington Tankers Ltd. by a syndicate of banks on whose behalf you act as agent and security trustee. 1 Terms defined in the Loan Agreement shall, unless otherwise expressly indicated, have the same meaning when used in this certificate. The terms "TRANSFEROR" and "TRANSFEREE" are defined in the schedule to this certificate. 2 The Transferor:- 2.1 confirms that the details in the Schedule under the heading "TRANSFEROR'S COMMITMENT" accurately summarise its Commitment; and 2.2 requests the Transferee to accept by way of novation the transfer to the Transferee of the amount of the Transferor's Commitment specified in the Schedule by counter-signing and delivering this certificate to the Agent at its address for Communications specified in the Loan Agreement. 3 The Transferee requests the Agent to accept this certificate as being delivered to the Agent pursuant to and for the purposes of clause [ ] of the Loan Agreement so as to take effect in accordance with the terms of that clause on the Transfer Date specified in the Schedule. 4 The Agent (on its own behalf and on behalf of the Borrower and each of the Banks other than the Transferor) confirms its acceptance of this certificate for the purposes of clause [ ] of the Loan Agreement. 5 The Transferee confirms that:- 5.1 it has received a copy of the Loan Agreement together with all other information which it has required in connection with this transaction; 5.2 it has not relied and will not in the future rely on the Transferor or any other party to the Loan Agreement to check or enquire on its behalf into the legality, validity, effectiveness, adequacy, accuracy or completeness of any such information; and 5.3 it has not relied and will not in the future rely on the Transferor or any other party to the Loan Agreement to keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of any of the Security Parties. 6 Execution of this certificate by the Transferee constitutes its representation to the Transferor and to all other parties to the Loan Agreement that it has the power to become a party to the Loan Agreement as a Bank on the terms of the Loan Agreement and has taken all steps to authorise execution and delivery of this certificate. 7 The Transferee undertakes with the Transferor and each of the other parties to the Loan Agreement that it will perform in accordance with their terms all those obligations which by the terms of the Loan Agreement will be assumed by it after delivery of this certificate to the Agent and the satisfaction of any conditions subject to which this certificate is expressed to take effect. 8 The Transferor makes no representation or warranty and assumes no responsibility with respect to the legality, validity, effectiveness, adequacy or enforceability of any of the Security Documents or any document relating to any of the Security Documents, and assumes no responsibility for the financial condition of any of the Security Parties or for the performance and observance by the Security Parties of any of their obligations under any of the Security Documents or any document relating to any of the Security Documents and any conditions and warranties implied by law are expressly excluded. 9 The Transferee acknowledges that nothing in this certificate or in the Loan Agreement shall oblige the Transferor to:- 9.1 accept a re-transfer from the Transferee of the whole or any part of the rights, benefits and/or obligations transferred pursuant to this certificate; or 9.2 support any losses directly or indirectly sustained or incurred by the Transferee for any reason including, without limitation, the non-performance by any party to any of the Security Documents of any obligations under any of the Security Documents. 10 The address and fax number of the Transferee for the purposes of clause [ ] of the Loan Agreement are set out in the Schedule. 11 This certificate may be executed in any number of counterparts each of which shall be original but which shall together constitute the same instrument. 12 This certificate shall be governed by and interpreted in accordance with English law. THE SCHEDULE 1 TRANSFEROR: 2 TRANSFEREE: 3 TRANSFER DATE (not earlier that the fifth Business Day after the date of delivery of the Transfer Certificate to the Agent): 4 TRANSFEROR'S COMMITMENT: 5 AMOUNT TRANSFERRED: 6 Transferee's address and fax number for the purposes of clause 10.20 of the Loan Agreement: [NAME OF TRANSFEROR] [NAME OF TRANSFEREE] By: By: Date: Date: FORTIS BANK (NEDERLAND) N.V. as Agent for and on behalf of itself, the Borrower and each of the Banks (other than the Transferor) By: Date: