10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Form 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010

or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from . . . . . . . . . . . .  to . . . . . . . . . . . . . .

Commission File No. 001-10852

International Shipholding Corporation

(Exact name of registrant as specified in its charter)

Delaware 36-2989662

           (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

11 North Water St.  Suite 18290  Mobile, AL          36602

(Address of principal executive offices)       (Zip Code)

Registrant's telephone number, including area code:(251) 243-9100

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered

 Common Stock, $1 Par Value New York Stock Exchange

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ☐ No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes þNo ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes  ☐   No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

            Large accelerated filer   ☐                                             Accelerated filer þ      Non-accelerated filer   ☐   Smaller reporting company   ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

State the aggregate market value of the voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

Date                                                                             Amount

            June 30, 2010                                                                   $119,610,127

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.

Common stock, $1 par value. . . . . . . . 7,244,986 shares outstanding as of March 3, 2011

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive proxy statement to be furnished in connection with registrant’s 2011annual meeting of stockholders are incorporated by reference into Part III of this Form 10-K.

INTERNATIONAL SHIPHOLDING CORPORATION

TABLE OF CONTENTS

 PART I  2

ITEM 1.     Business  2

ITEM 1a.   Risk Factors  4

ITEM 1b.   Unresolved Staff Comments  5

ITEM 2.      Properties  5

ITEM 3.      LegalProceedings  6

ITEM 4.      [Reserved]  6

 PART II  6

ITEM 5.      Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities  6

ITEM 6.      Selected Financial Data  7

ITEM 7.      Management’s  Discussion and Analysis of Financial Condition and Results of  Operations  8

ITEM 7a.   Quantitative and Qualitative Disclosures About Market Risk  12

ITEM 8.      Financial Statements and Supplementary Data  12

ITEM 9.      Changes  in and Disagreements with Accountants on Accounting and Financial Disclosure  12

ITEM 9a.   Controls and Procedures  12

ITEM 9b.   Other Information  13

 PART III  13

ITEM 10.    Directors, Executive Officers and Corporate Governance  13

ITEM 11.    Executive Compensation  13

ITEM 12.    Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder Matters  13

ITEM 13.    Certain Relationships and Related Transactions, and Director Independence  13

ITEM 14.    Principal Accounting Fees and Services  13

 PART IV  14

ITEM 15.     Exhibits, Financial Statement Schedules  14

SIGNATURES  15

In this report, the terms “we,” “us,” “our” and the “Company” refer to International Shipholding Corporation and its subsidiaries.  In addition, the term “COA” means a Contract of Affreightment, the term “MPS” means the maritime prepositioning ship program of the U.S. Navy, the term “MSC” means the U.S. Military Sealift Command, the term “Newbuildings” means a vessel that is under construction, the term “Notes” means the Notes to our Consolidated Financial Statements contained elsewhere in this report, the term “PCTC” means a Pure Car/Truck Carrier vessel, the term “RO/RO” means a Roll-On/Roll-Off vessel, and the term “SEC” means the U.S. Securities and Exchange Commission.

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PART I

ITEM 1.  BUSINESS

General

Through our subsidiaries, we operate a diversified fleet of U.S. and International Flag vessels that provide international and domestic maritime transportation services to commercial and governmental customers primarily under medium to long-term time charters or contracts of affreightment.  As of March 3, 2011 we owned or operated 33 ocean-going vessels and had seven Newbuildings on order for future delivery.

Our current operating fleet of 33 ocean-going vessels consists of:

·   Six U.S. flag Pure Car/Truck Carriers specifically designed to transport fully assembled automobiles, trucks and larger vehicles,

·   Three International flag Pure Car/Truck Carriers with the capability of transporting heavyweight and large dimension trucks and buses, as well as automobiles,

·   Two multi-purpose vessels, two container vessels and one tanker vessel, which are used to transport supplies for the Indonesian operations of a mining company,

·   One U.S. flag Molten Sulphur Carrier, which is used to carry molten sulphur from Texas to a processing plant on the Florida Gulf Coast,

·   Two special purpose vessels modified as Roll-On/Roll-Off vessels to transport loaded rail cars between the U.S. Gulf and Mexico,

·   One U.S. flag conveyor belt-equipped self-unloading Coal Carrier, which carries coal in the coastwise trade,

·   Three Roll-On/Roll-Off vessels that permit rapid deployment of rolling stock, munitions, and other military cargoes requiring special handling,

·   Two U.S. flag container vessels which began operating on time charters in 2008,

·   Three Double Hull Handy-Size Bulk Carriers, which are trading worldwide under a revenue sharing agreement with European partners,

·   Two Capesize Bulk Carriers trading worldwide on time charters in which we own a 50% interest of each, and

·   Five Mini-Bulkers trading worldwide under a commercial management agreement in which we own a 25% interest of each.

As described further in Item 2 below, we own 14 of these 33 vessels.

We also have the following interests in the following seven newbuildings:

·   Two Handymax Bulk Carriers newbuildings in which we own a 50% interest of each, and

·   Five Mini-Bulker newbuildings in which we own a 25% interest of each.

           Our fleet is operated by our principal subsidiaries, Central Gulf Lines, Inc. (“Central Gulf”), LCI Shipholdings, Inc. (“LCI”), Waterman Steamship Corporation (“Waterman”), CG Railway, Inc. (“CG Railway”), Enterprise Ship Company, Inc. (“ESC”), and East Gulf Shipholding, Inc. (“EGS”).  Other of our subsidiaries provide ship charter brokerage, agency and other specialized services.

Additional information on our vessels appears on the Fleet Statistics Schedule located in the front of our combined Annual Report and 10-K report furnished to our stockholders.

Operating Segments

We have five operating segments, Time Charter Contracts – U.S.  Flag, Time Charter Contracts – International Flag, Contracts of Affreightment (“COA”), Rail-Ferry Service, and Other, as described below.  Most of our revenues and gross voyage profits are contributed by our time charter contracts segment. Beginning with the second quarter Form 10-Q report, we split Time Charter Contracts into two different operating segments, Time Charter Contracts – U.S. Flag and Time Charter Contracts – International Flag.  Although our previous segment reporting was appropriate, this change further aligns our segment disclosures with the information reviewed by our chief operating decision maker.  In this report, we recast all prior period data for the previous Time Charter Contracts Segment based on the new operating segments.

For additional information about our operating segments and markets see Note K - Significant Operations.  In addition to our five operating segments, we have investments in several unconsolidated entities of which we own 50% or less and have the ability to exercise significant influence over operating and financial activities.  A sixth operating segment, Liner Services, was discontinued in 2007.  During the first quarter of 2008, we sold the one remaining LASH vessel and the remaining LASH barges for scrapping and these results are reflected as discontinued operations. (See Note P – Discontinued Operations).

Time Charter Contracts-U.S. Flag: Time charters are contracts by which our charterer obtains the right for a specified period to direct the movements and utilization of the vessel in exchange for payment of a specified daily rate, but we retain operating control over the vessel.  Typically, we fully equip the vessel and are responsible for normal operating expenses, repairs, crew wages, and insurance, while the charterer is responsible for voyage expenses, such as fuel, port and stevedoring expenses. Our Time Charter Contracts-U.S. Flag segment includes contracts for commercial and supplementary cargo for six PCTCs, and an electric utility for a conveyor-equipped, self-unloading Coal Carrier. Also included in this segment are contracts under which the MSC charters three RO/ROs that are under operating contracts described further below, and contracts with another shipping company for two container vessels.

Time Charter Contracts-International Flag: We operate this segment in the same manner as our Time Charter Contracts – U.S. Flag segment, except with International flagged vessels.  This segment included contracts for most of 2010 with Far Eastern and South American shipping companies for three PCTCs.  Also included in this segment are two multi-purpose vessels, one tanker and two container vessels, which service ISC’s long-term contract to transport supplies for a mining company’s Indonesian operations.

Contract of Affreightment:Contracts of Affreightments are contracts by which we undertake to provide space on our vessel for the carriage of specified goods or a specified quantity of goods on a single voyage or series of voyages over a given period of time between named ports or within certain geographical areas in return for the payment of an agreed amount per unit of cargo carried.  Generally, we are responsible for all operating and voyage expenses.  Our COA segment includes one contract, serviced by one vessel, which is for the transportation of molten sulphur through December 31, 2013, subject to additional renewal options in favor of the charterer.

Rail-Ferry Service: This service uses our two Roll-on/Roll-off Special Purpose double-deck vessels, which carry loaded rail cars between the U.S. Gulf Coast and Mexico.  We began operations out of our new terminal in Mobile, Alabama and the upgraded terminal in Mexico during the third quarter of 2007.  The upgrades to the Mexican terminal were made to accommodate the second decks, which were added to our vessels in the second and third quarters of 2007 to double the capacity of the vessels.  (See Item 1a., Risk Factors, for a description of material risks relating to this service).

Other:This segmentconsists of operations that include more specialized services than the above-mentioned four segments and ship charter brokerage and agency services.  Also included in the Other category are corporate related items, results of insignificant operations, and income and expense items not allocated to reportable segments.

Unconsolidated Entities.  We have a 50% interest in a company that (i) owns two Cape-Size Bulk Carriers and  (ii) has two Handymax Bulk Carrier Newbuildings on order for delivery in 2012.  We also have a 49% interest in a company that operates the rail terminal in Coatzacoalcos, Mexico that is used by our Rail-Ferry Service, anda 50% interest in a company that owns and operates a transloading and rail and truck service warehouse storage facility in New Orleans, Louisiana. In December 2009, we acquired a 25% interest in Oslo Bulk AS (“Oslo”) for $6,250,000, which owns four newly built Mini-Bulkers and has four Mini-Bulker Newbuildings to be delivered in early 2011. In December 2009, we acquired a 25% interest in Tony Bulkers Pte Ltd (“Tony Bulkers”) for $2,269,000, which owns one newly built Mini-Bulker and has one Mini-Bulker Newbuilding to be delivered in early 2011. This investment is accounted for under the equity method and our share of earnings or losses will be reported in our consolidated statements of income net of taxes.

Business Strategy

The company operates a diversified fleet of U.S. and International Flag vessels that provide international and domestic maritime transportation services to customers primarily under medium to long-term contracts. Our business strategy consists of identifying growth opportunities as market needs change, utilizing our extensive experience to meet those needs, and continuing to maintain a diverse portfolio of medium to long-term contracts, under which we can serve our long-standing customer base by providing quality transportation services.  We plan to continue this strategy by expanding our relationships with existing customers, seeking new customers, and selectively pursuing acquisitions.

Because our strategy is to seek medium to long-term contracts and because we have diversified customer and cargo bases, we believe we are generally insulated from the cyclical nature of the shipping industry to a greater degree than those companies who operate in the spot markets.

History

The Company was originally founded as Central Gulf Steamship Corporation in 1947 by the late Niels F.  Johnsen and his sons, Niels W. Johnsen, a retired past CEO and Director, and Erik F. Johnsen, a past CEO and current Director of the Company.  Central Gulf was privately held until 1971 when it merged with Trans Union Corporation.  In 1978, International Shipholding Corporation was formed to act as a holding company for Central Gulf, LCI, and certain other affiliated companies in connection with the 1979 spin-off by Trans Union of our common stock to Trans Union’s stockholders.  In 1986, we acquired the assets of Forest Lines, and in 1989 we acquired Waterman.  Since our spin-off from Trans Union, we have continued to act solely as a holding company, and our only significant assets are the capital stock of our subsidiaries.

Competitive Strengths

Diversification. Our strategy for many years has been to seek and obtain contracts that provide predictable cash flows and contribute to a diversification of operations.  These diverse operations vary from chartering vessels to the United States government, to chartering vessels for the transportation of automobiles, transportation of paper, steel, wood and wood pulp products, carriage of supplies for a mining company, transporting molten sulphur, transporting coal for use in generating electricity, and transporting standard size railroad cars.

Predictable Operating Cash Flows. Our operations have historically generated cash flows sufficient to cover our debt service requirements and operating expenses, including the recurring drydocking requirements of our fleet.  For the years ending December 31, 2010 and December 31, 2009, approximately 62% and 47%, respectively, of our revenues were generated from fixed contracts. The length and structure of our contracts, the creditworthiness of our customers, and our diversified customer and cargo bases all contribute to our ability to consistently meet such requirements in an industry that tends to be cyclical in nature.  Our medium to long-term time charters provide for a daily charter rate that is payable whether or not the charterer utilizes the vessel.  These time charters generally require the charterer to pay certain voyage operating costs, including fuel, port, and stevedoring expenses, and in some cases include cost escalation features covering certain of our expenses.  In addition, our COA operation guarantees a minimum amount of cargo for transportation.  Our cash flow from operations was approximately $64.4 million, $62.7 million and $42.2 million for the years ended December 31, 2010, 2009 and 2008, respectively, after deducting cash used for drydocking payments of $2.5 million, $16.0 million and $4.2 million for each of those years, respectively.  Regularly scheduled repayment of debt was $14.5 million, $14.2 million and $13.0 million for the years ended December 31, 2010, 2009 and 2008, respectively.

Longstanding Customer Relationships.  We currently have medium to long-term time charters or contracts of affreightment with a variety of creditworthy customers.  Most of these companies have been customers of ours for over ten years.  Substantially all of our current cargo contracts and time charter agreements are renewals or extensions of previous agreements.  In recent years, we have been successful in winning extensions or renewals of a substantial majority of all of the contracts.  We believe that our longstanding customer relationships are in part due to our excellent reputation for providing quality specialized maritime service in terms of on-time performance, minimal cargo damage claims and reasonable timecharter and freight rates.

Experienced Management Team.   Our management team has substantial experience in the shipping industry.  Our CEO, President, and Chief Financial Officer have over 105 years of collective experience with the Company.  We believe that the experience of our management team is important to maintaining long-term relationships with our customers.

Types of Service

Through our principal operating subsidiaries, we provide specialized maritime transportation services to our customers primarily under medium to long-term contracts.  Our five operating segments, Time Charter Contracts – U.S. Flag, Time Charter Contracts – International Flag, Contracts of Affreightment, Rail-Ferry Service, and Other are described below.  For further information on the amount of revenues and gross voyage profits contributed by each segment, please see Item 7 of this report.

I.  Time Charter Contracts

        Military Sealift Command Charters

We have had contracts with the MSC (or its predecessor) almost continuously for over 30 years.  In 1983, Waterman was awarded a contract to operate three U.S. Flag RO/RO vessels under time charters to the MSC for use by the United States Navy in its maritime prepositioning ship (“MPS”) program.  These vessels currently represent three of the 16 MPS vessels which are part of the MSC’s worldwide fleet and provide support to the U.S. Marine Corps.  These ships are designed primarily to carry rolling stock and containers. One of the current agreements is set to expire by the end of March 2011.  On February 24, 2011, the MSC notified us of their intent to exercise the option to extend the agreement for up to an additional four months.  The remaining two agreements are set to expire in May 2011, with the MSC holding options to further extend these agreements.  In July 2010, MSC notified us that we would be excluded from further consideration for extending the current operating agreements on the three U.S. Flag roll on-roll off vessels. Shortly thereafter, we protested this action and were reinstated for consideration by MSC. These three contracts represented 11.9% of our total revenue in 2010. Even if we successfully retain any one or more of these MSC contracts, we anticipate materially reduced revenues.

       Pure Car/Truck Carriers

U.S. Flag.  Our fleet currently includes six U.S. Flag PCTCs, of which five are owned by us and one is leased.  In 1986, we entered into multi-year time charters to carry Toyota and Honda automobiles from Japan to the United States.  To service these charters, we had constructed two car carriers that were specially designed to carry 4,000 and 4,660 fully assembled automobiles, respectively.  Both vessels were built in Japan and were registered under the U.S. Flag.  In 2000 and 2001, we replaced these two vessels with larger PCTCs, which are operating under time charters with a Japanese shipping company.  On January 3, 2011 we exercised our option to purchase the one leased vessel effective July 17, 2011.

In 1998, we acquired a 1994-built PCTC, which we reflagged as a U.S. Flag vessel.  After being delivered to us in April of 1998, this vessel entered a long-term charter, with the aforementioned Japanese shipping company.  In 1999, we acquired a newly built PCTC, which we reflagged as a  U.S. Flag vessel, which immediately after being delivered to us in September 1999 entered into a long-term charter with the same Japanese shipping company.  This contract may be extended beyond the initial term at the option of the Japanese shipping company.

In 2005, we acquired a 1998-built PCTC, which we reflagged as a U.S. Flag vessel.  Immediately after being delivered to us in September of 2005, we chartered this vessel to the same Japanese shipping company.

In 2007, we acquired a 2007-built PCTC, which we reflagged to U.S. Flag.  Immediately after being delivered to us in September of 2007, we chartered this vessel through August of 2010 to a Far East based shipping company, which held an option to purchase the vessel at the end of the contract.  On February 5, 2010, the charterer notified us of its intention to not exercise their option to purchase the vessel.  Subsequently, the charterer did not exercise its purchase option, and we also negotiated a mutually acceptable early redelivery of the vessel effective February 14, 2010.  The vessel is currently employed on a long-term time charter with a Japanese shipping company.

International Flag.  Our current fleet includes three International Flag PCTCs.  Of the three, two are owned by us and one is leased.  In 1988, we had two new car carriers constructed by a shipyard affiliated with Hyundai Motor Company, each with a carrying capacity of 4,800 fully assembled automobiles, to transport Hyundai automobiles from South Korea primarily to the United States under two long-term time charters.  In 1998 and 1999, we sold these car carriers and replaced them with two newly built PCTCs, each with the capacity to carry heavy and large size rolling stock in addition to automobiles and trucks.  We immediately entered into long-term time charters of these vessels to a Korean shipping company.  One of these PCTCs was subsequently sold to an unaffiliated party and leased back under an operating lease.  On January 13, 2011 we exercised our option to purchase this vessel effective July 3, 2011.

In April 2010, we acquired a newly built 6400 Car Equivalent Units PCTC. The vessel is employed on a medium term time charter.

Under each of our international Flag PCTC contracts, the charterers are responsible for voyage operating costs such as fuel, port, and stevedoring expenses, while we are responsible for other operating expenses including crew wages, repairs, and insurance.  During the terms of these charters, we are entitled to our full time charter hire irrespective of the number of voyages completed or the number of cars carried per voyage.

       Coal Carrier

In 1995, we purchased an existing U.S. Flag conveyor belt-equipped, self-unloading Coal Carrier that was time-chartered to a New England electric utility to carry coal in the coastwise trade.  Effective December 2010, the time charter was extended for a further period.

Southeast Asia Transportation Contract

Our contract to transport supplies for a mining company in Indonesia which commenced in 1995, is serviced by two multi-purpose vessels, a small tanker, and two container vessels.  The contract was renewed in 2009.  We own the tanker and manage the other four vessels.

Container Vessels

We currently operate two U.S. Flag vessels that are bareboat chartered in and time chartered out.

Bulk Carriers

We currently operate three newly built International Flag double hull Handy-Size Bulk Carriers, delivered to us in January 2011.

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II.  Contracts of Affreightment

 In 1994, we entered into a 15-year transportation contract with an affiliate of Freeport-McMoRan Sulphur LLC for which we had built a 28,000 dead-weight ton Molten Sulphur Carrier that carries molten sulphur from Louisiana and Texas to a fertilizer plant on the Florida Gulf Coast.  Under a December 2008 contract amendment, the initial term of the contract was extended.  Under the terms of this contract, we are guaranteed the transportation of a minimum of 1.8 million tons of molten sulphur per year.  The amended contract also gives the charterer  renewal options.

III.  Rail-Ferry Service

This service uses two of our special purpose vessels, which carry loaded rail cars between the U.S. Gulf and Mexico.  The service provides departures every four days from Mexico and the U.S. Gulf Coast, respectively, for a three-day transit between ports.  We began operations out of our new terminal in Mobile, Alabama and the upgraded terminal in Mexico during the third quarter of 2007.  The upgrades to the Mexican terminal were made to accommodate the second decks added to our vessels in 2007 to double their carrying capacity.  (See Item 1a., Risk Factors, for a description of material risks relating to this service).

IV.  Other

Several of our subsidiaries provide ship charter brokerage, agency, and other specialized services to our operating subsidiaries and, in the case of ship charter brokerage and agency services, to unaffiliated companies.  The income produced by these services substantially covers the related overhead expenses.  These services facilitate our operations by allowing us to avoid reliance on third parties to provide these essential shipping services.

Marketing

We maintain marketing staffs in New York, Mobile, Singapore, and Shanghai and a network of marketing agents in major cities around the world who market our time charter and contracts of affreightment services.  We market our Rail-Ferry Service under the name “CG Railway.”  We market our remaining transportation services under the names Central Gulf Lines, Waterman Steamship Corporation and East Gulf Shipholding.  We advertise our services in trade publications in the United States and abroad.

Insurance

           We maintain protection and indemnity (“P&I”) insurance to cover liabilities arising out of our ownership and operation of vessels with the Standard Steamship Owners’ Protection & Indemnity Association (Bermuda) Ltd., which is a mutual shipowners’ insurance organization commonly referred to as a P&I club.  The club is a participant in and subject to the rules of its respective international group of P&I associations.  The premium terms and conditions of the P&I coverage provided to us are governed by the rules of the club.

We maintain hull and machinery insurance policies on each of our vessels in amounts related to the value of each vessel.  This insurance coverage, which includes increased value and time charter hire, is maintained with a syndicate of hull underwriters from the U.S., British, Dutch, Japanese and French insurance markets.  We maintain war risk insurance on each of our vessels in an amount equal to each vessel’s total insured hull value.  War risk insurance is placed through U.S., British, Norwegian and French insurance markets and covers physical damage to the vessels and P&I risks for which coverage would be excluded by reason of war exclusions under either the hull policies or the rules of the P&I club.  Our war risk insurance also covers liability to third parties caused by war or terrorism, but does not cover damages to our land-based assets caused by war or terrorism. (See Item 1a., Rick Factors, for a description of material risks relating to terrorism).

The P&I insurance also covers our vessels against liabilities arising from the discharge of oil or hazardous substances in U.S., international, and foreign waters, subject to various exclusions.

We also maintain loss of hire insurance with U.S., British, Dutch and French insurance markets to cover our loss of revenue in the event that a vessel is unable to operate for a certain period of time due to loss or damage arising from the perils covered by the hull and machinery policy and war risk policy.

Insurance coverage for shoreside property, shipboard consumables and inventory, spare parts, workers’ compensation, office contents, and general liability risks is maintained with underwriters in U.S. and British markets.

Insurance premiums for the coverage described above vary from year to year depending upon our loss record and market conditions.  In order to reduce premiums, we maintain certain deductible and co-insurance provisions that we believe are prudent and generally consistent with those maintained by other shipping companies.  Certain exclusions under our insurance policies could limit our ability to receive payment for our losses. (See Note D – Self-Retention Insurance).

Tax Matters

Under United States tax laws in effect prior to 2005, U.S. companies such as ours and their domestic subsidiaries generally were taxed on all income, which in our case includes income from shipping activities, whether operated in the United States or abroad.  With respect to any foreign subsidiary in which we hold more than a 50 percent interest (referred to in the tax laws as a controlled foreign corporation, or “CFC”), we were treated as having received a current taxable distribution of our pro rata share of income derived from foreign shipping operations when earned.

The American Jobs Creation Act of 2004  (“Jobs Creation Act”), which became effective for us on January 1, 2005, changed the United States tax treatment of the foreign operations of our U.S. Flag vessels and the operations of our International Flag vessels.  As a result of the Jobs Creation Act, the taxable income from the shipping operations of CFCs is not subject to United States income tax until that income is repatriated.  We have a plan to re-invest indefinitely some of our foreign earnings, and accordingly have not provided deferred taxes against those earnings.  As permitted under the Jobs Creation Act, we have elected to have our U.S. Flag operations (other than those of two ineligible vessels used exclusively in United States coastwise commerce) taxed under a  “tonnage tax” regime rather than under the usual U.S. corporate income tax regime.  Because we made the tonnage tax election in December 2004 referred to above, our gross income for United States income tax purposes with respect to our eligible U.S. Flag vessels for 2005 and subsequent years does not include (1) income from qualifying shipping activities in U.S. foreign trade (such as transportation between the U.S. and foreign ports or between foreign ports), (2) income from cash, bank deposits and other temporary investments that are reasonably necessary to meet the working capital requirements of our qualifying shipping activities, and (3) income from cash or other intangible assets accumulated pursuant to a plan to purchase qualifying shipping assets.  Our taxable income with respect to the operations of our eligible U.S. Flag vessels is based on a “daily notional taxable income,” which is taxed at the highest corporate income tax rate.  The daily notional taxable income from the operation of a qualifying vessel is 40 cents per 100 tons of the net tonnage of the vessel up to 25,000 net tons, and 20 cents per 100 tons of the net tonnage of the vessel in excess of 25,000 net tons.  The taxable income of each qualifying vessel is the product of its daily notional taxable income and the number of days during the taxable year that the vessel operates in United States foreign trade.  All other domestic operations are taxed at the U.S. corporation statutory rate.

           As of December 31, 2010, our net deferred tax asset/liability was reduced to zero as a result of the establishment of a full valuation allowance with respect to our net deferred tax asset during the fourth quarter of 2010. The valuation allowance was established as a result of recent losses incurred with respect to our operations taxed at the U.S. Corporate Statutory rate. The establishment of the valuation allowance resulted in a higher effective tax rate during 2010.

Regulation

Our operations between the United States and foreign countries are subject to the Shipping Act of 1984 (the “Shipping Act”), which is administered by the Federal Maritime Commission, and certain provisions of the Federal Water Pollution Control Act, the Oil Pollution Act of 1990, the Act to Prevent Pollution from Ships, and the Comprehensive Environmental Response Compensation and Liability Act, all of which are administered by the U.S. Coast Guard and other federal agencies, and certain other international, federal, state, and local laws and regulations, including international conventions and laws and regulations of the Flag nations of our vessels.  On October 16, 1998, the Ocean Shipping Reform Act of 1998 was enacted, which amended the Shipping Act to promote the growth and development of United States exports through certain reforms in the regulation of ocean transportation.  This legislation, in part, repealed the requirement that a common carrier or conference file tariffs with the Federal Maritime Commission, replacing it with a requirement that tariffs be open to public inspection in an electronically available, automated tariff system.  Furthermore, the legislation required that only the essential terms of service contracts be published and made available to the public.

           On October 8, 1996, Congress adopted the Maritime Security Act of 1996, which created the Maritime Security Program (MSP) and authorized the payment of $2.1 million per year per ship for 47 U.S. Flag ships through the fiscal year ending September 30, 2005.  This program eliminated the trade route restrictions imposed by the previous federal program and provides flexibility to operate freely in the competitive market.  On December 20, 1996, Waterman entered into four MSP operating agreements with the United States Maritime Administration (“MarAd”), and Central Gulf entered into three MSP operating agreements with MarAd.  We also participate in the Voluntary Intermodal Sealift Agreement (“VISA”) program administered by MarAd.  Under this VISA program, and as a condition of participating in the MSP, we have committed to providing vessel capacity for the movement of military  cargoes in times of war or national emergency.  By law, the MSP is subject to annual appropriations from Congress.  In the event that sufficient appropriations are not made for the MSP by Congress in any fiscal year, the Maritime Security Act of 1996 permits MSP participants, such as Waterman and Central Gulf, to re-flag their vessels under foreign registry expeditiously.  In 2003, Congress authorized an extension of the MSP through 2015, increased the number of ships eligible to participate in the program from 47 to 60, and increased MSP payments to companies in the program, all made effective on October 1, 2005.  Authorized annual payments per fiscal year for each vessel for the current MSP program were $2.6 million for years 2007 and 2008, and $2.9 million for years 2009 to 2011, and $3.1 million for years 2012 to 2015, subject to annual appropriation by the Congress, which is not assured.  On October 15, 2004, Waterman and Central Gulf each filed applications to extend their MSP operating agreements for another ten years through September 30, 2015, all seven of which were effectively grandfathered in the MSP reauthorization.  Simultaneously, we offered additional ships for participation in the MSP.  On January 12, 2005, MarAd awarded Central Gulf four MSP operating agreements and Waterman four MSP operating agreements, effective October 1, 2005, for a net increase of one MSP operating agreement.  In January of 2011, the President signed into law legislation that extends the MSP under its current terms and conditions through September 30, 2025.  The terms of the MSP contracts of Waterman and Central Gulf currently run though September 30, 2015.  It is anticipated that, as a result of the recent law extending the MSP for an additional ten years, MarAd will initiate a process to allow MSP contractors to submit applications to extend their current MSP contracts, but this process has not yet commenced.

Under the Merchant Marine Act, U.S. Flag vessels are subject to requisition or charter to the United States Navy’s Military Sealift Command (“MSC”) by the United States whenever the President declares that national security requires such action.  The owners of any such vessels must receive just compensation as provided in the Merchant Marine Act, but there is no assurance that lost profits, if any, will be fully recovered.  In addition, during any extension period under each MSC charter or contract, the MSC has the right to terminate the charter or contract on 30 days’ notice.

Certain laws governing our operations, as well as our U.S. Coastwise transportation contracts, require us to be  75% owned by U.S. citizens.  We monitor our stock ownership to verify our continuing compliance with these requirements.  Our certificate of incorporation allows our board of directors to restrict the acquisition of our capital stock by non-U.S. citizens.  Under our certificate of incorporation, our board of directors may, in the event of a transfer of our capital stock that would result in non-U.S. citizens owning more than 23% (the “permitted amount”) of our total voting power, declare such transfer to be void and ineffective.  In addition, our board of directors may, in its sole discretion, deny voting rights and withhold dividends with respect to any shares of our capital stock owned by non-U.S. citizens in excess of the permitted amount.  Furthermore, our board of directors is entitled under our certificate of incorporation to redeem shares owned by non-U.S. citizens in excess of the permitted amount in order to reduce the ownership of our capital stock by non-U.S. citizens to the permitted amount.

We are required by various governmental and quasi-governmental agencies to obtain permits, licenses, and certificates with respect to our vessels.  The kinds of permits, licenses, and certificates required depend upon such factors as the country of registry, the commodity transported, the waters in which the vessel operates, the nationality of the vessel’s crew, the age of the vessel, and our status as a vessel owner or charterer.  We believe that we have, or can readily obtain, all permits, licenses, and certificates necessary to permit our vessels to operate.

The International Maritime Organization (“IMO”) amended the International Convention for the Safety of Life at Sea (“SOLAS”), to which the United States is a party, to require nations that are parties to SOLAS to implement the International Safety Management (“ISM”) Code.  The ISM Code requires that responsible companies, including owners or operators of vessels engaged on foreign voyages, develop and implement a safety management system to address safety and environmental protection in the management and operation of vessels.  Companies and vessels to which the ISM Code applies are required to receive certification and documentation of compliance.  Vessels operating without such certification and documentation in the U.S. and ports of other nations that are parties to SOLAS may be denied entry into ports, detained in ports or fined.  We implemented a comprehensive safety management system and obtained timely IMO certification and documentation for our companies and all of our vessels.  In addition, our ship management subsidiary, LMS Shipmanagement, Inc., is certified under the ISO 9001-2008 Quality Standard.

In 2003, SOLAS was again amended to require parties to the convention to implement the International Ship and Port Facility Security (“ISPS”) Code.  The ISPS Code requires owners and operators of vessels engaged on foreign voyages to conduct vulnerability assessments and to develop and implement company and vessel security plans, as well as other measures, to protect vessels, ports and waterways from terrorist and criminal acts.  In the U.S., these provisions were implemented through the Maritime Transportation Security Act of 2002 (“MTSA”).  These provisions became effective on July 1, 2004.  As with the ISM Code, companies and vessels to which the ISPS Code applies must be certificated and documented.  Vessels operating without such certification and documentation in the U.S. and ports of other nations that are parties to SOLAS may be denied entry into ports, detained in ports or fined.  Vessels subject to fines in the U.S. are liable in rem, which means vessels may be subject to arrest by the U.S. government.  For U.S. Flag vessels, company and vessel security plans must be reviewed and approved by the U.S. Coast Guard.  We have conducted the required security assessments and submitted plans for review and approval as required, and we believe that we are in compliance in all material respects with all ISPS Code and MTSA security requirements.

The Coast Guard and Maritime Transportation Act of 2004 amended the Oil Pollution Act of 1990 (“OPA”) to require owners or operators of all non-tanker vessels of 400 gross tons or greater to develop and submit plans for responding, to the maximum extent practicable, to worst case discharges and substantial threats of discharges of oil from these vessels.  This statute extends to all types of vessels of 400 gross tons or greater. The vessel response planning requirements of the OPA had previously only applied to tanker vessels.  We have submitted response plans timely for our vessels, and have received Coast Guard approval for all of our vessels.

Also, under the OPA, vessel owners, operators and bareboat charterers are jointly, severally and strictly liable for all response costs and other damages arising from oil spills from their vessels in waters subject to U.S. jurisdiction, with certain limited exceptions.  Other damages include, but are not limited to, natural resource damages, real and personal property damages, and other economic damages such as net loss of taxes, royalties, rents, profits or earning capacity, and loss of subsistence use of natural resources.  For non-tanker vessels, the OPA limits the liability of responsible parties to the greater of $1,000 per gross ton or $854,400.  The limits of liability do not apply if it is shown that the discharge was proximately caused by the gross negligence or willful misconduct of, or a violation of a federal safety, construction or operating regulation by, the responsible party, an agent of the responsible party or a person acting pursuant to a contractual relationship with the responsible party.  Further, the limits do not apply if the responsible party fails or refuses to report the incident, or to cooperate and assist in oil spill removal activities.  Additionally, the OPA specifically permits individual states to impose their own liability regimes with regard to oil discharges occurring within state waters, and some states have implemented such regimes.

The Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) also applies to owners and operators of vessels, and contains a similar liability regime for cleanup and removal of hazardous substances and natural resource damages.  Liability under CERCLA is limited to the greater of $300 per gross ton or $5 million per vessel.

Under the OPA, vessels are required to establish and maintain with the U.S. Coast Guard evidence of financial responsibility sufficient to meet the highest limit of their potential liability under the act.  Under Coast Guard regulations, evidence of financial responsibility may be demonstrated by insurance, surety bond, self-insurance or guaranty.  An owner or operator of more than one vessel must demonstrate financial responsibility for the entire fleet in an amount equal to the financial responsibility of the vessel having greatest maximum liability under the OPA and CERCLA.  We insure each of our vessels with pollution liability insurance in the amounts required by law.  A catastrophic spill could exceed the insurance coverage available, in which event our financial condition and results of operations could be adversely affected.

Many countries have ratified and follow the liability plan adopted by the IMO as set out in the International Convention on Civil Liability for Oil Pollution Damage of 1969 (the “1969 Convention”) and the Convention for the Establishment of an International Fund for Oil Pollution of 1971.  Under these conventions, the registered owner of a vessel is strictly liable for pollution damage caused in the territorial seas of a state party by the discharge of persistent oil, subject to certain defenses.  Liability is limited to approximately $183 per gross registered ton (a unit of measurement of the total enclosed spaces in a vessel) or approximately $19.3 million, whichever is less.  If a country is a party to the 1992 Protocol to the International Convention on Civil Liability for Oil Pollution Damage (the “1992 Protocol”), the maximum liability limit is $82.7 million.  The limit of liability is tied to a unit of account that varies according to a basket of currencies.  The right to limit liability is forfeited under the 1969 Convention when the discharge is caused by the owner's actual fault, and under the 1992 Protocol, when the spill is caused by the owner's intentional or reckless misconduct.  Vessels operating in waters of states that are parties to these conventions must provide evidence of insurance covering the liability of the owner.  In jurisdictions that are not parties to these conventions, various legislative schemes or common law govern.  We believe that our pollution insurance policy covers the liability under the IMO regimes.

Competition

The shipping industry is intensely competitive and is influenced by events largely outside the control of shipping companies.  Varying economic factors can cause wide swings in freight rates and sudden shifts in traffic patterns.  Vessel redeployments and new vessel construction can lead to an overcapacity of vessels offering the same service or operating in the same market.  Changes in the political or regulatory environment can also create competition that is not necessarily based on normal considerations of profit and loss.  Our strategy is to reduce the effects of cyclical market conditions by operating specialized vessels in niche market segments and deploying a substantial number of our vessels under medium to long-term time contracts with creditworthy customers and on trade routes where we have established market share.  We also seek to compete effectively in the traditional areas of price, reliability, and timeliness of service.

 Our Time Charter Contract and Contracts of Affreightment segments primarily include medium and long-term contracts with long standing customers.  While our PCTCs in our Time Charter Contract segment operate worldwide in markets where International Flag vessels with foreign crews predominate, we believe that our U.S. Flag PCTCs can compete effectively in obtaining renewals of existing contracts if we are able to continue to participate in the MSP and continue to receive cooperation from our seamen’s unions in controlling costs.

Our Rail-Ferry Service faces competition principally from companies who transport cargo over land rather than water, including railroads and trucking companies that cross land borders.

Employees

As of December 31, 2010, we employed approximately 377 shipboard personnel and 124 shoreside personnel.  We consider relations with our employees to be excellent.

All of Central Gulf, Waterman, and our other U.S. shipping companies’ shipboard personnel are covered by collective bargaining agreements.  Some of these agreements relate to particular vessels and have terms corresponding with the terms of their respective vessel’s charter.  We have experienced no strikes or other significant labor problems during the last ten years.

Available Information

Our internet address is www.intship.com.  We make available free of charge through our website our annual report on Form 10-K, proxy statement for our annual meeting of stockholders, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.  The information found on our website is not part of this or any other report.

Unless otherwise indicated, information contained in this annual report and other documents filed by us under the federal securities laws concerning our views and expectations regarding the marine transportation industry are based on estimates made by us using data from industry sources, and on assumptions made by us based on our management’s knowledge and experience in the markets in which we operate and the marine transportation industry generally.  We believe these estimates and assumptions are accurate on the date made.  However, this information may prove to be inaccurate because it cannot always be verified with certainty.  You should be aware that we have not independently verified data from industry or other third-party sources and cannot guarantee its accuracy or completeness.  Our estimates and assumptions involve risks and uncertainties and are subject to change based on various factors, including those discussed immediately below in Item 1A of this annual report.

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ITEM 1A.  RISK FACTORS

Our revenues decreased in 2010 and could decrease further in 2011.

Beginning in 2008, our revenues and gross voyage profits benefited from significant increases in the volume of supplemental cargos carried by our vessels.  These supplemental cargoes peaked during the fourth quarter of 2009, and have decreased every quarter since then to levels comparable to 2008.  If our supplemental cargo volumes continue to decrease, our revenues and gross voyage profits will be negatively impacted.

We may not be able to renew our time charters and contracts when they expire at favorable rates or at all.  

During 2010, we received approximately 62% of our revenue from time charters (excluding supplemental cargoes), bareboat charters or contracts of affreightment. However, there can be no assurance that any of these charters or contracts, which are generally for periods of one year or more, will be renewed at favorable rates, or at all.  Shipping rates are based on several factors that are unpredictable and beyond our control.  If upon expiration of our existing charters and contracts, we are unable to obtain new charters or contracts at rates comparable to those received under the expired charters or contracts, our revenues and earnings may be adversely affected.

In particular, we cannot assure that we will be able to renew the three contracts we have with the MSC that are currently scheduled to end in March and May 2011. These three contracts represented 11.9% of our total revenue in 2010.

We operate in a highly competitive industry.  

The shipping industry is intensely competitive and can be influenced by economic and political events that are outside the control of shipping companies.  We compete with companies that have greater resources than we have, or who may be better positioned to adapt to changes in market or economic conditions. Consequently, there can be no assurance that we will be able to deploy our vessels on economically attractive terms, maintain attractive freight rates, pass cost increases through to our customers or otherwise successfully compete against our competitors. Any failure to remain competitive in the shipping industry could have an adverse effect on our results of operations and financial condition.

Changes in the demand for our services or vessels could cause our charter and cargo rates to decline, which could have a material adverse effect on our revenues and earnings.

Historically, the shipping industry has been cyclical.  The nature, timing and degree of changes to industry conditions are generally unpredictable and may adversely affect the values of our assets or our financial performance.  Various factors influence the demand for our transportation services, including worldwide demand for the products we carry and changes in the supply and demand of vessels. The worldwide supply of vessels generally increases with deliveries of new, refurbished or converted vessels and decreases with the scrapping of older vessels. If the available supply of vessels exceeds the number of vessels being scrapped, vessel capacity and competition in the markets where we operate may increase.  In the absence of a corresponding increase in the demand for these vessels, the charter hire and cargo rates for our vessels could fluctuate significantly and result in, among other things, lower operating revenues and reduced earnings.  

If Congress does not make sufficient appropriations under the Maritime Security Act of 1996, we may not continue to receive certain payments.

If Congress does not make sufficient appropriations under the Maritime Security Act of 1996 in any fiscal year, we may not continue to receive annual payments with respect to certain of our vessels that we have committed to the federal government under the U.S. Maritime Security Program.  Under this program, each participating vessel received an annual payment of $2.9 million in 2009 and 2010. These vessels are eligible to receive $2.9 million in year 2011, and $3.1 million in years 2012 to 2015.  As of December 31, 2010, eight of our vessels operated under contracts issued under this program.  Since payments under this program are subject to annual appropriations by Congress and are not guaranteed, we cannot assure you that we will continue to receive these annual payments, in full or in part.

We cannot assure that we will be able to comply with all of our loan covenants.

        Substantially all of our credit agreements require us to comply with various loan covenants, including financial covenants that stipulate minimum levels of net worth and maximum amounts of debt leverage.  We are currently evaluating several alternatives designed to alleviate potential covenant breaches that we project could otherwise arise in the near future based on current operating trends.  While we currently believe that we have available options to prevent or mitigate such breaches, we cannot assure that we will be able to implement them timely or at all, or that they will enable us to meet all of our current covenants

Recent turmoil in the credit markets could negatively impact our business, results of operations, financial condition or liquidity, or those of our customers.

Our operations are affected by local, national and worldwide economic conditions and the condition of the shipping industry in general.  Over the last couple of years, worldwide economic conditions have experienced a significant downturn as a result of, among other things, the failure of several financial institutions, slower overall economic activity, fluctuations in commodity prices, and other adverse business conditions and related concerns.  Any continuation or worsening of these trends could ultimately have a negative impact on our financial performance and condition, including our ability to borrow money from current credit sources or secure additional financing to fund our ongoing operations.

We are subject to certain risks with respect to our counterparties on contracts, and failure of such counterparties to meet their obligations could cause us to suffer losses or otherwise adversely affect our business.   

The ability of our counterparties to perform their obligations under their contracts with us will depend upon a number of factors that are beyond our control and may include, among other things, general economic conditions and the overall financial condition of these counterparties, especially in light of the recent global financial crisis. If our counterparties fail to honor their obligations under their agreements with us, we could sustain significant losses or a reduction in our vessel usage, both of which could have an adverse effect on our financial condition, results of operations and cash flows.

Older vessels have higher operating costs and are potentially less desirable to charterers.  

The average age of the vessels in our fleet that we own or lease is approximately 12 years, including the average age of our owned and leased Pure Car/Truck Carrier Fleet, which is approximately 10 years.  In general, capital expenditures and other costs necessary for maintaining a vessel in good operating condition increase and become more difficult to estimate with accuracy as the age of the vessel increases. Moreover, customers generally prefer modern vessels over older vessels, which places the older vessels at a competitive disadvantage, especially in weak markets. In addition, changes in governmental regulations, compliance with classification society standards and customer requirements or competition may require us to make additional expenditures for alternations or the addition of new equipment.  In order to make such alterations or add such equipment, we may be required to take our vessels out of service, thereby reducing our revenues. Expenditures such as these may also require us to incur additional debt or raise additional capital. There can be no assurance that market or general economic conditions will enable us to replace our existing vessels with new vessels, justify the expenditures necessary to maintain our older vessels in good operating condition or enable us to operate our older vessels profitably during the remainder of their estimated useful lives.

Our Rail-Ferry Service has a history of losses, and we can give no assurances as to its future profitability.

This service began operating in February of 2001 and has been unprofitable every year except 2008, when the two vessels used to provide this service averaged approximately 75% capacity utilization. Beginning in 2009, the worldwide economic downturn negatively impacted the volumes and cargo rates for this service, especially on its northbound route to the U.S.  As a result of a reduction in future anticipated cash flows generated by this service, we recognized a non-cash impairment charge of $25.4 million in the third quarter of 2010 to reduce the carrying value of these assets to their estimated fair value.  We cannot assure you that this service will be operated profitably in the future, however even at unprofitable levels, the service remains cash positive.

We are subject to the risk of continuing high prices, and increasing prices, of the fuel we consume in our Rail-Ferry operations.   

We are exposed to commodity price risks with respect to fuel consumption in our Rail-Ferry operations, and we can give no assurance that we will be able to offset higher fuel costs due to the competitive nature of these operations.  Although we currently have fuel surcharges in place, a material increase in current fuel prices that we cannot recover through these fuel cost surcharges could adversely affect our results of operations and financial condition.

Our business and operations are highly regulated, which can adversely affect our operations.  

Our business and the shipping industry in general are subject to increasingly stringent laws and regulations governing our vessels, including worker’s health and safety, and the staffing, construction, operation, insurance and transfer of our vessels.  Compliance with or the enforcement of these laws and regulations could have an adverse effect on our business, results of operations or financial condition. For example, in the event of war or national emergency, our U.S. Flag vessels are subject to requisition by the U.S. government. Although we would be entitled to compensation in the event of a requisition of one or more of our vessels, the amount and timing of such payments would be uncertain and there would be no guarantee that such amounts would be paid, or if paid, would fully satisfy lost profits associated with the requisition.

In addition, we are required by various governmental and quasi-governmental agencies to obtain and maintain certain permits, licenses and certificates with respect to our operations. In certain instances, the failure to obtain or maintain these authorizations could have an adverse effect on our business. We may also be required to periodically modify operating procedures or alter or introduce new equipment for our existing vessels to appropriately respond to changes in governmental regulation.

Our operations are also subject to laws and regulations related to environmental protection.  Compliance with these laws and regulations can be costly.  Failure to comply with these laws and regulations may result in penalties, sanctions or, in certain cases, the ultimate suspension or termination of our operations. Additionally, some environmental laws impose strict and, under certain circumstances, joint and several liability for remediation of spills and the release of hazardous materials. As a result, we could become subject to liability irrespective of fault or negligence. These laws and regulations may also expose us to liability for the conduct of or conditions caused by our charterers or other parties.

Terrorist attacks, piracy and international hostilities can affect the transportation industry, which could adversely affect our business.

Terrorist attacks or piracy attacks against merchant ships, particularly in the Gulf of Aden and off the East Coast of Africa, the outbreak of war, or the existence of international hostilities could damage the world economy, adversely affect the availability of and demand for transportation services, and adversely affect our ability to profitably operate and deploy our vessels.  We operate in a sector of the economy that we believe is particularly likely to be adversely impacted by the effects of political instability, terrorist attacks, war, international hostilities or piracy.

Marine transportation is inherently risky, and insurance may be insufficient to cover losses that may occur to our assets or result from our operations.

The operation of our vessels are subject to inherent risks, such as: (i) catastrophic marine disaster; (ii) adverse weather conditions; (iii) mechanical failure; (iv) collisions; (v) hazardous substance spills; (vi) seizure or expropriation of our vessels by governments, pirates, combatants or others; and (vii) navigation and other human errors.  The occurrence of any of these events may result in, among other things, damage to or loss of our vessels and our vessels' cargo or other property, delays in delivery of cargo, damage to other vessels and the environment, loss of revenues, termination of vessel charters or other contracts, fines or other restrictions on conducting business, damage to our reputation and customer relationships, and injury to personnel.  Such occurrences may also result in a significant increase in our operating costs or liability to third parties.  In addition, such occurrences may result in our company being held strictly liable for pollution damages under the Oil Pollution Act of 1990, the Comprehensive Environmental Response Compensation and Liability Act or one of the international conventions to which our vessels operating in foreign waters may be subject.

Although we maintain insurance coverage against most of these risks at levels our management considers to be customary in the industry, risks may arise for which we are not adequately insured. Additionally, any particular claim may not be covered by our policies, or may be subject to deductibles, the aggregate amount of which could be material. Any uninsured or underinsured loss could have an adverse effect on our financial performance or condition. We also make no assurances that we will be able to renew our existing insurance coverage at commercially reasonable rates or that such coverage will be adequate to cover future claims that may arise.

Additionally, certain of our insurance coverage is maintained through mutual “protection and indemnity” associations. As a mutual club, a substantial portion of its continued viability to effectively manage liability risks is reliant upon the premiums paid by its members. As a member of such associations, we may incur the obligation to satisfy payments in addition to previously established or budgeted premiums to the extent member claims would surpass the reserves of the association. We may be subject to calls or premiums in amounts based not only on our own claim records, but also the claim records of all other members over which we have no control. Our payment of these calls could result in significant additional expenses.

We are subject to risks associated with operating internationally.  

Our international shipping operations are subject to risks inherent in doing business in countries other than the United States.  These risks include, among others: (i) economic, political and social instability; (ii) potential vessel seizure, terrorist attacks, piracy, kidnapping, the expropriation of assets and other governmental actions, many of which are not covered by our insurance; (iii) currency restrictions and exchange rate fluctuations; (iv) potential submission to the jurisdiction of a foreign court or arbitration panel; (v) pandemics or epidemics that disrupt worldwide trade or the movement of vessels; (vi) import and export quotas; and (vii) the imposition of unanticipated or increased taxes, increased environmental and safety regulations or other forms of public and governmental regulation that increase our operating expenses.  Many of these risks are beyond our control, and we cannot predict the nature or the likelihood of the occurrence or corresponding affect of any such events, each of which could have an adverse effect on our financial condition and results of operations.

Our vessels could be seized by maritime claimants, which could result in a significant loss of earnings and cash flow for the related off-hire period.

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts or claims for damages.  In many jurisdictions, a maritime lienholder may enforce its lien by either arresting or attaching a vessel through foreclosure proceedings.  The arrest or attachment of one or more of our vessels could result in a significant loss of earnings and cash flow during the detainment period.

In addition, international vessel arrest conventions and certain national jurisdictions allow so-called “sister ship” arrests, that allow the arrest of vessels that are within the same legal ownership as the vessel which is subject to the claim or lien.  Certain jurisdictions go further, permitting not only the arrest of vessels within the same legal ownership, but also any “associated” vessel.  In nations with these laws, an “association” may be recognized when two vessels are owned by companies controlled by the same party.  Consequently, a claim may be asserted against us or any of our subsidiaries or our vessels for the liability of one or more of the other vessels we own.  While we have insurance coverage for these types of claims, we cannot guarantee it will cover all of our potential exposure.

A substantial number of our shipboard employees are unionized. In the event of a strike or other work stoppage, our business and operations may be adversely affected.  

As of December 31, 2010, approximately 76% of our 377 shipboard personnel were unionized employees covered by collective bargaining agreements. Given the prevalence of maritime trade unions and their corresponding influence over its members, the shipping industry is vulnerable to work stoppages and other potentially disruptive actions by employees. We may also have difficulty successfully negotiating renewals to our collective bargaining agreements with these unions or face resistance to any future efforts to place restrains on wages, reduce labor costs or moderate work practices. Any of these events may result in strikes, work disruptions and have other potentially adverse consequences. While we have experienced no strikes, work stoppages or other significant labor problems during the last ten years, we cannot assure that such events will not occur in the future or be material in nature.  In the event we experience one or more strikes, work stoppages or other labor problems, our business and, in turn, our results of operations may be adversely affected.

The market value of vessels fluctuates significantly, which could adversely affect our liquidity, result in breaches of our financing agreements or otherwise adversely affect our financial condition.

The market value of vessels fluctuates over time.  The fluctuation in market value of vessels over time is based upon various factors, including:

·   age of the vessel,

·   general economic and market conditions affecting the transportation industry, including the availability of vessel financing,

·   number of vessels in the world fleet,

·   types and sizes of vessels available,

·   changes in trading patterns affecting demand for particular sizes and types of vessels,

·   cost of newbuildings,

·   prevailing levels of charter rates,

·   competition from other shipping companies and other modes of transportation, and

·   technological advances in vessel design and propulsion.

Declining values of our vessels could adversely affect our liquidity by limiting our ability to raise cash by refinancing vessels.  Declining vessel values could also result in a breach of loan covenants or trigger events of default under relevant financing agreements that require us to maintain certain loan-to-value ratios.  In such instances, if we are unable or unwilling to pledge additional collateral to offset the decline in vessel values, our lenders could accelerate our debt and foreclose on our vessels pledged as collateral for the loans.

Delays or cost overruns in building new vessels (including the failure to deliver new vessels) could harm us.

Building new vessels is subject to risks of delay (including the failure to timely deliver new vessels to customers) or cost overruns caused by one or more of the following:

·   financial difficulties of the shipyard building a vessel, including bankruptcy,

·   unforeseen quality or engineering problems,

·   work stoppages,

·   weather interference,

·   unanticipated cost increases,

·   delays in receipt of necessary materials or equipment,

·   changes to design specifications, and

·   inability to obtain the requisite permits, approvals or certifications from governmental authorities and the applicable classification society upon completion of work.

Significant delays, cost overruns and failure to timely deliver new vessels to customers could adversely affect us in several ways, including delaying the implementation of our business strategies or materially increasing our expected contract commitments to customers.

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We face periodic drydocking costs for our vessels, which can be substantial.  

Vessels must be drydocked periodically for regulatory compliance and for maintenance and repair.  Our drydocking requirements are subject to associated risks, including delay and cost overruns, lack of necessary equipment, unforeseen engineering problems, employee strikes or other work stoppages, unanticipated cost increases, inability to obtain necessary certifications and approvals and shortages of materials or skilled labor. A significant delay in drydockings could have an adverse effect on our contract commitments. The cost of repairs and renewals required at each drydock are difficult to predict with certainty and can be substantial.  Our insurance does not cover these costs.

Some of our employees are covered by laws limiting our protection from exposure to certain claims.

Some of our employees are covered by several maritime laws, statutes and regulations which circumvent and nullify certain liability limits established by state workers’ compensation laws, including provisions of the Jones Act, the Death on the High Seas Act, and the Seamen’s Wage Act. We are not generally protected by the limits imposed by state workers’ compensation statutes for these particular employees, and as a result our exposure for claims asserted by these employees may be greater than would otherwise be the case.

We are subject to the control of our principal stockholders.  

As of March 3, 2011, three of our directors, Erik F. Johnsen, Niels M. Johnsen and Erik L. Johnsen, and their respective family members and affiliated entities, beneficially owned an aggregate of 24.36% of our common stock.  Niels M. Johnsen and Erik L. Johnsen are also executive officers of the Company, and their respective fathers are former executive officers.  Erik F. Johnsen continued to provide consulting services to us through December 31, 2010.  As a result, the Johnsen family may have the ability to exert significant influence over our affairs and management, including the election of directors and other corporate actions requiring stockholder approval.

As a holding company with no operations of our own, we rely on payments from our operating companies to meet our obligations.

As a holding company without any material assets or operations, substantially all of our income and operating cash flow is dependent upon the earnings of our subsidiaries and the distribution of those earnings to us or upon loans or other payments of funds by those subsidiaries to us.  As a result, we rely upon our subsidiaries to generate the funds necessary to meet our obligations, including the payment of amounts owed under our long-term debt.  The ability of our subsidiaries to generate sufficient cash flow from operations to allow us and them to make scheduled payments on our respective obligations will depend on their future financial performance, which will be affected by a range of economic, competitive and business factors, many of which are outside of our control. Additionally, our subsidiaries are separate and distinct legal entities and have no obligation to pay any amounts owed by us or, subject to limited exceptions for tax-sharing purposes, to make any funds available to us to pay dividends or to repay our debt or other obligations.  Our rights to receive assets of any subsidiary upon its liquidation or reorganization will also be effectively subordinated to the claims of creditors of that subsidiary, including trade creditors.  The footnotes to our consolidated financial statements incorporated by reference herein describe these matters in additional detail. 

The agreements governing certain of our debt instruments impose restrictions on our business.  

The agreements governing certain of our debt instruments contain a number of covenants imposing restrictions on our business. The restrictions these covenants place on us include limitations on our ability to: (i) consolidate or merge; (ii) incur new debt; (iii) engage in transactions with affiliates; (iv) create or permit to exist liens on our assets: and (v) in the case of a breach in certain financial covenants, pay cash dividends.  These agreements also require us to attain a number of financial ratios that measure our financial position and performance.  Our ability to satisfy these and other covenants depends on our results of operations and ability to respond to changes in business and economic conditions.  Several of these matters are beyond our control or may be significantly restricted, and, as a result, we may be prevented from engaging in transactions that otherwise might be considered beneficial to us and our common stockholders.

In addition, as our debt obligations are represented by separate agreements with different lenders, in some cases the breach of any of these covenants or other default under one agreement may create an event of default under other agreements, resulting in the acceleration of our obligation to pay principal, interest and potential penalties under such other agreements (even though we may otherwise be in compliance with all of our obligations under those agreements). Thus, an event of default under a single agreement, including one that is technical in nature or otherwise not material, could result in the acceleration of significant indebtedness under multiple lending agreements. If amounts outstanding under such agreements were to be accelerated, there can be no assurance that our assets would be sufficient to generate sufficient cash flow to repay the accelerated indebtedness, or that our lenders would not proceed against the collateral securing that indebtedness.

We are highly leveraged when considering commitments under operating leases.

Our leverage could have material adverse consequences for us, including:

·   hindering our ability to adjust to changing market, industry or economic conditions,

·   limiting our ability to access the capital markets to refinance maturing debt or to fund acquisitions of vessels or businesses,

·   limiting the amount of free cash flow available for future operations, dividends, stock repurchases or other uses,

·   making us more vulnerable to economic or industry downturns, including interest rate increases, and

·   placing us at a competitive disadvantage to those of our competitors that have less indebtedness.

In connection with executing our business strategies, from time to time we evaluate the possibility of acquiring additional vessels or businesses, and we may elect to finance such acquisitions by incurring additional indebtedness.  Moreover, if we were to suffer uninsured material losses or liabilities, we could be required to raise substantial additional capital to fund liabilities that we could not pay with our free cash flow. Our ability to arrange additional financing will depend on, among other factors, our financial position and performance, as well as prevailing market conditions and other factors beyond our control.  We cannot assure you that we will be able to obtain additional financing on terms acceptable to us or at all.  If we are able to obtain additional financing, our credit may be adversely affected and our ability to satisfy our obligations under our current indebtedness could be adversely affected.

We have a Yen-denominated loan and volatility in the USD/Yen exchange rate could cause material adjustments to the earnings we report each quarter.  

We have a Yen-denominated loan of Yen 5,102,500,000 which as of December 31, 2010 converted to a USD$61.8 million liability at a USD/Yen exchange rate of $1 to Yen 81.22.  As described further in our periodic SEC reports, current accounting guidelines require us to record adjustments to our earnings each quarter based on changes in exchange rates.  Volatility in the USD/Yen exchange rate could cause material adjustments to the earnings we report each quarter.

Repeal, amendment, suspension or failure to enforce the Jones Act could have an adverse affect on our business and results of operations.

A portion of our shipping operations are conducted in the U.S. coastwise trade. Under the Jones Act, this trade is restricted to vessels built in the United States, owned and manned by U.S. citizens and registered under U.S. law.  Our failure to comply with these restrictions could subject us to severe penalties, including the permanent loss of the right to engage in U.S. coastwise trade.  If the Jones Act were repealed, substantially amended or waived, it could potentially result in additional competition from vessels built in generally lower-cost foreign shipyards and owned and manned by foreign nationals, which could have an adverse effect on our business, results of operations and financial condition. We cannot assure you that the Jones Act will not be repealed or modified.

Loss of our senior management or other key personnel could have an adverse effect on our business, financial condition and results of operations.

Our future success will depend, in significant part, upon the continued services of our senior management team and other key personnel, especially those of our CEO, President, and Chief Financial Officer, who have substantial experience in the shipping industry and over 105 years of collective experience with us. We believe that the experience of our senior management team is a vital component to maintain long-term relationships with our customers.  The loss of the services of any of these individuals could adversely affect our future operating results, and we may have to incur significant costs to find sufficient replacements for them, if available.

We are susceptible to severe weather and natural disasters.

Given the nature and scope of our operations, we are constantly vulnerable to disruption as a result of adverse weather conditions, including hurricanes, typhoons, earthquakes and other natural disasters. These type of events may, among other things, (i) hinder our ability to effectively and timely provide scheduled service to our customers whether due to damage to our properties, to our customers’ operations, or to dock or other transportation facilities; (ii) interfere with our terminal operations; (iii) damage our vessels and equipment; or (iv) result in injury or death to our employees. Any of these factors, especially to the extent not fully covered by insurance, could have an adverse affect on our business, financial condition and results of operation.

We cannot assure that we will have the necessary funds to pay dividends on our common stock or we may elect not to pay dividends on our common stock in the future.

While our Board currently plans to continue our dividend program, our stockholders may not receive additional dividends in the future for reasons that may include, without limitation, any of the following factors:

·   we may not have enough cash to pay such dividends due to changes in our cash requirements, capital or vessel spending plans, strategic objectives, cash flow or financial position,

·   debt covenants and corporate law limitations could restrict our ability to pay dividends, or the ability of our subsidiaries to pay dividends to us, and

·   the actual amount of dividends distributed and the decision to make any distribution remains at all times entirely at the discretion of our Board of Directors, who are free to change or suspend our dividend program at any time.

Our common stockholders should be aware that they have no contractual or other legal right to dividends.

We may be required to contribute cash to meet our obligations under certain multi-employer pension plans.

       Domestically, we participate in and make periodic contributions to various multi-employer pension plans under union and industry-wide agreements that generally provide defined benefits to employees covered by collective bargaining agreements.  Absent an applicable exemption, a contributor to a multi-employer plan is liable, upon termination or withdrawal from the plan, for its proportionate share of the plan’s underfunded vested liability.  Funding requirements for benefit obligations of our pension plans are subject to certain regulatory requirements and we may be required to make cash contributions which may be material to one or more of these plans to satisfy certain underfunded benefit obligations.  Information from the plans’ administrators is not readily available to permit us to determine whether there may be unfunded vested benefits.

We are exposed to risks arising out of tax audits.

       As a significant taxpayer, we are subject to frequent and regular audits and examinations by the Internal Revenue Service, as well as state and local tax authorities.  These tax audits and examinations may result in tax liabilities that differ materially from those that we have recorded in our consolidated financial statements.  Because the ultimate outcomes of these matters are uncertain, we can give no assurance as to whether an adverse result from one or more of them will have a material effect on our financial results

We are exposed to risks arising out of recent legislation affecting U.S. public companies, including risks relating to evaluations of controls required by Section 404 of the Sarbanes-Oxley Act.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, and related regulations implemented by the SEC, the New York Stock Exchange and the Public Company Accounting Oversight Board, are increasing legal and financial compliance costs and making some activities more time consuming.  Any future failure to successfully or timely complete annual assessments of our internal controls required by Section 404 of the Sarbanes-Oxley Act could subject us to sanctions or investigation by regulatory authorities.  Any such action could adversely affect our financial results or investors’ confidence in us, and could cause our stock price to fall.  If we fail to maintain effective controls and procedures, we may be unable to provide financial information in a timely and reliable manner, which could in certain instances limit our ability to borrow or raise capital.

If conditions or assumptions differ from the judgments, assumptions or estimates used in our critical accounting policies, the accuracy of our financial statements and related disclosures could be affected.

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires us to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes.  For a discussion of our critical accounting policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in Item 7 of our most recent annual report on Form 10-K incorporated herein by reference.  If future events or assumptions differ significantly from the judgments, assumptions and estimates in our critical accounting policies, these events or assumptions could have a material impact on our consolidated financial statements and related disclosures.

Other Risks

We face other risks.

The list of risks above is not all inclusive, and you should be aware that we face various other risks.  

ITEM 1B. UNRESOLVED STAFF COMMENTS

None

ITEM 2.  PROPERTIES

Vessels

Of the 33 ocean-going vessels operating in our fleet at March 3, 2011, and seven Newbuildings presently on order for future delivery, fourteen were 100% owned by us, four were 50% owned by us, ten were 25% owned by us, seven were leased, bareboat chartered or time chartered by us, and five were operated by us under operating contracts.

Under governmental regulations, insurance policies, and certain of our financing agreements and charters, we are required to maintain our vessels in accordance with standards of seaworthiness, safety, and health prescribed by governmental regulations or promulgated by certain vessel classification societies. We have implemented the quality and safety management program mandated by the IMO and have obtained certification of all vessels currently required to have a Safety Management Certificate.  We seek to maintain our vessels in accordance with governmental regulations and the highest classification standards of the International Association of Classification Societies Ltd.

Certain of the vessels owned by our subsidiaries are mortgaged to various lenders to secure such subsidiaries’ long-term debt (See Note C - Long-Term Debt).

Other Properties

We lease our corporate headquarters in Mobile, Alabama, our administrative, sales and chartering office in New York, our administrative office in Singapore, which was reestablished on October 1, 2009, and our agency and chartering office in Shanghai.  In 2010, the aggregate annual rental payments under these operating leases totaled approximately $1.5 million.

5 

ITEM 3.  LEGAL PROCEEDINGS

We have been named as a defendant in numerous lawsuits claiming damages related to occupational diseases, primarily related to asbestos and hearing loss.  We believe that most of these claims are without merit, and that insurance and the indemnification of a previous owner of one of our subsidiaries mitigate our exposure. (For additional information, See Note H – Commitments and Contingencies.)

In the normal course of our operations, we become involved in various litigation matters including, among other things, claims by third parties for alleged property damages, personal injuries and other matters.  While the outcome of such claims cannot be predicted with certainty, we believe that our insurance coverage and reserves with respect to such claims are adequate and that such claims should not have a material adverse effect on our business or financial condition. (For additional information, See Note H – Commitments and Contingencies.)

On June 23, 2009, a complaint was filed in U.S. District Court of Oregon by ten plaintiffs against approximately 40 defendants, including Waterman Steamship Corporation, which is one of our wholly owned subsidiaries. The suit was filed for contribution and recovery of both past and future cost associated with the investigation and remediation of the Portland Harbor Superfund Site. Based on our preliminary review to date, we believe we have no exposure, but our exposure, if any, would be limited to an insurance deductible which we believe would be immaterial.

We do not believe, based on current knowledge, that any of the foregoing legal proceedings or claims are likely to have a material adverse effect on our financial position, results of operations or cash flows, although we cannot provide any assurances to this effect.

ITEM 4.  [Reserved]

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is listed on the New York Stock Exchange and is traded under the symbol ISH.  The following table sets forth the high and low sales prices, along with the quarterly dividends, for each of the quarters indicated.

2009	High	Low	Paid
1st Quarter	$                                     25.96	$                                     16.43	$          0.50/Share
2nd Quarter	27.62	17.72	$          0.50/Share
3rd Quarter	32.96	23.93	$          0.50/Share
4th Quarter	36.84	28.01	$          0.50/Share
			Dividends
2010	High	Low	Paid
1st Quarter	$                                     32.25	$                                     26.06	$          0.50/Share
2nd Quarter	32.43	20.87	$          0.375/Share
3rd Quarter	28.93	20.64	$          0.375/Share
4th Quarter	29.49	23.82	$          0.375/Share

As described in greater detail in Item 1A of this report, the declaration and payment of dividends is at the discretion of our Board of Directors, and will depend upon our financial results, cash requirements, future prospects and other factors deemed relevant by the Board of Directors.

As of March 3, 2011, there were approximately 413 stockholders of record of our common stock.  As of March 3, 2011, the closing stock price of our common stock was $24.09.

Performance Graph

The following graph compares the cumulative total shareholder return of our Common Stock to that of the S&P 500 Index and an Industry Peer Group (which consists of Overseas Shipholding Group, Diana Shipping Inc, Alexander & Baldwin, Inc., and Eagle Bulk Shipping Inc) for the Corporation's last five fiscal years.

*Assumes $100 invested at the close of trading on the last trading day in 2005 in ISH common stock, the S&P 500, and the Industry Peer Group.  Also assumes reinvestment of dividends.

December 31,

	2005	2006	2007	2008	2009	2010
ISH --♦--	$100.00	$  86.76	$140.02	$166.62	$221.96	$193.26
S&P --▲--	$100.00	$115.79	$122.16	$  76.97	$  97.33	$112.00
Peer Group --■--	$100.00	$104.24	$151.13	$  73.87	$  86.81	$  85.09

In accordance with New York Stock Exchange rules, Niels M. Johnsen, our Chief Executive Officer, has certified to the NYSE that, as of May 24, 2010, he was not aware of any violation by us of the NYSE’s corporate governance listing standards.   The certification is to be submitted to the NYSE each year no later than 30 days after our annual stockholders meeting.

The Chief Executive Officer and Chief Financial Officer certifications required for 2010 by Section 302 of the Sarbanes-Oxley Act of 2002 are included as exhibits to this Form 10-K.

Equity Compensation Plans

The information in Item 12 of this annual report regarding equity compensation plans is incorporated herein by reference.

Stock Repurchases

The information in Item 12 of this annual report regarding our stock repurchases in incorporated herein by reference.

6 

ITEM 6.  SELECTED FINANCIAL DATA

	INTERNATIONAL SHIPHOLDING CORPORATION
	SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA
	The following summary of selected consolidated financial data is not covered by the auditors' report appearing elsewhere herein. However,
	in the opinion of management, the summary of selected consolidated financial data includes all adjustments necessary for a fair representation of
	each of the years presented.
	This summary should be read in conjunction with the consolidated financial statements and the notes thereto appearing elsewhere in this annual
	report.
	(All Amounts in Thousands Except Share and Per Share Data)
		Year Ended December 31,
		2010	2009	2008 (2)	2007	2006
Income Statement Data (1):
	Revenues (3)	$290,049	$379,951	$281,901	$218,113	$      203,498
	Impairment Loss (4)	25,430	2,899	369	-	8,866
	Gross Voyage Profit	37,343	61,120	41,693	28,776	19,054
	Operating Income	16,183	36,270	20,279	10,630	1,445
	Income from Continuing Operations	15,302	42,221	34,222	11,792	18,194
	Net Income Available to Common Stockholders	15,302	42,221	38,961	15,016	14,648
	Basic and Diluted Earnings Per Common Share (5):
	Net Income Available to Common Stockholders - Basic	2.14	5.84	4.67	1.48	2.58
	Net Income Available to Common Stockholders - Diluted	2.12	5.80	4.56	1.41	2.24
Balance Sheet Data:
	Working Capital	15,094	40,538	50,506	23,189	3,024
	Total Assets	544,123	496,650	434,111	440,655	428,042
	Long-Term Debt, Less Current Maturities
	(including Capital Lease Obligations)	200,241	97,635	126,841	130,523	98,984
	Convertible Exchangeable Preferred Stock	-	-	-	37,554	37,554
	Stockholders' Investment	233,750	238,931	205,192	173,702	153,736
Other Data:
	Cash Flow from Operations	64,387	62,681	42,185	20,231	22,981
	Cash Flow from Investing Activities	(114,876)	(79,776)	41,434	(2,180)	27,532
	Cash Flow from Financing Activities	27,179	12,728	(45,887)	(48,221)	(22,418)
	Cash Dividends Per Share of Common Stock	1.625	2.00	0.50	-	-
	Weighted Average Shares of Common Stock Outstanding:
	Basic	7,158,439	7,224,748	7,314,216	6,360,208	6,116,036
	Diluted	7,231,178	7,282,119	7,501,555	8,369,473	8,122,578
(1)	During 2007, the decision was made to discontinue our LASH Liner Service. As a result, the LASH Liner Service results were removed from continuing operations and reclassified into Discontinued Operations for all years presented above.
(2)	Includes income from the sale of a Dry Bulk vessel, of which we owned a 50% share.
(3)	Starting with the filing of our Form 10-Q for the quarterly period ended March 31, 2009, we began to report our revenues and voyage expenses for our supplemental cargoes on our U.S. flag Pure Car Truck Carriers on a gross basis. All periods presented includes a reclassification for grossing up of our revenues and voyage expenses. This reclassification does not change what we previously reported for gross voyage profit, net income or earnings per share. The reclassification applies only to the reporting of revenues and voyage expenses for carriage of our supplemental cargo on our U.S. flag Pure Car Truck Carriers which is part of our Time Charter Segment.
(4)	During the third quarter of 2010, we recorded a non-cash impairment loss of $25.4 million on two of our Roll-on/Roll-off special purpose vessels included in our Rail Ferry Service segment. In 2009, the segment began to feel the impact of the current economic recession and reported lower than expected gross voyage profit results. The lower results were further dampened by the loss of one of the segment’s largest customers in December of 2009. As a result, the Company has routinely performed an impairment test in prior periods and determined based on the projected results it could recover the carrying value of the assets.  However, based on the challenge to replace the major customer lost in 2009, a lack of improvement throughout 2010, and no improvement expected in the short term for the segment’s operating results, the Company determined that the cash flows expected to be generated by the long-lived assets of its Rail-Ferry segment are less than the carrying amount of these assets. The fair value of these assets was estimated based upon an independent third party appraiser (Level 2 inputs).
	During the second quarter of 2009 we recorded a non-cash impairment loss of $2.9 million on one of our International flag container vessels included in our Time Charter Contracts segment.  This charge was the result of the termination of our Time Charter agreement on the vessel upon the mutual agreement with our customer.  We agreed to the early termination in exchange for an increase in charter hire on the other International flag container vessel remaining under timecharter.
	Results for 2006 reflect an Impairment Loss of approximately $8.9 million.  This non-cash charge was made to write down our investment in the terminal located in New Orleans, Louisiana utilized in our Rail-Ferry Service.  This service relocated its U.S. operations during 2007 to Mobile, Alabama, where a new terminal was constructed.
(5)	Basic and diluted earnigns per common share from continuing operations.

7 

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

NOTICE REGARDING FORWARD-LOOKING STATEMENTS

This report on Form 10-K and other documents filed or furnished by us under the federal securities law include, and future oral or written statements or press releases by us and our management may include, forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and as such may involve known and unknown risks, uncertainties, and other factors that may cause our actual results to be materially different from the anticipated future results expressed or implied by such forward-looking statements.  Forward-looking statements may include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “plan,” “anticipate,” “project,” “seek,” “hope,” “should” or “could” and other similar words.

Our forward-looking statements are based upon our judgment and assumptions as of the date such statements are made concerning future developments and events, many of which are outside of our control.  These forward looking statements, and the assumptions upon which such statements are based, are inherently speculative and are subject to uncertainties that could cause our actual results to differ materially from such statements.  Important factors that could cause our actual results to differ materially from our expectations include, but are not limited to, those which may be set forth in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and therein.

Such statements include, without limitation, statements regarding (1) anticipated future operating and financial performance, financial position and liquidity, growth opportunities and growth rates, acquisition and divestiture opportunities, business prospects, regulatory and competitive outlook, investment and expenditure plans, investment results, pricing plans, strategic alternatives, business strategies, and other similar statements of expectations or objectives; (2) estimated fair values of capital assets, the recoverability of the cost of those assets, the estimated future cash flows attributable to those assets, and the appropriate discounts to be applied in determining the net present values of those estimated cash flows; (3) estimated scrap values of assets; (4) estimated proceeds from selling assets and the anticipated cost of constructing or purchasing new or existing vessels; (5) estimated fair values of financial instruments, such as interest rate, commodity and currency swap agreements; (6) estimated losses (including independent actuarial estimates) under self-insurance arrangements, as well as estimated gains or losses on certain contracts, trade routes, lines of business or asset dispositions; (7) estimated losses attributable to asbestos claims or other litigation; (8) estimated obligations, and the timing thereof, relating to vessel repair or maintenance work; (9) the adequacy of our capital resources and the availability of additional capital resources on commercially acceptable terms; (10) our ability to remain in compliance with our debt covenants; (11) anticipated trends in government sponsored cargoes; (12) our ability to effectively service our debt; (13) financing opportunities and sources (including the impact of financings on our financial position, financial performance or credit ratings); (14) changes in laws, regulations or tax rates, or the outcome of pending legislative or regulatory initiatives; and (15) assumptions underlying any of the foregoing.

Important factors that could cause our actual results to differ materially from our expectations include our ability to:

·   identify customers who require marine transportation services or vessels offered by us,

·   secure financing on satisfactory terms to repay existing debt or support operations, including to acquire, modify, or construct vessels if such financing is necessary to service the potential needs of current or future customers,

·   maximize the usage of our vessels and other assets on favorable economic terms,

·   manage the amount and rate of growth of our administrative and general expenses and costs associated with operating our vessels,

·   manage our growth in terms of implementing internal controls and information systems and hiring or retaining key personnel, among other things, and

·   effectively handle our substantial leverage by servicing and meeting the covenant requirements in each of our debt instruments, thereby avoiding any defaults under those instruments and avoiding cross defaults under others.

·   Other factors that could cause actual results to differ materially from our expectations include, without limitation:

·   unanticipated changes in vessel utilization or cargo rates, or in charter hire, fuel, or other operating expenses,

·   the rate at which competitors add or scrap vessels, as well as demolition scrap prices and the availability of scrap facilities in the areas in which we operate,

·   changes in interest rates, which could increase or decrease the amount of interest we incur on our variable rate debt and the availability and cost of capital to us,

·   the impact on our financial statements of nonrecurring accounting charges that may result from our ongoing evaluation of business strategies, asset valuations, and organizational structures,

·   changes in accounting policies and practices adopted voluntarily or as required by accounting principles generally accepted in the United States,

·   changes in laws and regulations such as those related to government assistance programs and tax rates,

·   the frequency and severity of claims against us, and unanticipated outcomes of current or possible future legal proceedings,

·   unexpected out-of-service days on our vessels whether due to unplanned maintenance or other causes,

·   the ability of customers to fulfill their obligations with us,

·   the performance of unconsolidated subsidiaries,

·   political events in the United States and abroad, including terrorism and piracy, and the U.S. military's response to those events,

·   election results, regulatory activities and the appropriation of funds by the U.S. Congress,

·   changes in foreign currency exchange rates, and

·   other economic, competitive, governmental, and technological factors which may affect our operations.

Due to these uncertainties, we cannot assure that we will attain our anticipated results, that our judgments or assumptions will prove correct, or that unforeseen developments will not occur.  Accordingly, you are cautioned not to place undue reliance upon any of our forward-looking statements, which speak only as of the date made.  Additional risks that we currently deem immaterial or that are not presently known to us could also cause our actual results to differ materially from those expected in our forward-looking statements.  Except for meeting our ongoing obligations under the federal securities laws, we undertake no obligation to update or revise for any reason any forward-looking statements made by us or on our behalf, whether as a result of new information, future events or developments, changed circumstances or otherwise.

For additional information, see the description of our business included above in Item 1 of this report, as well as Item 7 of this report below.

CRITICAL ACCOUNTING POLICIES

Set forth below is a discussion of the accounting policies and related estimates that we believe are the most critical to understanding our consolidated financial statements, financial condition, and results of operations and which require complex management judgments or estimates and entail material uncertainties.  Information regarding our other accounting policies is included in the Notes to Consolidated Financial Statements appearing elsewhere herein.

Voyage Revenue and Expense Recognition

Revenues and expenses relating to our Rail-Ferry Service segment voyages are recorded over the duration of the voyage.  Our voyage expenses are estimated at the beginning of the voyages based on historical actual costs or from industry sources familiar with those types of charges.  As the voyage progresses, these estimated costs are revised with actual charges and timely adjustments are made.  The expenses are allocated over the voyage based on the number of days in progress at the end of the period.  We believe there is no material difference between recording estimated expenses ratably over the voyage versus recording expenses as incurred.  Revenues and expenses relating to our other segments' voyages, which require no estimates or assumptions, are recorded when earned or incurred during the reporting period.

Depreciation

Provisions for depreciation are computed on the straight-line method based on estimated useful lives of our depreciable assets.  Various methods are used to estimate the useful lives and salvage values of our depreciable assets. Due to the capital intensive nature of our business and our large base of depreciable assets, changes in such estimates could have a material effect on our results of operations.

Drydocking Costs

We defer certain costs related to the drydocking of our vessels.  Deferred drydocking costs are capitalized as incurred and amortized on a straight-line basis over the period between drydockings (generally two to five years).  Because drydocking charges can be material in any one period, we believe that the acceptable deferred method provides a better matching for the amortization of those costs over future revenue periods benefiting from the drydocking of our vessel.  We capitalize only those costs that are incurred to meet regulatory requirements or upgrades, or that add economic life to the vessel.  Normal repairs, whether incurred as part of the drydocking or not, are expensed as incurred.

Income Taxes

Income taxes are accounted for in accordance with ASC Topic 740-10. Provisions for income taxes include deferred income taxes that are provided on items of income and expense, which affect taxable income in one period and financial income in another.  Certain foreign operations are not subject to income taxation under pertinent provisions of the laws of the country of incorporation or operation.  However, pursuant to existing U.S. tax laws, earnings from certain of our foreign operations are subject to U.S. income taxes when those earnings are repatriated to the U.S. We intend to permanently re-invest $12,583,000, $3,051,000 and $24,135,000 of our 2010, 2009 and 2008 foreign earnings, respectively, and accordingly, have not provided deferred taxes against those earnings.  As described further in Item 1 of this report, the Jobs Creation Act, which first applied to us on January 1, 2005, changed the United States tax treatment of the foreign operations of our U.S. flag vessels and our international flag shipping operations.  We made an election under the Jobs Creation Act to have our qualifying U.S. flag operations taxed under a “tonnage tax” rather than under the usual U.S. corporate income tax regime.

We account for uncertain tax positions in accordance with ASC Topic 740-10-05. ASC 740-10-05 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements.  ASC 740-10-05 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition.

As of December 31, 2010, our net deferred tax asset/liability was reduced to zero as a result of the establishment of a full valuation allowance with respect to our net deferred tax asset during the fourth quarter of 2010. The valuation allowance was established as a result of recent losses incurred with respect to our operations taxed at the U.S. Corporate Statutory rate. The establishment of the valuation allowance resulted in a higher effective tax rate during 2010.

Self-Retention Insurance

We maintain provisions for estimated losses under our self-retention insurance based on estimates of the eventual claims settlement costs. Our estimates are determined based on various factors, such as (1) severity of the injury (for personal injuries) and estimated potential liability based on past judgments and settlements, (2) advice from legal counsel based on its assessment of the facts of the case and its experience in other cases, (3) probability of pre-trial settlement which would mitigate legal costs, (4) historical experience on claims for each specific type of cargo (for cargo damage claims), and (5) whether our seamen are employed in permanent positions or temporary revolving positions.  It is reasonably possible that changes in our estimated exposure may occur from time to time.  The measurement of our exposure for self-insurance liability requires management to make estimates and assumptions that affect the amount of loss provisions recorded during the reporting period.  Actual results could differ materially from those estimates.

Asbestos Claims

We maintain provisions for estimated losses for asbestos claims based on estimates of eventual defense and settlement costs.  Our policy is to establish provisions based on a range of estimated exposure.  We estimate this potential range of exposure using input from legal counsel and internal estimates based on the individual deductible levels for each policy year. We believe that insurance and the indemnification of a previous owner of one of our wholly-owned subsidiaries will partially mitigate our exposure.  The measurement of our exposure for asbestos liability requires management to make estimates and assumptions that affect the amount of the loss provisions recorded during the period.  Our estimates and assumptions are formed from variables such as the maximum deductible levels in a claim year, the amount of the indemnification recovery and the claimant's employment history with the company.  Actual results could differ materially from those estimates.

Derivative Instruments and Hedging Activities

Under ASC Topic 815-10, in order to consider a derivative instrument as a hedge, (i) we must designate the instrument as a hedge of future transactions, and (ii) the instrument must reduce our exposure to the applicable risk.  If the above criteria are not met, we must record the fair market value of the instrument at the end of each period and recognize the related gain or loss through earnings.  If the instrument qualifies as a hedge, net settlements under the agreement are recognized as an adjustment to earnings, while changes in the fair market value of the hedge are recorded through Stockholders’ Investment in Other Comprehensive Income (Loss).  We currently employ, or have employed in the recent past, interest rate swap agreements, foreign currency contracts, and commodity swap contracts.

Pension and Postretirement Benefits

Our pension and postretirement benefit costs are calculated using various actuarial assumptions and methodologies as prescribed by ASC Topic 715-10-15. These assumptions include discount rates, health care cost trend rates, inflation rates, rate of compensation increases, expected return on plan assets, mortality rates, and other factors.  We believe that the assumptions utilized in recording the obligations under our plans are reasonable based on input from our outside actuary and information as to historical experience and performance.  Differences in actual experience or changes in assumptions may affect our pension and postretirement obligations and future expense.

We account for our pension and post retirement benefit plans in accordance with ASC Topic 715-30-35. This statement requires balance sheet recognition of the overfunded or underfunded status of pension and postretirement benefit plans.  Under ASC Topic 715-30-35, actuarial gains and losses, prior service costs or credits, and any remaining transition assets or obligations that have not been recognized under previous accounting standards must be recognized in Other Comprehensive Income, net of tax effects, until they are amortized as a component of net periodic benefit cost.  In addition, the measurement date, the date at which plan assets and the benefit obligation are measured, is required to be the company’s fiscal year end.

Impairment of Long-Lived Assets

We review the carrying amounts of our vessels for possible impairment when events or circumstances indicate that the carrying value of a particular vessel may not be recoverable.  The carrying values of the our vessels may not represent their fair market value at any point in time because the market prices of vessels tend to fluctuate with changes in charter rates, second hand vessel sales and the cost of newbuildings.  We record impairment losses only when events occur that cause us to believe that future cash flows for any individual vessel will be less than its carrying value.  In such instances, we would recognize an impairment charge in the period in which that determination is made if the estimate of the undiscounted future cash flows expected to result from the use of the vessel and its eventual disposition is less than the vessel’s carrying amount.  In developing estimates of future cash flows, we must make assumptions about future charter rates, ship operating expenses, and the estimated remaining useful lives of the vessels.  These assumptions are based on historical trends as well as future expectations.  Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate, such assumptions are highly subjective.  For information on recent fixed asset impairment charges, see “ – Liquidity and Capital Resources – Rail-Ferry Service.”

Impairment of Investments

Our holdings in marketable securities are classified as available-for-sale and are thus carried on the balance sheet at fair value with changes in carrying value recorded in accumulated other comprehensive income/(loss) until the investments are sold.  We review these investments for impairment when there is evidence that fair value may be below the carrying cost.  We write down an investment if fair value is below the carrying cost and the impairment is other than temporary.  If we determine that a material decline in fair value below the carrying cost is other than temporary, we would record a noncash impairment loss in our consolidated statement of income in the period in which that determination is made. The carrying value of that security would then be written down to its fair value at the end of that period, establishing a new cost basis.  In determining the fair value of an investment and assessing whether any identified impairment is other than temporary, we use significant estimates and considerable judgments.  Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate, such assumptions are highly subjective.  For information on recent investment impairment charges, see the discussion of our “Other Income and Expenses” for 2010, 2009 and 2008 appearing below.

8 

EXECUTIVE SUMMARY

Overview of 2010

Overall Strategy

The company operates a diversified fleet of U.S. and International Flag vessels that provide international and domestic maritime transportation services to customers primarily under medium to long-term contracts. Our business strategy consists of identifying growth opportunities as market needs change, utilizing our extensive experience to meet those needs, and continuing to maintain a diverse portfolio of medium to long-term contracts, under which we can serve our long-standing customer base by providing quality transportation services.

2010 Consolidated Financial Performance

Overall adjusted net income decreased from $45.1 million in 2009 to $40.7 million for 2010, excluding impairment charges of $2.9 million in 2009 and $25.4 million in 2010, respectively (as described further in the Non-GAAP reconciliation table below). The decrease of $4.4 million can be attributed to  i) a decrease in gross profits of $1.3 million, ii) a non-cash foreign exchange loss in 2010 of $8.2 million on our Yen facility debt and iii) a decrease in our tax benefits of $2.2 million; partially offset by (iv) a decrease in administrative and general expenses of $1.4 million, (v) a $2.2 million increase in income from unconsolidated entities and (vi) a loss on the sale of assets occurring in 2009 of $2.2 million.

Key 2010 developments include the following:

§   Decrease in consolidated gross voyage profit was primarily due to a drop in supplemental cargo income partially offset by income from the addition of an international flagged PCTC in the first quarter of 2010.

§   Decrease in overhead expenses of $1.4 million was primarily due to a charge in 2009 related to the repayment of incentive awards to governmental agencies.

§   Non-cash foreign exchange loss was due to the strengthening of the Yen to U.S. Dollar exchange ratio from 92.46 at year end 2009 to 81.22 at year end 2010.

§   Lower tax benefits were due to changes in the valuation allowance on our deferred tax assets.

§   Increase in income from our unconsolidated entities was primarily due to a gain on the sale of the one remaining Panamax bulk carrier in 2010.

§   A decrease in 2010 of our depreciation and amortization costs (discussed further in Note W) had the effect of increasing our 2010 net income by $3.7 million, or $.51 per share.

Segment Performance

Time Charter Contracts- U.S. Flag

§Decrease in gross profits from $54.7 million in 2009 to $48.3 million in 2010.

              §Decrease in our supplemental cargo volumes.

Time Charter Contracts- International Flag

§ Improved gross profit results of $9.6 million.

§ Delivery of new PCTC in the first quarter of 2010.

Contract of Affreightment

§ Decrease in gross profits of $2.8 million primarily due to a scheduled freight rate reduction.

Rail-Ferry

§ Overall improvement in gross profit of $1.0 million, excluding $25.4 million impairment charge in 2010.

  §Continued to operate at maximum capacity on southbound voyages.

    §Improvements in northbound volumes at the end of 2010.

Other

§ Net income from unconsolidated entities increased by $2.3 million mainly due to the sale of the one remaining Panamax bulk carrier in the first quarter of 2010.

Financial Discipline & Strong Balance Sheet

§ Operating cash flow increased from $62.7 million in 2009 to $64.4 million in 2010.

§ Temporary decrease in working capital (Current Assets less Current Liabilities) from $40.5 million at year end 2009 to $15.1 million for year end 2010 due to final construction payments on three Handy-Size Bulk Carriers delivered in January 2011. Permanent financing replenished the installment payments in early 2011.

§ Cash dividend payments of $1.625 per share for the fiscal year.

Non-GAAP Financial Measures

In Management’s Discussion and Analysis of Financial Condition and Results of Operations, we refer to adjusted net income and adjusted gross voyage profit, which excludes non-cash impairment charges on fixed assets.  We believe this is useful information to investors because it provides comparable information with respect to our financial condition and results of operations excluding such non-cash charges.  The following table provides a reconciliation of net income to adjusted net income and gross voyage profit to adjusted gross voyage profit.

(All amounts in thousands)	For the Year Ended
	December 31,
	2010		2009
Gross Voyage Profit	$	37,343	$	61,120
Impairment Charge		25,430		2,899
Adjusted Gross Voyage Profit	$	62,773	$	64,019
Net Income	$	15,302	$	42,221
Impairment Charge		25,430		2,899
Adjusted Net Income	$	40,732	$	45,120

YEAR ENDED DECEMBER 31, 2010

COMPARED TO YEAR ENDED DECEMBER 31, 2009

(All Amounts in Thousands)	Time Charter Contracts- U.S. Flag		Time Charter Contracts-International Flag		COA			Rail-Ferry Service			Other		Total
2010
Revenues from External Customers	$	197,311	$	47,208	$	16,283		$	26,672		$	2,575	$	290,049
Voyage Expenses		139,269		29,588		16,930			22,648			912		209,347
Vessel Depreciation		9,755		2,982		-			5,181			11		17,929
Impairment Charge		-		-		-			25,430			-		25,430
Gross Voyage Profit (Loss)		48,287		14,638		(647	)		(26,587	)		1,652		37,343
Adjusted Gross Voyage Profit (Loss)		48,287		14,638		(647	)		(1,157	)		1,652		62,773
2009
Revenues from External Customers	$	279,879	$	50,966	$	18,046		$	27,891		$	3,169	$	379,951
Voyage Expenses		211,850		41,501		15,827			24,585			1,915		295,678
Vessel Depreciation		13,368		1,407		-			5,468			11		20,254
Impairment Loss		-		2,899		-			-			-		2,899
Gross Voyage Profit (Loss)		54,661		5,159		2,219			(2,162	)		1,243		61,120
Adjusted Gross Voyage Profit (Loss)		54,661		8,058		2,219			(2,162	)		1,243		64,019

 The following table shows the breakout of Revenues by segment between fixed and variable for the years 2010 and 2009, respectively:

                                  o    Variable Revenue            oFixed Revenue

Adjusted gross voyage profit represents gross voyage profit excluding non-cash impairment charges on fixed assets (as described further under “Non-GAAP Financial Measures” above).  Beginning with the second quarter 2010, we split Time Charter Contracts operations into two different operating segments, U.S. Flag and International Flag.  The changes of revenue and expenses associated with each of our segments are discussed within the gross voyage analysis below.

Time Charter Contracts-U.S. Flag:The decrease in this segment’s gross voyage profit from $54.7 million in 2009 to $48.2 million in 2010 is primarily due to the decrease in the carriage of supplemental cargoes on our U.S. Flag Pure Car Truck Carriers, which is partially offset by the reduction in 2010 in depreciation expense on our U.S. Flag Coal Carrier from extending its economic life to match the extension of the vessel’s time charter contract.  Gross revenues for the segment decreased from $279.9 million in 2009 to $197.3 million in 2010 primarily as a result of the decrease in supplemental cargoes.  Our fixed revenues of $117.1 million in 2010 and $109.5 million in 2009 represent revenues derived from our fixed time charter contracts, and our variable revenues of $80.2 million in 2010 and $170.4 million in 2009 represent revenues derived from our supplemental cargoes.

Time Charter Contracts-International Flag:The increase in this segment’s gross voyage profit from $8.1 million in 2009 to $14.6 million in 2010 is primarily due to more operating days on vessels servicing our Indonesian customer, and the initial employment of a newly constructed PCTC commencing in late March 2010. Revenues for the segment decreased from $51.0 million in 2009 to $47.2 million in 2010 due to vessels with lower profit margins ending their service in late 2009 and early 2010.

Contract of Affreightment: The decrease in this segment’s gross voyage profit from $2.2 million in 2009 to a loss of $647,000 in 2010 was primarily due to a decrease in revenues due to a contractually scheduled freight rate adjustment. Although the current results for the segment have decreased, the benefit from a 2007 sale leaseback is reflected in a lower consolidated effective tax rate.

Rail-Ferry Service: Adjusted gross voyage profit improved from a $2.2 million loss in 2009 to a $1.2 million loss for 2010, excluding a $25.4 million impairment charge recognized in 2010 on the segment’s two Roll-on/Roll-off Special Purpose double deck vessels.  This improvement is mainly due to reduced amortization costs (which are discussed further in Note W).  In December 2009, we were notified by one of our major Northbound customers of their intention to discontinue using the service effective immediately sighting a sourcing decision as their reason for the change.  We were able to offset this loss partially with additional Northbound volumes driven by our service being used as an alternative source of transportation resulting from outages in Mexico’s cross border rail service and a negotiated retroactive settlement to reduce our port costs.

We based the aforementioned non-cash impairment charge taken in the third quarter of 2010 on our determination that the cash flows expected to be generated by the long-lived assets of the Rail-Ferry segment were less than the carrying amount of these assets due partially to the challenge of replacing a major customer lost in late 2009.

Other: Gross voyage profit for this segment increased from $1.2 million in 2009 to $1.7 million in 2010. This was primarily due to an increase in chartering brokerage income.

9 

Other Income and Expenses

Administrative and general expenses (A&G) decreased 6% from $22.6 million in 2009 to $21.2 million in 2010.  An increase in executive stock compensation was offset by a charge in 2009 related to the repayment of certain  incentives received from various Alabama agencies.

The following table shows the significant A&G components for the twelve months ending December 31, 2010 and 2009 respectively:

(All amounts in thousands)	Year Ended December 31,
A&G Account	2010		2009		Variance
Wages and Benefits	$	10,172	$	10,142	$	(30	)
Executive Stock Compensation		2,342		1,834		(508	)
Professional Services		2,639		2,627		(12	)
Office Building Expense		1,444		1,292		(152	)
Other		4,605		6,270		1,665
Consulting Fees*		-		476		476
TOTAL:	$	21,202	$	22,641	$	1,439

* Fees associated with unaffiliated company’s offer to purchase the Company.

Interest Expense increased from $6.1 million in 2009 to $7.2 million in 2010 due to (i) entering into a new loan agreement in the third quarter of 2009 to finance the purchase of two Multi-Purpose vessels that were subsequently sold to an Indonesian company and (ii) higher interest expense due to the incurrence of bank indebtedness in 2010 to fund the final installment owed on our International Flag PCTC Newbuilding.

Derivative Loss in 2010 represents the ineffective portion of a derivative contract and the related mark-to-market adjustment associated with this portion of the derivative. (See Foreign Currency Exchange Rate Risk on page 38.)

Investment (Income) Loss improved from a loss of $72,000 in 2009 to income of $1.8 million in 2010 due to other than temporary impairment losses taken on certain investments in 2009, higher average cash balances in the first quarter 2010 and higher average balances of interest-bearing debt securities.

Other Income from Vessel Financing increased from $655,000 in 2009 to $2.3 million in 2010 due to interest earned on a note receivable on vessels sold to an Indonesian company in the third quarter of 2009.

Foreign Exchange Loss in 2010 reflects the strengthening of the Japanese Yen against the U.S. Dollar related to the non-cash revaluation of our Yen denominated loan facility associated with the financing of our International Flag PCTC delivered in March 2010. (See Item 1A Risk Factors.)

Income Taxes

For 2010, we recorded a benefit for income taxes of $1.3 million on $4.7 million of income from continuing operations before income from unconsolidated entities, reflecting tax losses on operations taxed at the U.S. corporate statutory rate.  For 2009, our benefit was $3.5 million on $31.7 million of income from continuing operations before income from unconsolidated entities.  Our tax benefit decreased from the comparable prior year primarily as a result of improved gross profits of the Company’s U.S. Flag Coal Carrier and establishment of a valuation allowance with respect to our net deferred tax asset as discussed below.

As a result of the recent losses on operations taxed at the U.S. corporate statutory rate, we are unable to rely on projections of future taxable income in assessing the realizability of the deferred tax assets associated with such operations.  Accordingly, we have assessed the realizability of such deferred tax assets based on the future reversals of existing deferred tax liabilities, which resulted in the establishment of a full valuation allowance with respect to our net deferred tax assets as of December 31, 2010.  The establishment of the valuation allowance had a negative impact on our effective tax rate and future changes to the valuation allowance will impact the effective tax rate.

Equity in Net Income of Unconsolidated Entities

Equity in net income of unconsolidated entities, net of taxes, increased from $7.0 million in 2009 to $9.3 million in 2010.

The results were driven by our 50% investment in Dry Bulk Cape Holding Ltd (“Dry Bulk”), which owns two Capesize Bulk Carriers and has two Handymax Bulk Carrier Newbuildings on order for delivery in 2012.  Dry Bulk contributed $6.8 million in 2009 as compared to $10.8 million in 2010. Included in the 2010 results is a gain of $1.4 million on the sale of the remaining Panamax Bulk Carrier by a Dry Bulk affiliate. Offsetting Dry Bulk’s favorable results were 2010 losses of $1.1 million and $196,000 attributable to our 25% investments in Oslo and Tony Bulkers, respectively (See Note L).

YEAR ENDED DECEMBER 31, 2009

COMPARED TO YEAR ENDED DECEMBER 31, 2008

(All Amounts in Thousands)	Time Charter Contracts- U.S. Flag		Time Charter Contracts-International Flag		COA		Rail-Ferry Service			Other		Total
2009
Revenues from External Customers	$	279,879	$	50,966	$	18,046	$	27,891		$	3,169	$	379,951
Voyage Expenses		211,850		41,501		15,827		24,585			1,915		295,678
Vessel Depreciation		13,368		1,407		-		5,468			11		20,254
Impairment Charge		-		2,899		-		-			-		2,899
Gross Voyage Profit (Loss)		54,661		5,159		2,219		(2,162	)		1,243		61,120
Adjusted Gross Voyage Profit (Loss)		54,661		8,058		2,219		(2,162	)		1,243		64,019
2008
Revenues from External Customers	$	167,153	$	53,490	$	19,199	$	39,491		$	2,568	$	281,901
Voyage Expenses		129,996		39,446		17,793		32,136			869		220,240
Vessel Depreciation		13,386		1,205		-		5,365			12		19,968
Gross Voyage Profit		23,771		12,839		1,406		1,990			1,687		41,693

The following table shows the breakout of Revenues by segment between fixed and variable for the years 2009 and 2008, respectively:

                 o    Variable Revenue             o     Fixed Revenue

Beginning with the second quarter 2010, we split Time Charter Contracts operations into two different operating segments, U.S. Flag and International Flag.  The changes of revenue and expenses associated with each of our segments are discussed within the gross voyage analysis below.

Time Charter Contracts-U.S. Flag:The increase in this segment’s gross voyage profit from $23.8 million in 2008 to $54.7 million in 2009 is primarily due to an increase in the carriage of supplemental cargoes on our U.S. Flag Pure Car Truck Carriers.  Gross revenues for the segment increased from $167.2 million in 2008 to $279.9 million in 2009 primarily as a result of the increase in supplemental cargoes.  Our fixed revenues of $109.5 million in 2009 and $108.7 million in 2008 represent revenue derived from our fixed time charter contracts, and our variable revenues of $170.4 million in 2009 and $58.5 million in 2008 represent revenues derived from our supplemental cargoes.

Time Charter Contracts-International Flag:The decrease in this segment’s adjusted gross voyage profit from $12.8 million in 2008 to $8.1 million in 2009 is due to reduced charter hire rates on two container vessels, with one ending service in August 2009.

Contract of Affreightment: The increase in this segment’s gross voyage profit from $1.4 million in 2008 to $2.2 million in 2009 was primarily due to lower fuel costs in 2009, which was partially offset by a decrease in revenues due to contractually scheduled freight rate adjustment.

Rail-Ferry Service:  Gross voyage results for this segment decreased from a profit of $1.9 million in 2008 to a loss of $2.2 million in 2009, while revenues decreased from $39.4 million in 2008 to $27.9 million in 2009. The weak market conditions had a negative impact especially with the northbound service. In December 2009, we were notified by one of our major northbound customers of their intention to discontinue using the service effective immediately sighting a sourcing decision as their reason for the change. This loss represents approximately 23% of total revenue for this segment.

Other: Gross voyage profit for this segment decreased from $1.7 million in 2008 to $1.2 million in 2009. This decrease was primarily due to foreign currency exchange losses related to our unconsolidated interest in an entity in Mexico, an exchange loss on the Yen denominated facility revaluation adjustment and a favorable earnings adjustment for one of our 50% owned investments, which increased gross profit and were recorded in 2008.

Other Income and Expenses

Administrative and general expenses (A&G) increased 6% from $21.4 million in 2008 to $22.6 million in 2009.  A substantial portion of this increase was due to the expansion of our executive stock compensation program initiated in April 2008 and the accrual of a contingent liability associated with incentives received from various Alabama agencies.

The following table shows the significant A&G components for the twelve months ending December 31, 2009 and 2008 respectively:

(All amounts in thousands)	Year Ended December 31,
A&G Account	2009		2008		Variance
Wages and Benefits	$	10,142	$	9,574	$	(568	)
Executive Stock Compensation		1,834		874		(960	)
Professional Services		2,627		2,875		248
Office Building Expense		1,292		1,159		(133	)
Other		6,270		5,971		(299	)
Consulting Fees		476		961		485
TOTAL:	$	22,641	$	21,414	$	(1,227	)

Interest expense decreased 11.3% from $6.9 million in 2008 to $6.1 million in 2009. The decrease was primarily due to lower interest rates and lower principal balances.

Investment income (loss) decreased from $525,000 of income in 2008 to a loss of $72,000 in 2009. Included in these amounts are recognized impairment losses of $369,000 in the fourth quarter of 2008 and $757,000 in the first three quarters of 2009 on the Company’s investments in marketable securities. These charges reflect investments in certain equity securities whose market values had been materially impacted by poor economic conditions. During the fourth quarter of 2009, we sold our stock portfolio and recognized a gain of approximately $980,000 on the sale, which is reported as a separate line item under Interest and Other on the Income Statement.

Income Taxes

For 2009, we recorded a benefit for income taxes of $3.5 million on $31.7 million of income from continuing operations before income from unconsolidated entities, reflecting tax losses on operations taxed at the U.S. corporate statutory rate.  For 2008, our benefit was $877,000 on $12.4 million of income from continuing operations before income from unconsolidated entities.  Our tax benefit increased from the comparable prior year primarily as a result of lower results of the Company’s U.S. Flag Coal Carrier and Rail Ferry segments, which are subject to the higher corporate statutory rate.

Equity in Net Income of Unconsolidated Entities

Equity in net income of unconsolidated entities, net of taxes, decreased from $20.9 million in 2008 to $7.0 million in 2009.

The results were driven by our 50% investment in Dry Bulk Cape Holding Ltd (“Dry Bulk”), which owns one Panamax-size Bulk Carrier, two Capesize Bulk Carriers and has two Handymax Bulk Carrier Newbuildings on order for delivery in 2012.  Dry Bulk contributed $6.8 million in 2009 as compared to $21.2 million in 2008.  The 2008 results included a gain on the sale of one of Dry Bulk’s vessels, a Panamax Bulk Carrier, of approximately $15.9 million in June 2008.

10 

LIQUIDITY AND CAPITAL RESOURCES - 2010

The following discussion should be read in conjunction with the more detailed Consolidated Balance Sheets and Consolidated Statements of Cash Flows included elsewhere herein as part of our Consolidated Financial Statements.

Our working capital (which we define as the difference between our total current assets and total current liabilities) decreased from $40.5 million at December 31, 2009, to $15.1 million at December 31, 2010.  The decrease in our working capital was temporary and is primarily related to construction payments on our three Handy-Size Bulk Carriers delivered in January 2011.  Permanent financing replenished the installment payments in early January 2011.  Cash and cash equivalents decreased during 2010 by $23.3 million to a total of $24.2 million.  This decrease was due to cash provided by operating activities of $64.4 million and cash provided by financing activities of $27.2 million being offset by cash used by investing activities of $114.9 million.  Of the $53.4 million in current liabilities at December 31, 2010, $21.3 million related to current maturities of long-term debt.

Net cash provided by operating activities of $64.4 million for 2010 was generated after adjusting for the items listed in our Consolidated Statements of Cash Flows, including non-cash items such as (i) a $25.4 million impairment loss on two of our special purpose vessels, (ii) amortization of deferred charges of $6.6 million and (iii) an $8.2 million loss on a foreign currency exchange related to the revaluation of our Yen denominated loan facility.  These items were partially offset by a non-cash deduction of $9.3 million from the equity in net income of unconsolidated entities, and deferred drydocking payments of $2.5 million.  During 2010, we received cash dividends of $3.0 million from the normal operations of our unconsolidated entities.

Net cash used in investing activities of $114.9 million for 2010 included capital outlays of $123.1 million and the purchase, net of sale, of short-term corporate bonds of $1.3 million, partially offset by proceeds from the sale of assets of $3.9 million, principal payments received under direct financing leases of $5.5 million, and cash investments in unconsolidated entities of $4.9 million.  Included in the $123.1 million of capital payments are $51.4 million for the final installment payment on an International Flag Pure Car Truck Carrier delivered in late March 2010 and installment payments of $71.0 million on three Handy-size Bulk Carrier Newbuildings delivered in the first quarter of 2011.We have obtained permanent financing for both of these as noted below.

Net cash provided by financing activities of $27.2 million for 2010 included outflows of regularly scheduled debt payments of $14.5 million, an additional $6.0 million paid toward principal payment on debt affiliated with the purchase of two Multi-Purpose vessels in 2009, the buyback of shares of our common stock of $5.2 million and cash dividends paid of $11.9 million. These cash outflows were offset by the net effect of (i) a line of credit draw of $36.0 million offset by line of credit payments of $26.0 million, (ii) a debt payment of $48.4 million and loan proceeds of $46.0 million from the refinancing of the 2007 U.S. Flag PCTC, (iii) loan proceeds of $4.2 million and subsequent pay off of a bridge loan for $12.6 million, (iv) proceeds of $46.1 million from the final bank draw associated with financing of the International Flag PCTC Newbuilding and (v) proceeds of $21.2 million from bank draws on the facility agreement to finance the construction and delivery of three Handy-Size dry bulk carriers delivered in January 2011.

In 2007, we acquired a 2007-built PCTC, which we reflagged as a U.S. Flag vessel. The vessel was financed with a three year Yen denominated loan with a balloon payment of 4.25 billion Yen due on September 10, 2010. Immediately after being delivered to us in September of 2007, we chartered this vessel through August of 2010 to a Far East based shipping company, which held an option to purchase the vessel at the end of the contract.  A portion of the charter was based on Yen capital hire payments which corresponded with our Yen debt payments.  On February 5, 2010, the charterer notified us of their intention not to exercise their option to purchase the vessel and did not exercise their option on the due date of February 6, 2010.  On February 14, 2010, we negotiated a mutually acceptable early redelivery of the vessel under the time charter.  On March 8, 2010, we entered into a U.S. denominated bridge loan which converted our total outstanding debt of 4.32 billion Yen to approximately $47.9 million.  On June 29, 2010 we entered into a refinancing loan agreement to establish long-term financing on this vessel for $46.0 million.  As a result of the time charterer’s redelivery of the vessel in February 2010, we reclassified on our balance sheet $48.1 million of net investment in direct financing leases from current assets to vessels in the first quarter of 2010.  This vessel is currently employed on a long-term time charter.

On March 31, 2010 we adjusted our $30 million unsecured revolving line of credit upward to $35 million and extended the maturity date to April 6, 2012.  As of December 31, 2010, we had pledged $6.4 million as collateral for a letter of credit.  The remaining $18.6 million was available as of December 31, 2010, after a $10 million draw late in the fourth quarter of 2010.  Associated with this credit facility is a commitment fee of .125% per year on the undrawn portion of this facility.

We filed a universal shelf registration statement with the Securities and Exchange Commission which was declared effective on October 27, 2010. We believe this registration statement will provide us with additional flexibility to access the public equity and debt capital markets as needed for accretive opportunities.  For further information, see the Form S-3, filed with the Securities and Exchange Commission on October 13, 2010.

We routinely evaluate the acquisition of additional vessels or businesses.  At any given time, we may be engaged in discussions or negotiations regarding additional acquisitions.  We generally do not announce our acquisitions or dispositions until we have entered into a definitive agreement.  We may require additional financing in connection with any such acquisitions, the consummation of which could have a material impact on our financial condition or operations.

Stock Repurchase Program

On January 25, 2008, our Board of Directors approved a share repurchase program for up to a total of 1,000,000 shares of our common stock. We expect that any share repurchases under this program will be made from time to time for cash in open market transactions at prevailing market prices. The timing and amount of any purchases under the program will be determined by management based upon market conditions and other factors.  In 2008, we repurchased 491,572 shares of our common stock for $11.5 million. Thereafter, we suspended repurchases until the second quarter of 2010, when we repurchased 223,051 shares of our Common Stock for $5.2 million.  Unless and until the Board otherwise provides, this authorization will remain open indefinitely, or until we reach the 1,000,000 share limit.

Debt and Lease Obligations

As of December 31, 2010, we held five vessels under operating contracts, five vessels under bareboat charter or lease agreements and two vessels under time charter agreements.  The types of vessels held under these agreements include (i) two Pure Car/Truck Carriers, two Breakbulk/Multi Purpose vessels, three Roll-On/Roll-Off vessels and  four container vessels, all of which operate in our Time Charter-U.S. Flag and Time Charter-International Flag segments, and (ii) a Molten Sulphur Carrier operating in our Contracts of Affreightment segment.  We also conduct certain of our operations from leased office facilities. See Item 2 of this report.

We have lease agreements on our offices in Mobile, AL, New York, NY and Shanghai, China, which expire in April 2027, June 2018 and June 2011, respectively.  We also have a lease agreement on our office in Singapore, which expires in September 2014, with an option to renew for a further period of three years.

Debt Covenants

Substantially all of our credit agreements require us to comply with various loan covenants, including financial covenants that stipulate minimum levels of net worth and maximum amounts of debt leverage. While we currently believe that we have available options to prevent or mitigate such breaches, we cannot be sure that we will be able to implement them timely or at all, or that they will enable us to meet all of our current covenants.

In the unanticipated event that our cash flow and capital resources are not sufficient to fund our debt service obligations, we could be forced to reduce or delay capital expenditures, sell assets, obtain additional equity capital, enter into financings of our unencumbered vessels or restructure debt. We believe we can continue to fund our working capital and routine capital investment liquidity needs through cash flow from operations.  To the extent we are required to seek additional capital, our efforts could be hampered by the recent turmoil in the credit markets. See “Risk Factors” in Item 1A of this annual report.  We presently have variable to fixed interest rate swaps on 61% of our long-term debt.

Contractual Obligations and Other Commitments

The following is a summary of the scheduled maturities by period of our debt and lease obligations that were outstanding as of December 31, 2010:

Debt and lease obligations (000’s)	Total	2011	2012	2013	2014	2015	Thereafter
Long-term debt (including current maturities)	$221,565	$   21,324	$44,067	$  35,675	$  19,809	$  16,000	$     84,690
Interest payments	34,931	7,502	6,691	5,282	4,253	3,593	7,610
Operating leases	45,122	10,371	4,932	4,956	4,924	4,800	15,139
Vessel Commitments	89,480	79,480	10,000	-	-	-	-
Total by period	$391,098	$118,677	$65,690	$  45,913	$  28,986	$  24,393	$ 107,439

Reflected in the table under “Vessel Commitments” is our obligation to repurchase two vessels that we formally owned and are currently leasing under two separate sale and leaseback arrangements. On January 3, 2011 and January 13, 2011, respectively, we exercised early buy options on both vessels.  Based on the terms of the existing lease agreements, the total of the early buy out prices for both vessels is expected to be about $64.5 million, payable in July 2011.  We are currently evaluating our options to finance the acquisitions.

 The above contractual obligations table does not include our approximate $17 million obligation to the Alabama State Port Authority related to the terminal upgrades in Mobile, Alabama, to be paid by us over the ten-year terminal lease.  This long-term obligation, reported in other long-term liabilities, will be met by the usage fees paid by our Rail Ferry vessels in the Mobile port.  The table further excludes (i) contingent equity contributions that may be payable to Dry Bulk under the circumstances described under “Liquidity and Capital Resources – Bulk Carriers” and (ii) contributions that we expect to make to our pension plan in 2011, as described further below and in Note E.

Current Economic and Market Issues

The downturn in the worldwide economy that followed the bankruptcy of Lehman Brothers in September 2008 impacted our Rail-Ferry service and certain other aspects of our operations.  Nonetheless, customers who owed us payments under our fixed contracts generally paid us in full in the ordinary course.  We cannot assure you that this will continue.  For more information, see our list of Risk Factors included in Item 1A of this report.

During the year ended 2010, the financial markets recovered.  By maintaining our asset allocation within our stated policy guidelines with targets of approximately 57% equities and 43% fixed instruments, our pension plan also participated in the recovery.  We are evaluating our requirements going forward as to asset allocation mixes, with the potential of reducing our equity exposure further to 50% throughout 2011.  While as of December 31, 2010 we continue to show an underfunded status in other comprehensive income, we have exceeded our required funding obligations under the current Pension Protection Act.We expect to contribute $600,000 to our pension plan for fiscal year 2011.

Rail-Ferry Service

As noted above, in 2009, this segment began to feel the impact of the poor economic recession and reported lower than expected gross profit results. The lower results were further dampened by the loss of one of the segment’s largest customers in December of 2009. As a result, we tested regularly to determine if service was impaired. In the third quarter of 2010, we determined that the cash flows expected to be generated by the long-lived assets of its Rail-Ferry segment are less than the carrying amount of these assets. and we recognized a non-cash impairment charge of $25.4 million to reduce the carrying value of these assets to their estimated fair value. The fair value of these assets was estimated based upon an independent third party appraiser (Level 2 inputs).

We intend to continue to operate the Rail-Ferry segment as long as it can generate positive cash flows and further utilize the vessels available capacity to generate a return that would be accretive to net income.

As of December 31, 2010, the cost of our total investment in a joint venture that owns a trans-loading and storage facility (RTI), which was used to support the Rail-Ferry service in New Orleans, included an equity investment in unconsolidated entities of $1.2 million and an outstanding loan of approximately $2.2 million due from our 50% partner in the venture.  As a result of our terminal operations moving from New Orleans to Mobile, an impairment test to determine our loss exposure on this facility was required.  As of December 31, 2010, no impairment was recorded as we expect to recover our total investment.

Bulk Carriers

In November 2009, we contracted with a Korean shipyard to construct three double hull Handy-Size Bulk Carrier Newbuildings.  We made equity payments of $17.0 million in the fourth quarter 2009 and $71.0 million in 2010 on these vessels. All three vessels were delivered in January 2011.  With our equity position on these Newbuildings being fully funded, on August 2, 2010, we entered into a $55.2 million Senior Secured Term Loan Facility Agreement to finance the construction and delivery installment payments under separate shipbuilding contracts for these three Newbuildings.  The Facility matures in seven years and is based on a 15-year amortization. See Exhibit 10.12 to this report for a copy of the facility agreement and our Current Report on Form 8-K dated August 2, 2010 for a further description of this facility.

We have a 50% interest in Dry Bulk, which owns 100% of subsidiary companies which own two Cape-Size Bulk Carriers. This investment is accounted for under the equity method and our share of earnings or losses are reported in our consolidated statements of income net of taxes.  Dry Bulk’s subsidiary companies have entered into ship purchase agreements with a Japanese company for two Handymax Bulk Carrier newbuildings, scheduled to be delivered in 2012.  Total investment in the newbuildings is anticipated to be approximately $74.0 million, of which our share would be 50% or approximately $37.0 million.  During the period of construction up to delivery, where 50% of the projected overall costs will be expended, Dry Bulk plans to finance the interim construction costs with equity contributions of up to 15% with the 85% balance of the cost being financed with a bank construction loan.  Due to current financial market conditions, it is likely that the permanent financing will require additional equity contributions.  We anticipate our share of the additional contributions to be $2 million in 2011 and $10 million in 2012.

In December 2009, we acquired for $6,250,000 a 25% investment in Oslo Bulk AS (“Oslo Bulk”), which, in 2008, contracted to build eight new Mini Bulkers. Four of the eight Mini-Bulkers were delivered and entered into a commercial management agreement as of December 31, 2010. The remaining four vessels are expected to be delivered in the first quarter of 2011. During 2010, we invested an additional $3.9 million in Tony Bulkers Pte Ltd, (“Tony Bulkers”), an affiliate of Oslo Bulk AS, for our 25% share of the installment payments for two more new Mini-Bulkers.  One of the Mini-Bulkers was delivered in the fourth quarter, 2010. We paid our remaining share of installment payments associated with the Mini-Bulker Newbuilding of approximately $1.7 million in January 2011 and the vessel is expected to be delivered in the second quarter 2011.  These investments are accounted for under the equity method and our share of earnings or losses is reported in our consolidated statements of income net of taxes.

Dividend Payments

The payment of dividends to common stockholders is at the discretion of our board of directors.  On October 29, 2008, our Board of Directors authorized the reinstitution of a quarterly cash dividend program beginning in the fourth quarter of 2008. Since then, the Board has declared a cash dividend each quarter.

Environmental Issues

Our environmental risks primarily relate to oil pollution from the operation of our vessels.  We have pollution liability insurance coverage with a limit of $1 billion per occurrence, with deductible amounts not exceeding $500,000 for each incident.

On June 23, 2009, a complaint was filed in U.S. District Court of Oregon by ten plaintiffs against approximately 40 defendants, including Waterman Steamship Corporation, which is one of our wholly owned subsidiaries. See Item 3 of this annual report for further information.

New Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued guidance which expanded the required disclosures about fair value measurements. In particular, this guidance requires (i) separate disclosure of the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements along with the reasons for such transfers, (ii) information about purchases, sales, issuances and settlements to be presented separately in the reconciliation for Level 3 fair value measurements, (iii) fair value measurement disclosures for each class of assets and liabilities and (iv) disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for fair value measurements that fall in either Level 2 or Level 3. The adoption of this guidance did not have a material effect on our financial condition or results of operations.

In February 2010, the FASB issued guidance related to events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This guidance amends existing standards to address potential conflicts with Securities and Exchange Commission guidance and refines the scope of the reissuance disclosure requirements to include revised financial statements only. Under this guidance, SEC filers are no longer required to disclose the date through which subsequent events have been evaluated. The adoption of this standard did not have a material effect on our financial condition or results of operations.

In June 2009, the FASB issued an accounting standard to require an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity (“VIE”), identifying the primary beneficiary of a VIE, and to require ongoing reassessment of whether an enterprise is the primary beneficiary of a VIE, rather than only when specific events occur.  The standard also eliminated the quantitative approach previously required for determining the primary beneficiary of a VIE, amended certain guidance for determining whether an entity is a VIE, added an additional reconsideration event when changes in facts and circumstances pertinent to a VIE occur, eliminated the exception for troubled debt restructuring regarding VIE reconsideration and required advanced disclosures that provide users of financial statements with more transparent information about an enterprise’s involvement in a VIE.  We adopted this accounting standard effective January 1, 2010.  The adoption of this standard did not have a material effect on our financial condition or results of operations.

11 

LIQUIDITY - 2009

The following discussion should be read in conjunction with the more detailed Consolidated Balance Sheets and Consolidated Statements of Cash Flows included elsewhere herein as part of our Consolidated Financial Statements.

Our working capital (which we define as the difference between our total current assets and total current liabilities) decreased from $50.5 million at December 31, 2008, to $40.5 million at December 31, 2009.  Cash and cash equivalents decreased during 2009 by $4.4 million to a total of $47.5 million.  This decrease was due to cash provided by operating activities of $62.7 million, and cash provided by investing activities of $12.7 million, offset by cash used by financing activities of $79.8 million.  Of the $98.8 million in current liabilities at December 31, 2009, $68.8 million related to current maturities of long-term debt.  Approximately $48.0 million of this debt is offset in current assets as the current portion of a direct finance lease on a PCTC we purchased in 2007.

Operating activities generated positive cash flow after adjusting net income of $42.2 million for non-cash provisions such as depreciation, amortization and gains on sales of assets and investments.  Cash provided by operating activities of $62.7 million for 2009 was generated after adjusting for non-cash items such as $2.9 million impairment loss on one of our International Flag container vessels, amortization of deferred charges, a non-cash deduction of $7.0 million from the equity in net income of unconsolidated entities, and deferred drydocking payments of $16.0 million. During 2009, we received cash dividends of $3.0 million from the normal operations of our unconsolidated entities.

Cash used by investing activities of $79.8 million for 2009 included capital outlays of $80.3 million and the purchase of short-term corporate bonds of $10.6 million, partially offset by proceeds from the sale of assets of $5.0 million and principal payments received under direct financing leases of $7.8 million.  Included in the $80.3 million of capital payments is $40.7 million for the purchase of the two vessels used in our Indonesian mining service, subsequently sold to a third party under an installment sale described further below.  Additionally, we made equity payments of $17 million paid toward the construction of three new Handy size double-hull Drybulk Carriers, and $16.6 million in installment payments toward the construction of a Pure Car/ Truck Carrier to be delivered in March 2010.

 Cash provided by financing activities of $12.7 million for 2009 included regularly scheduled debt payments of $14.2 million and cash dividends paid of $14.5 million, partially offset by proceeds from new debt of $41.6 million, including a $25.0 million loan relating to the purchase of the two vessels previously mentioned to be used in our Indonesian mining service.

We entered into a financing agreement with Regions Bank on August 27, 2009 for a five year facility to finance up to $40.0 million for the purchase of additional vessels. As of December 31, 2009, the Company has drawn $25.0 million under this facility towards the purchase of the vessels to fulfill the additional requirements under the Indonesian mining contract. The vessels purchased with the loan proceeds were subsequently sold to a third party in the third quarter of 2009, generating a deferred gain of approximately $10.6 million. In addition to a $1.1 million payment received from the buyer, a ten year note receivable was agreed to for the remaining balance. We hold a first mortgage covering the vessels until the note is fully satisfied. Due to our financing of the transaction, the gain realized on the sale was deferred. This deferral will be recognized over ten years, the length of the agreement with the buyer. With this financing, our unsecured revolving line of credit was reduced from $35 million to $30 million, expiring in April of 2011. As of December 31, 2009, $6.4 million of this revolving credit facility was pledged as collateral for letters of credit, and the remaining $23.6 million was available.   

In 2007, we acquired a 2007-built PCTC, which we reflagged to U.S. Flag. The vessel was financed with a three year Yen denominated note with a balloon payment of 4.25 billion Yen due on September 10, 2010. Immediately after being delivered to us in September of 2007, we chartered this vessel through August of 2010 to a Far East based shipping company, which held an option to purchase the vessel at the end of the contract.  The charter was based on Yen capital hire payments which correspond with our Yen debt payments.  On February 5, 2010, the charterer notified us of their intention not to exercise their option to purchase the vessel, and we subsequently negotiated a mutually acceptable redelivery of the vessel effective February 14, 2010. On March 8, 2010 we entered into a U.S. dollar denominated bridge loan which converted our total outstanding debt of 4.32 billion Yen to approximately $48 million USD.  On June 29, 2010 we entered into a refinancing loan agreement to establish long-term financing on this vessel for $46.0 million.  As a result of the time charterer’s redelivery of the vessel in February 2010, we reclassified on our balance sheet $48.1 million of net investment in direct financing leases from current assets to vessels in the first quarter of 2010.  This vessel is currently employed on a long-term time charter.

As a result of the redelivery of the vessel in February 2010, we reclassified approximately $48.0 million of net investment in direct financing leases from current assets to vessels in the first quarter of 2010.  This reclassification resulted in a decrease in our working capital of $48.0 million.  On June 29, 2010 we entered into a refinancing loan agreement to establish long term financing on this vessel for $46.0 million.  On March 31, 2010 we adjusted our $30 million unsecured revolving line of credit upward to $35 million and extended the maturity date to April 6, 2012.

LIQUIDITY - 2008

The following discussion should be read in conjunction with the more detailed Consolidated Balance Sheets and Consolidated Statements of Cash Flows included elsewhere herein as part of our Consolidated Financial Statements.

Our working capital (which we define as the difference between our total current assets and total current liabilities) increased from $23.2 million at December 31, 2007, to $50.5 million at December 31, 2008.  Cash and cash equivalents increased during 2008 by $37.1 million to a total of $51.8 million.  This increase was due to cash provided by operating activities of $42.2 million, and cash provided by investing activities of $41.4 million, offset by cash used by financing activities of $45.9 million.  Of the $39.8 million in current liabilities at December 31, 2008, $13.3 million related to current maturities of long-term debt.

Operating activities generated positive cash flow after adjusting net income of $39.1 million for non-cash provisions such as depreciation, amortization and gains on sales of assets and investments.  Cash provided by operating activities of $42.2 million for 2008 also included, among other things, the add back of the non-cash loss of $1.4 million on the early redemption of Preferred Stock, the deduction of the non-cash $4.6 million pre-tax gain on the sale of LASH assets, and the deduction of the non-cash recognition of $20.9 million in earnings from our equity in net income of unconsolidated entities, which included a gain on the sale of a Panamax Bulk Carrier.  We received cash dividends of $6.0 million from the normal operations of our unconsolidated entities, with the proceeds from the aforementioned sale presented in investing activities.

Cash provided by investing activities of $41.4 million for 2008 included proceeds from the sale of our discontinued LASH liner service assets of $10.8 million, proceeds from Dry Bulk’s subsidiary company’s sale of the Panamax Bulk Carrier of $25.5 million, net proceeds from the sale and purchase of short term investments of $1.6 million and principal payments received under direct financing leases of $7.5 million, partially offset by capital improvements of $4.0 million, including improvements to our information technology systems and additional tank work on our Rail-Ferry vessels.

           Cash used for financing activities of $45.9 million for 2008 included regularly scheduled debt payments of $13.0 million, payment of $17.3 million on the early redemption of our Preferred Stock, $11.5 million of repurchases of our common stock, and $3.7 million on cash dividends paid on our common stock.

In March of 2008, we signed an agreement with Regions Bank to provide us with an unsecured revolving line of credit for $35 million.  This facility replaced the prior secured revolving line of credit for the like amount.  As of December 31, 2008, $6.4 million of the $35 million revolving credit facility was available.

ITEM 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the ordinary course of our business, we are exposed to foreign currency, interest rate, and commodity price risk.  We utilize derivative financial instruments including interest rate swap agreements and forward exchange contracts, and in the past we have also utilized commodity swap agreements to manage certain of these exposures.  We hedge only firm commitments or anticipated transactions and do not use derivatives for speculation.  We neither hold nor issue financial instruments for trading purposes.

Interest Rate Risk

The fair value of our cash and short-term investment portfolio at December 31, 2010, approximated its carrying value due to its short-term duration.  The potential decrease in fair value resulting from a hypothetical 10% increase in interest rates at year-end for our investment portfolio is not material.

The fair value of long-term debt, including current maturities, was estimated to be $221.6 million compared to a carrying value of $221.6 million.  The potential increase in fair value resulting from a hypothetical 10% adverse change in the borrowing rates applicable to our long-term debt at December 31, 2010 is not material.

We have entered into seven interest rate swap agreements with commercial banks, two in September of 2005, one in November of 2005, three in September of 2007, and one in January 2008, in order to reduce the possible impact of higher interest rates in the long-term market by utilizing the fixed rate available with the swap.  For each of these agreements, the fixed rate payor is the Company, and the floating rate payor is the commercial bank.  While these arrangements are structured to reduce our exposure to increases in interest rates, it also limits the benefit we might otherwise receive from any decreases in interest rates, and our weighted average cost of capital.

The fair value of these agreements at December 31, 2010, estimated based on the amount that the banks would receive or pay to terminate the swap agreements at the reporting date, taking into account current market conditions and interest rates, is a liability of $9.6 million. A hypothetical 10% decrease in interest rates as of December 31, 2010 would have resulted in a $10.2 million liability.

Commodity Price Risk

As of December 31, 2010, we do not have commodity swap agreements in place to manage our exposure to price risk related to the purchase of the estimated 2011 fuel requirements for our Rail-Ferry Service segment.  We have fuel surcharges in place for our Rail-Ferry Service, which we expect to effectively manage the price risk for those services during 2011.  Revenue from fuel surcharges in 2010 for the Rail-Ferry Service was $2.5 million.  If we had commodity swap agreements, they could be structured to reduce our exposure to increases in fuel prices.  However, they would also limit the benefit we might otherwise receive from any price decreases associated with this commodity.  A 20% increase in the price of fuel for the period January 1, 2010 through December 31, 2010 would have resulted in an increase of approximately $747,000 in our fuel costs for the same period, and in a corresponding decrease of approximately $0.10 in our basic earnings per share based on the shares of our common stock outstanding as of December 31, 2010.  The additional fuel costs assumes no additional revenue was generated from fuel surcharges, however, we believe that some or all of the price increase could have been passed on to our customers through the aforementioned fuel surcharges during the same period but might have been limited by our need to maintain competitive rates.  Our charterers in the Time Charter segment are responsible for purchasing vessel fuel requirements; thus, we have no fuel price risk in this segment.

Foreign Currency Exchange Rate Risk

We entered into foreign exchange contracts to hedge certain firm purchase commitments during 2010.  These contracts mature on various dates during 2011. The fair value of these contracts at December 31, 2010, is an asset of $157,000.  The potential fair value of these contracts that would have resulted from a hypothetical 10% adverse change in the exchange rates would be an asset of $142,000.

On January 23, 2008, a wholly-owned subsidiary of the Company entered into a Senior Secured Term Loan Facility denominated in Japanese Yen for the purchase of a 6400 CEU Newbuilding PCTC, which was completed and delivered in March 2010.  The decision to enter into this Yen loan was driven by the lower Yen interest rates versus the USD interest rates at that time.  Subsequently, we entered into a Yen interest rate swap designed to cap the interest at 2.065%.  In June 2009, we received notification that the banking institution would be exercising their option to reduce the Yen financing on this vessel from 80% to 65% of the delivered vessel cost. The loan was fully drawn in March 2010 to the full amount available of Yen 5,102,500,000.  Under current accounting guidelines, since this Facility is not denominated in our functional currency, the outstanding balance of the Facility as of the end of each reporting period is to be revalued, with any adjustments recorded to earnings.  Due to the amount of the Facility, we may sustain fluctuations that may cause material swings in our reported results.  As an example, a hypothetical 1 to 5 Yen increase or decrease on the exchange rate between the U.S. Dollar and Yen, which was $1 to Yen 81.22 at December 31, 2010, would impact our earnings by approximately $600,000 to $3.0 million for the reporting period (See Item 1A-Risk Factors).  While we believe that these fluctuations may smooth out over time, any particular reporting period could be materially impacted by these adjustments.  There was a 12% appreciation in the Yen to USD exchange rate at December 31, 2010 compared to December 31, 2009, resulting in a $8.2 million foreign exchange loss for the year ended December 31, 2010, reported under Interest and Other on our consolidated Statement of Income.  We continue to monitor the movements in the foreign currency markets in order to take advantage of potential opportunities.  During the month of September, the Japanese Government intervened into the foreign currency market causing a temporary weakening of the Yen to USD.  We bought forward contracts to purchase Yen to cover our installments due under the Facility for the periods December 15, 2010 and March 15, 2011.  The rate of exchange for these transactions was approximately Yen 85.4 to 1 USD, with total USD equivalents of $3,005,000.  On January 27, 2011 we purchased another 128 million Yen to cover the June 15, 2011 installment for 82.80 to 1 USD, or a USD equivalent of $1,546,000.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by Item 8 begins on page F-1 of this Form 10-K.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9a.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of December 31, 2010, we conducted an evaluation of the effectiveness of our disclosure controls and procedures.  The evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”).

Based on that evaluation as of such date, our CEO and CFO have concluded that our disclosure controls and procedures have been effective in providing reasonable assurance that they have been timely alerted of material information required to be filed in this annual report.  During the quarter ended December 31, 2010, we did not make any changes to our internal control over financial reporting that materially affected, or that we believe are reasonably likely to materially affect, our internal control over financial reporting.  The design of any system of controls is based in part upon certain assumptions about the likelihood of future events and contingencies, and there can be no assurance that any design will succeed in achieving our stated goals.  Because of the inherent limitations in any control system, you should be aware that misstatements due to error or fraud could occur and not be detected.

Management’s Report on Internal Control Over Financial Reporting

                Our management, with the participation of our CEO and CFO, is responsible for establishing and maintaining adequate internal control over financial reporting. Our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2010.  In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework.  Based on our assessment we have concluded that, as of December 31, 2010, our internal control over financial reporting is effective based on those criteria.  Our independent registered public accounting firm for 2010, Ernst & Young LLP, has provided the following attestation report on management’s assessment of our internal control over financial reporting as of December 31, 2010.

12 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

International Shipholding Corporation

We have audited International Shipholding Corporation’s internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). International Shipholding Corporation’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exits, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, International Shipholding Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of International Shipholding Corporation as of December 31, 2010 and 2009, and the related consolidated statements of income, changes in stockholders’ investment, and cash flows for each of the three years in the period ended December 31, 2010 of International Shipholding Corporation and our report dated March 14, 2011 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP  

New Orleans, Louisiana

March 14, 2011

ITEM 9b.  OTHER INFORMATION

 - None -

PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

We have adopted a written Code of Business Conduct and Ethics applicable to all officers, directors and employees, including our principal executive officer, principal financial officer and principal accounting officer.  In addition, (i) the audit, compensation and nominating and governance committees of our board have each adopted written charters governing their operations and (ii) our board has adopted written corporate governance guidelines.  Interested persons may obtain a copy of these materials without charge by writing to International Shipholding Corporation, Attention: Manuel G. Estrada, Vice President and Chief Financial Officer, 11 North Water Street, RSA Battle House Tower, 18th Floor, Mobile, Alabama 36602.  Copies are also available on the Investor Relations section of our website at www.intship.com.

The information relating to Directors and Executive Officers called for by Item 10 will be included in our definitive proxy statement to be filed pursuant to Section 14(a) of the Securities Exchange Act of 1934, and is incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION

The information called for by Item 11 will be included in our definitive proxy statement to be filed pursuant to Section 14(a) of the Securities Exchange Act of 1934, and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Stock Repurchase Plan

On January 25, 2008, our Board of Directors approved a share repurchase program for up to a total of 1,000,000 shares of our common stock. We expect that any share repurchases under this program will be made from time to time for cash in open market transactions at prevailing market prices. The timing and amount of any purchases under the program will be determined by management based upon market conditions and other factors.  In 2008, we repurchased 491,572 shares of our common stock for $11.5 million. Thereafter, we suspended repurchases until the second quarter of 2010, when we repurchased 223,051 shares of our Common Stock for $5.2 million.  Unless and until the Board otherwise provides, this authorization will remain open indefinitely, or until we reach the 1,000,000 share limit.

We did not repurchase any of  our shares of common stock during the fourth fiscal quarter of 2010. As of December 31, 2010, we had 285,377 shares available to be purchased under our 2008 repurchase plan.

ISSUER PURCHASES OF EQUITY SECURITIES
Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share	(c) Total Number of Shares Purchased as Part of Publicly Announced Plan	(d) Maximum Number of Shares that May Yet Be Purchased Under the Plan
October 1, 2010 – October 31, 2010	-	-	-	285,377
November 1, 2010 - November 30, 2010	-	-	-	285,377
December 1, 2010 – December 31, 2010	-	-	-	285,377

On February 2, 2010 and May 6, 2010, 13,534 and 8,826 shares of Common Stock, respectively, were retired in order to meet tax liabilities associated with the vesting of Restricted Stock Grants by our executive officers.

Equity Compensation Plan Information

 The following table sets forth information as of December 31, 2010:

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted average exercise price of outstanding options, warrants and rights	Number of securities remaining available  for future issuance
Equity compensation plans approved by security holders	-	-	105,000
Total	-	-	105,000

Other

The balance of the information called for by Item 12 will be included in our definitive proxy statement to be filed pursuant to Section 14(a) of the Securities Exchange Act of 1934, and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information called for by Item 13 will be included in our definitive proxy statement to be filed pursuant to Section 14(a) of the Securities Exchange Act of 1934, and is incorporated herein by reference.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

The information called for by Item 14 will be included in our definitive proxy statement to be filed pursuant to Section 14(a) of the Securities Exchange Act of 1934, and is incorporated herein by reference.

13 

PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The following financial statements, schedules and exhibits are filed as part of this report:

(a)  1.           Financial Statements

The following financial statements and related notes are included on pages F-1 through F-14 of this Form

10-K.

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Income for the years ended December 31, 2010, 2009, and 2008

Consolidated Balance Sheets at December 31, 2010 and 2009

Consolidated Statements of Changes in Stockholders' Investment for the years ended December 31, 2010, 2009, and 2008

Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009, and 2008

Notes to Consolidated Financial Statements

  2.         Financial Statement Schedules

The following financial statement schedules are included on pages S-1 through S-3 of this Form 10-K.

Report of Independent Registered Public Accounting Firm

Schedule II -- Valuation and Qualifying Accounts and Reserves

All other financial statement schedules are not required under the related instructions or are inapplicable and therefore have been omitted.

      3.       Exhibits

(3.1) Restated Certificate of Incorporation of the Registrant, as amended through May 19, 2010 (filed with the Securities and Exchange Commission as Exhibit 3.1 to the Registrant's Form 10-Q dated July 28, 2010 and incorporated herein by reference)

(3.2) By-Laws of the Registrant as amended through October 28, 2009 (filed with the Securities and Exchange Commission as Exhibit 3.2 to the Registrant's Form Current Report on Form 8-K dated November 2, 2009 and incorporated herein by reference)

(4.1) Specimen of Common Stock Certificate (filed as an exhibit to the Registrant's Form 8-A filed with the Securities and Exchange Commission on April 25, 1980 and incorporated herein by reference)

(10.1) Credit Agreement, dated as of September 30, 2003, by and among LCI Shipholdings, Inc. and Central Gulf Lines, Inc., as Joint and Several Borrowers, the banks and financial institutions listed therein, as Lenders, Deutsche Schiffsbank Aktiengesellschaft as Facility Agent and Security Trustee, DnB NOR Bank ASA, as Documentation Agent, and the Registrant, as Guarantor (filed with the Securities and Exchange Commission as Exhibit 10.2 to Pre-Effective Amendment No. 2, dated December 10, 2004 and filed with the Securities and Exchange Commission on December 10, 2004, to the Registrant's Registration Statement on Form S-1 (Registration No. 333-120161) and incorporated herein by reference)

(10.2) Credit Agreement, dated September 26, 2005, by and among Central Gulf Lines, Inc., as Borrower, the banks and financial institutions listed therein, as Lenders, DnB NOR Bank ASA, as Facility Agent and Arranger, and Deutsche Schiffsbank Aktiengesellschaft, as Security Trustee and Arranger, and the Registrant, as Guarantor (filed with the Securities and Exchange Commission as Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated September 30, 2005 and incorporated herein by reference)

(10.3) Credit Agreement, dated December 13, 2005, by and among CG Railway, Inc., as Borrower, the investment company, Liberty Community Ventures III, L.L.C., as Lender, and the Registrant, as Guarantor (filed with the Securities and Exchange Commission as Exhibit 10.4 to the Registrant's Form 10-K for the annual period ended December 31, 2005 and incorporated herein by reference)

(10.4) Credit Agreement, dated as of June 29, 2010, by and among Waterman Steamship Corporation, as borrower, the Registrant, as guarantor, and Regions as lender, relating to a $46.0 million term loan (filed with the Securities and Exchange Commission as Exhibit 10.11 to the Registrant's Form 10-Q dated July 28, 2010 and incorporated herein by reference)

(10.5) Credit Agreement, dated as of August 2, 2010, by and among East Gulf Shipholding, Inc., as borrower, the Registrant, as guarantor, the banks and financial institutions listed therein, as lenders, and ING Bank N.V., London Branch, as facility agent and security trustee. (filed with the Securities and Exchange Commission as Exhibit 10.12 to the Registrant’s Form 10-Q/A dated December 23, 2010 and incorporated herein by reference) (On December 28, 2010, the Securities and Exchange Commission granted confidential treatment with respect to certain portions of this exhibit.)

(10.6) $35,000,000 Revolving Loan to the Registrant and seven of its subsidiaries by Regions Bank dated March 7, 2008, as amended by instruments dated March 3, 2009, August 13, 2009 and March 31, 2010 *

(10.7) Credit Agreement, dated as of January 23, 2008, by and among East Gulf Shipholding, Inc., as borrower, the Registrant, as guarantor, the banks and financial institutions party thereto, as lenders, DnB NOR Bank ASA, as facility agent, and Deutsche Schiffsbank Aktiengesellschaft, as security trustee. (filed with the Securities and Exchange Commission as Exhibit 10.13 to the Registrant’s Form 10-K for the annual period ended December 31, 2007 and incorporated herein by reference)

(10.8) Consulting Agreement, dated December 15, 2010, between the Registrant and Erik F. Johnsen *

(10.9) International Shipholding Corporation 2009 Stock Incentive Plan (filed with the Securities and Exchange Commission as Exhibit 99.2 to the Registrant's Current Report on Form 8-K dated April 30, 2009 and incorporated herein by reference)

(10.10) Form of Restricted Stock Agreement under the International Shipholding Corporation 2009 Stock Incentive Plan (filed with the Securities and Exchange Commission as Exhibit 10.1 to the Registrant’s Form 8-K dated May 6, 2008 and incorporated herein by reference)

(10.11) Form of Restricted Stock Agreement dated May 6, 2009 under the International Shipholding Corporation 2009 Stock Incentive Plan (filed with the Securities and Exchange Commission as Exhibit 99.2 to the Registrant's Current Report on Form 8-K dated May 7, 2009 and incorporated herein by reference)

(10.12) Form of Restricted Stock Agreement dated January 27, 2010 under the International Shipholding Corporation 2009 Stock Incentive Plan (filed with the Securities and Exchange Commission as Exhibit 10.9 to the Registrant's Form 10-Q dated July 28, 2010 and incorporated herein by reference)

(10.13) Form of Restricted Stock Agreement dated January 26, 2011 under the International Shipholding Corporation 2009 Stock Incentive Plan *

(10.14) Form of Restricted Stock Agreement dated January 26, 2011 under the International Shipholding Corporation 2009 Stock Incentive Plan *

(10.15) Description of Life Insurance Benefits Provided by the Registrant to Niels W. Johnsen and Erik F. Johnsen Plan (filed with the Securities and Exchange Commission as Exhibit 10.8 to the Registrant's Form 10-K for the annual period ended December 31, 2004 and incorporated herein by reference)

(10.16) SHIPSALES Agreement, dated as of September 21, 2007, by and between East Gulf Shipholding, Inc., as buyer, and Clio Marine Inc., as seller. (filed with the Securities and Exchange Commission as Exhibit 10.12 to the Registrant’s Current Report on Form 8-K dated January 14, 2009 and incorporated herein by reference) (On March 3, 2009, the Securities and Exchange Commission granted confidential treatment with respect to certain portions of this exhibit.)

(10.17) Change of Control Agreement, by and between the Registrant and Niels M. Johnsen, effective as of August 6, 2008 (filed with the Securities and Exchange Commission as Exhibit 10.14 to the Registrant’s Form 10-Q for quarterly period ended June 30, 2008 and incorporated herein by reference)

(10.18) Change of Control Agreement, by and between the Registrant and Erik L. Johnsen, effective as of August 6, 2008 (filed with the Securities and Exchange Commission as Exhibit 10.15 to the Registrant’s Form 10-Q for quarterly period ended June 30, 2008 and incorporated herein by reference)

(10.19) Change of Control Agreement, by and between the Registrant and Manuel G. Estrada, effective as of August 6, 2008 (filed with the Securities and Exchange Commission as Exhibit 10.16 to the Registrant’s Form 10-Q for quarterly period ended June 30, 2008 and incorporated herein by reference)

(10.20) Form of Indemnification Agreement, by and between the Registrant and members of the Board of Directors, effective as of November 11, 2009 (filed with the Securities and Exchange Commission as Exhibit 10.20 to the Registrant’s Form 10-K for the annual period ended December 31, 2009 and incorporated herein by reference)

(10.21) Shipbuilding Contract, dated as of November 6, 2009, by and between East Gulf Shipholding, Inc., as buyer, and Hyundai Mipo Dockyard Co., Ltd. as seller (filed in redacted form in redacted form with the Securities and Exchange Commission as Exhibit 10.21 to the Registrant’s Form 10-K for the annual period ended December 31, 2009 and incorporated herein by reference) (On May 20, 2010, the Securities and Exchange Commission granted confidential treatment with respect to certain portions of this exhibit.)

(10.22) Shipbuilding Contract, dated as of November 6, 2009, by and between East Gulf Shipholding, Inc., as buyer, and Hyundai Mipo Dockyard Co., Ltd. as seller (filed in redacted form with the Securities and Exchange Commission as Exhibit 10.22 to the Registrant’s Form 10-K for the annual period ended December 31, 2009 and incorporated herein by reference) (On May 20, 2010, the Securities and Exchange Commission granted confidential treatment with respect to certain portions of this exhibit.)

(10.23) Shipbuilding Contract, dated as of November 6, 2009, by and between East Gulf Shipholding, Inc., as buyer, and Hyundai Mipo Dockyard Co., Ltd. as seller (filed in redacted form with the Securities and Exchange Commission as Exhibit 10.23 to the Registrant’s Form 10-K for the annual period ended December 31, 2009 and incorporated herein by reference) (On May 20, 2010, the Securities and Exchange Commission granted confidential treatment with respect to certain portions of this exhibit.)

(10.24) Performance Guarantee, dated as of November 11, 2009, by International Shipholding Corporation, as guarantor (filed in redacted form with the Securities and Exchange Commission as Exhibit 10.24 to the Registrant’s Form 10-K for the annual period ended December 31, 2009 and incorporated herein by reference) (On May 20, 2010, the Securities and Exchange Commission granted confidential treatment with respect to certain portions of this exhibit.)

(10.25) Performance Guarantee, dated as of November 11, 2009, by International Shipholding Corporation, as guarantor (filed in redacted form with the Securities and Exchange Commission as Exhibit 10.25 to the Registrant’s Form 10-K for the annual period ended December 31, 2009 and incorporated herein by reference) (On May 20, 2010, the Securities and Exchange Commission granted confidential treatment with respect to certain portions of this exhibit.)

(10.26) Performance Guarantee, dated as of November 11, 2009, by International Shipholding Corporation, as guarantor (filed in redacted form with the Securities and Exchange Commission as Exhibit 10.26 to the Registrant’s Form 10-K for the annual period ended December 31, 2009 and incorporated herein by reference) (On May 20, 2010, the Securities and Exchange Commission granted confidential treatment with respect to certain portions of this exhibit.)

(10.27) Letter of Guarantee, dated as of November 12, 2009, by Korea Eximbank, as guarantor (filed in redacted form with the Securities and Exchange Commission as Exhibit 10.27 to the Registrant’s Form 10-K for the annual period ended December 31, 2009 and incorporated herein by reference) (On May 20, 2010, the Securities and Exchange Commission granted confidential treatment with respect to certain portions of this exhibit.)

(10.28) Letter of Guarantee, dated as of November 12, 2009, by Korea Eximbank, as guarantor (filed in redacted form with the Securities and Exchange Commission as Exhibit 10.28 to the Registrant’s Form 10-K for the annual period ended December 31, 2009 and incorporated herein by reference) (On May 20, 2010, the Securities and Exchange Commission granted confidential treatment with respect to certain portions of this exhibit.)

(10.29) Letter of Guarantee, dated as of November 12, 2009, by Korea Eximbank, as guarantor (filed in redacted form with the Securities and Exchange Commission as Exhibit 10.29 to the Registrant’s Form 10-K for the annual period ended December 31, 2009 and incorporated herein by reference) (On May 20, 2010, the Securities and Exchange Commission granted confidential treatment with respect to certain portions of this exhibit.)

      (21.1)Subsidiaries of International Shipholding Corporation *

      (23.1)Consent of Ernst & Young LLP *

  (31.1) Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *

(31.2) Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *

(32.1) Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

(32.2) Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

*These exhibits filed with this 10-K report

14 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INTERNATIONAL SHIPHOLDING CORPORATION

(Registrant)

/s/ Manuel G. Estrada

March 14, 2011                                           By           ______________________________

     Manuel G. Estrada

     Vice President and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

INTERNATIONAL SHIPHOLDING CORPORATION

(Registrant)

/s/ Niels M. Johnsen

March 14, 2011                                           By           ____________________________

      Niels M. Johnsen

      Chairman of the Board and

      Chief Executive Officer

/s/ Erik L. Johnsen

March 14, 2011                                           By           ____________________________

      Erik L. Johnsen

      President and Director

            /s/ Erik F. Johnsen

March 14, 2011                                           By           ____________________________

      Erik F. Johnsen

      Director

                                                      /s/ Edwin A. Lupberger

March 14, 2011                                           By           ____________________________

Edwin A. Lupberger

Director

/s/ H. Merritt Lane III

March 14, 2011                                           By           ____________________________

      H. Merritt Lane III

      Director

/s/ T. Lee Robinson, Jr.

March 14, 2011                                           By           ____________________________

T. Lee Robinson, Jr.

Director

/s/ James J. McNamara

March 14, 2011                                           By           ____________________________

James J. McNamara

Director

/s/ Kenneth H. Beer

March 14, 2011                                           By           ____________________________

Kenneth H. Beer

Director

/s/ Harris V. Morrissette

March 14, 2011                                           By           ____________________________

Harris V. Morrissette

Director

/s/ Manuel G. Estrada

March 14, 2011                                           By           ____________________________

Manuel G. Estrada

Vice President and Chief Financial Officer

/s/ Kevin M. Wilson

March 14, 2011                                           By           __________________________

Kevin M. Wilson

Controller

15 

INDEX OF FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Statements of Income for the years ended December 31, 2010, 2009 and 2008	F-3
Consolidated Balance Sheets at December 31, 2010 and 2009	F-4
Consolidated Statements of Changes in Stockholders' Investment for the years ended December 31, 2010, 2009 and 2008	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008	F-6
Notes to Consolidated Financial Statements	F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

International Shipholding Corporation

We have audited the accompanying consolidated balance sheets of International Shipholding Corporation as of December 31, 2010 and 2009, and the related consolidated statements of income, changes in stockholders’ investment, and cash flows for each of the three years in the period ended December 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of International Shipholding Corporation at December 31, 2010 and 2009, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), International Shipholding Corporation's internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 14, 2011 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

New Orleans, Louisiana

March 14, 2011

F-2

INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(All Amounts in Thousands Except Share Data)
	Year ended December 31,
	2010			2009			2008
Revenues	$	290,049		$	379,951		$	281,901
Operating Expenses:
Voyage Expenses		209,347			295,678			220,240
Vessel Depreciation		17,929			20,254			19,968
Impairment Loss		25,430			2,899			-
Gross Voyage Profit		37,343			61,120			41,693
Administrative and General Expenses		21,202			22,641			21,414
Loss (Gain) on Sale of Other Assets		(42	)		2,209			-
Operating Income		16,183			36,270			20,279
Interest and Other:
Interest Expense		7,157			6,110			6,886
Derivative Loss		426			-			-
(Gain) Loss on Sale of Investments		(213	)		(980	)		148
Loss on Redemption of Preferred Stock		-			-			1,371
Other Income from Vessel Financing		(2,335	)		(655	)		-
Investment (Income) Loss		(1,778	)		72			(525	)
Foreign Exchange Loss		8,196			-			-
		11,453			4,547			7,880
Income Before (Benefit) Provision for Income Taxes and
Equity in Net Income of Unconsolidated Entities		4,730			31,723			12,399
(Benefit) Provision for Income Taxes:
Current		692			306			33
Deferred		(1,982	)		(3,845	)		(910	)
		(1,290	)		(3,539	)		(877	)
Equity in Net Income of Unconsolidated
Entities (Net of Applicable Taxes)		9,282			6,959			20,946
Income from Continuing Operations		15,302			42,221			34,222
Income from Discontinued Operations:
Income from Discontinued Operations		-			-			220
Gain on Sale of Liner Assets		-			-			4,607
Net Income from Discontinued Operations		-			-			4,827
Net Income	$	15,302		$	42,221		$	39,049
Preferred Stock Dividends		-			-			88
Net Income Available to Common Stockholders	$	15,302		$	42,221		$	38,961
Basic and Diluted Earnings Per Common Share:
Continuing Operations	$	2.14		$	5.84		$	4.67
Discontinued Operations		-			-			0.66
Basic Earnings Per Common Share:	$	2.14		$	5.84		$	5.33
Continuing Operations	$	2.12		$	5.80		$	4.56
Discontinued Operations		-			-			0.64
Diluted Earnings Per Common Share:	$	2.12		$	5.80		$	5.20
Weighted Average Shares of Common Stock Outstanding:
Basic		7,158,439			7,224,748			7,314,216
Diluted		7,231,178			7,282,119			7,501,555
Dividends Per Share	$	1.625		$	2.00			-

The accompanying notes are an integral part of these statements.

F-3

INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(All Amounts in Thousands)
	December 31,			December 31,
ASSETS	2010			2009
Current Assets:
Cash and Cash Equivalents	$	24,158		$	47,468
Marketable Securities		11,527			10,333
Accounts Receivable, Net of Allowance for Doubtful Accounts
of $311 and $299 in 2010 and 2009:
Traffic		6,364			5,221
Agents'		1,555			3,353
Other		8,555			12,637
Federal Income Taxes Receivable		242			-
Net Investment in Direct Financing Leases		5,596			52,649
Other Current Assets		2,513			1,640
Notes Receivable		4,248			5,348
Material and Supplies Inventory		3,774			3,100
Total Current Assets		68,532			141,749
Investment in Unconsolidated Entities		27,261			15,971
Net Investment in Direct Financing Leases		50,102			55,046
Property, Plant and Equipment:
Vessels		365,797			314,534
Leasehold Improvements		26,128			26,128
Construction in Progress		78,355			49,496
Furniture and Equipment		7,863			6,966
		478,143			397,124
Less -  Accumulated Depreciation		(143,667	)		(185,292	)
		334,476			211,832
Other Assets:
Deferred Charges, Net of Accumulated Amortization		14,482			15,914
of $14,525 and $20,826 in 2010 and 2009, Respectively
Acquired Contract Costs, Net of Accumulated Amortization		-			364
of $30,526 and $30,162 in 2010 and 2009, Respectively
Due from Related Parties		4,124			5,043
Notes Receivable		40,142			44,390
Other		5,004			6,341
		63,752			72,052
	$	544,123		$	496,650

INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(All Amounts in Thousands)
	December 31,			December 31,
	2010			2009
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current Maturities of Long-Term Debt	$	21,324		$	68,789
Accounts Payable and Accrued Liabilities		32,114			32,422
Total Current Liabilities		53,438			101,211
Long-Term Debt, Less Current Maturities		200,241			97,635
Other Long-Term Liabilities:
Deferred Income Taxes		-			2,070
Lease Incentive Obligation		7,022			6,262
Other		49,672			50,541
		56,694			58,873
Stockholders' Investment:
Common Stock, $1.00 Par Value, 10,000,000 Shares Authorized,		8,564			8,484
7,075,659 And 7,228,570 Shares Issued at December 31, 2010 and
December 31, 2009, Respectively
Additional Paid-In Capital		84,846			83,189
Retained Earnings		183,541			180,121
Treasury Stock, 1,388,066 and 1,165,015 Shares		(25,403	)		(20,172	)
at December 31, 2010 and 2009, Respectively
Accumulated Other Comprehensive Loss		(17,798	)		(12,691	)
		233,750			238,931
	$	544,123		$	496,650

The accompanying notes are an integral part of these statements.

F-4 

INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' INVESTMENT
(All Amounts in Thousands)
											Accumulated
			Additional								Other
	Common		Paid-In		Retained			Treasury			Comprehensive
	Stock		Capital		Earnings			Stock			(Loss) Income			Total
Balance at December 31, 2007	$	7,193	$	60,177	$	117,008		$	(8,704	)	$	(1,972	)	$	173,702
Comprehensive Income:
Net Income		-		-		39,050			-			-			39,050
Other Comprehensive Income (Loss):
Unrealized Holding Gain on Marketable Securities,
Net of Deferred Taxes of ($465)		-		-		-			-			(848	)		(848	)
Net Change in Fair Value of Derivatives, Net of
Deferred Taxes of ($1,275)		-		-		-			-			(9,809	)		(9,809	)
Change in Funding Status of Benefit Plans, Net of
Deferred Taxes of $970		-		-		-			-			(4,219	)		(4,219	)
Total Comprehensive Income															24,174
Compensation Expense - restricted stock		41		716		-			-			-			757
Repurchase of Common Stock		-		-		-			(11,468	)		-			(11,468	)
Preferred Stock Dividends		-		-		(88	)		-			-			(88	)
Common Stock Dividends ($0.50 per share)		-		-		(3,591	)		-			-			(3,591	)
Preferred Stock Conversion		1,156		20,550		-			-			-			21,706
Balance at December 31, 2008	$	8,390	$	81,443	$	152,379		$	(20,172	)	$	(16,848	)	$	205,192
Comprehensive Income:
Net Income		-		-		42,221			-			-			42,221
Other Comprehensive Income (Loss):
Unrealized Foreign Currency Translation Loss		-		-		-			-			65			65
Unrealized Holding Gain on Marketable Securities,
Net of Deferred Taxes of $131		-		-		-			-			222			222
Net Change in Fair Value of Derivatives, Net of
Deferred Taxes of $200		-		-		-			-			4,156			4,156
Change in Funding Status of Benefit Plans, Net of
Deferred Taxes of $11		-		-		-			-			(286	)		(286	)
Total Comprehensive Income															46,378
Compensation Expense - restricted stock		94		1,746		-			-			-			1,840
Common Stock Dividends ($2.00 per share)		-		-		(14,479	)		-			-			(14,479	)
Preferred Stock Conversion		-		-		-			-			-			-
Balance at December 31, 2009	$	8,484	$	83,189	$	180,121		$	(20,172	)	$	(12,691	)	$	238,931
Comprehensive Income:
Net Income		-		-		15,302			-			-			15,302
Other Comprehensive Income (Loss):
Unrealized Foreign Currency Translation Gain		-		-		-			-			111			111
Unrealized Holding Gain on Marketable Securities, Net of Deferred Taxes of $72		-		-		-			-			133			133
Net Change in Fair Value of Derivatives, Net of
Deferred Taxes of ($137)		-		-		-			-			(1,856	)		(1,856	)
Change in Funding Status of Benefit Plans, Net of Deferred Taxes of $0		-		-		-			-			(3,495	)		(3,495	)
Total Comprehensive Income															10,195
Stock-Based Compensation, net of Shares Withheld		80		1,657		-			-			-			1,737
Repurchase of Common Stock		-		-		-			(5,231	)		-			(5,231	)
Common Stock Dividends ($1.625 per share)		-		-		(11,882	)		-			-			(11,882	)
Balance at December 31, 2010	$	8,564	$	84,846	$	183,541		$	(25,403	)	$	(17,798	)	$	233,750

The accompanying notes are an integral part of these statements.

F-5 

INTERNATIONAL SHIPHOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All Amounts in Thousands)
	Year Ended December 31,
	2010			2009			2008
Cash Flows from Operating Activities:
Net Income	$	15,302		$	42,221		$	39,050
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:
Depreciation		18,898			21,020			20,351
Amortization of Deferred Charges and Other Assets		6,569			9,878			8,566
Deferred Benefit for Income Taxes		(1,982	)		(3,845	)		(910	)
Impairment Loss		25,430			2,899			-
Loss on Early Redemption of Preferred Stock		-			-			1,371
Non-Cash Stock Based Compensation		2,341			1,834			757
Equity in Net Income of Unconsolidated Entities		(9,282	)		(6,959	)		(20,946	)
Distributions from Unconsolidated Entities		3,000			3,000			6,000
(Gain) Loss on Sale of Assets		(42	)		2,209			(4,607	)
(Gain) Loss on Sale of Investments		(213	)		(980	)		148
Loss on Foreign Currency Exchange		8,196			-			-
Deferred Drydocking Charges		(2,516	)		(15,960	)		(4,171	)
Changes in:
Accounts Receivable		4,737			1,649			(3,202	)
Inventories and Other Current Assets		(1,287	)		704			(72	)
Other Assets		1,337			(913	)		(386	)
Accounts Payable and Accrued Liabilities		(3,906	)		6,059			1,041
Other Long-Term Liabilities		(2,195	)		(135	)		(805	)
Net Cash Provided by Operating Activities		64,387			62,681			42,185
Cash Flows from Investing Activities:
Principal Payments Received under Direct Financing Leases		5,522			7,763			7,497
Purchases of Property, Plant and Equipment		(123,146	)		(80,303	)		(4,024	)
Proceeds from Sale of Assets		3,853			5,020			10,818
Purchase of Marketable Securities		(10,938	)		(10,617	)		(4,743	)
Proceeds from Sale of Marketable Securities		9,615			3,529			6,361
Investment in Unconsolidated Entities		(4,949	)		(6,250	)		-
Distributions from Unconsolidated Entities		-			-			25,500
Payments on Note Receivables		5,167			1,082			25
Net Cash (Used in) Provided by Investing Activities		(114,876	)		(79,776	)		41,434
Cash Flows from Financing Activities:
Redemption of Preferred Stock		-			-			(17,306	)
Common Stock Repurchase		(5,231	)		-			(11,468	)
Proceeds from Issuance of Debt		153,476			41,617			-
Repayment of Debt		(108,029	)		(14,175	)		(12,950	)
Additions to Deferred Financing Charges		(1,155	)		(235	)		(484	)
Preferred Stock Dividends Paid		-			-			(88	)
Common Stock Dividends Paid		(11,882	)		(14,479	)		(3,591	)
Net Cash Provided by (Used in) Financing Activities		27,179			12,728			(45,887	)
Net (Decrease) Increase in Cash and Cash Equivalents		(23,310	)		(4,367	)		37,732
Cash and Cash Equivalents at Beginning of Period		47,468			51,835			14,103
Cash and Cash Equivalents at End of Period	$	24,158		$	47,468		$	51,835
Noncash investing and financing activities:
Note received as consideration in sale of vessels	$	-		$	50,800		$	-
Noncash investing activities:
Reclassification of direct financing lease to vessels	$	48,093		$	-		$	-

The accompanying notes are an integral part of these statements.

F-6 

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements include the accounts of International Shipholding Corporation (a Delaware corporation) and its majority-owned subsidiaries.  In this report, the terms “we,” “us,” “our,” and “the Company” refer to International Shipholding Corporation and its subsidiaries.  All significant intercompany accounts and transactions have been eliminated.

Our policy is to consolidate all subsidiaries in which we hold a greater than 50% voting interest or otherwise control its operating and financial activities.  We use the equity method to account for investments in entities in which we hold a 20% to 50% voting interest and have the ability to exercise significant influence over their operating and financial activities, and the cost method to account for investments in entities in which we hold less than 20% voting interest and in which we cannot exercise significant influence over operating and financial activities.

Certain reclassifications have been made to the prior period financial information in order to conform to current year presentation.

Nature of Operations

Through our subsidiaries, we operate a diversified fleet of U.S. and international flag vessels that provide domestic and international maritime transportation services to commercial customers and agencies of the United States government primarily under medium- to long-term charters or contracts.  At December 31, 2010, our fleet consisted of 40 ocean-going vessels or newbuildings and related shoreside handling facilities.  Our strategy is to (i) identify customers with high credit quality and marine transportation needs requiring specialized vessels or operating techniques, (ii) seek medium- to long-term charters or contracts with those customers and, if necessary, modify, acquire, or construct vessels to meet the requirements of those charters or contracts, and (iii) provide our customers with reliable, high quality service at a reasonable cost.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates. Estimates are primarily used in accounting for the impairment and depreciation of fixed assets, self retention insurance, asbestos claims, pension and postretirement benefits, derivative instruments and hedging activities and income taxes.

Voyage Revenue and Expense Recognition

Revenues and expenses relating to our Rail-Ferry Service segment’s voyages are recorded over the duration of the voyage. Our voyage expenses are estimated at the beginning of the voyages based on historical actual costs or from industry sources familiar with those types of charges. As the voyage progresses, these estimated costs are revised with actual charges and timely adjustments are made. The expenses are allocated over the voyage based on the number of days in progress at the end of the period. We believe there is no material difference between recording estimated expenses allocated over the voyage versus recording expenses as incurred. Revenues and expenses relating to our other segments’ voyages, which require no estimates or assumptions, are recorded when earned or incurred during the reporting period.

Maritime Security Program

 The Maritime Security Act, which established the Maritime Security Program (“MSP”), was signed into law in October of 1996 and has been extended to 2015.  As of December 31, 2010, six of our Pure Car/Truck Carriers (“PCTCs”), and two of our container vessels were qualified and received contracts for MSP participation.  Annual payments for each vessel in the MSP program were $2,900,000 in 2010 and 2009 and $2,600,000 in 2008.  We recognize MSP revenue on a monthly basis over the duration of the qualifying contracts.

Cash and Cash Equivalents

We consider highly liquid debt instruments, mutual funds, and money market funds with an original maturity of three months or less to be cash equivalents.  The carrying amount approximates fair value for these instruments.

Inventories

Inventories aboard our vessels are carried at the lower of cost or market based on the first-in, first-out method of accounting.  As of December 31, 2010 and 2009, inventory including all spare parts was approximately $3,800,000 and $3,100,000, respectively.

Allowance for Doubtful Accounts

We provide an allowance for doubtful accounts for accounts receivable balances estimated to be non-collectible.  These provisions are maintained based on identified specific accounts, past experiences, and current trends, and require management’s estimates with respect to the amounts that are non-collectible.  Accounts receivable balances are written off against our allowance for doubtful accounts when deemed non-collectible.

Property, Plant and Equipment

For financial reporting purposes, property, plant and equipment are depreciated over their estimated useful lives using the straight-line method to the estimated salvage value.  The estimated useful lives of property, plant and equipment at December 31, 2010 are as follows:

	Years
7 Pure Car/Truck Carriers	20
1 Coal Carrier	15
3 Other Vessels *	25
Leasehold Improvements	10-20
Other Equipment	3-12
Furniture and Equipment	3-10

* Includes two Special Purpose vessels and one Tanker vessel.

At December 31, 2010, our fleet of 40 vessels also included (i) three Roll-On/Roll-Off (“RO/RO”) vessels, which we operate, (ii) a Molten Sulphur Carrier, two Multi-Purpose vessels and four container vessels, which we charter in one of our services, (iii) two PCTCs which we lease for our Time Charter contracts, (iv) three Handy-size Double Hull newbuildings, which were delivered to us in the first quarter of 2011,  (v) two Cape-Size Bulk Carriers and two Handymax-size Bulk Carrier Newbuildings  in which we own a 50% interest and (vi) five Mini Bulker Carriers and five Mini Bulker Newbuildings in which we own a 25% interest.

 Costs of all major property additions and betterments are capitalized.  Ordinary maintenance and repair costs are expensed as incurred.  Interest and finance costs relating to vessels and other equipment under construction are capitalized to properly reflect the cost of assets acquired.  Capitalized interest totaled $1,788,000, $943,000, and $698,000 for the years ended December 31, 2010, 2009, and 2008, respectively.  Capitalized interest was calculated based on our weighted-average interest rate on our outstanding debt.

We monitor our fixed assets for impairment and perform an impairment analysis in accordance with Accounting Standards Codification (“ASC”) Topic 360-10-05  when triggering events or circumstances indicate a fixed asset or asset group may be impaired.  Such events or circumstances may include a decrease in the market price of the long-lived asset or asset group or a significant change in the way the asset is being used. Once a triggering event or circumstance is identified an analysis is done which shows the net book value of the asset  as compared to the estimated undiscounted future cash flows the asset will generate over its remaining useful life. It is possible that our asset impairment review would include a determination of the asset’s fair value based on a third-party evaluation or appraisal. An impairment loss is measured as the amount by which the carrying amount of a long-lived asset or asset group exceeds its fair value.

We recorded an impairment charge of $25,430,000 in 2010 on our Rail Ferry service assets and a charge of $2,899,000 on an International Flag container vessel (See Note V – Impairment of Long Lived Assets).

Drydocking Costs

We defer certain costs related to the drydocking of our vessels.  Deferred drydocking costs are capitalized as incurred and amortized on a straight-line basis over the period between drydockings (generally two to five years). Because drydocking charges can be material in any one period, we believe that the capitalization and amortization of these costs over the drydocking period provides a better matching with the future revenue generated by our vessel. We capitalize only those costs that are incurred to meet regulatory requirements. Normal repairs, whether incurred as part of the drydocking or not, are expensed as incurred (See Note J – Deferred Charges and Acquired Contract Costs).

Deferred Financing Charges and Acquired Contract Costs

We amortize our deferred financing charges and acquired contract costs over the terms of the related financing agreements and contracts using the effective interest method (See Note J – Deferred Charges and Acquired Contract Costs on).

Self-Retention Insurance

We maintain provisions for estimated losses under our self-retention insurance program based on estimates of the eventual claims settlement costs.  The measurement of our exposure for self-insurance liability requires management to make estimates and assumptions that affect the amount of loss provisions recorded during the reporting period.  Actual results could differ materially from those estimates (See Note D – Self-Retention Insurance).

Asbestos Claims

We maintain provisions for estimated losses for asbestos claims based on estimates of eventual claims settlement costs.  Our policy is to establish provisions based on a range of estimated exposure.  We estimate this potential range of exposure using input from legal counsel and internal estimates based on the individual deductible levels for each policy year. We believe that insurance and the indemnification of a previous owner of one of our wholly-owned subsidiaries will partially mitigate our exposure.  The measurement of our exposure for asbestos liability requires management to make estimates and assumptions that affect the amount of the loss provisions recorded during the period.  Our estimates and assumptions are formed from variables such as the maximum deductible levels in a claim year, the amount of the indemnification recovery and the claimant's employment history with the company.  Actual results could differ materially from those estimates.

Income Taxes

Income taxes are accounted for in accordance with ASC Topic 740-10.  Provisions for income taxes include deferred income taxes that are provided on items of income and expense, which affect taxable income in one period and financial statement income in another.

Certain foreign operations are not subject to income taxation under pertinent provisions of the laws of the country of incorporation or operation.  However, pursuant to existing U.S. tax laws, earnings from certain of our foreign operations are subject to U.S. income taxes when those earnings are repatriated to the U.S.

The Jobs Creation Act, which first applied to us on January 1, 2005, changed the U.S. tax treatment of the foreign operations of our U.S. flag vessels and our international flag shipping operations.  We made an election under the Jobs Creation Act to have our qualifying U.S. flag operations taxed under the “tonnage tax” regime rather than under the usual U.S. corporate income tax regime (See Note F – Income Taxes).

Foreign Currency Transactions

Certain of our revenues and expenses are converted into or denominated in foreign currencies, primarily the Singapore Dollar, Indonesian Rupiah, Euro, British Pound, Mexican Peso, Australian Dollar, and Japanese Yen.  All exchange adjustments are charged or credited to income in the year incurred. We recognized an exchange gain of $1,259,000 for the year ended December 31, 2010 and a loss of $208,000 and $35,000 for the years ended December 31, 2009 and 2008, respectively.  These gains and losses are recorded as operating gains and losses.

In addition to the foreign currency operational transactions, we also recorded a non-cash foreign exchange loss of $8.2 million, reflecting the periodic remeasurement of a Yen-denominated credit facility to U.S. Dollars. This loss is reflected in our consolidated statements of income as “Interest and Other.”

Dividend Policy

The payment of dividends is at the discretion of our Board of Directors.  On October 29, 2008, our Board of Directors authorized the reinstitution of a quarterly cash dividend program beginning in the fourth quarter of 2008.

F-7 

Earnings Per Share

Basic earnings per share was computed based on the weighted average number of common shares issued and outstanding during the relevant periods.  Diluted earnings per share also reflects dilutive potential common shares, including shares issuable under stock options and restricted stock grants using the treasury stock method.

Derivative Instruments and Hedging Activities

Under ASC Topic 815-10, in order to consider a derivative instrument as a hedge, (i) we must designate the instrument as a hedge of future transactions, and (ii) the instrument must reduce our exposure to the applicable risk.  If the above criteria are not met, we must record the fair market value of the instrument at the end of each period and recognize the related gain or loss through earnings.  If the instrument qualifies as a hedge, net settlements under the agreement are recognized as an adjustment to earnings, while changes in the fair market value of the hedge are recorded through Stockholders’ Investment in Other Comprehensive Income (Loss).  We currently employ, or have employed in the recent past, interest rate swap agreements and foreign currency contracts (See Note N – Fair Value of Financial Instruments and Derivatives).

Stock-Based Compensation

 Under ASC Topic 505-50, we determine compensation cost based on the grant date fair value of awards and  record compensation expense over the vesting period of such awards.  The compensation cost related to our restricted stock is determined based on the average stock price on the date of grant and is amortized on a straight-line basis over the vesting period. (See Note S – Stock-Based Compensation).

Pension and Postretirement Benefits

Our pension and postretirement benefit costs are calculated using various actuarial assumptions and methodologies.  These assumptions include discount rates, health care cost trend rates, inflation, rate of compensation increases, expected return on plan assets, mortality rates, and other factors.  We believe that the assumptions utilized in recording the obligations under our plans are reasonable based on input from our outside actuary and information as to historical experience and performance.  Differences in actual experience or changes in assumptions may affect our pension and postretirement obligations and future expense.

We account for our pension and postretirement benefit plans in accordance with ASC Topic 715-30-35.  This statement requires balance sheet recognition of the overfunded or underfunded status of pension and postretirement benefit plans.  Under ASC Topic 715-30-35, actuarial gains and losses, prior service costs or credits, and any remaining transition assets or obligations that have not been recognized under previous accounting standards must be recognized in Other Comprehensive Income (Loss), net of tax effects, until they are amortized as a component of net periodic benefit cost.  In addition, the measurement date, the date at which plan assets and the benefit obligation are measured, is required to be the Company’s fiscal year end.  This standard does not change the determination of net periodic benefit cost included in net income or the measurement issues associated with benefit plan accounting.  For the period ended December 31, 2010, the effect of the adjustment to our underfunded status was an increase in the liability of $3,495,000, and an Other Comprehensive Loss of $3,495,000, net of taxes of $0.  For the period ended December 31, 2009, the effect of the adjustment to our underfunded status was an increase in the liability of $275,000, and an Other Comprehensive Loss of $286,000, net of taxes of $11,000 (See Note E – Employee Benefit Plans).

New Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued guidance which expanded the required disclosures about fair value measurements. In particular, this guidance requires (i) separate disclosure of the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements along with the reasons for such transfers, (ii) information about purchases, sales, issuances and settlements to be presented separately in the reconciliation for Level 3 fair value measurements, (iii) fair value measurement disclosures for each class of assets and liabilities and (iv) disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for fair value measurements that fall in either Level 2 or Level 3. The adoption of this guidance did not have a material effect on our financial condition or results of operations.

In June 2009, the FASB issued an accounting standard to require an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity (“VIE”), identifying the primary beneficiary of a VIE, and to require ongoing reassessment of whether an enterprise is the primary beneficiary of a VIE, rather than only when specific events occur.  The standard also eliminated the quantitative approach previously required for determining the primary beneficiary of a VIE, amended certain guidance for determining whether an entity is a VIE, added an additional reconsideration event when changes in facts and circumstances pertinent to a VIE occur, eliminated the exception for troubled debt restructuring regarding VIE reconsideration and required advanced disclosures that provide users of financial statements with more transparent information about an enterprise’s involvement in a VIE.  We adopted this accounting standard effective January 1, 2010.  The adoption of this standard did not have a material effect on our financial condition or results of operations.

NOTE B – PROPERTY, PLANT & EQUIPMENT

Property, plant and equipment consisted of the following (in thousands):

	December 31,
(All Amounts in Thousands)	2010			2009
Pure Car/Truck Carriers*	$	227,947		$	97,031
Special Purpose Vessels**		37,070			109,934
Coal Carrier		92,771			92,771
Container Ships		-			14,798
Tanker		8,009			-
Non-vessel related property, plant and equipment		33,991			33,094
		399,788			347,628
Less:  Accumulated depreciation		(143,667	)		(185,292	)
		256,121			162,336
Construction-in-progress		78,355			49,496
	$	334,476		$	211,832

* Recently constructed PCTC placed in service in April 2010 and redelivery of PCTC previously under direct finance   lease, classified as PP&E in 2010.

**Writedown of two Roll-on/Roll-off Special Purpose double-deck vessels (see Note V – Impairment of Long Lived Assets)

NOTE C – LONG-TERM DEBT

Long-term debt consisted of the following:

( in thousands)		Interest Rate			Total Principal Due
		December 31,	December 31,	Maturity	December 31,	December 31,
Description		2010	2009	Date	2010	2009
Secured:
Notes Payable – Variable Rate	*	1.2894%	1.2506%	2015	$          18,000	$          20,667
Notes Payable – Variable Rate	*	0.0000%	0.0000%	2012	13,300	13,440
Notes Payable – Variable Rate	**	1.2894%	1.5325%	2013	36,857	44,325
Notes Payable – Variable Rate		N/A	1.1306%	2010	-	47,125
Notes Payable – Variable Rate		3.2575%	4.7500%	2014	15,739	24,000
Notes Payable – Variable Rate	***	1.0829%	1.1778%	2020	61,776	8,434
Notes Payable – Variable Rate		3.0563%	N/A	2017	44,722	-
Notes Payable – Variable Rate		2.77-2.79%	N/A	2018	21,171	-
Bridge Loan – Variable Rate		N/A	3.1697%	2010	-	8,433
Line of Credit		4.7575%	N/A	2012	10,000	-
					221,565	166,424
		Less Current Maturities			(21,324)		(68,789)
					$       200,241	$       97,635

*  We have interest rate swap agreements in place to fix the interest rates on our variable rate notes payable expiring in 2015 and 2012 at 4.41% and 5.17%, respectively.  After applicable margin adjustments, the effective interest rates on these notes payable are fixed at 4.67% and 5.41%, respectively. The swap agreements are for the same terms as the associated notes payable.

** We have three interest rate swap agreements currently in place to fix the interest rate on portions of this variable note payable at 3.46%, 2.69% and 2.45% respectively through the termination of the loan.  After applicable margin adjustments, the effective interest rates on the swapped portion of these notes payable are 4.46%, 3.69% and 3.45%, respectively.  Two of these swap agreements became effective in 2010 when the previous swap agreements terminated and the remaining agreement has been in place since the inception of the loan.

*** We have an interest rate swap agreement in place to fix the interest rate on our variable rate note payable expiring in 2020 at 2.065%.  After applicable margin adjustments, the effective interest rate on this note payable is fixed at 2.965%.  The swap agreement is for the same term as the associated note payable.

All of the debt listed in the chart above was either (i) issued directly by International Shipholding Corporation or (ii) issued by one or more subsidiaries of International Shipholding Corporation and guaranteed by International Shipholding Corporation.  Our variable rate notes payable and our line of credit are secured by assets with an aggregate net book value of $256,500,000 as of December 31, 2010, and by a security interest in certain operating contracts and receivables.

The aggregate principal payments required as of December 31, 2010, for each of the next five years are $21,324,000 in 2011, $44,067,000 in 2012, $35,675,000 in 2013, $19,809,000 in 2014, $16,000,000 in 2015 and $84,690,000 thereafter.

In August 2009, we reduced our $35 million credit facility to $30 million.  As of December 31, 2009, we had $6.4 million of our $30 million revolving credit facility, which expires in April of 2011, pledged as collateral for a letter of credit.  The remaining $23.6 million of that credit facility was available as of December 31, 2009.  In March 2010, we increased our $30 million credit facility back to $35 million and extended the maturity date to April of 2012.  As of December 31, 2010, we had $6.4 million of our $35 million revolving credit facility, which expires in April of 2012, pledged as collateral for a letter of credit.  Additionally, $10 million was drawn for working capital purposes and repaid in January 2011.  We had $18.6 million of available borrowings on the credit facility as of December 31, 2010.  Associated with this credit facility is a commitment fee of .125% per year on the undrawn portion of this facility. The net weighted average interest rate on all of our long-term debt after consideration of the effect of our interest rate swaps at December 31, 2010 and December 31, 2009 was 3.5478% and 4.7082%, respectively.

We entered into a financing agreement with Regions Bank on August 27, 2009 for a five year facility to finance up to $40.0 million for the purchase of additional vessels. As of December 31, 2009, the Company had drawn $25.0 million under this facility towards the purchase of the vessels to fulfill the additional requirements under a contract to provide services to an Indonesian mining company.  The vessels purchased with the loan proceeds were subsequently sold to a third party in the third quarter of 2009, generating a deferred gain of approximately $10.6 million.  The loan was refinanced on June 29, 2010 for seven years with an additional equity payment by the Company of $6.1 million.  In addition to a $1.1 million payment received from the buyer, a ten year note receivable was agreed to for the remaining balance. We hold a first mortgage covering the vessels until the note is fully satisfied. Due to our financing of the transaction, the gain realized on the sale was deferred. This deferral will be recognized over ten years, the length of the agreement with the buyer.

Additionally we entered into a credit facility with ING Bank on August 2, 2010 to finance 65% of the construction price of each of three Korean built vessels to be delivered in early 2011 with a maximum amount of $55,200,000.  As of December 31, 2010, a total of $21,171,000 had been drawn on this facility and we had available borrowings of $34,029,000.

Most of our debt agreements, among other things, impose defined minimum working capital and net worth requirements, impose leverage requirements, and prohibit us from incurring, without prior written consent, additional debt or lease obligations, except as defined.  As of December 31, 2010, we met all of the financial covenants under our various debt agreements, the most restrictive of which include the working capital, leverage ratio, minimum net worth and interest coverage ratios.

Certain of our loan agreements restrict the ability of our subsidiaries to dispose of collateralized assets or any other asset which is substantial in relation to our assets taken as a whole without the approval from the lender.  We have consistently remained in compliance with this provision of the loan agreements.

F-8 

NOTE D – SELF-RETENTION INSURANCE

We are self-insured for Hull and Machinery claims in excess of $150,000/Hull and $250,000/Machinery for each incident and for Loss of Hire claims in excess of 14 days. The aggregate stop loss included in the policy is $1,000,000 for Hull and $500,000 for Machinery per policy year.  Once the aggregate stop loss amount is exceeded, we have coverage up to limits provided.

Protection and Indemnity claims, including cargo and personal injury claims, are not included in our self-retention insurance program.  We have third party insurance coverage for these claims with deductible levels ranging from $100,000 to $250,000 per incident depending on vessel type.

The current and non-current liabilities for self-insurance exposure and for claims under deductible levels were $641,000 and $461,000, respectively, as of December 31, 2010.  The current and non-current liabilities were $641,000 and $1,751,000, respectively, as of ended December 31, 2009.

NOTE E – EMPLOYEE BENEFIT PLANS

Pension and Postretirement Benefits

We maintain a defined benefit pension plan (the “Retirement Plan”) for employees hired prior to September 1, 2006, and all such employees of our domestic subsidiaries who are not covered by union sponsored plans may participate after one year of service. Employees hired on or after September 1, 2006 with at least one year of service as of June 30, 2008, were eligible to participate in the new Cash Balance Plan as of July 1, 2008.  Computation of benefits payable under the defined pension plan is based on years of service, up to thirty years, and the employee's highest sixty consecutive months of compensation, which is defined as the participant’s base salary plus overtime (excluding incentive pay), bonuses or other extra compensation, in whatever form.  Our funding policy is based on minimum contributions required under ERISA as determined through an actuarial computation.  Plan assets consist primarily of investments in equity and fixed income mutual funds and money market holdings.  The target asset allocation range is 40% in fixed income investments and 60% in equity investments.  The asset allocation as of December 31, 2010 was 42.74%, or $10,688,000, in fixed income investments and 57.26%, or $14,319,000, in equity investments.  The asset allocation as of December 31, 2009 was 38.78%, or $8,717,000, in fixed income investments and 61.22%, or $13,757,000, in equity investments.  The plan’s prohibited investments include selling short, commodities and futures, letter stock, unregistered securities, options, margin transactions, derivatives, leveraged securities, and International Shipholding Corporation securities.  The plan’s diversification strategy includes limiting equity securities in any single industry to 25% of the equity portfolio market value, limiting the equity holdings in any single corporation to 10% of the market value of the equity portfolio, and diversifying the fixed income portfolio so that no one issuer comprises more than 10% of the aggregate fixed income portfolio, except for issues of the U.S. Treasury or other Federal Agencies.  The plan’s assumed future returns are based primarily on the asset allocation and on the historic returns for the plan’s asset classes determined from both actual plan returns and, over longer time periods, market returns for those asset classes.  As of December 31, 2010, the plan has assets of $25,007,000 and a projected pension obligation of $27,473,000.

Our postretirement benefit plan currently provides medical, dental, and life insurance benefits to eligible retired employees and their eligible dependents.

The following table sets forth the plans’ changes in the benefit obligations and fair value of assets and a statement of the funded status:

(All Amounts in Thousands)	Pension Plan		Postretirement Benefits
	Year Ended December 31,		Year Ended December 31,
	2010	2009	2010	2009
Change in Benefit Obligation
Benefit Obligation at Beginning of Year	$          25,432	$         22,601	$          6,863	$          6,764
Service Cost	477	468	76	16
Interest Cost	1,470	1,481	586	416
Actuarial (Gain) Loss	1,377	2,134	3,753	659
Benefits Paid and Actual Expenses	(1,283)	(1,252)	(599)	(1,051)
Medicare Part D Reimbursements	-	-	50	59
Benefit Obligation at End of Year	$          27,473	$         25,432	$          10,729	$            6,863
Change in Plan Assets
Fair Value of Plan Assets at Beginning of Year	$          22,473	$         18,100	$                   -	$                   -
Actual Return on Plan Assets	2,867	3,625	-	-
Employer Contribution	950	2,000	549	992
Benefits Paid and Actual Expenses	(1,283)	(1,252)	(599)	(1,051)
Medicare Part D reimbursements	-	-	50	59
Fair Value of Plan Assets at End of Year	$           25,007	$          22,473	$                   -	$                   -
Unfunded Status	$         (2,466)	$         (2,959)	$       (10,729)	$         (6,863)
Key Assumptions
Discount Rate	5.50%	6.00%	5.50%	6.00%
Rate of Compensation Increase	4.50%	4.50%	N/A	N/A

The accumulated benefit obligation for the pension plan was $25,117,000 and $23,081,000 at December 31, 2010 and 2009, respectively.

The following table shows amounts recognized in accumulated other comprehensive income (loss):

(All Amounts in Thousands)	Pension Plan						Postretirement Benefits
	Year Ended December 31,						Year Ended December 31,
	2010			2009			2010			2009
Prior Service Cost	$	26		$	29		$	55		$	67
Net Loss		(6,368	)		(6,494	)		(3,741	)		(186	)
Amounts in Other Comprehensive Loss	$	(6,342	)	$	(6,465	)	$	(3,686	)	$	(119	)

The following table provides the components of net periodic benefit cost for the plans:

(All Amounts in Thousands)	Pension Plan			Postretirement Benefits
	Year Ended December 31,			Year Ended December 31,
	2010	2009	2008	2010	2009	2008
Components of Net Periodic Benefit Cost
Service Cost	$        477	$        468	$        597	$           76	$         16	$         18
Interest Cost	1,470	1,481	1,415	586	416	428
Expected Return on Plan Assets	(1,706)	(1,426)	(1,792)	-	-	-
Amortization of Prior Service Cost	(3)	(3)	(2)	(11)	(11)	(12)
Amortization of Net Actuarial Loss	342	409	-	198	(16)	-
Net Periodic Benefit Cost	$        580	$        929	$        218	$         849	$       405	$       434
The assumptions used in the measurement of net pension cost are shown in the following table:
Key Assumptions
Discount Rate	6.00%	6.75%	6.25%	6.00%	6.00%	6.75%
Expected Return on Plan Assets	7.75%	7.75%	7.75%	N/A	N/A	N/A
Rate of Compensation Increase	4.50%	4.50%	5.00%	N/A	N/A	N/A

For measurement purposes, the health cost trend was assumed to be 7.6% and the dental care cost trend rate was assumed to be 2.1% in 2010 and 2011. The health care cost trend will increase by 0.2% in 2011 and 2012, decrease by 1.4% in 2012 and 2013 and will decrease steadily by .10% each year thereafter. The health cost and dental care cost trends above are the same for employees over 65.  A one percent change in the assumed health care cost trend rates would have the following effects:

(All Amounts in Thousands)	1% Increase		1% Decrease
Change in total service and interest cost components
for the year ended December 31, 2010	$	69	$	(58	)
Change in postretirement benefit obligation as of December 31, 2010		1,232		(1,035	)

The following table provides the expected future benefit payments as of December 31, 2010:

(All Amounts in Thousands)
Fiscal Year Beginning	Pension Plan	Postretirement Benefits
2011	$               1,447	$                   676
2012	1,465	670
2013	1,532	685
2014	1,584	687
2015	1,624	684
2016-2020	9,219	3,572

We continue to evaluate ways in which we can better manage these benefits and control the costs.  Any changes in the plan or revisions to assumptions that affect the amount of expected future benefits may have a significant effect on the amount of the reported obligation and annual expense.

Crew members on our U.S. flag vessels belong to union-sponsored pension plans.  We contributed approximately $3,526,000, $3,184,000, and $2,588,000 to these plans for the years ended December 31, 2010, 2009, and 2008, respectively.  These contributions are in accordance with provisions of negotiated labor contracts and generally are based on the amount of straight pay received by the union members.  Information from the plans’ administrators is not readily available to permit us to determine whether there may be unfunded vested benefits.

In December of 2003, the Medicare Prescription Drug, Improvements, and Modernization Act of 2003 (“Act”) was signed into law.  The Act included a special subsidy for employers that sponsor retiree health plans with prescription drug benefits that are at least as favorable as the new Medicare Part D benefit.  We determined that our plan is actuarially equivalent and as such we have been receiving this special subsidy.  The law resulted in a decrease in our annual net periodic benefit cost.

In early 2010, Congress passed and the President signed into law the Health Care and Education Affordability Reconciliation Act of 2010.  Based on our review and evaluation of the law, we do not believe the impact on our postretirement benefits will be material to us at this time.

401(k) Savings Plan

We provide a 401(k) tax-deferred savings plan to all full-time employees. We match 50% of the employee’s first $2,000 contributed to the plan annually.  We contributed $96,000, $105,000 and $109,000 to the plan for the years ended December 31, 2010, 2009 and 2008, respectively.

Stock Incentive Plan

In April 2009, our stockholders approved the International Shipholding Corporation 2009 Stock Incentive Plan (the “Plan”).  The compensation committee of the board of directors of the Company will generally administer the Plan, and has the authority to grant awards under the Plan, including setting the terms of the awards. Incentives under the Plan may be granted in any one or a combination of the following forms: incentive stock options under Section 422 of the Internal Revenue Code, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights, and other stock-based awards.

A total of 200,000 shares of the Company’s common stock are authorized to be issued under the Plan with 53,066 shares available to be issued. The Company has no other equity compensation plan with shares available for issuance. Officers, directors, and key employees of the Company and the Company’s consultants and advisors will be eligible to receive incentives under the Plan when designated by the compensation committee as Plan participants (See Note S – Stock-Based Compensation).

Life Insurance

We have agreements with the two former Chairmen of the Company whereby their estates or designated beneficiaries will be paid approximately $822,000 and $627,000, respectively, upon death.  We have recorded reserve amounts to fund a portion of these death benefits, which amount to $822,000 and $410,000, respectively.

F-9 

NOTE F - INCOME TAXES

Under previous United States tax law, U.S. companies like us and their domestic subsidiaries generally have been taxed on all income, including in our case income from shipping operations, whether derived in the United States or abroad.  With respect to any foreign subsidiary in which we hold more than a 50 percent interest (referred to in the tax laws as a controlled foreign corporation, or “CFC”), we were treated as having received a current taxable distribution of our pro rata share of income derived from foreign shipping operations.The American Jobs Creation Act, which became effective for us on January 1, 2005, changed the United States tax treatment of our U.S. flag vessels and our foreign flag shipping operations operating in CFCs.

In December of 2004, we made an election under the Jobs Creation Act to have our U.S. flag operations (other than those of two ineligible vessels used exclusively in United States coastwise commerce) taxed under a “tonnage tax” regime rather than under the usual U.S. corporate income tax regime.  As a result of that election, our gross income and taxable income for United States income tax purposes with respect to our eligible U.S. flag vessels will not include (1) income from qualifying shipping activities in U.S. foreign trade (i.e., transportation between the U.S. and foreign ports or between foreign ports), (2) income from cash, bank deposits and other temporary investments that are reasonably necessary to meet the working capital requirements of our qualifying shipping activities, and (3) income from cash or other intangible assets accumulated pursuant to a plan to purchase qualifying shipping assets.

Under the tonnage tax regime, our taxable income with respect to the operations of our eligible U.S. flag vessels will instead be based on a “daily notional taxable income,” which is taxed at the highest corporate income tax rate.

Our Federal income tax returns are filed on a consolidated basis and include the results of operations of our wholly-owned U.S. subsidiaries.  Pursuant to the Tax Reform Act of 1986, the recognition of earnings of foreign subsidiaries, which were $2,564,000 in 2010, $2,015,000 in 2009, and $1,243,000 in 2008, have been included in our federal tax provision calculations.  No foreign tax credits are expected to be utilized on the federal return as of December 31, 2010.

Components of the net deferred tax liability (asset) are as follows:

	December 31,			December 31,
(All Amounts in Thousands)	2010			2009
Liabilites:
Fixed Assets	$	9,615		$	12,016
Deferred Charges		2,668			2,492
Other Liabilities		236			286
Total Liabilities		12,519			14,794
Assets:
Derivatives		(1,492	)		(1,331	)
Post-Retirement Benefits		(814	)		(719	)
Alternative Minimum Tax Credit		(4,577	)		(4,577	)
Net Operating Loss Carryforward		(5,053	)		(4,171	)
Valuation Allowance		452			-
Other Assets		(1,035	)		(1,926	)
Total Assets		(12,519	)		(12,724	)
Total Deferred Tax Liability, Net	$	-		$	2,070

 The following is a reconciliation of the U.S. statutory tax rate to our effective tax rate expense (benefit):

	Year Ended December 31,
	2010	2009	2008
Statutory Rate	35.00%	35.00%	35.00%
State Income Taxes	0.70%	(0.05)%	0.36%
Effect of Tonnage Tax Rate	(280.91)%	(46.30)%	(42.76)%
Foreign Earnings - Indefinitely Reinvested	-	(1.18)%	(6.84)%
Controlled Foreign Corporation Disallowed Losses	193.67%	0.65%	-
Foreign Earnings	7.29%	-	4.23%
Change in Valuation Allowance	9.56%	-	-
Foreign Income Taxes	10.23%	0.55%	-
Permanent Differences and Other, Primarily Non-deductible Expenditures	(2.79)%	0.17%	2.94%
	(27.25)%	(11.16)%	(7.07)%

Foreign income taxes of $581,000, $497,000, and $525,000 are included in our consolidated statements of income in the Provision (Benefit) for Income Taxes for the years ended December 31, 2010, 2009, and 2008, respectively.  We pay foreign income taxes in Indonesia, Singapore and Mexico.

For U.S. federal income tax purposes, in 2010, we generated $2,891,000 in net operating loss carryforwards (“NOLs”), which will be added to the previous carryforward of $11,544,000.  The balance at December 31, 2010 of approximately $14,435,000 will expire in 2024 through 2029.  We also have approximately $4,577,000 of alternative minimum tax credit carryforwards, which are not subject to expiration and are available to offset future regular income taxes subject to certain limitations.

We had total income from continuing operations before (benefit) provision for income taxes and equity in net income of unconsolidated entities of $4,730,000, $31,723,000, and $12,399,000, for 2010, 2009, and 2008, respectively. Income from continuing U.S. operations was $29,321,000, $33,727,000, and $11,282,000.  Income (loss) from continuing foreign operations was ($24,591,000), ($2,004,000), and $1,117,000 for 2010, 2009, and 2008, respectively.

We file income tax returns in the U.S. federal and various state and foreign jurisdictions.  The number of years that are open under the statute of limitations and subject to audit varies depending on the tax jurisdiction.  Our U.S. income tax returns for 2004 and subsequent years remain open to examination. It is our policy to recognize interest and penalties associated with underpayment of income taxes as interest expense and general and administrative expenses, respectively. If recognized, substantially all of our unrecognized tax benefits would impact our effective rate.

The following is a reconciliation of the total amounts of unrecognized tax benefits as of December 31, 2010 and 2009:

			2010	2009
	Total unrecognized tax benefits as of: January 1,		$      1,400	$      1,855
	Increases (decreases) in unrecognized tax benefits as a result of:      Tax positions taken during a prior year		-	(270)
		Lapse of applicable statute of limitations	-	(185)
Total unrecognized tax benefits as of:  December 31,			$      1,400	$      1,400

NOTE G – TRANSACTIONS WITH RELATED PARTIES

We own a 50% interest in RTI Logistics L.L.C. (“RTI”) (See Note L-Unconsolidated Entities).  At December 31, 2010, we had two long-term receivables of $1,900,000 and $427,050, respectively, due from RTI.  The long-term portion of both of these receivables is recorded on our consolidated balance sheets under “ Due from Related Parties.”  Interest income on the $1,900,000 receivable is earned at the rate of 5% per year for seven years.  A total of $20,000 was repaid in 2010 on this receivable.  A total of $20,000 per year is due on this receivable with the balance of $1,880,000 due by December 31, 2012.  Interest income on the $427,050 receivable is earned at the rate of 6% per year, and the receivable along with the accrued interest is payable on demand.

We own a 49% interest in Terminales Transgolfo  (“TTG”) (See Note L- Unconsolidated Entities).  At December 31, 2010, we had a note receivable of $2,113,000 due from TTG.  The long-term portion of this receivable is recorded on our consolidated balance sheets under “ Due from Related Parties.”   The note receivable has no fixed payment schedule but payment in full is due by December 31, 2020.  Interest income on this receivable is earned at the rate of 7.65% per year for seven years.

A son of one of our Directors serves as our Secretary and is a partner in, and member of the Board of Directors of, the law firm of Jones, Walker, Waechter, Poitevent, Carrere and Denegre, which has represented us since our inception. Fees paid to the firm for legal services rendered to us were approximately $1,261,000, $1,106,000, and $1,099,000 for the years ended December 31, 2010, 2009 and 2008, respectively.  There were no amounts due to the legal firm at December 31, 2010, 2009 and 2008, respectively.

NOTE H - COMMITMENTS AND CONTINGENCIES

Commitments

As of December 31, 2010, 20 vessels that we own or operate were committed under various contracts extending beyond 2010 and expiring at various dates through 2019.  Certain of these agreements also contain options to extend the contracts beyond their minimum terms.

Contingencies

In the normal course of our operations, we become involved in various litigation matters including, among other things, claims by third parties for alleged property damages, personal injuries, and other matters.  While we believe that we have meritorious defenses against these claims, our management has used significant estimates in determining our potential exposure.  Our estimates are determined based on various factors, such as (1) severity of the injury (for personal injuries) and estimated potential liability based on past judgments and settlements, (2) advice from legal counsel based on its assessment of the facts of the case and its experience in other cases, (3) probability of pre-trial settlement which would mitigate legal costs, (4) historical experience on claims for each specific type of cargo (for cargo damage claims), and (5) whether our seamen are employed in permanent positions or temporary revolving positions.  It is reasonably possible that changes in our estimated exposure may occur from time to time.  As is true of all estimates based on historical experience, these estimates are subject to some volatility.  However, because our total exposure is limited by our aggregate stop loss levels (see Note D for further discussion of our self-retention insurance program), we believe that our exposure is within our estimated levels.  Where appropriate, we have recorded provisions, included in Other Long-Term Liabilities: Other, to cover our potential exposure and recorded anticipated recoveries from insurance companies, included in Other Assets.  Although it is difficult to predict the costs of ultimately resolving such issues, we have determined that our current insurance coverage is sufficient to limit any additional exposure to an amount that would not be material to our financial position.  Therefore, we do not expect such changes in these estimates to have a material effect on our financial position or results of operations, although we cannot provide assurances to this effect.

We have been named as a defendant in numerous lawsuits claiming damages related to occupational diseases, primarily related to asbestos and hearing loss.  We believe that most of these claims are without merit, and that insurance and the indemnification of a previous owner of one of our subsidiaries may mitigate our exposure.  Based on consultation with outside legal counsel, we have estimated our current overall exposure to the numerous lawsuits in question, after considering insurance coverage for these claims, to be approximately $284,000.  We believe those estimates are reasonable and have established reserves accordingly.  Our reserves for these lawsuits as of December 31, 2010 and 2009 were approximately $284,000 and $279,000, respectively.  There is a reasonable possibility that there will be additional claims associated with occupational diseases asserted against us. However, we do not believe that it is reasonably possible that our exposure from those claims will be material because (1) the lawsuits filed since 1989 claiming damages related to occupational diseases in which we have been named as a defendant have primarily involved seamen that served on-board our vessels and the number of such persons still eligible to file a lawsuit against us is diminishing and (2) we believe such potential additional claims, if pursued, would be covered under either or both of (i)an indemnification agreement with a previous owner of one of our subsidiaries or (ii) one or more of our existing insurance policies with deductibles ranging from $2,500 to $25,000 per claim. 

NOTE I - LEASES

Direct Financing Leases

In 2005, we entered into a direct financing lease for a U.S. flag PCTC expiring in 2015 and in 1999, we entered into a direct financing lease of an international flag PCTC expiring in 2019.  The schedule of future minimum rentals to be received by us under these direct financing leases at December 31, 2010, is as follows:

(All Amounts in Thousands)	Receivables Under Financing Leases
Year Ended December 31,
2011	$	13,097
2012		13,117
2013		13,096
2014		12,707
2015		11,044
Thereafter		23,207
Total Minimum Lease Payments Receivable		86,268
Estimated Residual Value of Leased Property		8,051
Less Unearned Income		(38,621	)
Total Net Investment in Direct Financing Leases		55,698
Current Portion		(5,596	)
Long-Term Net Investment in Direct Financing Leases at December 31, 2010	$	50,102

Operating Leases

As of December 31, 2010, we leased from third parties vessels and office space. The Company is currently committed to leases for three vessels with terms expiring on July 2013, July 2016, and August 2017. We operate the vessels under these leases under fixed charter agreements covering the terms of the respective leases.

Our operating lease agreements have fair value renewal options and fair value purchase options.  Most of the agreements impose defined minimum working capital and net worth requirements, impose restrictions on the payment of dividends, and prohibit us from incurring, without prior written consent, additional debt or lease obligations, except as defined. On January 3, 2011 and January 13, 2011, we exercised the early buy out option on two of these vessels. Based on the terms of the existing lease agreements, the aggregate early buy out price for both vessels is approximately $64.5 million and is payable in July 2011. We are currently evaluating our options to finance the acquisitions.

The Mobile corporate office lease, which commenced on April 1, 2007, has a twenty year term with periodic graduating payments that are accounted for on a straight line basis. We incurred $730,000 in leasehold improvements and were provided with incentives in the amount of $1.4 million, both of which are amortized over the life of the lease with the incentives amortized as a credit to rent expense. In October 2008, the Company renewed its lease agreement on its New York office space under a ten year term with the first nine months as free rent and including periodic graduating payments. The rent expense is amortized on a straight line basis. In addition, we incurred $503,000 in leasehold improvements which are being amortized over the life of the lease. We also lease a Shanghai office, with the current term expiring in June 2011, and a Singapore office, with the current term expiring in September 2014 with an option to renew for three years. We incurred $199,000 in leasehold improvements on the Singapore office which are being amortized over the life of the lease.

In addition to those operating leases with terms expiring after December 31, 2010, we also operated certain vessels under short-term operating charters during 2010.

Rent expense related to all of our operating leases, including charter hire rate payments, totaled approximately $28,844,000, $35,745,000 and $33,837,000 for the years ended December 31, 2010, 2009 and 2008, respectively.  The following is a schedule, by year, of future minimum payments required under operating leases that have initial non-cancelable terms in excess of one year as of December 31, 2010:

	Payments Under Operating Leases*
(All Amounts in Thousands)	U.S. Flag Vessels		International Flag Vessel		Other Leases		Total
Year Ended December 31,
2011	$	5,966	$	3,170	$	1,235	$	10,371
2012		3,729		-		1,203		4,932
2013		3,729		-		1,227		4,956
2014		3,729		-		1,195		4,924
2015		3,729		-		1,071		4,800
Thereafter		5,904		-		9,235		15,139
Total Future Minimum Payments	$	26,786	$	3,170	$	15,166	$	45,122

*Does not include the two vessels under lease for which we exercised the early buy out option discussed above.

F-10 

NOTE J - DEFERRED CHARGES AND ACQUIRED CONTRACT COSTS

Deferred charges and acquired contract costs are comprised of the following:

	December 31,		December 31,
(All Amounts in Thousands)	2010		2009
Drydocking Costs	$	12,338	$	14,342
Financing Charges and Other		2,144		1,572
Acquired Contract Costs		-		364
	$	14,482	$	16,278

The Acquired Contract Costs represent the portion of the purchase price paid for our wholly-owned subsidiary, Waterman Steamship Corporation, applicable to that company’s three U.S. flag RO/RO vessels under maritime prepositioning ship contract agreements, which were originally scheduled to expire at the end of the second quarter 2010 but were subsequently extended by the Military Sealift Command (“MSC”). One of the current agreements is set to expire by the end of March 2011 and the remaining two agreements are set to expire in May 2011, with the MSC holding options to further extend all three agreements. The amortization expense for the year ended December 31, 2010 was $364,000 and the amortization expense for the years ended December 31, 2009 and 2008 was $1,455,000, respectively.

The amortization expense for drydock and financing charges for the years ended December 31, 2010, 2009 and 2008 were $5,288,000 and $582,000, $7,858,000 and  $446,000 and $6,714,000 and $400,000, respectively.

NOTE K - SIGNIFICANT OPERATIONS

Major Customers

We have several medium to long-term contracts related to the operations of various vessels (See Note H – Commitments and Contingencies), from which revenues represent a significant amount of our total revenue.  Revenues from contracts with the MSC were $34,401,000, $32,012,000 and $29,988,000 for the years ended December 31, 2010, 2009 and 2008, respectively.  In July 2009, we received notification from the MSC that we were being excluded from further consideration for extending the current operating agreements on three U.S. flag roll on-roll off vessels. Shortly thereafter, we protested this action and were reinstated for consideration by the MSC. One of the current agreements is set to expire by the end of March 2011.  On February 24, 2011, the MSC notified us of their intent to exercise the option to extend the agreement for up to an additional four months.  The remaining two agreements are set to expire in May 2011, with the MSC holding options to further extend these agreements.

We have six U.S. flag PCTCs, also qualified under the MSP, which carry automobiles for a Japanese charterer.  Revenues, from these customers including MSP revenue, were $54,225,000, $51,590,000 and $50,208,000 for the years ended December 31, 2010, 2009, and 2008, respectively.

These six U.S. flag PCTCs carry supplemental cargo.  Revenues under these contracts were $79,778,000, $171,493,000, and $58,414,000 for the years ended December 31, 2010, 2009 and 2008, respectively.

All of the aforementioned revenues are included in our Time Charter-U.S. Flag segment.

Until the fourth quarter of 2010, we operated five international flag PCTCs under various contracts that transport automobiles from South Korea to the United States and Europe, with two of these contracts lapsing in the fourth quarter 2010.  The vessels associated with the contracts that lapsed were chartered in under charter agreements that terminated when these contracts lapsed.  Revenues under these contracts were $25,566,000, $25,883,000 and $26,065,000 for the years ended December 31, 2010, 2009 and 2008 respectively.

All of the aforementioned revenues are included in our Time Charter-International Flag segment.

Concentrations

A significant portion of our traffic receivables is due from contracts with the MSC and transportation of government sponsored cargo.  There are no concentrations of receivables from customers or geographic regions that exceeded 10% of stockholders’ investment at December 31, 2010, 2009 or 2008.

With only minor exceptions related to personnel aboard certain international flag vessels, all of our shipboard personnel are covered by collective bargaining agreements under multiple unions.  The percentage of the Company’s total work force that is covered by these agreements is approximately 75.6%.  Seven of these contracts representing 16% of our workforce expire in June 2011, one of these contracts representing 12% of our workforce expires in September 2011, and three of these contracts representing 22% of our workforce expire in December 2011.

We have two Special Purpose vessels, which carry loaded rail cars between the U.S. Gulf Coast and Mexico.  Revenues from this service were $26,768,000, $27,405,000 and $39,410,000 for the years ended December 31, 2010, 2009 and 2008, respectively.  Revenues from these two Special Purpose vessels are included in our Rail-Ferry segment. This segment has been adversely impacted by the economic recession, including the fact that one of its major northbound customers stopped shipments in December 2009. The Company recognized a non-cash impairment charge of $25,430,000 in the third quarter of 2010 to reduce the carrying value of these assets to their estimated fair value.

Geographic Information

We have operations in several principal markets, including international service between U.S. Gulf and East Coast ports and ports in Mexico, the Middle East and the Far East, and domestic transportation services along the U.S. Gulf and East Coast.  Revenues attributable to the major geographic areas of the world are presented in the following table.  Revenues for our Time Charter Contracts-U.S. Flag, Time Charter Contracts-International Flag, Contract of Affreightment, Rail-Ferry Service, and Other segments are assigned to regions based on the location of the customer.  Because we operate internationally, most of our assets are not restricted to specific locations.  Accordingly, an allocation of identifiable assets to specific geographic areas is not applicable.

	Year Ended December 31,
(All Amounts in Thousands)	2010		2009		2008
United States	$	179,127	$	265,416	$	154,068
Asian Countries		84,146		86,000		87,329
Rail-Ferry Service Operating Between U.S. Gulf Coast and Mexico		26,768		27,405		39,410
Other Countries		8		1,130		1,094
Total Revenues	$	290,049	$	379,951	$	281,901

Operating Segments

Our operating segments are identified primarily based on the characteristics of the contracts or terms under which the fleet of vessels are operated.  Each of the reportable segments is managed separately as each requires different resources depending on the nature of the contract or terms under which each vessel within the segment operates. Beginning with the second quarter 2010, we split Time Charter Contracts operations into two different operating segments, U.S. Flag and International Flag.  Our operating segments are identified and described below.

Time Charter Contracts-U.S. Flag: Time charters are contracts by which our charterer obtains the right for a specified period to direct the movements and utilization of the vessel in exchange for payment of a specified daily rate, but we retain operating control over the vessel.  Typically, we fully equip the vessel and are responsible for normal operating expenses, repairs, crew wages, and insurance, while the charterer is responsible for voyage expenses, such as fuel, port and stevedoring expenses.  Our Time Charter Contracts – U.S. Flag segment includes contracts for commercial and supplementary cargo for six PCTCs, and an electric utility for a conveyor-equipped, self-unloading Coal Carrier. Also included in this segment are contracts under which the MSC charters three RO/ROs that are under an operating contract, and contracts with another shipping company for two container vessels.

Time Charter Contracts-International Flag: We operate this segment in the same manner as our Time Charter Contracts-U.S. Flag segment, except with International flagged vessels.  Our Time Charter Contracts – International Flag segment includes contracts with Far Eastern and South American shipping companies for five PCTCs, two of which we no longer operate as of the fourth quarter, 2010. Also included in this segment are two multi-purpose vessels, one tanker and two container vessels, which service ISC’s long-term contract to transport supplies for a mining company’s Indonesian operations and contracts with another shipping company for two container vessels, of which we no longer operate as of fourth quarter, 2010.

Contract of Affreightment (“COA”):For this type of contract, we undertake to provide space on our vessel for the carriage of specified goods or a specified quantity of goods on a single voyage or series of voyages over a given period of time between named ports or within certain geographical areas in return for the payment of an agreed amount per unit of cargo carried.  Generally, we are responsible for all operating and voyage expenses.  Our COA segment includes one contract, which is for the transportation of molten sulphur.

Rail-Ferry Service: This service uses our two Special Purpose vessels, which carry loaded rail cars between the U.S. Gulf Coast and Mexico.  Each vessel currently has a capacity for 113 standard size rail cars.  With departures every four days from Coatzacoalcos, Mexico and the U.S. Gulf Coast, it offers with each vessel a three-day transit between these ports and provides a total of 90 trips per year in each direction when both ships are operating.

Other:This segmentconsists of operations that include more specialized services than the above-mentioned segments and ship charter brokerage and agency services.  Also included in the Other category are corporate related items, results of insignificant operations, and income and expense items not allocated to reportable segments.

The following table presents information about segment profit and loss and segment assets.  Beginning with the second quarter 2010, we split Time Charter Contracts operations into two different operating segments, U.S. Flag and International Flag.  We do not allocate administrative and general expenses, gains or losses on sales of investments, investment income, gains or losses on early extinguishment of debt, equity in net income of unconsolidated entities, income taxes, or losses from discontinued operations to our segments.  Intersegment revenues are based on market prices and include revenues earned by our subsidiaries that provide specialized services to the operating segments.  Expenditures for segment assets represent cash outlays during the periods presented, including purchases of assets, improvements to assets, and drydock payments.

			Time Charter
(All Amounts in Thousands)	Time Charter Contracts-U.S. Flag		Contracts-International Flag		COA			Rail-Ferry Service			Other			Total
2010
Revenues from External Customers	$	197,311	$	47,208	$	16,283		$	26,672		$	2,575		$	290,049
Intersegment Revenues (Eliminated)		-		-		-			-			18,642			18,642
Intersegment Expenses (Eliminated)		-		-		-			-			(18,642	)		(18,642	)
Voyage Expenses		139,269		29,588		16,930			22,648			912			209,347
Depreciation		9,755		2,982		-			5,181			11			17,929
Impairment Loss		-		-		-			25,430			-			25,430
Gross Voyage (Loss) Profit		48,287		14,638		(647	)		(26,587	)		1,652			37,343
Interest Expense		3,034		2,774		-			831			518			7,157
Segment Profit (Loss)		45,253		11,864		(647	)		(27,418	)		1,134			30,186
Segment Assets		136,402		195,594		1,832			40,511			24,721			399,060
Expenditures for Segment Assets		570		117,767		330			6,695			300			125,662
2009
Revenues from External Customers	$	279,879	$	50,966	$	18,046		$	27,891		$	3,169		$	379,951
Intersegment Revenues (Eliminated)		-		-		-			-			12,975			12,975
Intersegment Expenses (Eliminated)		-		-		-			-			(12,975	)		(12,975	)
Voyage Expenses		211,850		41,501		15,827			24,585			1,915			295,678
Depreciation		13,368		1,407		-			5,468			11			20,254
Impairment Loss		-		2,899		-			-			-			2,899
Gross Voyage Profit (Loss)		54,661		5,159		2,219			(2,162	)		1,243			61,120
Interest Expense		3,240		892		-			1,427			551			6,110
Segment Profit (Loss)		51,421		4,267		2,219			(3,589	)		692			55,010
Segment Assets		103,485		87,585		2,546			63,600			25,940			283,156
Expenditures for Segment Assets		11,726		78,305		2			4,686			1,544			96,263
2008
Revenues from External Customers	$	167,153	$	53,490	$	19,199		$	39,491		$	2,568		$	281,901
Intersegment Revenues (Eliminated)		-		-		-			-			19,626			19,626
Intersegment Expenses (Eliminated)		-		-		-			-			(19,626	)		(19,626	)
Voyage Expenses		129,996		39,446		17,793			32,136			869			220,240
Depreciation		13,386		1,205		-			5,365			12			19,968
Gross Voyage Profit		23,771		12,839		1,406			1,990			1,687			41,693
Interest Expense		3,691		1,113		-			1,502			580			6,886
Segment Profit		20,080		11,726		1,406			488			1,107			34,807
Segment Assets		164,860		62,961		3,934			67,470			27,155			326,380
Expenditures for Segment Assets		2,904		1,534		169			1,694			1,894			8,195

In 2007, we elected to discontinue our U.S. flag LASH service and our International LASH service.  Those services were reported in the Liner Services segment in previous periods.  The segment information for 2008 presented above has been restated to remove the effects of those operations to reflect the reclassification from continuing operations to discontinued operations (See Note P – Discounted Operations).

Following is a reconciliation of the totals reported for the operating segments to the applicable line items in the consolidated financial statements:

(All Amounts in Thousands)	Year Ended December 31,
Profit or Loss:	2010			2009			2008
Total Profit for Reportable Segments	$	30,186		$	55,010		$	34,807
Unallocated Amounts:
Administrative and General Expenses		(21,202	)		(22,641	)		(21,414	)
Loss (Gain) on Sale of Other Assets		42			(2,209	)		-
Ineffective Portion on Derivative Instrument		(426	)		-			-
Gain (Loss) on Sale of Investment		213			980			(148	)
Investment (Loss) Income		1,778			(72	)		525
Other Income from Vessel Financing		2,335			655			-
Foreign Exchange Loss		(8,196	)		-			-
(Loss) on Redemption of Preferred Stock		-			-			(1,371	)
Income from Continuing Operations Before (Benefit)
Provision for Income Taxes and Equity in Net
Income of Unconsolidated Entities	$	4,730		$	31,723		$	12,399

	December 31,		December 31,
Assets:	2010		2009
Total Assets for Reportable Segments	$	399,060	$	283,156
Unallocated Amounts:
Current Assets		68,532		141,749
Investment in Unconsolidated Entities		27,261		15,971
Due from Related Parties		4,124		5,043
Other Assets		5,004		6,341
Note Receivable		40,142		44,390
Total Assets	$	544,123	$	496,650

F-11 

NOTE L - UNCONSOLIDATED ENTITIES

Bulk Carriers

In 2003, we acquired a 50% investment in Dry Bulk Cape Holding Inc. (“Dry Bulk”) for $3,479,000, which owns 100% of subsidiary companies that currently own two Capesize Bulk Carriers and have two Handymax Bulk Carrier Newbuildings on order for delivery in 2012.  This investment is accounted for under the equity method and our share of earnings or losses is reported in our consolidated statements of income net of taxes.  For the years ended December 31, 2010, 2009 and 2008, our portions of earnings net of taxes were $10,818,000, $6,845,000 and $21,239,000, respectively.  Included in the 2010 results is a gain of $1,400,000 on the sale of one Dry Bulk’s Panamax Bulk Carriers. We received dividends of $3,000,000, $3,000,000 and $31,500,000 in 2010, 2009 and 2008, respectively. The 2008 amount included a cash distribution for our share of the proceeds from Dry Bulk’s sale of a Panamax Bulk Carrier in the amount of $25.5 million in July 2008.

The unaudited condensed financial position and results of operations of Dry Bulk are summarized below:

	December 31,		December 31,
(Amounts in Thousands)	2010		2009
Current Assets	$	17,518	$	8,385
Noncurrent Assets		69,477		91,692
Current Liabilities		1,438		1,706
Noncurrent Liabilities		58,756		87,278

	Year Ended December 31,
(Amounts in Thousands)	2010		2009		2008
Operating Revenues	$	28,222	$	27,417	$	25,682
Operating Income		22,851		17,089		14,249
Net Income		21,364		13,760		42,129

In December 2009, we acquired for $6,250,000 a 25% investment in Oslo Bulk AS (“Oslo Bulk”), which, in 2008, contracted to build eight new Mini Bulkers. Four of the eight Mini-Bulkers were delivered and under contract as of December 31, 2010. The remaining four vessels are expected to be delivered in the first quarter of 2011. During 2010, we invested an additional $3.9 million in Tony Bulkers Pte Ltd, (“Tony Bulkers”), an affiliate of Oslo Bulk AS, for our 25% share of the installment payments for two additional new Mini-Bulkers, one of which  was delivered in the fourth quarter of 2010. We paid our remaining share of installment payments associated with the other Mini-Bulker Newbuilding of approximately $1.6 million in January 2011 and the vessel is expected to be delivered in the second quarter of 2011.  These investments are accounted for under the equity method and our share of earnings or losses is reported in our consolidated statements of income net of taxes.  Our portion of the earnings of Oslo Bulk and Tony Bulkers was a loss of $1.1 million and $196,000, respectively, for the year ended December 31, 2010.

Terminal Management Company

In 2000, we acquired a 50% interest in Terminales Transgolfo (“TTG”) for $228,000, which operates a terminal in Coatzacoalcos, Mexico, utilized by our Rail-Ferry Service.  During 2005, the other unaffiliated 50% owner of TTG acquired 1% of our 50% interest in TTG.   As of December 31, 2010, we have a 49% interest in TTG.  In 2006, TTG began making improvements to the terminal in Mexico to accommodate the second decks that were added to the two vessels operating in our Rail-Ferry Service during the first half of 2007.  We funded  49% of the cost of the terminal improvements, of which 30% is a capital contribution and is reported as an investment in unconsolidated entities.  The remaining 70% is a loan to TTG (see Note G-Transactions with Related Parties).  No capital contributions were made during the years ended December 31, 2010 and 2009. During the year ended December 31, 2008, we made capital contributions of $120,000 associated with funding improvements to the terminal.  The investment is accounted for under the equity method, and our share of earnings or losses, which was immaterial for all periods presented, is reported in our consolidated statements of income net of taxes.  No distributions were made by TTG during 2010, 2009 and 2008.  As of December 31, 2010, 2009 and 2008, TTG owed us $2,113,000, $3,295,000 and $4,459,000, respectively. (See Note G- Transactions with Related Parties).

Transloading and Storage Facility Company

In 2005, we acquired a 50% interest in RTI Logistics L.L.C. (“RTI”), which owns a transloading and storage facility that was used in our Rail-Ferry Service, for $1,587,000.  We purchased our shares from a former owner at a premium, which resulted in a difference of approximately $973,000 between our investment in RTI and the underlying equity in net assets of the subsidiary.  Additional investments of approximately $386,000 were made in 2006. The investment is accounted for under the equity method, and our share of earnings or losses is reported in our consolidated statements of income net of taxes.  The Company’s interest in the earnings from the date of this investment through December 31, 2010, was immaterial.  No distributions were made by RTI during 2010, 2009 and 2008.  We have also loaned funds to RTI, and as of December 31, 2010, 2009 and 2008, RTI owed us $2,327,000, $2,230,000 and $2,250,000, respectively (See Note G- Transactions with Related Parties).

NOTE M - SUPPLEMENTAL CASH FLOW INFORMATION

	Year Ended December 31,
(All Amounts in Thousands)	2010		2009		2008
Cash Payments:
Interest Paid	$	6,825	$	5,570	$	7,589
Taxes Paid		744		530		597

NOTE N -FAIR VALUE OF FINANCIAL INSTRUMENTS, DERIVATIVES AND MARKETABLE SECURITIES

The Company uses derivative instruments to manage certain foreign currency exposures and interest rate exposures. The Company does not use derivative instruments for speculative trading purposes.  All derivative instruments must be recorded on the balance sheet at fair value.  For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is recorded to other comprehensive income, and is reclassified to earnings when the derivative instrument is settled.  Any ineffective portion of changes in the fair value of the derivative is reported in earnings.  None of the Company’s derivative contracts contain credit-risk related contingent features that would require us to settle the contract upon the occurrence of such contingency.  However, all of our contracts contain clauses specifying events of default under specified circumstances, including failure to pay or deliver, breach of agreement, default under the specific agreement to which the hedge relates, bankruptcy, misrepresentation and mergers, without exception.  The remedy for default is settlement in entirety or payment of the fair market value of the contracts, which is $9,500,000 in the aggregate for all of our contracts less a posted collateral of $693,000 for the year ended December 31, 2010.  The unrealized loss related to the Company’s derivative instruments included in accumulated other comprehensive loss was $8,700,000 and $6,800,000 as of December 31, 2010 and 2009, respectively.

The notional and fair value amounts of our derivative instruments as of December 31, 2010 were as follows:

(Amounts in thousands)		Asset Derivatives 2010		Liability Derivatives 2010
	Current Notional	Balance Sheet	Fair	Balance Sheet	Fair Value
As of December 31, 2010	Amount	Location	Value	Location
Interest Rate Swaps*	$  143,466	-	-	Other Liabilities	$9,620
Foreign Exchange Contracts	$3,000	Other Current Assets	$157	-	-
Total Derivatives designated as hedging instruments	$146,466	-	$157	-	$9,620
*With regard to the interest rates of our long-term debt that have been swapped to a fixed rate under contracts, they include an interest rate swap on a Yen based facility for the financing of a new PCTC delivered in March 2010.   The notional amount under this contract is approximately $75,300,000 (Based on a Yen to USD exchange rate of 82).  With the bank exercising its option to reduce the underlying Yen loan from 80% to 65% funding of the vessel’s delivery cost, the 15% reduction represents the ineffective portion, which consists of the portion of the derivative instrument that is no longer supported by an underlying credit facility.  The change in fair value related to the ineffective portion of this swap was a $426,000 loss for the year ended December 31, 2010 and this amount was included in earnings. .

The effect of derivative instruments designated as cash flow hedges on our consolidated statement of income for the year ended December 31, 2010 is as follows:

(Amounts in thousands)	Gain (Loss) Recognized in Other Comprehensive Income	Location of Gain (Loss) Reclassified from AOCI to Income	Amount of Gain (Loss) Reclassified from AOCI to Income	Gain (Loss) Recognized in Income from Ineffective portion
Interest Rate Swaps	($1,514)	Interest Expense	($3,966)	($426)
Foreign Exchange Contracts	($342)	Voyage Expenses	$1,589	-
Total	($1,856)	-	($2,377)	($426)

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Interest Rate Swap Agreements

We enter into interest rate swap agreements to manage well-defined interest rate risks. The Company records the fair value of the interest rate swaps as an asset or liability on its balance sheet. The Company’s interest rate swaps are accounted for as effective cash flow hedges.  Accordingly, the effective portion of the change in fair value of the swap is recorded in Other Comprehensive Income (Loss). As of December 31, 2010, the Company has the following swap contracts outstanding:

Effective Date	Termination Date	Current Notional Amount	Swap Rate	Type
11/30/05	11/30/12	$13,300,000	5.17%	Fixed
3/31/08	9/30/13	$12,285,667	3.46%	Fixed
9/30/10	9/30/13	$12,285,667	2.69%	Fixed
9/30/10	9/30/13	$12,285,667	2.45%	Fixed
9/26/05	9/28/15	$9,000,000	4.41%	Fixed
9/26/05	9/28/15	$9,000,000	4.41%	Fixed
3/15/09	9/15/20	¥ 6,175,333,334	2.065%	Fixed

Foreign Currency Contracts

We enter into forward exchange contracts to hedge certain firm purchase and sale commitments denominated in foreign currencies.  The purpose of our foreign currency hedging activities is to protect us from the risk that the eventual dollar cash inflows or outflows resulting from revenue collections from foreign customers and purchases from foreign suppliers will be adversely affected by changes in exchange rates.  The term of the currency contracts is rarely more than one year.  Our foreign currency contracts are accounted for as effective cash flow hedges. Accordingly, the effective portion of the change in fair value is recorded in Other Comprehensive Income (Loss).

During 2010, we entered into two forward purchase contracts. One contract was for Mexican Pesos for $1,725,000 U.S. Dollar equivalents beginning in September 2010 that expires in August 2011. The other contract was for Indonesian Rupiah for $1,800,000 U.S. Dollar equivalents beginning in January 2011 that expires in December 2011. There were no forward sales contracts as of December 31, 2010 or 2009.

The following table summarizes the outstanding contracts as of December 31, 2010:

(Amounts in Thousands)
Transaction Date	Type of Currency	Transaction Amount in Dollars	Effective Date	Expiration Date
June 2010	Rupiah	1,800	January 2011	December 2011
June 2010	Peso	1,200	September 2010	August 2011

Long-Term Debt

The fair value of long-term debt, which is estimated based on the current rates offered to us on outstanding obligations, approximated the carrying amount as of December 31, 2010 and 2009, primarily as a result of all of our debt being carried at variable rates.

Due from Related Parties and Notes Receivable

The carrying amount of these notes receivable approximated fair market value as of December 31, 2010 and 2009.  Fair market value takes into consideration the current rates at which similar notes would be made.

Marketable Securities

We have categorized all marketable securities as available-for-sale securities. Management performs a quarterly evaluation of marketable securities for any other-than-temporary impairment.  During 2008, we determined that the unrealized losses in the stocks of several financial institutions were other-than-temporarily impaired due to the duration and severity of the losses.  Therefore, we recognized an impairment charge of $369,000 during 2008. During 2009, we recognized an impairment charge of $757,000 related to certain equity investments which were determined to have other-than-temporary impairments. These impairment charges represented the difference between each investment’s cost and fair value on the respective balance sheet dates. The fair value was determined using market prices that represented Level 1 inputs in the fair value hierarchy described in Note U-Fair Value Measurements.  Our entire portfolio of stocks was sold in the fourth quarter of 2009, generating a gain of approximately $980,000.

The following tables include cost and valuation information on our investment securities:

(All Amounts in Thousands)	December 31, 2010
Security Type	Cost Basis		AOCI Unrealized Holding Gains			Estimated Fair Value
Corporate Bonds*	$	11,322	$	133		$	11,527
	$	11,322	$	133		$	11,527
* Various maturity dates from February 2011 – February 2015.
	December 31, 2009
Security Type	Cost Basis		AOCI Unrealized Holding Loss			Estimated Fair Value
Corporate Bonds*	$	10,449	$	(116	)	$	10,333
	$	10,449	$	(116	)	$	10,333
* Various maturity dates from February 2010 – August 2013.

We used the following methods and assumptions in estimating our fair value disclosures of the following financial instruments:

Cash and Cash Equivalents: The carrying amounts reported in the balance sheet for cash and short-term instruments approximates fair value.

Marketable Securities: Fair value of marketable securities is based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.

Long-Term Debt: The fair value of our debt is estimated based on the current rates offered to us on outstanding obligations.

F-12 

NOTE O – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Following are the components of the consolidated balance sheet classification Accounts Payable and Accrued Liabilities:
	December 31,		December 31,
(All Amounts in Thousands)	2010		2009
Accrued Voyage Expenses	$	17,608	$	16,750
Trade Accounts Payable		6,647		7,151
Lease Incentive Obligation		2,723		3,955
Derivative Liability		-		1,063
Self-Insurance Liability		1,754		1,754
Accrued Salaries and Benefits		2,668		1,544
Accrued Insurance Premiums		301		-
Accrued Interest		413		205
	$	32,114	$	32,422

NOTE P – DISCONTINUED OPERATIONS

The Company decided in the fourth quarter of 2006 to dispose of certain LASH Liner Service assets.  The decision was based on the belief that we could generate substantial cash flow and profit on the disposition of the assets, while improving our future operating results.  Accordingly, we sold our LASH Feeder vessel and 114 barges in the first quarter of 2007.  In the second quarter of 2007, the Company sold the one remaining U.S. flag LASH vessel and 111 LASH barges.  In the third quarter of 2007, the company elected to discontinue its International LASH service by the end of 2007.  The one remaining LASH vessel and the remaining barges were sold in the first quarter of 2008.

There were no revenues associated with these operations for the years ended December 31, 2010 and 2009. Revenues associated with these operations for the year ended December 31, 2008 were $220,000.

       NOTE Q – EARNINGS PER SHARE

The calculation of basic and diluted earnings per share is as follows (in thousands except share amounts):

	Year Ended December 31,
	2010		2009		2008
Numerator
Net Income Available to Common  Stockholders – Basic
Continuing *	$	15,302	$	42,221	$	34,134
Discontinued		-		-		4,827
	$	15,302	$	42,221	$	38,961
Net Income- Diluted
Continuing	$	15,302	$	42,221	$	34,222
Discontinued		-		-		4,827
	$	15,302	$	42,221	$	39,049
Denominator
Weighted Avg Share of Common Stock Outstanding:
Basic		7,158,439		7,224,748		7,314,216
Plus:
Effect of dilutive restrictive stock		72,739		57,371		22,339
Effect of dilutive convertible shares from preferred stock		-		-		165,000
Diluted		7,231,178		7,282,119		7,501,555
Basic and Diluted Earnings Per Common Share
Net Income Available to Common
Stockholders – Basic
Continuing Operations	$	2.14	$	5.84	$	4.67
Discontinued Operations		-		-		0.66
	$	2.14	$	5.84	$	5.33
Net Income Available to Common
Stockholders – Diluted
Continuing Operations	$	2.12	$	5.80	$	4.56
Discontinued Operations		-		-		0.64
	$	2.12	$	5.80	$	5.20

* Income from Continuing Operations less Preferred Stock Dividends

NOTE R- ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Accumulated other comprehensive income (loss) is comprised of the following, net of tax:
		December 31,
		2010	2009
	Unrealized translation loss	$             (198)	$               (309)
	Unrealizedgain on marketable securities	133	-
	Fair value of derivatives	(8,698)	(6,842)
	Funding status of benefit plans	(9,035)	(5,540)
		$        (17,798)	$          (12,691)

NOTE S – STOCK BASED COMPENSATION

On April 30, 2008, our Compensation Committee granted the remaining 175,000 shares of restricted stock from the 1998 stock incentive plan to certain executive officers.  The shares vest ratably over the respective vesting periods, which range from three to four years. The fair value of the Company’s restricted stock, which is determined using the average stock price as of the date of the grant, is applied to the total shares that are expected to fully vest and is amortized to compensation expense on a straight-line basis over the vesting period

On April 29, 2009, our Compensation Committee granted 47,500 shares of restricted stock to certain executive officers from the 2009 Stock Incentive Plan, which vested on May 6, 2010.

On January 28, 2010, our Compensation Committee granted 47,500 shares of restricted stock to certain executive officers from the 2009 Stock Incentive Plan.  These shares vest on the day our 2010 Form 10-K is filed with the SEC.

On January 14, 2011, our independent Directors received unrestricted stock awards of 4,434 shares from the 2009 Stock Incentive Plan.

On January 26, 2011, our Compensation Committee granted 47,500 shares of restricted stock to certain executive officers from the 2009 Stock Incentive Plan. These shares will vest on the day our 2011 Form 10-K is filed with the SEC in 2012, contingent upon the Company achieving certain performance measures for fiscal year 2011 and the executive officer remaining employed by us on such date.

A summary of the activity for restricted stock awards during the years ended December 31, 2010 and 2009 is as follows:

	2010					2009
	Shares			Weighted Average Fair Value Per Share		Shares			Weighted Average Fair Value Per Share
Non-vested		177,500		$	19.51		175,000		$	19.01
Shares Granted		47,500		$	28.40		47,500		$	20.87
Shares Vested –		(92,500	)	$	19.97		(45,000	)	$	19.01
Shares Forfeited		-			-		-			-
Non-vested – December 31,		132,500		$	22.38		177,500		$	19.51

The following table summarizes the future expected amortization of unrecognized compensation cost, which we will include in administrative and general expenses, relating to all of the Company’s restricted stock grants as of December 31, 2010:

Grant Date	2011		2012		Total
April 30, 2008	$	435,000	$	34,000	$	469,000
January 28, 2010	$	289,000	$	-	$	289,000

For the year ended December 31, 2010, the Company’s income before taxes and net income included $2,341,000 and $1,522,300, respectively, of stock-based compensation expense charges, while basic and diluted earnings per share were each charged $0.21 per share. For the year ended December 31, 2009, the Company’s income before taxes and net income included $1,834,000 and $1,192,100, respectively, of stock-based compensation expense charges, while basic and diluted earnings per share were each charged $0.17 and $0.16 per share, respectively.  For the year ended December 31, 2008, the Company’s income before taxes and net income included $757,000 and $492,000, respectively, of stock-based compensation expense charges, while basic and diluted earnings per share were each charged $0.07 per share.

NOTE T – STOCK REPURCHASE PROGRAM

On January 25, 2008, the Company’s Board of Directors approved a share repurchase program for up to a total of 1,000,000 shares of the Company’s common stock. We expect that any share repurchases under this program will be made from time to time for cash in open market transactions at prevailing market prices. The timing and amount of any purchases under the program will be determined by management based upon market conditions and other factors.  In 2008, we repurchased 491,572 shares of our common stock for $11,468,000. Thereafter, we suspended repurchases until the second quarter of 2010, when we repurchased 223,051 shares of our Common Stock for $5,231,000.  Unless and until the Board otherwise provides, this authorization will remain open indefinitely, or until we reach the 1,000,000 share limit.

NOTE U - FAIR VALUE MEASUREMENTS

Effective January 1, 2008, we adopted the provisions of Accounting Standards Codification (“ASC”) Topic 820.  ASC Topic 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements.

ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability is not adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, and (iii) able and willing to complete a transaction.

ASC Topic 820 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present value on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, ASC Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

w      Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

w      Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (including interest rates, volatilities, prepayment speeds, credit risks) or inputs that are derived principally from or corroborated by market data by correlation or other means.

 w  Level 3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity's own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

The following table summarizes our financial assets and financial liabilities measured at fair value on a recurring basis as of December 31, 2010, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

(Amounts in thousands)	Level 1 Inputs		Level 2 Inputs			Level 3 Inputs		Total Fair Value
Marketable securities	$	11,527	$	-		$	-	$	11,527
Derivative assets		-		157			-		157
Derivative liabilities		-		(9,620	)		-		(9,620	)

F-13 

NOTE V - IMPAIRMENT OF LONG LIVED ASSETS

The Company reviews property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of an asset group to future net undiscounted cash flows expected to be generated by the asset group. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

The Company’s Rail-Ferry segment consists of two Roll-on/Roll-off Special Purpose double-deck vessels, which carry loaded rail cars between the U.S. Gulf Coast and Mexico. In 2009, the segment began to feel the impact of the worldwide economic downturn and reported lower than expected gross profit results. The lower results were further dampened by the loss of one of the segment’s largest customers in December of 2009. As a result, we tested regularly to determine if this service was impaired. In the third quarter of 2010, we determined that the cash flows expected to be generated by the long-lived assets of our Rail-Ferry segment were less than the carrying amount of these assets. As such, we recognized a non-cash impairment charge of $25,430,000 in the third quarter of 2010 to reduce the carrying value of these assets to their estimated fair value. The fair value of these assets was estimated based upon an independent third party appraiser (Level 2 inputs).

We intend to continue to operate the Rail-Ferry segment as long as it can generate positive cash flows and further utilize the vessels available capacity to generate a return that would be accretive to net income.

During the second quarter of 2009, we recorded an impairment charge of $2,899,000 on one of our International flag container vessels included in our Time Charter Contracts-International Flag segment.  This charge was the result of the termination of our Time Charter agreement on the vessel upon the mutual agreement with our customer.  We agreed to the early termination in exchange for an increase in charter hire on the other international flag container vessel remaining under charter. The amount of the impairment charge was determined by writing down the remaining net book value of the vessel and the remaining unamortized deferred drydocking charges to the estimated fair market value of the vessel.  The estimated fair value of the vessel was determined using available market data, which represented Level 2 inputs in the fair value hierarchy.  In the third quarter 2009, we sold the vessel and recorded an additional loss of $129,000.

NOTE W – CHANGES IN ACCOUNTING ESTIMATE

In the first quarter of 2010, we extended the economic life on our U.S. flag Coal Carrier, basing this change in estimate on the extension on the vessel’s time charter contract.  This change in estimate reduced our depreciation expense and increased our pre-tax income by $5.2 million and our net income by $3.4 million, or $0.47 per share, for the year ended December 31, 2010.

Also in the first quarter of 2010, we extended the economic life of both the Mobile, Alabama and Coatzacoalcos, Mexico rail terminal’s leasehold improvements due to contractual extensions to the rail terminal operating agreement.  The amortization periods were extended two and a half years and six years, respectively. The extension of these amortization periods increased our pre-tax income by approximately $1.8 million, and our net income by approximately $1.2 million, or $0.16 per share, for the year ended December 31, 2010.

NOTE X - CONVERTIBLE EXCHANGEABLE PREFERRED STOCK

In January of 2005, we issued 800,000 shares of 6% convertible exchangeable preferred stock, $1.00 par value, at a price of $50.00 per share.  The proceeds of the preferred stock offering, after deducting all associated costs, were $37,987,000. Each share of the preferred stock had a liquidation preference of $50 per share and was convertible into shares of our common stock based on the initial conversion price of $20.00 per share. On February 1, 2008 we completed the redemption of our 800,000 outstanding shares of 6% Convertible Exchangeable Preferred Stock.  In lieu of cash redemption, holders of 462,382 shares of the Preferred Stock elected to convert their shares into approximately 1,155,955 shares of our common stock. The remaining 337,618 outstanding shares of Preferred Stock were retired for cash (including accrued and unpaid dividends to, but excluding, the redemption date), pursuant to the terms of the Preferred Stock. As a result, we no longer have any shares of the 6% Convertible Exchangeable Preferred Stock outstanding. The total cash payment for the redemption of the Preferred Stock including the accrued and unpaid dividends was $17,306,000. We had a charge to earnings of approximately $1,371,000 in the first quarter of 2008 from the redemption of the Preferred Stock.

NOTE Y – QUARTERLY FINANCIAL INFORMATION – (Unaudited)

	(All Amounts in Thousands Except Share Data)	Quarter Ended
		March 31		June 30		Sept. 30			Dec. 31
2010	Revenues	$	72,914	$	85,084	$	74,400		$	57,651
	Expenses		58,707		66,497		54,848			47,224
	Impairment Loss		-		-		25,430			-
	Gross Voyage Profit (Loss)		14,207		18,587		(5,878	)		10,427
	Income (Loss) from Continuing Operations		10,568		9,616		(13,823	)		8,941
	Net Income (Loss) Available to Common Stockholders		10,568		9,616		(13,823	)		8,941
	Basic and Diluted Earnings (Loss) per Common Share:
	Net Income (Loss) Available to Common Stockholders-Basic
	Continuing Operations		1.46		1.33		(1.95	)		1.26
	Net Income (Loss) Available to Common Stockholders-Diluted
	Continuing Operations		1.44		1.32		(1.95	)		1.25
2009	Revenues	$	98,078	$	99,815	$	92,261		$	89,795
	Expenses		83,250		82,087		76,769			73,826
	Impairment Loss		-		2,899		-			-
	Gross Voyage Profit		14,828		14,829		15,492			15,969
	Income from Continuing Operations		9,475		10,659		11,309			10,777
	Net Income Available to Common Stockholders		9,475		10,659		11,309			10,777
	Basic and Diluted Earnings per Common Share:
	Net Income Available to Common Stockholders-Basic
	Continuing Operations		1.31		1.47		1.56			1.49
	Net Income Available to Common Stockholders-Diluted
	Continuing Operations		1.31		1.46		1.55			1.47

F-14

INDEX OF SUPPLEMENTAL FINANCIAL STATEMENT SCHEDULES

Report of Independent Registered Public Accounting Firm	S-2
Schedule II - Valuation and Qualifying Accounts and Reserves	S-3

S-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

International Shipholding Corporation

We have audited the consolidated financial statements of International Shipholding Corporation as of December 31, 2010 and 2009, and for each of the three years in the period ended December 31, 2010, and have issued our report thereon dated March 14, 2011 (included elsewhere in this Form 10-K).  Our audits also included the financial statement Schedule II of this Form 10-K.  This schedule is the responsibility of the Company’s management.  Our responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

                                                                                                                        /s/  Ernst & Young  LLP

New Orleans, Louisiana

March 14, 2011

S-2

INTERNATIONAL SHIPHOLDING CORPORATION

Schedule II - Valuation and Qualifying Accounts and Reserves

(Amounts in Thousands)

						Deductions
			Balance at	Additions		for purpose for	Balance at
			beginning of	Charged to	Charged to	which accounts	end of
			period	expense	Other accounts	were set up	period
	December 31, 2008:
		Insurance Reserves	$          6,192	$         4,797	$                   -	$            6,297	$         4,692
		Custom Reserves	296	-	-	-	296
		Other Reserves	836	388	-	-	1,224
	Total		$          7,324	$         5,185	$                   -	$            6,297	$         6,212
December 31, 2009:
		Insurance Reserves	$         4,692	$         3,117	$                   -	$            3,286	$         4,523
		Custom Reserves	296	-	-	296	-
		Other Reserves	1,224	-	-	103	1,121
	Total		$         6,212	$         3,117	$                   -	$            3,685	$         5,644
	December 31, 2010:
		Insurance Reserves	$         4,523	$         1,913	$                   -	$            3,203	$         3,233
		Other Reserves	1,121	410	-	323	1,208
	Total		$         5,644	$         2,323	$                   -	$            3,526	$         4,441

S-3

EX-10.6

Exhibit 10.6

$35,000,000 Revolving Loan

to

International Shipholding Corporation,

Enterprise Ship Company, Inc., Sulphur Carriers, Inc.,

Gulf South Shipping Pte Ltd., CG Railway, Inc.,

LCI Shipholdings, Inc., Central Gulf Lines, Inc. and

Waterman Steamship Corporation

by

Regions Bank

March 7, 2008

J. Kris Lowry, Esq.

Maynard, Cooper & Gale, P.C. 1901 Sixth Avenue North

2400 Regions Harbert Plaza Birmingham, Alabama 35203-2618 (205) 254-1000

01614639.1

$35,000,000 Revolving Loan

to

International Shipholding Corporation,

Enterprise Ship Company, Inc., Sulphur Carriers, Inc.,

Gulf South Shipping Pte Ltd., CG Railway, Inc.,

LCI Shipholdings, Inc., Central Gulf Lines, Inc. and

Waterman Steamship Corporation

by

Regions Bank

Closing Date: March 7, 2008

Index to Transcript

1. Credit Agreement

2. Revolving Note

3. CIP Forms:

(a)International Shipholding Corporation

(b)Enterprise Ship Company, Inc.

(c)Sulphur Can-iers, Inc.

(d)Gulf South Shipping Pte Ltd.

(e)CG Railway, Inc.

 (f) LCI Shipholdings, Inc.

(g)Central Gulf Lines, Inc.

(h)Waterman Steamship Corporation

4. Opinion of Borrower's Counsel

5. Subrogation and Contribution Agreement

6. Officer's Certificate (with attached organizational documents):

(a)International Shipholding Corporation

(b)Enterprise Ship Company, Inc.

(c)Sulphur Carriers, Inc.

(d)Gulf South Shipping Pte Ltd.'

(e)CG Railway, Inc.

(f)LCI Shipholdings, Inc.

(g)Central Gulf Lines, Inc.

(h)Waterman Steamship Corporation

1/ To be provided post-closing.

7. Existence/Good Standing Certificates:

(a)International Shipholding Corporation

(b)Enterprise Ship Company, Inc.

(c)Sulphur Carriers, Inc.

(d)Gulf South Shipping Pte Ltd.'

(e)CG Railway, Inc.

(f)LCI Shipholdings, Inc.

(g)Central Gulf Lines, Inc.

(h)Waterman Steamship Corporation

8. Payoff Letter

9. Closing Statement

10. Post-Closing Agreement

1/ To be provided post-closing.

CREDIT AGREEMENT

Dated as of March 7, 2008

Between

INTERNATIONAL SHIPHOLDING CORPORATION,

ENTERPRISE SHIP COMPANY, INC., SULPHUR CARRIERS, INC.,

GULF SOUTH SHIPPING PTE LTD., CG RAILWAY, INC.,

LCI SHIPHOLDINGS, INC., CENTRAL GULF LINES, INC.,

WATERMAN STEAMSHIP CORPORATION, as Borrowers

and

REGIONS BANK, as Lender

Relating to a

$35,000,000 Revolving Loan

01609127.3

TABLE OF CONTENTS

ARTICLE 1 Rules of Construction and Definitions 

SECTION 1.1 General Rules of Construction 

SECTION 1.2 Definitions 

SECTION 1.3 Joint and Several Liability. 

ARTICLE 2 Credit to be Extended Under this Agreement 

SECTION 2.1 Revolving Loan 

SECTION 2.2 Revolving Note. 

SECTION 2.3 Interest 

SECTION 2.4 Prepayments. 

SECTION 2.5 Extension of Termination Date. 

SECTION 2.6 Place and Time of Payments. 

SECTION 2.7 Letter of Credit Borrowings 

SECTION 2.8 Availability Fee 

SECTION 2.9 Commitment/Origination Fees 

ARTICLE 3 Representations and Warranties 

SECTION 3.1 Organization, Powers, etc. 

SECTION 3.2 Authorization of Borrowing, etc 

SECTION 3.3 Litigation 

SECTION 3.4 Agreements. 

SECTION 3.5 Federal Reserve Board Regulations 

SECTION 3.6 Investment Company Act. 

SECTION 3.7 ERISA. 

SECTION 3.8 Enforceability 

SECTION 3.9 Consents, Registrations, Approvals, etc. 

SECTION 3.10 Financial Condition. 

SECTION 3.11 No Misleading Information 

SECTION 3.12 Taxes. 

SECTION 3.13 Patents, Trademarks. 

SECTION 3.14 Hazardous Substances 

SECTION 3.15 Solvency. 

SECTION 3.16 Foreign Trade Control Regulations 

ARTICLE 4 Conditions of Lending 

SECTION 4.1 Representations and Warranties 

SECTION 4.2 No Default 

SECTION 4.3 Automatic Representations and Warranties 

SECTION 4.4 Required Items. 

SECTION 4.5 Authorized Representative Certificates. 

SECTION 4.6 Other Supporting Documents. 

ARTICLE 5 Covenants 

SECTION 5.1 Existence. 

SECTION 5.2 Continuation of Current Business, Offices, Name, etc. 

SECTION 5.3 Sale of Assets, Consolidation, Merger 

SECTION 5.4 Accounting Records. 

SECTION 5.5 Reports to the Lender 

SECTION 5.6 Maintenance. 

SECTION 5.7 Insurance 

SECTION 5.8 Payment of Indebtedness, Taxes, etc. 

SECTION 5.9 Litigation Notice. 

SECTION 5.10 Visitation 

SECTION 5.11 Notice of Default 

SECTION 5.12 Further Assurances 

SECTION 5.13 Transactions with Related Persons. 

SECTION 5.14 Use of Credit Proceeds 

SECTION 5.15 Financial Covenants. 

SECTION 5.16 Change in Management. 

ARTICLE 6 Events of Default 

SECTION 6.1 Events of Default. 

SECTION 6.2 Lender's Remedies on Default. 

ARTICLE 7 Miscellaneous 

SECTION 7.1 Notices. 

SECTION 7.2 Expenses. 

SECTION 7.3 Independent Obligations. 

SECTION 7.4 Heirs, Successors and Assigns. 

SECTION 7.5 Governing Law. 

SECTION 7.6 Date of Agreement 

SECTION 7.7 Separability Clause. 

SECTION 7.8 Counterparts 

SECTION 7.9 No Oral Agreements. 

SECTION 7.10 Waiver and Election. 

SECTION 7.11 No Obligations of Lender; Indemnification. 

    SECTION 7.12 Set-off 

    SECTION 7.13 Participation 

    SECTION 7.14 Submission to Jurisdiction. 

    SECTION 7.15 Usury Laws. 

    SECTION 7.16 WAIVER OF TRIAL BY JURY. 

    SECTION 7.17 Termination. 

CREDIT AGREEMENT

THIS CREDIT AGREEMENT ("this Agreement") dated as of March 7, 2008 is between INTERNATIONAL SHIPHOLDING CORPORATION, a Delaware corporation ("ISC"), ENTERPRISE SHIP COMPANY, INC., a Delaware corporation ("Enterprise"), SULPHUR CARRIERS, INC., a Delaware corporation ("Sulphur Carriers"), GULF SOUTH SHIPPING PTE LTD., a Singapore corporation ("Gulf South"), CG RAILWAY, INC., a Delaware corporation ("CG Railway"), LCI SHIPHOLDINGS, INC., a Marshall Islands corporation ("LCI"), CENTRAL GULF LINES, INC., a Delaware corporation ("Central Gulf'), and WATERMAN STEAMSHIP CORPORATION, a New York corporation ("Waterman"; ISC, Enterprise, Sulphur Carriers, Gulf South, CG Railway, LCI, Central Gulf, and Waterman are, collectively, referred to as the "Borrowers"), and REGIONS BANK, an Alabama banking corporation (the "Lender").

Recitals

Capitalized terms used in these Recitals have the meanings defined for them above or in Section 1.2. The Borrowers have requested that the Lender extend Credit to the Borrowers under this Agreement and the other Credit Documents as described herein. To induce the Lender to extend Credit to the Borrowers, the Borrowers have agreed to execute and deliver this Agreement to the Lender.

Agreement

NOW, THEREFORE, in consideration of the foregoing Recitals, and to induce the Lender to extend Credit to the Borrowers under this Agreement and the other Credit Documents, the Borrowers and the Lender hereby agree as follows:

ARTICLE 1

Rules of Construction and Definitions

SECTION 1.1 General Rules of Construction. For the purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(a)Words of masculine, feminine or neuter gender include the correlative words of other genders. Singular terms include the plural as well as the singular, and vice versa.

(b)All references herein to designated "Articles," "Sections" and other subdivisions or to lettered Exhibits are to the designated Articles, Sections and subdivisions hereof and the

Exhibits annexed hereto unless expressly otherwise designated in context. All Article, Section, other subdivision and Exhibit captions herein are used for reference only and do not limit or describe the scope or intent of, or in any way affect, this Agreement.

(c)The terms "include," "including," and similar terms shall be construed as if followed by the phrase "without being limited to."

(d)The terms "herein," "hereof' and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, other subdivision or Exhibit.

(e)All Recitals set forth in, and all Exhibits to, this Agreement are hereby incorporated in this Agreement by reference.

(f)No inference in favor of or against any party shall be drawn from the fact that such party or such party's counsel has drafted any portion hereof.

(g)All references in this Agreement to a separate instrument are to such separate instrument as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof.

SECTION 1.2 Definitions. As used in this Agreement, the following terms are defined as follows:

(a)Actual/360 Day Basis means a method of computing interest and other charges on the basis of an assumed year of 360 days for the actual number of days elapsed, meaning that the interest accrued for each day will be computed by multiplying the interest rate applicable on that day by the unpaid principal balance on that day and dividing the result by 360.

(b)Advance is defined in Section 2.1.

(c)Affiliate of any specified person means any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For purposes of this definition, "control" when used with respect to any specified person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

(d)Applicable Margin means the applicable margin set forth in Schedule I, determined as follows: For purposes of computation of the Applicable Margin based upon the financial covenants described in Schedule I, such computation shall be determined by the Lender as of the end of each calendar quarter, based on the compliance certificate most recently delivered by the Borrowers in accordance with Section 5.5(c). Any adjustment in the Applicable Margin shall be prospective and shall commence as of the first day of the month next following the delivery of the compliance certificate most recently delivered by the Borrowers until such time as the Applicable Margin is subsequently adjusted (provided that should the Borrowers fail to timely deliver a required compliance certificate or shall fail to deliver the quarterly or year-to-date financial statements required by Section 5.5(b) relating to such compliance certificate, the Lender at its option may adjust the Applicable Margin to the highest applicable percentage as of the date the compliance certificate or financial statements were due to be delivered). Any such change in the Applicable Margin shall be effective without notice to the Borrowers and without any further action by the Lender.

(e)Application is defined in Section 2.7(b).

(f)  Authorized Representative means the officer or officers of the Borrowers that are duly authorized to act for such entity in the specified capacity under the Governing Documents of such entity or applicable law.

(g)Borrowers shall have the meaning attributed to that term in the preamble to this Agreement.

(h)Business Day means any day, excluding Saturday and Sunday, on which the Lender's main office in Mobile, Alabama, is open to the public for carrying on substantially all of its banking business.

(i)Change of Control means (a) any "person" (as such term is used in sections 13(d) and 14(d) of the Exchange Act), other than the existing owners, that becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 30% of the total voting power of ISC or (b) ISC ceases to own, directly or indirectly, 100% of any of the Borrowers or (c) the Board of Directors of any of the Borrowers ceases to consist of a majority of the directors existing on the date hereof or directors nominated by at least two-thirds (2/3) of the then existing directors.

(j)Closing Date means March 7, 2008.

(k)Consolidated EBITDA means, for any period, with respect to ISC and the Subsidiaries, the sum of (without duplication) (a) Consolidated Net Income; (b) all Interest Expense of ISC and the Subsidiaries; (c) income taxes of ISC and the Subsidiaries; and (d) depreciation and amortization of ISC and the Subsidiaries determined on a consolidated basis in accordance with GAAP for such period; provided that if any Subsidiary is not wholly-owned by ISC, Consolidated EBITDA shall be reduced (to the extent not otherwise reduced in accordance with GAAP) by an amount equal to (i) the amount of Consolidated Net Income attributable to such Subsidiary multiplied by (ii) the percentage ownership interest in the income of such Subsidiary not owned by ISC on the last day of such period.

(l)Consolidated Indebtedness means all Indebtedness of ISC and the Subsidiaries determined on a consolidated basis in accordance with GAAP.

(m)Consolidated Net Incomemeans, for any period, the consolidated net income of ISC and the Subsidiaries for such period, as shown on the consolidated financial statements of ISC and the Subsidiaries delivered in accordance with Section 5.5.

(n)Consolidated Tangible Net Worthmeans, with respect to ISC and the Subsidiaries, at any date for which a determination is to be made (determined on a consolidated basis without duplication in accordance with GAAP) (a) the amount of capital stock; plus (b) the amount of surplus and retained earnings (or, in the case of a surplus or retained earnings deficit, minus the amount of such deficit); plus (c) deferred charges to the extent amortized and acquired contract costs net of accumulated amortization as stated on the then most recent audited balance sheet of ISC; minus (d) the sum of (i) the cost of treasury shares and (ii) the book value of all assets that should be classified as intangibles (without duplication of deductions in respect of items already deducted in arriving at surplus and retained earnings) but in any event including goodwill, minority interests, research and development costs, trademarks, trade names, copyrights, patents and franchises, unamortized debt discount and expense, all reserves and any write up in the book value of assts resulting from a revaluation thereof subsequent to December 31, 1996.

(o)Creditmeans, individually and collectively, all loans, forbearances, renewals, extensions, advances, disbursements and other extensions of credit now or hereafter made by the Lender to or for the account of the Borrowers under this Agreement and the other Credit Documents, including the Loans.

(p)Credit Documentsmeans this Agreement and the documents described in Exhibit A and all other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby.

(q)Default Ratemeans a rate of interest equal to two percentage points (200 basis points) in excess of the Prime Rate, or the maximum rate permitted by law, whichever is less.

(r)ERISA means the Employee Retirement Income Security Act of 1974, as amended.

(s)Events of Defaultis defined in Section 6.1. An Event of Default "exists" if an Event of Default has occurred and is continuing.

(t)Existing Letter of Creditmeans the following described letter of credit issued by the Lender and now outstanding, until such time that said letter of credit expires or is otherwise cancelled:

(u)GAAPmeans generally accepted accounting principles for the United States.

(v)Governing Documents means, with respect to any person that is not a natural person, all organizational and governing documents applicable thereto.

(w)Governmental Authority means any national, state, county, municipal or other government, domestic or foreign, and any agency, authority, department, commission, bureau, board, court or other instrumentality thereof.

(x)Governmental Requirements means all laws, rules, regulations, ordinances, judgments, decrees, codes, orders, injunctions, notices and demand letters of any Governmental Authority.

(y)Hazardous Substances means all pollutants, effluents, contaminants, emissions, toxic or hazardous wastes and other substances, the removal of which is required or the manufacture, use, maintenance, handling, discharge or release of which is regulated, restricted, prohibited or penalized by any Governmental Requirement, or even if not so regulated, restricted, prohibited or penalized, might pose a hazard to the health and safety of the public or the occupants of the property on which it is located or the occupants of the property adjacent thereto, including (1) asbestos or asbestos-containing materials, (2) urea formaldehyde foam insulation, (3) polychlorinated biphenyls (PCBs), (4) flammable explosives, (5) radon gas, (6) laboratory wastes, (7) experimental products, including genetically engineered microbes and other recombinant DNA products, (8) petroleum, crude oil, natural gas, natural gas liquid, liquefied natural gas, other petroleum products and synthetic gas usable as fuel, (9) radioactive materials and (10) any substance or mixture listed, defined or otherwise determined by any Governmental Authority to be hazardous, toxic or dangerous, or otherwise regulated, affected, controlled or giving rise to liability under any Governmental Requirement.

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

(aa) Interest Determination Date means the first day of each month in each year.

(bb) Interest Expense means, with respect to ISC and the Subsidiaries, on a consolidated basis, for any period (without duplication), interest expense, whether paid or accrued (including the interest component of capitalized leases), on all Indebtedness of ISC and the Subsidiaries for such period, net of interest income, all determined in accordance with GAAP.

(cc) ISC shall have the meaning attributed to that term in the preamble to this Agreement.

(dd) Letter of Credit Borrowings means as of any date the maximum aggregate amount that the Lender could be required to pay under drafts that could properly be drawn in compliance with the terms of all Letters of Credit outstanding on such date, other than drafts that have been drawn and paid.

(ee) Letter of Credit Obligations means (a) the Letter of Credit Borrowings and (b) the Reimbursement Obligations and the Borrowers' other obligations under this Agreement and the Applications with respect to drawings made on Letters of Credit, including obligations with respect to all principal, interest, fees and other charges related thereto.

(ff)       Letters of Credit means (a) the Existing Letter of Credit and (b) all letters of

credit hereafter issued by the Lender for the account of the Borrowers (or any of them) under this Agreement.

(gg) LIBOR-Based Rate means the per annum rate of interest most recently published in the Bloomberg reporting service or such other financial information reporting service used by the Lender as of the close of business on the Closing Date and on each Interest Determination Date (being the rate quoted for the immediately preceding Business Day) as the London Interbank Offered Rate for U.S. dollar deposits having a term of one month, plus the Applicable Margin. The Lender shall determine the LIBOR-Based Rate on the Closing Date and on each Interest Determination Date.

(hh) Lienmeans any mortgage, pledge, assignment, charge, encumbrance, lien, security title, security interest or other preferential arrangement.

(ii)Loansmeans, collectively, the Revolving Loan, Letter of Credit Borrowings and Reimbursement Obligations, and all extensions and renewals thereof.

    (jj)Margin Stock is defined in Regulation U of the Federal Reserve Board, as amended.

(kk)Maximum Facility Amount means $35,000,000.

(11)Obligations means (1) the Revolving Loan, the Letter of Credit Obligations and all other obligations and debts owing to the Lender and arising under the terms of this Agreement, the Revolving Note, the Applications and the other Credit Documents, whether now or hereafter incurred, existing or arising, including the Revolving Loan, all Letter of Credit Borrowings and Reimbursement Obligations with respect thereto; (2) any sums expended by the Lender in exercising the rights and remedies described in Section 6.2; (3) all accrued interest on the Revolving Loan and Reimbursement Obligations, and all costs, fees, charges and expenses incurred and payable in connection therewith, including fees payable under the terms of, or in connection with, this Agreement; (4) all other obligations and debts owing to the Lender arising in connection with, ancillary to, or in support of the Revolving Loan and Letter of Credit Obligations; (5) the payment and performance of all other indebtedness, obligations and liabilities of the Borrowers to the Lender (including obligations of performance) of every kind whatsoever, arising directly between the Borrowers and the Lender or acquired outright, as a participation or as collateral security from another person by the Lender, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred, contracted or arising, joint or several, liquidated or unliquidated, regardless of how they arise or by what agreement or instrument they may be evidenced or whether they are evidenced by agreement or instrument, and whether incurred as maker, endorser, surety, guarantor, general partner, drawer, tort-feasor, account party with respect to a letter of credit, indemnitor or otherwise; and (6) all renewals, extensions, modifications and amendments of any of the foregoing, whether or not any renewal, extension, modification or amendment agreement is executed in connection therewith.

(mm) Obligors means the Borrowers and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the Obligations.

(nn) Permitted Contest means any appropriate proceeding conducted in good faith by the Borrowers to contest any tax, assessment, charge, Lien or similar claim, during the pendency of which proceeding the enforcement of such tax, assessment, charge, Lien or claim is stayed; provided that the Borrowers have set aside on their books or, if required by the Lender, deposited as cash collateral with the Lender, adequate cash reserves to assure the payment of any such tax, assessment, charge, Lien or claim.

(oo) Permitted Encumbrances means any Liens and other matters that are described on Schedule II.

(pp) Person(whether or not capitalized) includes natural persons, sole proprietorships, corporations, trusts, unincorporated organizations, associations, companies, institutions, entities, joint ventures, partnerships, limited liability companies and Governmental Authorities.

(qq)Prime Ratemeans that rate of interest designated by the Lender from time to time as its "prime rate," it being expressly understood and agreed that the "prime rate" is merely an index rate used by the Lender to establish lending rates and is not necessarily the Lender's most favorable lending rate, and that changes in the "prime rate" are discretionary with the Lender.

(rr)Reimbursement Obligationmeans at any time the obligation of the Borrowers

with respect to any Letter of Credit to reimburse the Lender for amounts theretofore paid by the Lender pursuant to a drawing under such Letter of Credit.

(ss)Revolving Loanis defined in Section 2.1.

(tt)         Revolving Note is defined in Section 2.2.

(uu)     Solventmeans, with respect to any person on a particular date, that as of such date (1) the fair value of the property of such person is greater than the total amount of liabilities (including contingent liabilities) of such person, (2) the present fair salable value of the assets of such person is not less than the amount that will be required to pay the probable liability of such person on its debts as they become absolute and matured, (3) such person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such person's property would constitute an unreasonably small capital, and (4) such person does not intend to, or believe or reasonably should have believed that it will, incur debts beyond its ability to repay as they become due.

(vv)Subsidiarymeans, with respect to any Person, any business entity of which more than 50% of the outstanding voting stock or other equity interest is owned directly or indirectly by such Person and/or one or more other subsidiaries of such Person.

(ww)Subsidiary(ies)means all of the subsidiaries of ISC.

(xx)       Termination Datemeans the maturity date of the Revolving Loan (which is initially April 7, 2010), as such date may be extended from time to time pursuant to Section 2.5 or accelerated pursuant to Section 6.2.

SECTION 1.3 Joint and Several Liability.

(a)Each Borrower, separately and severally, hereby appoints and designates ISC as

its agent and attorney-in-fact to act on behalf of it for all purposes of the Credit Documents. ISC shall have authority to exercise on behalf of each Borrower all rights and powers that ISC deems necessary, incidental or convenient in connection with the Credit Documents, including the authority to execute and deliver certificates, documents, agreements and other instruments referred to or provided for in the Credit Documents, request Advances and Letters of Credit hereunder, receive all proceeds of Advances, give all notices, approvals and consents required or requested from time to time by the Lender and take any other actions and steps that each Borrower could take for its own account in connection with the Credit Documents from time to time, it being the intent of each Borrower to grant to ISC plenary power to act on behalf of each Borrower in connection with and pursuant to the Credit Documents. The appointment of ISC as agent and attorney-in-fact for each Borrower hereunder shall be coupled with an interest and be irrevocable so long as any Credit Document shall remain in effect. The Lender need not obtain any Borrower's consent or approval for any act taken by ISC pursuant to any Credit Document, and all such acts shall bind and obligate ISC and each Borrower, jointly and severally. Each Borrower forever waives and releases any claim (whether now or hereafter arising) against the Lender based on any claim of ISC's lack of authority to act on behalf of each Borrower in connection with the Credit Documents.

(b)Each of the Borrowers, and by its acceptance of this Agreement, the Lender hereby confirm that it is the intention of all such Persons that this Agreement and the Obligations of each of the Borrowers hereunder not constitute a fraudulent transfer or conveyance for purposes of the United States Federal Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Governmental Requirement covering the protection of creditors' rights or the relief of debtors to the extent applicable to this Agreement and the Obligations of each of the Borrowers hereunder. To effectuate the foregoing intention, each of the Borrowers and the Lender hereby irrevocably agrees that the Obligations and all of the other liabilities of each of the Borrowers under this Agreement shall be limited to the maximum amount as will, after giving effect to such maximum amount and all of the other contingent and fixed liabilities of such Borrower that are relevant under such Governmental Requirement, and after giving effect to any collections from, any rights to receive contributions from, or any payment made by or on behalf of any of the other Borrowers in respect of the Obligations of such other Borrower under this Agreement, result in the Obligations and all of the other liabilities of each of the Borrowers under this Agreement not constituting a fraudulent transfer or conveyance.

(c)Each Borrower (i) acknowledges that it has had full and complete access to the underlying papers relating to the Obligations and all other papers executed by any person in connection with the Obligations, has reviewed them and is fully aware of the meaning and effect of their contents; (ii) is fully informed of all circumstances that bear upon the risks of executing this Agreement and the other Credit Documents that a diligent inquiry would reveal; (iii) has adequate means to obtain from ISC on a continuing basis information concerning IS C's financial condition and is not depending on the Lender to provide such information, now or in the future; and (iv) agrees that the Lender shall have any obligation to advise or notify it or to provide it with any data or information.

(d)Each Borrower hereby agrees that its obligations and liabilities with respect to the Obligations are joint and several with ISC, continuing, absolute and unconditional (subject to the provisions of subsection (b) of this section). Without limiting the generality of the foregoing, the obligations and liabilities of each Borrower with respect to the Obligations shall not be released, discharged, impaired, modified or in any way affected by (i) the invalidity or unenforceability of any Credit Document, (ii) the failure of the Lender to give each Borrower a copy of any notice given to ISC, (iii) any modification, amendment or supplement of any obligation, covenant or agreement contained in any Credit Document, (iv) any compromise, settlement, release or termination of any obligation, covenant or agreement in any Credit Document, (v) any waiver of payment, performance or observance by or in favor of ISC of any obligation, covenant or agreement under any Credit Document, (vi) any consent, extension, indulgence or other action or inaction, or any exercise or non-exercise of any right, remedy or privilege with respect to any Credit Document, (vii) the extension of time for payment or performance of any of the Obligations, or (viii) any other matter that might otherwise be raised in avoidance of, or in defense against an action to enforce, the obligations of each Borrower under this Agreement, the Revolving Note or any other Credit Document.

(e)None of the Borrowers will exercise any rights that it may have or acquire by way of subrogation under this Agreement or any of the other Credit Documents or the Subrogation and Contribution Agreement referred to in subsection (f) below, by any payment made hereunder or under any of the other Credit Documents or otherwise, until all the Obligations have been paid in full and this Agreement has been terminated and is no longer subject to reinstatement. If any amount shall be paid to a Borrower on account of any such subrogation rights at any time when all of the Obligations shall not have been paid in full and this Agreement terminated, such amount shall be held in trust for the benefit of the Lender and shall be paid forthwith to the Lender to be credited and applied upon the Obligations, whether matured or unmatured, in accordance with the terms of the Credit Documents.

(0 The Borrowers will not amend or waive any provision of the Subrogation and Contribution Agreement dated the Closing Date entered into by the Borrowers nor consent to any departure from such Subrogation and Contribution Agreement, without having obtained the prior written consent of the Lender to such amendment, waiver or consent.

ARTICLE 2

Credit to be Extended

Under this Agreement

SECTION 2.1 Revolving Loan. From the Closing Date to the Termination Date, the Lender agrees, upon the terms and subject to the conditions of this Agreement and subject to the limitations set forth below with respect to the maximum amount of Advances permitted to be outstanding from time to time, to make a revolving loan (the "Revolving Loan") available to the Borrowers, jointly and severally, pursuant to which the Borrowers may from time to time jointly and severally borrow from the Lender and repay and reborrow, such sums as may be needed by the Borrowers for the purposes expressed in this Agreement, up to a maximum aggregate principal amount at any one time outstanding not exceeding the difference between (i) the Maximum Facility Amount in effect from time to time, and (ii) the sum of the then-outstanding (x) Advances, (y) Letter of Credit Borrowings and (z) Reimbursement Obligations. Each advance to the Borrowers under the Revolving Loan (an "Advance") will be made on prior written notice to the Lender made not later than 1:00 p.m. Mobile, Alabama time on the date such Advance is to be made, which notice shall be signed by an Authorized Representative of the Borrowers and shall set forth the amount of the Advance requested and the date on which the Advance is to be made. Not later than 4:00 p.m. Mobile, Alabama time on the date specified for the Advances, the Lender shall make available the amount of the Advances to be made by it on such date to the Borrowers by depositing the proceeds thereof into an account with the Lender in the name of the Borrowers. The Advances shall bear interest as provided in Section 2.3. The Lender's obligation to make Advances shall terminate, if not sooner terminated pursuant to the provisions of this Agreement, on the Termination Date. The Lender shall have no obligation to make Advances if an Event of Default exists.

SECTION 2.2 Revolving Note.All Advances shall be evidenced by a certain revolving note (the "Revolving Note"), payable to the order of the Lender, duly executed on behalf of the Borrowers, dated the Closing Date, in the principal amount of the Maximum Facility Amount and satisfactory in form and substance to the Lender. The Revolving Note shall be payable in full as to principal on the Termination Date. The Revolving Note shall be valid and enforceable as to the aggregate amount of the Revolving Loan outstanding from time to time, whether or not the full amount of the Revolving Loan is actually advanced by the Lender to the Borrowers.

SECTION 2.3 Interest.

(a)The Revolving Note shall bear interest from its date until payment in full on the unpaid principal balance at the rate per annum equal to the LIBOR-Based Rate. If it is impossible or impractical to obtain the LIBOR-Based Rate for a certain time period, the Revolving Loan shall bear interest at the Prime Rate. Such interest shall be payable monthly on the first day of each month in each year, commencing on April 1, 2008, and upon payment in full. Interest will be computed on an Actual/360 Day Basis.

(b)If an Event of Default exists, the Revolving Note shall bear interest at the Default Rate, until the earlier of (1) such time as all amounts due hereunder are paid in full or (2) no such Event of Default exists.

(c)The Borrowers agree to pay to the Lender, on demand, a late charge equal to five percent (5.0%) of any payment that is not paid within twelve (12) days after it is due. The late charge shall never be less than $10.00 on each payment. This provision shall not be deemed to excuse a late payment or be deemed a waiver of any other right the Lender may have, including the right to declare the entire unpaid principal and interest immediately due and payable and the right to collect interest on any late payment at the Default Rate.

SECTION 2.4 Prepayments. The Borrowers may at any time prepay all or any part of the Loans, without premium or penalty. Accrued interest to the date of prepayment shall be paid on any partial prepayment of the Revolving Note on the next succeeding monthly interest payment date, and shall be paid on any full prepayment of the Revolving Note in connection with the termination of this Agreement on the date of such prepayment.

SECTION 2.5 Extension of Termination Date.The Borrowers and the Lender may from time to time extend the then-current Termination Date to any subsequent termination date upon which the Borrowers and the Lender may agree by executing a written extension agreement. Upon the execution of such an extension agreement by the Borrowers and the Lender, the maturity date of the Revolving Loan shall be extended to the agreed-upon termination date, and the agreed-upon termination date shall become the new "Termination Date" for purposes of this Agreement.

SECTION 2.6 Place and Time of Payments.

(a)All payments by the Borrowers to the Lender under this Agreement and the other Credit Documents shall be made in lawful currency of the United States and in immediately available funds to the Lender at its main office in Mobile, Alabama at the hand delivery address set forth in Section 7.1 or at such other address within the continental United States as shall be specified by the Lender by notice to the Borrowers. Any payment received by the Lender after 2:00 p.m. (Mobile, Alabama time) on a Business Day (or at any time on a day that is not a Business Day) shall be deemed made by the Borrowers and received by the Lender on the following Business Day.

(b)All amounts payable by the Borrowers to the Lender under this Agreement or any of the other Credit Documents for which a payment date is expressly set forth herein or therein shall be payable on the specified due date without notice or demand by the Lender. All amounts payable by the Borrowers to the Lender under this Agreement or the other Credit Documents for which no payment date is expressly set forth herein or therein shall be payable ten days after written demand by the Lender to the Borrowers. The Lender may, at its option, send written notice or demand to the Borrowers of amounts payable on a specified due date pursuant to this Agreement or the other Credit Documents, but the failure to send such notice shall not affect or excuse the Borrowers' obligation to make payment of the amounts due on the specified due date.

(c)Payments that are due on a day that is not a Business Day shall be payable on the next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate.

(d)Except as otherwise required by law, payments received by the Lender shall be applied first to expenses, fees and charges, then to interest and fmally to principal.

SECTION 2.7 Letter of Credit Borrowings.

(a)From and after the Closing Date to and including thirty Business Days prior to the Termination Date, the Lender may, at its sole discretion, upon the terms and subject to the conditions of this Agreement, issue Letters of Credit from time to time for the account of the Borrowers in such amounts as may be requested by the Borrowers and as shall be approved by the Lender, up to a maximum aggregate amount of Letter of Credit Borrowings at any one time outstanding that, when added to (i) the then-outstanding Reimbursement Obligations plus (ii) the aggregate amount of the Advances then outstanding (and not yet repaid), would not exceed the Maximum Facility Amount; provided, however, that no Letter of Credit shall be issued if the issuance thereof would cause the aggregate outstanding amount of Letter of Credit Borrowings and Reimbursement Obligations to exceed $8,000,000. For all purposes of this Agreement, the Existing Letter of Credit shall be deemed to have been issued under this Agreement.

(b)Each request by the Borrowers for the issuance of a Letter of Credit (an "Application") shall, if required by the Lender, be submitted to the Lender, within a reasonable time prior to the date the Letter of Credit is to be issued, shall be on the Lender's then-standard application form for letters of credit, shall obligate the Borrowers to reimburse the Lender on demand for any amounts drawn under a Letter of Credit and such other sums as may be provided for therein, and shall be executed by an Authorized Representative of the Borrowers. In the event of any conflict between the provisions of any Application and the provisions of this Agreement, the provisions of this Agreement shall govern.

(c)Each Letter of Credit shall (i) be a letter of credit issued in the ordinary course of the business of the Borrowers; (ii) expire by its terms on a date not later than ten Business Days prior to the Termination Date; (iii) be in an amount that complies with paragraph (a) of this Section 2.7; and (iv) contain such further provisions and conditions as are standard and reasonable for ordinary irrevocable letters of credit and as may be requested by the Borrowers and reasonably satisfactory to the Lender.

(d)For each Letter of Credit the Lender issues and all renewals thereof, the Lender shall receive from the Borrowers, a letter of credit fee equal to the rate of one percent (1.0) per annum of the stated amount of the Letter of Credit being issued or renewed. Such fee shall be payable in advance on the date of issuance or renewal, as the case may be, and shall not be refundable under any circumstances and shall be calculated on an Actual/360 Day Basis.

(e)The Borrowers shall pay to the Lender administrative and other fees, if any, in connection with the Letters of Credit in such amounts and at such times as the Lender and the Borrowers shall agree from time to time.

    (f)  If a draft drawn under a Letter of Credit is presented to the Lender and the Lender honors such draft, the Borrowers shall, immediately upon demand of the Lender therefor, reimburse the Lender for the amount of such draft, with interest thereon from the date such draft is honored by the Lender to and including the date of reimbursement by the Borrowers to the Lender therefor, at the LIBOR-Based Rate. If the Borrowers fail so to reimburse the Lender, immediately upon demand therefor, for any amount due to the Lender on account of a draft drawn under the Letter of Credit and honored by the Lender, together with accrued interest thereon, by the close of business on the next Business Day after such amount becomes due, the Lender may, at its sole discretion, without exceeding the Maximum Facility Amount, and without further notice to or demand upon the Borrowers, make an Advance to itself for the purpose of paying such amount due to the Lender and interest thereon. Any such Advance shall be treated as any other Advance hereunder for all purposes. Interest on any such Advance will be at the LIBOR-Based Rate.

SECTION 2.8 Availability Fee. The Borrowers shall pay to the Lender an availability fee (the "Availability Fee") that begins to accrue on the Closing Date and shall be computed at the rate of one hundred twenty-five thousandths of one percent (.125%) per annum times the daily average difference between (1) the Maximum Facility Amount and (2) the sum of (i) the aggregate outstanding principal amount of the Advances, (ii) Letter of Credit Borrowings and (iii) Reimbursement Obligations. The Availability Fee shall be payable in arrears on the last day of each successive January, April, July and October and on the Termination Date, commencing on April 30, 2008. The Availability Fee shall be computed on an Actual/360 Day Basis.

SECTION 2.9 Commitment/Origination Fees.

(a)The Borrowers will pay the Lender a commitment fee equal to $35,000, which fee shall be payable on the Closing Date and will be fully earned and non-refundable on the Closing Date.

(b)The Borrowers will pay the Lender an origination fee equal to $50,000 which fee shall be payable on the Closing Date and will be fully earned and non-refundable on the Closing Date.

ARTICLE 3

Representations and Warranties

Each of the Borrowers represents and warrants to the Lender as follows: SECTION 3.1 Organization, Powers, etc.

(a)It is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization or formation.

(b)It has the requisite power and authority to own its properties and to carry on its business as now being conducted and is duly qualified or registered to do business in every jurisdiction where the character of its properties or the nature of its activities makes such qualification or registration necessary.

(c)It has the requisite power to execute, deliver and perform any Credit Documents to which it is a party.

SECTION 3.2 Authorization of Borrowing, etc. The execution, delivery and performance of any Credit Documents to which it is a party (a) have been duly authorized by all requisite action (including any necessary shareholder action), and (b) will not violate any Governmental Requirement, its Governing Documents or any indenture, agreement or other instrument to which it is a party, or by which it or any of its properties are bound, or be in conflict with, result in a breach of or constitute a default under, any such indenture, agreement or other instrument, or result in the creation or imposition of any Lien, upon any of its properties except as contemplated by the Credit Documents.

SECTION 3.3 Litigation. There are no actions, suits or proceedings (whether or not purportedly on its behalf) pending or, to the best of its knowledge, threatened against or affecting it, by or before any Governmental Authority, that involve any of the transactions contemplated by the Credit Documents or the possibility of any judgment or liability that might reasonably be expected to result in any material adverse change in its business, operations, properties or condition, financial or otherwise; and it is not, to the best of its knowledge, in default with respect to any Governmental Requirement.

SECTION 3.4 Agreements. It is not a party to any agreement or instrument, or subject to any restriction in its Governing Documents that materially and adversely affects its business, operations, properties or condition, financial or otherwise, and it is not in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which it is a party, which default might reasonably be expected to have a material adverse effect upon its business, operations, properties or condition, financial or otherwise.

SECTION 3.5 Federal Reserve Board Regulations. It does not intend to use any part of the proceeds of the Credit, and has not incurred any indebtedness to be reduced, retired or purchased by it out of such proceeds, for the purpose of purchasing or carrying any Margin Stock, and it does not own and has no intention of acquiring any such Margin Stock.

SECTION 3.6 Investment Company Act. It is not an "investment company," or a company "controlled" by an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended.

SECTION 3.7 ERISA.

(a)The execution and delivery of this Agreement and the issuance and delivery of the Revolving Note as contemplated hereby will not involve any prohibited transaction within the meaning of ERISA or Section 4975 of the Internal Revenue Code, as amended.

(b)Based on ERISA and the regulations and published interpretations thereunder, it is in compliance in all material respects with the applicable provisions of ERISA.

(c)No "Reportable Event," as defined in Section 4043(b) of Title IV of ERISA, has occurred with respect to any plan maintained by it.

SECTION 3.8 Enforceability. Any Credit Documents to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors' rights and remedies generally and by general principles of equity, whether considered in a proceeding at law or in equity.

SECTION 3.9 Consents, Registrations, Approvals, etc. No registration with or consent or approval of, or other action by, any Governmental Authority is required for the execution, delivery and performance of any Credit Documents to which it is a party.

SECTION 3.10 Financial Condition.

(a)ISC's consolidated financial statements that have been furnished to the Lender were prepared in conformity with GAAP consistently applied throughout the periods involved, are in accordance with its books and records, are correct and complete and present fairly its financial condition as of the date or dates indicated and for the periods involved in accordance with GAAP applied on a consistent basis.

(b)Since the date of such financial statements no material adverse change in ISC's consolidated financial condition, business or operations has occurred.

(c)ISC has no liability, direct or contingent, that is material in amount and that is not reflected in its consolidated financial statements.

(d)It has good and marketable title to all its properties and assets reflected on the financial statements except for properties and assets disposed of since the date thereof as no longer used or useful in the conduct of its business or disposed of in the ordinary course of its business.

(e)All such properties and assets are free and clear of all Liens, except as otherwise permitted or required by the provisions of this Agreement and the other Credit Documents.

SECTION 3.11 No Misleading Information. To the best knowledge of the Borrowers, neither this Agreement nor any of the other Credit Documents, nor any certificate, written statement or other document furnished to the Lender by or on behalf of the Borrowers in connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading; and there is no fact known to the Borrowers that the Borrowers have not disclosed to the Lender that materially adversely affects or, so far as the Borrowers can now reasonably foresee, will materially adversely affect the properties, or financial or other condition of the Borrowers or the ability of the Borrowers to perform their obligations hereunder and under the other Credit Documents.

SECTION 3.12 Taxes.

(a) It has filed or caused to be filed all tax returns that, to the knowledge of its officers, are required to be filed with any Governmental Authority, and it has paid or has caused to be paid all taxes as shown as due on said returns or on any assessment received by it.

(b)It has reserves that are believed by its officers to be adequate for the payment of additional taxes for years that have not been audited by the respective tax authorities.

(c)All payments made or to be made by it under or pursuant to this Agreement and the Revolving Note shall be made free and clear of, and without deduction or withholding for an account of, any taxes.

SECTION 3.13 Patents, Trademarks. It owns, or possesses the right to use, all the patents, trademarks, service marks, trade names, copyrights, franchises, consents, authorizations and licenses and rights with respect to the foregoing, necessary for the conduct of its business as now conducted and proposed to be conducted, without any known conflict with the rights of others.

SECTION 3.14 Hazardous Substances.

(a)Except as otherwise disclosed in writing to the Lender, it has never caused or permitted any Hazardous Substance to be placed, held, located, released or disposed of in violation of any Governmental Requirement on, under or at any real property legally or beneficially owned, leased or operated by it, and such property has never been used by it or, to the best of its knowledge, by any other person as a dump site or permanent or temporary storage site for any Hazardous Substance, in violation of any Governmental Requirement.

(b)To the best of its knowledge and except as otherwise disclosed in writing to the Lender, it has no liabilities with respect to Hazardous Substances, and no facts or circumstances exist that could give rise to liabilities with respect to Hazardous Substances.

SECTION 3.15 Solvency. It is and will remain Solvent, taking into account the transactions contemplated by the Credit Documents.

SECTION 3.16 Foreign Trade Control Regulations. To the best of its knowledge, none of the transactions contemplated herein will violate the provisions of any statute or regulation enacted to prohibit or limit economic transactions with certain foreign Persons including any of the provisions of the Foreign Assets Control Regulations of the United States of America (Title 31, Code of Federal Regulations, Chapter V, Page 500, as amended).

ARTICLE 4

Conditions of Lending

The obligation of the Lender to lend hereunder is subject to the following conditions precedent:

SECTION 4.1 Representations and Warranties. On and as of the Closing Date and any later date on which Credit is to be extended hereunder, the representations and warranties set forth in Article 3 must be true and correct with the same effect as though they had been made on and as of such date, except to the extent that they expressly relate to an earlier date.

SECTION 4.2 No Default. On and as of the Closing Date and any later date on which Credit is to be extended hereunder, the Borrowers must be in compliance with all the terms and provisions set forth in this Agreement on their part to be observed or performed, and no Event of Default, nor any event that upon notice or lapse of time or both would constitute an Event of Default, may exist.

SECTION 4.3 Automatic Representations and Warranties. The making of any request for an Advance (or permitting any Advance to be made without a prior written disclosure to the Lender to the contrary) shall constitute an automatic representation and warranty by the Borrowers that the representations and warranties contained in Article 3 are true and correct on and as of the date of such Advance and that no Event of Default, nor any event that upon notice or lapse of time or both would constitute an Event of Default, exists.

SECTION 4.4 Required Items. On and as of the Closing Date and any later date on which Credit is to be extended hereunder, the Lender must have received all financial statements, reports and other items required as of that date under Article 2 and Article 5 of this Agreement.

SECTION 4.5 Authorized Representative Certificates. On and as of the Closing Date the Borrowers must have delivered to the Lender the following certificates executed by the appropriate Authorized Representatives of the Borrowers, each of which certificates must be of a current date and must be satisfactory in form and substance to the Lender: (a) a certificate confirming compliance by the Borrowers with the conditions precedent set forth in Sections 4.1 and 4.2; (b) a certificate certifying as in full force and effect resolutions of the directors, shareholders or other appropriate persons under the Governing Documents and applicable law authorizing the transactions contemplated by the Credit Documents and authorizing certain Authorized Representatives of the Borrowers to execute the Credit Documents on behalf of the Borrowers and to act on behalf of the Borrowers with respect to the Credit Documents, including the authority to request disbursements of the proceeds of the Credit and to direct the disposition of such proceeds; and (c) a certificate certifying as true and correct attached copies of the Governing Documents of the Borrowers and the incumbency and signature of each Authorized Representative of the Borrowers specified in said resolutions. The Lender may conclusively rely on the certified resolutions described in Section 4.5(b) as to all actions on behalf of the Borrowers by the Authorized Representatives specified therein until the Lender receives further duly adopted resolutions cancelling or amending the prior resolutions.

SECTION 4.6 Other Supporting Documents. The Lender must receive on or before the Closing Date the following, each of which must be satisfactory to the Lender in form and content, (a) such legal opinions, certificates, proceedings, instruments and other documents as the Lender or its counsel may reasonably request to evidence (1) compliance by the Borrowers and all other parties to the Credit Documents with legal requirements, (2) the truth and accuracy as of the Closing Date of the respective representations thereof contained in the Credit Documents, and (3) the due performance or satisfaction by such parties at or prior to the Closing Date of all agreements then required to be performed and all conditions then required to be satisfied by them pursuant to the Credit Documents, and (b) such additional supporting documents as the Lender or its counsel may reasonably request.

ARTICLE 5

Covenants

Each of the Borrowers covenants and agrees that such Borrowers shall:

SECTION 5.1 Existence. Do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights and franchises and comply with all applicable Governmental Requirements.

SECTION 5.2 Continuation of Current Business, Offices, Name, etc.Not, without the prior written consent of the Lender, such consent not to be unreasonably withheld, (a) engage in any business other than the business now being conducted by it and other businesses directly related thereto; (b) change its name or conduct its business in any name other than its current name; (c) enter into (1) any agreement whereby the management, supervision or control of its business is delegated to or placed in any person other than its governing body and officers or (2) any contract or agreement whereby any of its principal functions are delegated to or placed in any agent or independent contractor.

SECTION 5.3 Sale of Assets, Consolidation, Merger. Not (a) other than as reasonably acceptable to the Lender, sell or otherwise dispose of all or a substantial part of its properties or assets to any person; or (b) consolidate with, or merge into, any corporation or other entity, or merge any corporation or other entity into it; provided, however, that ISC may merge with any Subsidiary or any other Person, if (1) at the time of such transaction and after giving effect thereto, no Event of Default shall have occurred or be continuing, (2) the surviving entity of such consolidation or merger shall be ISC and (3) after giving effect to the transaction, ISC's Consolidated Tangible Net Worth shall be greater or equal to its Consolidated Tangible Net Worth prior to the merger.

SECTION 5.4 Accounting Records. Keep proper books of record and account in which full, true and correct entries are made in accordance with GAAP applied on a consistent basis.

 SECTION 5.5 Reports to the Lender. Furnish to the Lender:

(a)within 90 days after the end of each fiscal year, consolidated financial statements (including a consolidated balance sheet and the related statements of income, cash flows and retained earnings) of 1SC for such fiscal year, together with statements in comparative form for the preceding fiscal year, all in reasonable detail, prepared in accordance with GAAP consistently applied throughout the periods involved, and audited and certified by independent certified public accountants of recognized standing selected by ISC and satisfactory to the Lender (the form of such certification also to be satisfactory to the Lender);

(b)within 45 days after the end of each of the first three quarters of each fiscal year, consolidated financial statements of ISC similar to those referred to in Section 5.5(a) for such quarter and for the period beginning on the first day of the fiscal year and ending on the last day of such quarter, unaudited but certified by an Authorized Representative of ISC;

(c)not later than 45 days after the end of each calendar quarter (commencing with the quarter ending March 31, 2008), a compliance certificate duly executed by an Authorized Representative of ISC substantially in the form of Schedule 5.5 attached hereto;

(d)with the financial statements submitted under Section 5.5(a) and 5.5(b), a certificate signed by the party certifying said statement to the effect that no Event of Default, nor any event that, upon notice or lapse of time or both, would constitute an Event of Default, exists or, if any such Event of Default or event exists, specifying the nature and extent thereof;

(e)promptly upon receipt thereof, copies of all other reports, management letters and other documents submitted to it by independent accountants in connection with any annual or interim audit of its books made by such accountants; and (0 as soon as practical, from time to time, such other information regarding its operations, business affairs and financial condition as the Lender may reasonably request.

SECTION 5.6 Maintenance. Maintain, preserve and protect all franchises and trade names and preserve all the remainder of its property used or useful in the conduct of its business and keep the same in good repair, working order and condition, and from time to time make, or cause to be made, all needful and proper repairs, renewals, replacements, betterments and improvements thereto, so that the business carried on in connection therewith may be properly and advantageously conducted at all times.

SECTION 5.7 Insurance. Maintain (a) adequate insurance on its properties to such extent and against such risks, including fire, as is customary with companies in the same or a similar business, (b) necessary worker's compensation insurance and (c) such other insurance as may be required by law or as may reasonably be required in writing by the Lender.

SECTION 5.8 Payment of Indebtedness, Taxes, etc. (a) Pay its indebtedness and obligations in accordance with normal terms; (b) pay all taxes, assessments and governmental charges or levies imposed upon it or upon its income and profits or upon any of its properties before they become in default, except any such tax, assessment or governmental charge that is subject to a Permitted Contest; and (c) pay all lawful claims for labor, materials and supplies or otherwise, which, if unpaid, might become a Lien upon any of its properties, except any such claim that is subject to a Permitted Contest.

SECTION 5.9 Litigation Notice. Promptly notify the Lender of any action, suit or proceeding at law or in equity or by or before any Governmental Authority that, if adversely determined, might reasonably be expected to impair its ability to perform its obligations under any of the Credit Documents to which it is a party, might reasonably be expected to impair its right to carry on its business substantially as now conducted, or might reasonably be expected to materially and adversely affect its business, operations, properties or condition, financial or otherwise.

SECTION 5.10 Visitation. Permit representatives of the Lender from time to time to visit and inspect any of its offices and properties and to examine its assets and books of account and to discuss its affairs, finances and accounts with and be advised as to the same by its officers, all at such reasonable times and intervals as the Lender may desire.

SECTION 5.11 Notice of Default. Promptly notify the Lender of the existence of any Event of Default, or any event that upon notice or lapse of time or both would constitute an Event of Default.

SECTION 5.12 Further Assurances. At its cost and expense, upon request of the Lender, duly execute and deliver, or cause to be duly executed and delivered, to the Lender such further instruments and do and cause to be done such further acts as may be reasonably necessary or proper in the opinion of the Lender or its counsel to carry out more effectively the provisions and purposes of the Credit Documents.

SECTION 5.13 Transactions with Related Persons. Not enter into any transaction with any Obligor or any officer, director, partner, member or Affiliate unless the terms of that transaction are no less favorable to it than those that would be obtained on an arms-length basis.

SECTION 5.14 Use of Credit Proceeds. Not, directly or indirectly use any part of the proceeds of the Credit (a) for any purpose other than working capital or (b) without limiting the generality of the foregoing, for the purpose of purchasing or carrying any Margin Stock, or of reducing, retiring or purchasing any indebtedness incurred for such purpose; or take any other action that would involve a violation of Section 7 of the Securities Exchange Act of 1934, as amended, or any regulation issued thereunder, including Regulation U or Regulation X of the Federal Reserve Board, in connection with the transactions contemplated hereby; provided, however, that nothing set forth in this Section 5.14 or elsewhere in this Agreement shall be construed as imposing any duty on the Lender to supervise the use or application of the Credit proceeds or any liability on the Lender to any person if the Credit proceeds are not used for the purposes set forth in this Agreement.

 SECTION 5.15 Financial Covenants.

(a)Dividends or Distributions. Not create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary to pay dividends or make any other distributions on its capital stock or limited liability company interests, as the case may be, to the Borrowers.

(b)        Indebtedness. Not incur any new Indebtedness (excluding any Indebtedness pursuant to this Agreement) other than Indebtedness incurred to finance the acquisition an/or construction of any vessels, provided that the principal amount of such Indebtedness shall not exceed eighty percent (80%) of such acquisition and/or construction price, unless such Indebtedness is subordinated to all existing Indebtedness and the Obligations.

(c)Liens. Not incur, create, assume or permit to exist any Lien on any of its properties, now or hereafter owned, other than:

(1)   Liens securing the payment of obligations permitted under Section 5.8(b);

             (2)other Permitted Encumbrances;

(3)   deposits under workmen's compensation, unemployment insurance and Social Security laws, or to secure the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases or to secure statutory obligations or surety or appeal bonds, or to secure indemnity, performance or other similar bonds in the ordinary course of business;

(4)   Liens imposed by law, such as carriers', warehousemen's or mechanics' liens, incurred in good faith in the ordinary course of business and that are not delinquent or that are subject to Permitted Contests, and any Lien arising out of a judgment or award not exceeding $500,000 with respect to which an appeal is being prosecuted, a stay of execution pending such appeal having been secured;

(5)   Liens in favor of the Lender;

(6)   Liens for taxes, assessments or other governmental charges or levies that are not delinquent or that are subject to Permitted Contests; and

(7)   purchase money Liens on equipment (arising substantially contemporaneously with the purchase of such equipment) acquired in the ordinary course of business to secure the purchase price of such equipment or to secure indebtedness incurred solely for the purpose of financing the acquisition of such equipment, or any Lien existing on the equipment at the time of its acquisition, provided that (A) the indebtedness secured by

such Lien does not exceed the purchase price or fair market value, whichever is less, of the equipment so acquired at the time of its acquisition, (B) the equipment is used or useful in the ordinary course of business of the acquiring person, and (C) the Lien does not cover any property other than the equipment so acquired.

(d)           Guaranties. Not guarantee, endorse, become surety for or otherwise in any way become or be responsible for the indebtedness, liabilities or obligations of any third party, other than RTI Logistics, L.L.C.

(e)           Subordination of Inter-Company Indebtedness. With respect to ISC, procure that, upon the occurrence and continuation of an Event of Default, no payments are made by any of the Borrowers on any inter-company Indebtedness until such time as the Obligations have been paid in full.

(f) Solvency. Continue to be Solvent.

(g)           Consolidated Indebtedness to Consolidated EBITDA Ratio. Maintain, on a consolidated basis, a ratio of Consolidated Indebtedness to Consolidated EBITDA of not more than 4.25 to 1.00 for ISC and the Subsidiaries through the Termination Date, as measured at the end of each fiscal quarter based on the four most recent fiscal quarters for which financial information is available.

(h)           Working Capital. Maintain on a consolidated basis for ISC and the Subsidiaries a ratio of current assets to current liabilities of not less than 1.00 to 1.00, as measured at the end of each fiscal quarter.

(i)           Consolidated Tangible Net Worth. Maintain a Consolidated Tangible Net Worth, as measured at the end of each fiscal quarter, in an amount of not less than the sum of One Hundred Sixty Million Dollars ($160,000,000) and fifty percent (50%) of all net income of ISC and the Subsidiaries (on a consolidated basis) earned after July 1, 2005.

(j)Consolidated EBITDA to Interest Expense. Maintain a ratio of Consolidated

EBITDA to Interest Expense of not less than 2.50 to 1.00, measured at the end of each fiscal quarter based on the four most recent fiscal quarters for which financial information is available.

(k) Fiscal Year. Not change its fiscal year.

(1)Change of Control. In the case of ISC, cause or permit a Change of Control.

SECTION 5.16 Change in Management. Promptly notify the Lender of any change in the senior executive officers of the Borrowers.

ARTICLE 6

Events of Default

SECTION 6.1 Events of Default. The occurrence of any of the following events shall constitute an event of default (an "Event of Default") under this Agreement (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement):

(a)any representation or warranty made in this Agreement or in any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time made; or

(b)any report, certificate, financial statement or other instrument furnished in connection with the Credit, this Agreement or any of the other Credit Documents, shall prove to be false or misleading in any material respect as of the time furnished; or

(c)default shall be made in the payment when due of any of the Obligations; or

(d)default shall be made in the due observance or performance of any covenant, condition or agreement on the part of the Borrowers to be observed or performed pursuant to the terms of Sections 5.2, 5.3 and 5.15 hereof; or

(e)default shall be made in the due observance or performance of any covenant, condition or agreement on the part of the Borrowers to be observed or performed pursuant to the terms of this Agreement (other than any covenant, condition or agreement, default in the observance or performance of which is elsewhere in this Section 6.1 specifically dealt with) and such default shall continue unremedied until the first to occur of (1) the date that is 30 days after written notice by the Lender to the Borrowers or (2) the date that is 30 days after the Borrowers first obtains knowledge thereof; or

(f) failure of Borrowers to timely perform any covenant in the Credit Documents

requiring the furnishing of notices, financial reports or other information to the Lender within ten (10) Business Days of when due; or

(g)any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein); or

(h)(1) default shall be made with respect to any Indebtedness (other than the Obligations) of any Obligor, if the effect of such default is to accelerate the maturity of such Indebtedness or to permit the holder thereof to cause such Indebtedness to become due prior to its stated maturity, or (2) any such Indebtedness shall not be paid when due (after giving effect to any applicable notice, grace or cure periods); or

(i)any Obligor shall (1) apply for or consent to the appointment of a receiver, trustee, liquidator or other custodian of such Obligor or any of such Obligor's properties or assets, (2) fail or admit in writing such Obligor's inability to pay such Obligor's debts generally as they become due, (3) make a general assignment for the benefit of creditors, (4) suffer or permit an order for relief to be entered against such Obligor in any proceeding under the federal Bankruptcy Code, or (5) file a voluntary petition in bankruptcy, or a petition or an answer seeking an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against such Obligor in any proceeding under any such law or statute, or if limited liability company action shall be taken by any Obligor for the purpose of effecting any of the foregoing; or

(j)a petition shall be filed, without the application, approval or consent of any Obligor in any court of competent jurisdiction, seeking bankruptcy, reorganization, rearrangement, dissolution or liquidation of such Obligor or of all or a substantial part of the properties or assets of such Obligor, or seeking any other relief under any law or statute of the type referred to in Section 6.1(i)(5) against such Obligor, or the appointment of a receiver, trustee, liquidator or other custodian of such Obligor or of all or a substantial part of the properties or assets of such Obligor, and such petition shall not have been stayed or dismissed within 30 days after the filing thereof; or

(k)any Obligor shall be dissolved or liquidated or cease to be Solvent or suspend business; or

(1)any writ of execution, attachment or garnishment shall be issued against the assets

of any Obligor and such writ of execution, attachment or garnishment shall not be dismissed, discharged or quashed within 30 days of issuance; or

(m) any final judgment for the payment of money (not paid or fully covered by insurance, subject to applicable deductibles) in excess of an aggregate of $2,500,000 shall be rendered against any Obligor and the same shall remain undischarged for a period of 30 days during which execution shall not be effectively stayed.

SECTION 6.2 Lender's Remedies on Default.

(a)If an Event of Default exists, or any event exists that upon notice or lapse of time or both would constitute an Event of Default, the Lender shall have no obligation to extend any further Credit hereunder. If an Event of Default exists under Section 6.1(i) or 6.1(j), all of the Obligations shall automatically become immediately due and payable. If any other Event of Default exists, the Lender may, by written notice to the Borrowers, declare any or all of the Obligations to be immediately due and payable, whereupon they shall become immediately due and payable. Any such acceleration (whether automatic or upon notice) shall be effective without presentment, demand, protest or other action of any kind, all of which are hereby expressly waived, anything contained herein or in any of the other Credit Documents to the contrary notwithstanding. If an Event of Default exists, the Lender may exercise any of its rights and remedies on default under the Credit Documents or applicable law.

(b)If an Event of Default exists, the Lender may treat all then outstanding Letters of Credit as if drafts in the full amount available to be drawn thereunder had been properly drawn thereunder and paid by the Lender and the Borrowers had failed or refused to reimburse the Lender for the amount so paid within the time required for the Borrowers to do so.

(c)If an Event of Default exists, the Borrowers shall, promptly upon demand of the Lender, deposit in cash with the Lender an amount equal to the amount of all Letter of Credit Obligations then outstanding, as collateral security for the repayment thereof, which deposit shall be held by the Lender under the provisions of Section 7.17.

ARTICLE 7 Miscellaneous

SECTION 7.1 Notices.

(a)Any request, demand, authorization, direction, notice, consent, waiver or other document provided or permitted by this Agreement or the other Credit Documents to be made upon, given or furnished to, or filed with, the Borrowers or the Lender must (except as otherwise provided in this Agreement or the other Credit Documents) be in writing and be delivered by one of the following means: (1) by personal delivery at the hand delivery address specified below, (2) by first-class, registered or certified mail, postage prepaid and addressed as specified below, or (3) if facsimile transmission facilities for such party are identified below or pursuant to a separate notice from such party, sent by facsimile transmission to the number specified below or in such notice.

(b)The hand delivery address, mailing address and (if applicable) facsimile transmission number for receipt of notice or other documents by such parties are as follows:

Borrowers

By hand and mail:

11 North Water Street

Suite 18290

Mobile, Alabama 36602

Attention: Chief Financial Officer

By facsimile: 251-706-0756

Lender

By hand and mail:

31 North Royal Street

Mobile, Alabama 36602

Attention: Lawrence G. Ford, Jr.

By facsimile: (251) 690-1588 With a copy to:

J. Kris Lowry

Maynard, Cooper & Gale, P.C. 1901 Sixth Avenue North

2400 Regions/Harbert Plaza

Birmingham, Alabama 35203-2618

By facsimile: (205) 254-1999

Any of such parties may change the address or facsimile transmission notice for receiving any such notice or other document by giving notice of the change to the other parties named in this Section 7.1.

(c)Any such notice or other document shall be deemed delivered when actually received by the party to whom directed (or, if such party is not a natural person, to an officer, director, partner, member or other legal representative of the party) at the address or number specified pursuant to this Section 7.1, or, if sent by mail, three Business Days after such notice or document is deposited in the United States mail, addressed as provided above.

(d)Five Business Days' written notice to the Borrowers as provided above shall constitute reasonable notification to the Borrowers when notification is required by law; provided, however, that nothing contained in the foregoing shall be construed as requiring five Business Days' notice if, under applicable law and the circumstances then existing, a shorter period of time would constitute reasonable notice.

SECTION 7.2 Expenses. The Borrowers shall promptly on demand pay all costs and expenses, including the fees and disbursements of counsel to the Lender, incurred by the Lender in connection with (a) the extension of the Credit and the administration or collection of the Obligations, (b) the negotiation, preparation and review of the Credit Documents (whether or not the transactions contemplated by this Agreement shall be consummated), (c) the enforcement of any of the Credit Documents, (d) the exercise by or on behalf of the Lender of any of its rights, powers or remedies under the Credit Documents, (e) the compliance by the Lender with any Governmental Requirements with respect to any of the Credit Documents, and (0 the prosecution or defense of any action or proceeding by or against the Lender, the Borrowers, any Obligor, or any one or more of them, concerning any matter related to this Agreement or any of the other Credit Documents, or any of the Obligations. All such amounts shall bear interest from the date demand is made at the Default Rate and shall be included in the Obligations. The Borrowers' obligations under this Section 7.2 shall survive the payment in full of the Obligations and the termination of this Agreement.

SECTION 7.3 Independent Obligations. The Borrowers agree that each of the obligations of the Borrowers to the Lender under this Agreement may be enforced against the Borrowers without the necessity of joining any other Obligor or any other person, as a party.

SECTION 7.4 Heirs, Successors and Assigns. Whenever in this Agreement any party hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrowers may not assign or transfer this Agreement without the prior written consent of the Lender; and all covenants and agreements of the Borrowers contained in this Agreement shall bind the Borrowers' heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Lender.

SECTION 7.5 Governing Law. This Agreement and the other Credit Documents shall be construed in accordance with and governed by the internal laws of the State of Alabama (without regard to conflict of law principles) except as required by mandatory provisions of law.

SECTION 7.6 Date of Agreement. The date of this Agreement is intended as a date for the convenient identification of this Agreement and is not intended to indicate that this Agreement was executed and delivered on that date.

SECTION 7.7 Separability Clause. If any provision of the Credit Documents shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 7.8 Counterparts. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed an original, but all such counterparts shall together constitute but one and the same agreement.

SECTION 7.9 No Oral Agreements. This Agreement is the final expression of the agreement between the parties hereto, and this Agreement may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Agreement and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence.

SECTION 7.10 Waiver and Election. The exercise by the Lender of any option given under this Agreement shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Lender in exercising any right, power or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of the Credit Documents, nor consent to any departure by the Borrowers therefrom, shall be effective unless in writing and signed by an authorized representative of the Lender, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrowers in any case shall entitle the Borrowers to any other or further notice or demand in similar or other circumstances.

SECTION 7.11 No Obligations of Lender; Indemnification. The Lender does not by virtue of this Agreement or any of the transactions contemplated by the Credit Documents assume any duties, liabilities or obligations with respect to any property now or hereafter granted to it as collateral for any of the Obligations unless expressly assumed by the Lender under a separate agreement in writing, and the Credit Documents shall not be deemed to confer on the Lender any duties or obligations that would make the Lender directly or derivatively liable for any person's negligent, reckless or wilful conduct. The Borrowers agree to indemnify and hold the Lender harmless against and with respect to any damage, claim, action, loss, cost, expense, liability, penalty or interest (including attorney's fees) and all costs and expenses of all actions, suits, proceedings, demands, assessments, claims and judgments directly or indirectly resulting from, occurring in connection with, or arising out of: (a) any inaccurate representation made by the Borrowers or any Obligor in this Agreement or any other Credit Document; and (b) any breach of any of the warranties or obligations of the Borrowers or any Obligor under this Agreement or any other Credit Document. The provisions of this Section 7.11 shall survive the payment of the Obligations in full and the termination of this Agreement and the other Credit Documents.

SECTION 7.12 Set-off. While any Event of Default exists, the Lender is authorized at any time and from time to time, without notice to the Borrowers (any such notice being expressly waived by the Borrowers), to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Lender to or for the credit or the account of the Borrowers against any and all of the Obligations, irrespective of whether or not the Lender shall have made any demand under this Agreement and although such Obligations may be unmatured. The rights of the Lender under this Section 7.12 are in addition to all other rights and remedies (including other rights of set-off or pursuant to any banker's lien) that the Lender may have.

SECTION 7.13 Participation. The Borrowers understand that the Lender may from time to time enter into a participation agreement or agreements with one or more participants pursuant to which each such participant shall be given a participation in the Credit and that any such participant may from time to time similarly grant to one or more subparticipants subparticipations in the Credit. The Borrowers agree that any participant or subparticipant may exercise any and all rights of banker's lien or set-off with respect to the Borrowers, as fully as if such participant or subparticipant had made a loan directly to the Borrowers in the amount of the participation or subparticipation given to such participant or subparticipant in the Credit. For the purposes of this Section 7.13 only, the Borrowers shall be deemed to be directly obligated to each participant or subparticipant in the amount of their participating interest in the amount of the Credit and any other Obligations. Nothing contained in this Section 7.13 shall affect the Lender's right of set-off (under Section 7.12 or applicable law) with respect to the entire amount of the Obligations, notwithstanding any such participation or subparticipation. The Lender may divulge to any participant or subparticipant all information, reports, financial statements, certificates and documents obtained by it from the Borrowers or any other person under any provision of this Agreement or otherwise.

SECTION 7.14 Submission to Jurisdiction. The Borrowers irrevocably (a) acknowledge that this Agreement will be accepted by the Lender and performed by the Borrowers in the State of Alabama; (b) submit to the jurisdiction of each state or federal court sitting in Mobile County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Agreement (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Agreement) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waive, to the fullest extent permitted by law, any objection or defense that the Borrowers may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agree that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrowers and may be enforced in any other court to the jurisdiction of which the Borrowers is subject, by a suit upon such judgment; (e) consent to the service of process on the Borrowers in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrowers at the Borrowers' address designated in or pursuant to Section 7.1; (f) agrees that service in accordance with Section 7.14(e) shall in every respect be effective and binding on the Borrowers to the same extent as though served on the Borrowers in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWERS THAT THE EXECUTION OF THIS AGREEMENT MAY SUBJECT THE BORROWERS TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN MOBILE COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWERS THAT THE BORROWERS MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 7.14 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided.

SECTION 7.15 Usury Laws. Any provision of this Agreement or any of the other Credit Documents to the contrary notwithstanding, the Borrowers and the Lender agree that they do not intend for the interest or other consideration provided for in this Agreement and the other Credit Documents to be greater than the maximum amount permitted by applicable law. Regardless of any provision in this Agreement or any of the other Credit Documents, the Lender shall not be entitled to receive, collect or apply, as interest on the Obligations, any amount in excess of the maximum rate of interest permitted to be charged under applicable law until such time, if any, as that interest, together with all other interest then payable, falls within the then applicable maximum lawful rate of interest. If the Lender shall receive, collect or apply any amount in excess of the then maximum rate of interest, the amount that would be excessive interest shall be applied first to the reduction of the principal amount of the Obligations then outstanding in the inverse order of maturity, and second, if such principal amount is paid in full, any excess shall forthwith be returned to the Borrowers. In determining whether the interest paid or payable under any specific contingency exceeds the highest lawful rate, the Borrowers and the Lender shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, (c) consider all the Obligations as one general obligation of the Borrowers, and (d) "spread" the total amount of the interest throughout the entire term of the Revolving Note so that the interest rate is uniform throughout the entire term of the Revolving Note.

SECTION 7.16 WAIVER OF TRIAL BY JURY. THE BORROWERS AND THE LENDER HEREBY (1) IRREVOCABLY AND UNCONDITIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OR COUNTERCLAIM OF ANY TYPE AS TO ANY MATTER ARISING DIRECTLY OR INDIRECTLY OUT OF OR WITH RESPECT TO THIS AGREEMENT, ANY OF THE OTHER FINANCING DOCUMENTS OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH AND (2) AGREE THAT EITHER PARTY MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, AND BARGAINED FOR AGREEMENT BETWEEN THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY, AND THAT ANY DISPUTE OR CONTROVERSY OF ANY KIND WHATSOEVER BETWEEN THEM SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

SECTION 7.17 Termination. This Agreement shall continue until the Obligations shall have been paid in full and the Lender shall have no obligation to make any further Advances, issue any Letters of Credit or extend any other credit hereunder. If on any date on which the Borrowers wish to pay the Obligations in full and terminate this Agreement, there are any outstanding Letter of Credit Borrowings, the Borrowers shall, unless otherwise agreed by the Lender in its sole discretion, make a cash prepayment to the Lender on such date in an amount equal to the then-outstanding Letter of Credit Borrowings, and the Lender shall hold such prepayment in an interest-bearing cash collateral account in the name and under the sole control of the Lender (which account shall bear interest at the Lender's then-current rate for such accounts) as security for the Reimbursement Obligations and other Letter of Credit Obligations. Such account shall not constitute an asset of the Borrowers but shall be subject to the Borrowers' rights under this Section 7.17. The Lender shall from time to time debit such account for the payment of the Letter of Credit Obligations as the same become due and payable and shall promptly refund any excess funds (including interest) held in said account to the Borrowers if and when no Letter of Credit Borrowings remain outstanding hereunder and all of the Obligations have been paid in full. The Borrowers shall remain liable for any Obligations in excess of the amounts paid from such account. This Agreement, and the obligations of the Borrowers hereunder, shall continue to be effective, or be automatically reinstated, as the case may be, if at any time payment in whole or in part of any payment made with respect to the Obligations is rescinded or must otherwise be restored or returned to the person making such payment upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of such person, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to such person or with respect to any part of the property thereof, or otherwise, all as though such payment had not been made.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the Borrowers and the Lender have caused this Agreement to be dated as of March 7, 2008 and to be duly executed and delivered.

INTERNATIONAL SHIPHOLDING CORPORATION

By: /s/ Erik L. Johnsen

Its: President

ENTERPRISE SHIP COMPANY, INC.

By: /s/ Erik L. Johnsen

Its: President

SULPHUR CARRIERS, INC.

By: /s/ Erik L. Johnsen

Its: President

GULF SOUTH SHIPPING PTE LTD.

By: /s/ Erik L. Johnsen

Its: President

CG RAILWAY, INC.

By: /s/ Erik L. Johnsen

Its: President

LCI SHIPHOLDINGS, INC.

By: /s/ Erik L. Johnsen

Its: President

CENTRAL GULF LINES, INC.

By: /s/ Erik L. Johnsen

Its: President

WATERMAN STEAMSHIP CORPORATION

By: /s/ Erik L. Johnsen

Its: President

EGIONS BANK

By: /s/ Russ Ford

Its: Senior Vice President

LIST OF EXHIBITS

Exhibit

A Credit Documents

EXHIBIT A

Credit Documents

The "Credit Documents" referred to in this Agreement include this Agreement and the following:

(a)The Revolving Note.

(b)Subrogation and Contribution Agreement executed by the Borrowers in favor of the Lender.

SCHEDULE I

APPLICABLE MARGIN

Ratio of Consolidated Indebtedness Applicable to Consolidated EBITDA Margin

Greater than or equal to 4.01 to 1.0 1.50%

Less than or equal to 4.0 to 1.0 1.25%

SCHEDULE II

PERMITTED ENCUMBRANCES

Borrower Liens as of March 7, 2008 Gulf South Shipping Pte Ltd.

1.Liens in favor of LCI Shipholdings, Inc. against assets of Gulf South Shipping Pte Ltd as filed with the Singapore authorities.

LCI Shipholdings Inc.

1.   Mortgage, Earnings Assignment and Insurance Assignment on vessel Asian Emperor in favor of Deutsche Schiffsbank AG as Facility Agent.

2.   Earnings Assignment and Insurance Assignment on vessel Asian King in favor of GECC of Tennessee.

Central Gulf Lines, Inc.

1.   Mortgage, Earnings Assignment and Insurance Assignment on vessels Green Lake and Green Cove in favor of Deutsche Schiffsbank AG as Facility Agent.

2.   Mortgage, Earnings Assignment and Insurance Assignment on vessel Green Ridge in favor of DnB Nor Bank ASA.

Waterman Steamship Corporation

1.   Mortgage, Earnings Assignment and Insurance Assignment on vessel Green Bay in favor of DnB Nor Bank ASA.

2.   Earnings Assignment and Insurance Assignment on vessel Green Dale in favor of GECC of Tennessee.

Sulphur Carriers, Inc.

1.Earnings Assignment and Insurance Assignment on vessel Sulphur Enterprise in favor

of ISC-Sulphur Holding, Inc.

REVOLVING NOTE

$35,000,000 Mobile, Alabama

March 7, 2008

s FOR VALUE RECEIVED, INTERNATIONAL SHIPHOLDING CORPORATION, a Delaware corporation ("ISC"), ENTERPRISE SHIP COMPANY, INC., a Delaware corporation ("Enterprise"), SULPHUR CARRIERS, INC., a Delaware corporation ("Sulphur Carriers"), GULF SOUTH SHIPPING PTE LTD., a Singapore corporation ("Gulf South"), CG RAILWAY, INC., a Delaware corporation ("CG Railway"), LCI SHIPHOLDINGS, INC., a Marshall Islands corporation ("LCI"), CENTRAL GULF LINES, INC., a Delaware corporation ("Central Gulf'), and WATERMAN STEAMSHIP CORPORATION, a New York corporation ("Waterman"; ISC, Enterprise, Sulphur Carriers, Gulf South, CG Railway, LCI, Central Gulf, and Waterman are, collectively, referred to as the "Borrowers"), jointly and severally promise to pay to the order of REGIONS BANK, an Alabama banking corporation (the "Lender"), the principal amount of Thirty-Five Million Dollars ($35,000,000), or so much as may be advanced by the Lender hereunder, in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount hereunder, in like money and funds, at the rates per annum and on the dates provided in the Credit Agreement.

This Note is the Revolving Note referred to in the Credit Agreement dated as of March 7, 2008 between the Borrowers and the Lender (the "Credit Agreement") and is subject to all of the provisions thereof, including those providing for optional prepayment, acceleration of maturity, arbitration of disputes, and adjustment of the interest rate hereunder, as set forth in the Credit Agreement. Capitalized terms used in this Note and not otherwise defined herein shall have the respective meanings defined for them in the Credit Agreement. All payments by the Borrower to the Lender under this Note shall be made in accordance with Section 2.6 of the Credit Agreement.

If an Event of Default exists, this Note shall bear interest at the Default Rate, until the earlier of (a) such time as all amounts due hereunder are paid in full or (b) no such Event of Default exists.

This Note is a master note, and it is contemplated that the proceeds of the loan evidenced hereby will be advanced by the Lender to the Borrowers in installments, and repaid and reborrowed, as needed for the purposes set forth in the Credit Agreement, upon compliance with the terms and conditions set forth therein. This Note shall be valid and enforceable as to the aggregate amount advanced at any time hereunder, whether or not the full face amount hereof is advanced. Each principal advance and payment on this Note shall be reflected by notations made by the Lender on its internal records (which may be kept on computer or otherwise), and the Lender is hereby authorized to record on such records all such principal advances and payments. The aggregate unpaid amount reflected by the Lender's notations on its internal records (whether on computer or otherwise) shall be deemed rebuttably presumptive evidence of the principal amount remaining outstanding and unpaid on this Note. No failure of the Lender so to record any advance or payment shall limit or otherwise affect the obligation of the Borrowers hereunder with respect to any advance, and no payment of principal by the Borrowers shall be affected by the failure of the Lender so to record the same.

If an Event of Default exists, the principal and all accrued interest on this Note and all other amounts payable by the Borrowers or any other Obligor under the Credit Agreement and the other Credit Documents may become immediately due and payable in the manner and with the effect provided in the Credit Agreement.

The Borrowers expressly waive any presentment, demand, protest or notice in connection with this Note, now or hereafter required by applicable law.

Time is of the essence of this Note.

This Note shall be construed in accordance with and governed by the internal laws of the State of Alabama (without regard to conflict of law principles) except as required by mandatory provisions of law.

All of the Borrowers representations, warranties, covenants and agreements under the Credit Agreement and this Note shall be joint and several and shall be binding on and enforceable against either, any or all of the Persons comprising the Borrowers. If any one or more of the Persons comprising the Borrowers is in default, the Lender may exercise its remedies on default against any or all of the Persons comprising the Borrowers.

[Remainder of page left intentionally blank]

IN WITNESS WHEREOF, the Borrowers have caused this Note to be dated as of March 7, 2008 and to be duly executed and delivered by their duly authorized representatives.

INTERNATIONAL SHIPHOLDING CORPORATION,

a Delaware corporation

By:      /s/ Erik L. Johnsen

Name: Erik L. Johnsen

Its:       President

Taxpayer Identification Number: 36-2989662

ENTERPRISE SHIP COMPANY, INC.,

a Delaware corporation

By:      /s/ Erik L. Johnsen

Name: Erik L. Johnsen

Its:       President

Taxpayer Identification Number: 72-1299059

SULPHUR CARRIERS, INC.,

a Delaware corporation

By:      /s/ Erik L. Johnsen

Name: Erik L. Johnsen

Its:       President

Taxpayer Identification Number: 72-1198965

GULF SOUTH SHIPPING PTE LTD.,

a Republic of Singapore corporation

By:      /s/ Erik L. Johnsen

Name: Erik L. Johnsen

Its:       Director

Taxpayer Identification Number: 98-0118628

 CG RAILWAY, INC.,

 a Delaware corporation

 By:      /s/ Erik L. Johnsen

 Name: Erik L. Johnsen

 Its:       President

 Taxpayer Identification Number: 72-1471108

 LCI SHIPHOLDINGS, INC.,

 a Republic of the Marshall Islands corporation

 By:      /s/ Erik L. Johnsen

 Name: Erik L. Johnsen

 Its:       President

 Taxpayer Identification Number: 98-6008094

 CENTRAL GULF LINES, INC.,

 a Delaware corporation

 By:      /s/ Erik L. Johnsen

 Name: Erik L. Johnsen

 Its:       President

 Taxpayer Identification Number: 72-0388979

 WATERMAN STEAMSHIP CORPORATION,

 a New York corporation

 By:      /s/ Erik L. Johnsen

 Name: Erik L. Johnsen

 Its:       President

 Taxpayer Identification Number: 63-0220640

 Send all correspondence and billings to:

 c/o International Shipholding Corporation

 P.O. Box 2004

 Mobile, Alabama 36652

 Attention: Mr. Manuel G. Estrada

 REGIONS

COMMERCIAL CUSTOMER IDENTIFICATION PROGRAM

For Organizations

I, the undersigned authorized representative of   International Shipholding Corporation

(the "Organization") , am duly authorized to execute and deliver this certificate, and I hereby certify to Regions Bank as follows: 1. The Organization's name as listed in its organizational documents is: International Shipholding Corporation

and the Organization's Tax Payer ID# is: 36-2989662

        2. The state where the Organization is organized and its organizational documents were filed is:          Delaware

3.   If not registered, the state where the Organization's chief executive office is located is:

4.   The location of the Organization's chief executive office is:

Street Address                       11 North Water St., Suite 18290

City Mobile                                  State  ALZip 36602 Country (if not U.S.)

5.   The attached copies of the organizational documents of the Organization are true and correct copies on and as of the date hereof and have not been modified or amended except to the extent, if any, reflected in the attached, and, if applicable, such organizational documents are on file with the state named in paragraph 2 above.

Date:     March 7, 2008                       International Shipholding Corporation

                                                                      Organization Name

                By :                                 /s/ David B. Drake

              (Signature)

              Title:                       Vice President -Treasurer

form B3910000 rev 01/11/07

NOTICE TO CUSTOMER

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.

 REGIONS

COMMERCIAL CUSTOMER IDENTIFICATION PROGRAM

For Organizations

I, the undersigned authorized representative of       Enterprise Ship Company, Inc.

(the "Organization") , am duly authorized to execute and deliver this certificate, and I hereby certify to Regions Bank as follows:

1. The Organization's name as listed in its organizational documents is:     Enterprise Ship Company, Inc

and the Organization's Tax Payer ID# is:              72-1299059

2.   The state where the Organization is organized and its organizational documents were filed is:    Delaware

3.If not registered, the state where the Organization's chief executive office is located is:

4.The location of the Organization's chief executive office is:

Street Address     11 North Water Street Suite 18290

City  Mobile              StateALZip .36602 Country (if not U.S.)

          5.  The attached copies of the organizational documents of the Organization are true and correct copies on and as of the date hereof and have not been modified or amended except to the extent, if any, reflected in the attached, and, if applicable, such organizational documents are on file with the state named in paragraph 2 above.

Date:     March 7, 2008                       Enterprise Ship Company, Inc.

                                                                               Organization Name

                By :                                                                                       /s/ David B. Drake

                                                               (Signature)

              Title:                                         Treasurer

form B3910000 rev 01/11/07

NOTICE TO CUSTOMER

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.

 REGIONS

COMMERCIAL CUSTOMER IDENTIFICATION PROGRAM

For Organizations

I, the undersigned authorized representative of       Sulphur Carriers, Inc.

(the "Organization") , am duly authorized to execute and deliver this certificate, and I hereby certify to Regions Bank as follows:

1. The Organization's name as listed in its organizational documents is:     Sulphur Carriers, Inc.

and the Organization's Tax Payer ID# is:              72-1198965

2.The state where the Organization is organized and its organizational documents were filed is:    Delaware

3. If not registered, the state where the Organization's chief executive office is located is:

         4. The location of the Organization's chief executive office is:

Street Address     11 North Water Street Suite 18290

City  Mobile              StateALZip .36602 Country (if not U.S.)

          5.  The attached copies of the organizational documents of the Organization are true and correct copies on and as of the date hereof and have not been modified or amended except to the extent, if any, reflected in the attached, and, if applicable, such organizational documents are on file with the state named in paragraph 2 above.

Date:     March 7, 2008                       Sulphur Carriers, Inc.

                                                                                  Organization Name

                By :                                                                                       /s/ David B. Drake

                                                               (Signature)

              Title:                                         Treasurer

form B3910000 rev 01/11/07

NOTICE TO CUSTOMER

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

To help the government fight the funding of tenprism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.

 REGIONS

COMMERCIAL CUSTOMER IDENTIFICATION PROGRAM

For Organizations

I, the undersigned authorized representative of       Gulf South Shipping Pte Ltd.

(the "Organization") , am duly authorized to execute and deliver this certificate, and I hereby certify to Regions Bank as follows:

1. The Organization's name as listed in its organizational documents is:     Gulf South Shipping Pte Ltd.

and the Organization's Tax Payer ID# is:              98-0118628

2. The state where the Organization is organized and its organizational documents were filed is:      Singapore

3. If not registered, the state where the Organization's chief executive office is located is:

         4. The location of the Organization's chief executive office is:

Street Address     3 Harbour Front Place #07-02/03 Harbour Front Tower 2

                 City      Singapore                    State                      Zip     099254             Country (if not U.S.)       Singapore

          5.  The attached copies of the organizational documents of the Organization are true and correct copies on and as of the date hereof and have not been modified or amended except to the extent, if any, reflected in the attached, and, if applicable, such organizational documents are on file with the state named in paragraph 2 above.

Date:     March 7, 2008                       Gulf South Shipping Pte Ltd.

                                                                              Organization Name

                By :                                                                                       /s/ Erik L. Johnsen

                                                               (Signature)

              Title:                                         Director

form B3910000 rev 01/11/07

NOTICE TO CUSTOMER

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.

 REGIONS

COMMERCIAL CUSTOMER IDENTIFICATION PROGRAM

For Organizations

I, the undersigned authorized representative of       CG Railway, Inc.

(the "Organization") , am duly authorized to execute and deliver this certificate, and I hereby certify to Regions Bank as follows:

1. The Organization's name as listed in its organizational documents is:     CG Railway, Inc.

and the Organization's Tax Payer ID# is:              72-1471108

2.The state where the Organization is organized and its organizational documents were filed is:    Delaware

3. If not registered, the state where the Organization's chief executive office is located is:

         4. The location of the Organization's chief executive office is:

Street Address     11 North Water Street Suite 18290

City  Mobile              StateALZip .36602 Country (if not U.S.)

          5.  The attached copies of the organizational documents of the Organization are true and correct copies on and as of the date hereof and have not been modified or amended except to the extent, if any, reflected in the attached, and, if applicable, such organizational documents are on file with the state named in paragraph 2 above.

Date:     March 7, 2008                       CG Railway, Inc.

                                                                                Organization Name

                By :                                                                                       /s/ David B. Drake

                                                               (Signature)

              Title:                                         Treasurer

NOTICE TO CUSTOMER

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.

 REGIONS

COMMERCIAL CUSTOMER IDENTIFICATION PROGRAM

For Organizations

I, the undersigned authorized representative of       LCI Shipholdings, Inc.

(the "Organization") , am duly authorized to execute and deliver this certificate, and I hereby certify to Regions Bank as follows:

1. The Organization's name as listed in its organizational documents is:     LCI Shipholdings, Inc.

and the Organization's Tax Payer ID# is:              98-6008094

2.The state where the Organization is organized and its organizational documents were filed is:       Marshall Islands

3. If not registered, the state where the Organization's chief executive office is located is:

         4. The location of the Organization's chief executive office is: Registered Agent: The Trust Complex of the Marshall Islands, Inc.

Street Address     Trust Company Complex, Ajeltake Road, Ajeltake Island

City  Majuro              StateZip .     Country (if not U.S.) Marshall Islands 96960

          5.  The attached copies of the organizational documents of the Organization are true and correct copies on and as of the date hereof and have not been modified or amended except to the extent, if any, reflected in the attached, and, if applicable, such organizational documents are on file with the state named in paragraph 2 above.

Date:     March 7, 2008                            LCI Shipholdings, Inc.

                                                                                Organization Name

                By :                                                                                       /s/ David B. Drake

                                                               (Signature)

              Title:                                         Treasurer

NOTICE TO CUSTOMER

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.

 REGIONS

COMMERCIAL CUSTOMER IDENTIFICATION PROGRAM

For Organizations

I, the undersigned authorized representative of       Central Gulf Lines, Inc.

(the "Organization") , am duly authorized to execute and deliver this certificate, and I hereby certify to Regions Bank as follows:

1. The Organization's name as listed in its organizational documents is:     Central Gulf Lines, Inc.

and the Organization's Tax Payer ID# is:              72-0388979

2.The state where the Organization is organized and its organizational documents were filed is:       Delaware

3. If not registered, the state where the Organization's chief executive office is located is:

         4. The location of the Organization's chief executive office is:

Street Address     11 North Water Street Suite 18290

City  Mobile              StateALZip .36602 Country (if not U.S.)

          5.  The attached copies of the organizational documents of the Organization are true and correct copies on and as of the date hereof and have not been modified or amended except to the extent, if any, reflected in the attached, and, if applicable, such organizational documents are on file with the state named in paragraph 2 above.

Date:     March 7, 2008                           Central Gulf Lines, Inc.

                                                                                   Organization Name

                By :                                                                                       /s/ David B. Drake

                                                               (Signature)

              Title:                                         Treasurer

NOTICE TO CUSTOMER

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.

 REGIONS

form B3910000 rev 01/11/07

COMMERCIAL CUSTOMER IDENTIFICATION PROGRAM

For Organizations

I, the undersigned authorized representative of       Waterman Steamship Corporation

(the "Organization") , am duly authorized to execute and deliver this certificate, and I hereby certify to Regions Bank as follows:

1. The Organization's name as listed in its organizational documents is:     Waterman Steamship Corporation

and the Organization's Tax Payer ID# is:              63-0220640

2.The state where the Organization is organized and its organizational documents were filed is:       New York

3. If not registered, the state where the Organization's chief executive office is located is:

         4. The location of the Organization's chief executive office is:

Street Address     11 North Water Street Suite 18290

City  Mobile              StateALZip .36602 Country (if not U.S.)

          5.  The attached copies of the organizational documents of the Organization are true and correct copies on and as of the date hereof and have not been modified or amended except to the extent, if any, reflected in the attached, and, if applicable, such organizational documents are on file with the state named in paragraph 2 above.

Date:     March 7, 2008                         Waterman Steamship Corporation

                                                                                 Organization Name

                By :                                                                                       /s/ David B. Drake

                                                               (Signature)

              Title:                                 Vice President-Treasurer

NOTICE TO CUSTOMER

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.

201 ST. CHARLES AVENUE. NEW ORLEANS, LOUISIANA 70170-5100 504-582-8000 FAX 504-582-8583 E-MAIL info@joneswaLker.comwww.joneswalIcer.com(N17779192)BATON ROUGE HOUSTON LAFAYETTE MIAMI NEW ORLEANS THE WOODLANDS WASHINGTON, D.C.

JONES

WALKER

March 7, 2008

Regions Bank

31 North Royal Street

Mobile, Alabama 36602

Attention: Lawrence G. Ford, Jr.

Re: Credit Agreement dated March 7, 2008 Gentlemen:

We have acted as counsel to INTERNATIONAL SHIPHOLDING CORPORATION, a Delaware corporation ("ISC"), ENTERPRISE SHIP COMPANY, INC., a Delaware corporation ("Enterprise"), SULPHUR CARRIERS, INC., a Delaware corporation ("Sulphur Carriers"), CG RAILWAY, INC., a Delaware corporation ("CG Railway"), LCI SHIPHOLDINGS, INC., a Marshall Islands corporation ("LCI"), CENTRAL GULF LINES, INC., a Delaware corporation ("Central Gulf'), and WATERMAN STEAMSHIP CORPORATION, a New York corporation ("Waterman"; ISC, Enterprise, Sulphur Carriers, CG Railway, LCI, Central Gulf, and Waterman are, collectively, referred to as the "Borrowers"), in connection with the credit to be extended by you to the Borrowers pursuant to the Credit Agreement between you and the Borrowers dated as of March 7, 2008 (the "Credit Agreement"). Capitalized terms not defined herein shall have the meanings set forth in the Credit Agreement.

We have examined certified resolutions of the boards of directors of the Borrowers dated March 3, 2008, evidencing approval of the execution of the Credit Agreement and the other Credit Documents to which they are parties and all other matters contemplated thereby, together with such other documents, corporate records, certificates of public officials, and instruments as we have deemed relevant and necessary as the basis for the opinions hereinafter expressed. As to various questions of fact material to our opinions, we have relied upon the representations and warranties made in each of the Credit Documents and upon certificates of public officials and of the Borrowers, upon which representations, warranties and certificates we believe we are justified in relying.

This opinion is limited to the federal laws and jurisprudence of the United States, the laws and jurisprudence of the State of Louisiana, the general corporation laws of the State of Delaware ("Delaware Corporate Law"), the general corporation laws of the Republic of the Marshall Islands ("Marshall Islands Corporate Law") and the general corporation laws of the state of New York ("New York Corporate Law"). To the extent that the opinions expressed herein involve Delaware Corporate Law, Marshall Islands Corporate Law or New York Corporate Law, we have relied upon our general familiarity with such laws. With respect to any

JONES, WALKER, WAECHTER, POITEVENT, CARRERE & DENEGRE L.L.P.

March 7, 2008 Page 2

agreements or other matters governed by the law of the State of Alabama, we have assumed that Alabama law does not differ from the law of the State of Louisiana.

For all purposes of this opinion, we have assumed, with your permission and without any independent investigation or inquiry on our part: (i) the genuineness of all signatures on each of the documents examined by us; (ii) the legal capacity of all natural persons who have signed documents examined by us; (iii) the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of all such latter documents; (iv) the factual accuracy and completeness of each of the representations and warranties as to matters of fact made in the Credit Documents by each of the parties thereto; (v) that each of the parties to the Credit Documents (other than the Borrowers) has duly authorized, executed and delivered the Credit Documents to which it is a party; (vi) that each of the parties to the Credit Documents (other than the Borrowers) has all requisite power and authority to enter into and perform its respective obligations in connection with the transactions described in the Credit Documents to which it is a party; (vii) that the Lender has given value; (viii) that there are no other agreements or understandings among the parties to any of the Credit Documents, written or oral, and there is no usage of trade or course of prior dealing among the parties thereto that would, in any case, define, supplement or qualify the terms of any of the Credit Documents; (ix) that the names and addresses of the parties set forth in certain of the Credit Documents are correct; (x) that any conditions precedent provided in the Credit Documents as to their effectiveness have been satisfied or waived; and (xi) that the Credit Documents constitute the valid, legal and binding obligations of all parties thereto (other than the Borrowers) in accordance with their respective terms under all applicable laws.

Based upon the foregoing assumptions and subject to the qualifications and limitations stated hereinbelow, we are of the opinion that:

1.Each of the Borrowers has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation with corporate authority and power to own, lease and operate its properties and to conduct its business; each of the Borrowers is duly qualified as a foreign corporation to transact business in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property and assets or the conduct of business or otherwise, except where the failure to so qualify would not result in any material adverse change in its business, operations, properties, or condition, financial or otherwise.

2.Each of the Borrowers has all requisite corporate power and authority to execute, deliver and perform their respective obligations under the Credit Documents and to consummate the transactions contemplated thereby. The Credit Documents (i) have been duly and validly authorized, executed and delivered by each of the Borrowers, and (ii) constitute the legal, valid and binding obligations of the Borrowers, enforceable against them in accordance with their respective terms.

March 7, 2008 Page 3

3.The execution, delivery and performance of the Credit Documents do not and will not conflict with or constitute or result in a breach, default, acceleration of any payment or violation by Borrowers of (A) their respective articles or certificates of incorporation, by-laws or other charter documents, (B) to the best of our knowledge, after due inquiry, any contract, indenture, mortgage, loan agreement, note, lease, license, authorization, permit, certificate or other agreement or instrument to which it is a party, or to which any of its assets or properties are subject, or result in the creation or imposition of any lien, charge, security interest or other encumbrance upon any of its assets or properties, or (C) any law, statute, judgment, decree, order, rule or regulation applicable to, or any of the foregoing issued by any court or other governmental or regulatory authority, agency or other body with jurisdiction over, the Borrowers or any of their respective assets or properties.

4.There is no legal action, suit, proceeding, inquiry or investigation (domestic or foreign) before or by any court or governmental or regulatory body or agency or arbitrator now pending or, to our knowledge, threatened, against or affecting the Borrowers, or any of their respective properties that, individually or in the aggregate, is reasonably likely to result in any material adverse change in its business, operations, properties, or condition, financial or otherwise.

5.No governmental consents, licenses, permits, notarizations, approvals, exemptions of, authorizations, registrations, declarations or filings or other action by, and no notices to, consents of, orders of or filings with, or any withholding payments to, any court or governmental or regulatory agency or body are required for the due execution, delivery and performance by the Borrowers of the Credit Documents, or for the legality, validity, performance or enforceability of the Credit Documents or the consummation of the transactions contemplated thereby.

6.To our knowledge, the Borrowers own or possess all permits, licenses, franchises or other governmental authorizations necessary to the ownership of any of their respective properties or the conduct of their respective business, except where the failure to so qualify would not result in any material adverse change in its business, operations, properties, or condition, financial or otherwise, and none of the Borrowers are in default with respect to any Governmental Requirement.

The opinions expressed herein are subject to the following additional assumptions, exceptions, qualifications and limitations:

A.Our opinions concerning the validity, binding effect and enforceability of the

Credit Documents mean that: (i) each of the Credit Documents constitutes an effective contract under applicable law, (ii) none of the Credit Documents is invalid in its entirety because of a specific statutory prohibition or public policy or is subject in its entirety to a contractual defense, and (iii) subject to the last three sentences of this paragraph, a remedy is available if there is a default under the Credit Documents. This opinion does not mean (a) a particular remedy is available upon default or (b) every provision of the Credit Documents will be upheld or enforced in any or each circumstance by a court; provided, however, subject to the last two sentences of

(N1777919.2)

March 7, 2008 Page 4

this paragraph, the unenforceability of a particular provision or the unavailability of a particular remedy should not materially interfere with the remedy of foreclosure under the Credit Documents. Notwithstanding the foregoing, the validity, binding effect and enforceability of the Credit Documents or any particular provision or remedy therein may be limited or otherwise affected by (x) bankruptcy, insolvency, reorganization, moratorium or other statutes, rules, regulations or laws affecting the enforcement of creditors' rights generally, (y) general principles of equity and the exercise of equitable powers by a court of competent jurisdiction, including, without limitation, the unavailability of or limitation on the availability of a particular right or remedy because of an equitable principle, such as specific performance or injunctive relief, or a requirement as to commercial reasonableness, conceivability or good faith and (z) applicable state and federal laws relating to fraudulent transfers or conveyances. In addition, the Lender's remedies under the Credit Documents will be subject to the requirement that certain procedural matters be satisfied in connection with any enforcement proceeding.

B.We express no opinion with respect to any of the following matters:

(i)the enforceability or irrevocability of any power of attorney granted under the Credit Documents;

(ii)any severability clause contained in the Credit Documents;

(iii)any agreement by any party to submit to the jurisdiction of any court sitting in any particular jurisdiction;

(iv)any waiver by the Borrowers of any right to (a) a trial by jury or (b) claim any forum as inconvenient;

(v)any non-judicial, self-help remedy granted by the Credit Documents;

(vi)the right of any person, other than the Lender, to enforce any right or avail themselves of any remedy set forth in the Credit Documents;

(vii)any provision of the Credit Documents that purports to waive the right to raise any defense with respect to any thereof;

(viii)any provision of the Credit Documents that waives or releases the legal rights of any party thereto prior to the accrual or existence of such rights;

(ix)any provision of the Credit Documents that purports to create a constructive trust as to any funds received by any party; and

(x)the validity or enforceability of any other documents or other writings incorporated by reference in the Credit Documents unless specifically addressed in this opinion.

March 7, 2008 Page 5

C. Where our opinions relate to our "knowledge", such "knowledge" means the

conscious awareness of facts or other information by the attorney who signed this opinion letter and any attorney in this firm who has involvement with the transactions contemplated by the Credit Agreement, preparation of the Credit Documents or preparation of this opinion letter.

The opinions expressed herein are limited to the specific issues addressed herein and are expressed as of the date hereof and are not intended to have any prospective effect. We assume no obligation to advise you or any other Person of any changes concerning the above, whether or not deemed material, which may hereafter come or be brought to our attention, including but not limited to, changes which could result from pending or future legislation, law or jurisprudence.

The foregoing expresses our legal opinion as to the matters set forth above and is based upon our professional knowledge and inquiries at this time. It is not, however, to be construed as a guarantee, but merely as our informed judgment as to the specific questions of law addressed herein.

This letter and the opinions set forth herein are solely for the benefit of the Lender and its counsel. Without our prior written consent, this opinion letter may not be quoted in whole or in part and may not be furnished to or used or relied upon by any other person or entity.

Very truly yours,

JONES, WALKER, WAECHTER, POITEVENT, CARRERE & DENEGRE, L.L.P.

01609094.2

SUBROGATION AND CONTRIBUTION AGREEMENT

THIS SUBROGATION AND CONTRIBUTION AGREEMENT dated as of March 7, 2008 ("this Agreement"), is entered into by the undersigned entities (the "Obligors").

Recitals

A.The Obligors have entered into a Credit Agreement dated as of March 7, 2008 (the "Credit Agreement") with Regions Bank (the "Lender"), pursuant to which Regions Bank agreed to make available to such Obligors a revolving loan in a maximum principal amount of $35,000,000. Capitalized terms used in this Agreement, unless otherwise defined herein, shall have the meanings assigned to them in the Credit Agreement.

B.The Obligors wish to effect an equitable sharing of their joint and several liabilities with respect to the Obligations.

Agreement

NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual agreements herein set forth, Obligors hereby contract and agree as follows:

1.If any Obligor makes a payment to the Lender with respect to the Obligations, it shall be subrogated to the rights of the Lender against the other Obligors with respect to such payment and shall have the rights of contribution set forth below against the other Obligors; provided, however, that such Obligor shall not enforce its rights to any payment by way of subrogation or by exercising its right of contribution so long as the Credit Agreement continues in effect, in accordance with Section 1.3 thereof. If any Obligor makes a payment with respect to the Obligations that is smaller in proportion to its Payment Obligation (as hereinbelow defined) than the payments made by the other Obligors are in proportion to the amounts of their respective Payment Obligations, the Obligor making such proportionately smaller payment shall, when permitted by the first sentence of this Section 1, pay to the other Obligors amounts such that the net payments made by the Obligors with respect to the Obligations shall be shared among the Obligors pro rata in proportion to their respective Payment Obligations. If any Obligor receives any payment by way of subrogation that is greater in proportion to the amount of its Payment Obligation than the payments received by the other Obligors are in proportion to the amounts of their respective Payment Obligations, the Obligor receiving such proportionately greater payment shall, when permitted by the first sentence of this Section 1, pay to the other Obligors an amount such that the subrogation payments received by the Obligors shall be shared among the Obligors pro rata in proportion to their respective Payment Obligations. As used in this Agreement, the term "Payment Obligations" shall mean, with respect to any Obligor, that part, if any, of (i) Advances (together with interest thereon and fees, prepayment premiums and other charges properly attributable thereto) that have been received by and used by or for the benefit of such Obligor and (ii) the Letter of Credit Obligations attributable to a Letter of Credit to the extent the issuance of such Letter of Credit benefitted such Obligor. If there is any doubt or uncertainty as to the Obligor or Obligors for whose benefit an Advance has been received or used, such Advance shall be deemed to have been received by and used by or for the benefit of International Shipholding Corporation ("ISC"). If there is any doubt or uncertainty as to the Obligor or Obligors for whose account a Letter of Credit has been issued, such Letter of Credit shall be deemed to have been issued for the account of ISC and such Letter of Credit Obligations attributable to such Letter of Credit shall be attributed to ISC. Any statute of limitations that relates to a suit or claim by one or more Obligors against another Obligor shall be tolled until the Obligations have been paid in full to the Lender.

2.This Agreement may not be amended, nor may any provision of this Agreement be waived, without the express prior written consent of the Lender.

3.This Agreement shall bind and inure to the benefit of the Obligors and their respective successors and assigns. This Agreement may only be waived, modified or amended by a written instrument signed by the party against whom the enforcement thereof is sought, subject to the provisions of Section 2 above. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Alabama. If any term of this Agreement shall be invalid or unenforceable, the remainder of this Agreement shall remain in full force and effect.

4.Nothing contained in this Agreement shall limit or otherwise affect the joint and several liability of the Obligors with respect to the Obligations under the Credit Agreement and the other Credit Documents.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of the date first above written.

INTERNATIONAL SHIPHOLDING CORPORATION,

a Delaware corporation

By:      /s/ Erik L. Johnsen

Name: Erik L. Johnsen

Its:       President

ENTERPRISE SHIP COMPANY, INC.,

a Delaware corporation

By:      /s/ Erik L. Johnsen

Name: Erik L. Johnsen

Its:       President

SULPHUR CARRIERS, INC.,

a Delaware corporation

By:      /s/ Erik L. Johnsen

Name: Erik L. Johnsen

Its:       President

GULF SOUTH SHIPPING PTE LTD.,

a Republic of Singapore corporation

By:      /s/ Erik L. Johnsen

Name: Erik L. Johnsen

Its:       Director

 CG RAILWAY, INC.,

a Delaware corporation

By:      /s/ Erik L. Johnsen

Name: Erik L. Johnsen

Its:       President

 LCI SHIPHOLDINGS, INC.,

 a Republic of the Marshall Islands corporation

 By:      /s/ Erik L. Johnsen

 Name: Erik L. Johnsen

 Its:       President

 CENTRAL GULF LINES, INC.,

 a Delaware corporation

 By:      /s/ Erik L. Johnsen

 Name: Erik L. Johnsen

 Its:       President

 WATERMAN STEAMSHIP CORPORATION,

 a New York corporation

 By:      /s/ Erik L. Johnsen

 Name: Erik L. Johnsen

 Its:       President

OFFICER'S CERTIFICATE

In connection with the execution of that certain Credit Agreement by and among INTERNATIONAL SHIPHOLDING CORPORATION, a Delaware corporation (the "Company"), and certain of its subsidiaries, as co-borrowers, and REGIONS BANK, an Alabama banking corporation, as lender, dated as of March , 2008, I do hereby certify as follows:

1.I am an Assistant Secretary of the Company and am duly authorized to execute and deliver this certificate.

2.Each of the following persons is a duly elected, qualified and acting officer of the Company and, as of the date hereof; has the title indicated and the signature opposite of such person's name is genuine.

Office                                               NameSignature

                     President                                    Erik L. Johnsen            /s/ Erik L. Johnsen

              Vice President and

            Chief Financial Officer                      Manuel G. Estrada          /s/ Manuel G. Estrada

       Vice President and Treasurer                  David B. Drake              /s/ David B. Drake

3.Attached hereto as Exhibit A is a true, correct and complete copy of the Restated Certificate of Incorporation of the Company and any amendments thereto (as amended, the "Certificate of Incorporation"). Said Certificate of Incorporation has not been amended or changed (except as set forth in the amendments, if any, included in Exhibit A) and is in full force and effect.

4.Attached hereto as Exhibit B is a true, correct and complete copy of the Bylaws of the Company and any amendments thereto. Said Bylaws have not been amended or changed (except as set forth in the amendments, if any, included in Exhibit B) and are in full force and effect.

5.Attached hereto as Exhibit C is a true, correct and complete copy of the authorizing resolution of the Company (the "Authorizing Resolution") duly adopted by its board of directors on March 3, 2008. The Authorizing Resolution has not been amended, changed or rescinded and is in full force and effect.

IN WITNESS WHEREOF, this certificate has been executed on behalf of the Company by the undersigned Assistant Secretary.

                          Dated: March     7    , 2008.

                                                                                                      /s/ H. Hughes Grehan

                                                                                    H. Hughes Grehan, as Assistant Secretary of

                                                                                    International Shipholding Corporation

EXHIBIT A

Certificate of Incorporation

STATE OF DELAWARE

SECRETARY OF STATE

OX VISION OF CORPORATIONS

FILED 1200 PM 05/24/1996

960151543 - 861721

RESTATED CERTIFICATE OF INCORPORATION

OF

INTERNATIONAL SHIPHOLDING CORPORATION

We, the undersigned, Erik F. Johnsen and George Denbgre, being respectively the President and Secretary of International Shipholding Corporation (the "Company"), a corporation organized and existing under the laws of the State of Delaware, do hereby certify as follows:

1.The name of the Company is International Shipholding Corporation.

2.The Company's original Certificate of Incorporation was filed with the Secretary of State of Delaware on October 20, 1978.

3.Pursuant to Section 24.2 of the Delaware General Corporation Law (the "DGCL"), an amendment to the Company's Certificate of Incorporation to add a new Article V thereto to provide for limitations on ownership of the Company's capital stock by non-U.S. citizens has been duly adopted by resolution of the Board of Directors of the Company and approved by the holders of the Company's Common Stock entitled to so vote on April 17, 1996.

4.Pursuant to Section 245 of the DGCL, this Restated Certificate of Incorporation was duly adopted by the Board of Directors of the Company and restates and integrates the provisions of the Company's Certificate of Incorporation as theretofore amended or supplement­ed, provides for the deletion of provisions intentionally omitted in reliance upon Section 245(c) of the DGCL, and also further amends the Company's Certificate of Incorporation by adding a new Article V thereto.

5.As so further amended, the text of the Restated Certificate of Incorporation of the Company shall read in its entirety as follows:

ARTICLE I

The name of the Company is INTERNATIONAL SI-UPHOLDING CORPORATION. ARTICLE 11

The registered office of the Company is to be located at 1209 Orange Street in the City of Wilmington, County of New Castle, State of Delaware. The name of its registered agent at such address is The Corporation Trust Company.

ARTICLE M

The nature of the business or purposes to be conducted or promoted is:

To carry on and conduct any and every kind of manufacturing, distribution and service business; to manufacture, process, fabricate, rebuild, service, purchase or otherwise acquire, to design, invent or develop, to import or export, and to distribute, lease, sell, assign or otherwise dispose of and generally deal in and with raw materials, products, goods, wares, merchandise and real and personal property of every kind and character; and to provide services of every kind and character.

To conduct any lawful business, to exercise any lawful purpose and power, and to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

In general, to possess and exercise all the powers and privileges granted by the General Corporation Law of Delaware or by any other law of Delaware or by this Certificate of Incorporation, together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the Company.

ARTICLE TV

A. General.

1.The total number of shares of stock that the Company hall have authority to issue is eleven million shares, of which ten million shall be common stock with a par value of $1.00 per share (the "Common Stock") and one million shall be preferred stock with a par value of $1.00 per share (the "Preferred Stock").

2.Shares of stock of any class now or hereafter authorized may be issued by the Company from time to time for such consideration (not less than the par value thereof if there be a par value) as shall be fixed from time to time by the Board of Directors of the Company. Any and all shares of stock so issued for which the consideration so fixed has been paid or delivered to the Company shall be declared and taken to be fully paid stock and chat] not • be liable to any further call or assessment thereon, and the holders of such shares shall not be liable for any further payments in respect of such shares. Subscriptions to, or the purchase price of, shares of stock of the Company may be paid for, wholly or partly, by cask by labor done, by personal property, or by real property or leases thereof. In the absence of actual fraud in the transaction, the judgment of the directors as to the value of such labor, personal property, real estate or leases thereof shall be conclusive.

3.Any and all right, title, interest and claim in or to any dividends declared by the Company, whether in cash, stock or otherwise, which are unclaimed by the stockholder entitled thereto for a period of six years after the close of business on the payment date, shall be and be deemed to be extinguished and abandoned; and such unclaimed dividends in the possession of the Company, its transfer agents or other agents or depositaries, shall at such time become the absolute property of the Company, free and clear of any and all claims of any person or entity whatsoever.

4.The designation and the powers, preferences, rights, qualifications, limitations and restrictions applicable to the Common Stock and the Preferred Stock shall be, or shall be determined, as hereinafter set forth.

B.Common Steclc.

1.          Dividend Rights. Subject to the provisions of law and the preferences of the Preferred Stock and of any other stock ranking prior to Common Stock as to dividends, the holders of Common Stock will be entitled to receive dividends when, as and if declared by the . Board of Directors.

2.          Voting Riehts. Except as otherwise provided by law or pursuant to this Article IV, the holders of Common Stock shall be entitled to one vote, in person or by proxy, for each share held On each matter submitted to a vote of the shareholders of the Company. Except as otherwise provided by law, by the Certificate of Incorporation or by resolution or resolutions of the Board of Directors providing for the issue of any series of Preferred Stock, the holders of Common Stock will have sole voting power.

3.                Liquidation Rights. In the event of any liquidation, dissolution or windingup of the Company, whether voluntary or involuntary, after payment or provision for payment of the debts and other liabilities of the Company and the preferential amounts to which the holders of any stock ranking prior to the Common Stock in the distribution of assets are entitled upon liquidation, the holders of the Common Stock and the holders of any other stock ranking on a parity with the Common Stock in the distribution of assets upon liquidation will be entitled to share in the remaining assets of the Company according to their respective interests.

C. Preferred Stock.

1.Authority of the Board of Directors to Issue in Series. Preferred Stock may be issued from time to time in one or more series. All shares of any one series of Preferred Stock shall be identical except as to the dates of issue and the dates from which dividends on shares of the series issued on different dates will cumulate, if cumulative. Authority is hereby expressly granted to the Board of Directors to authorize the issue of one or more series of Preferred Stock, and to fix by resolution or resolutions providing for the issue of each such series the voting powers, designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, of such series, to the full extent now or hereafter permitted by law, including, but not limited to, the following:

(a)The number of shares of such series, which may subsequently be increased, except as otherwise provided by the resolution or resolutions of the Board of Directors providing for the issue of such series, or decreased, to a number not less than the number of shares then outstanding, by resolution or resolutions of the Board of Directors, and the distinctive designation thereof;

(b)The dividend rights of such series, the preferences, if any, over any other class or series of stock, or of any other class or series of stock over such series, as to dividends, the extent, if any, to which shares of such series will be entitled to participate in dividends with shares of any other series or class of stock, whether dividends on shares of such series will be fully, partially or conditionally cumulative, or a combination thereof, and any limitations, re­strictions or conditions on the payment of such dividends;

(c)The rights of such series, and the preferences, if any, over any other class or series of stock, or of any other class or series of stock over such series, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and the extent, if any, to which shares of any such series will be entitled to participate in such event with any other series or class of stock;

(d)The time or times during which, the price or prices at which, and the terms and conditions on which the. shares of such series may be redeemed;

(e)The terms of any purchase, retirement or sinking funds which may be pro­vided for the shares of such series;

(f)The terms and conditions, if any, upon which the shares of such series will be convertible into or exchangeable for shares of any other series, class or classes, or any other securities;

(g)The voting powers, if any, of such series.

2.         Limitation on Dividends. No holders of any series of Preferred Stock will be entitled to receive any dividends thereon other than those specifically provided for by the Certificate of Incorporation or the resolution or resolutions of the Board of Directors providing for the issue of such series of Preferred Stock, nor will any accumulated dividends on Preferred Stock bear any interest_

3.         Limitation on Liquidating Distributions. In the event of any liquidation, dissolution or winding up of the Company, whether vobmtary or involuntary, the holders of Preferred Stock of each series will be entitled to receive only such amount or amounts as will have been fixed by the Certificate of Incorporation or by the resolution or resolutions of the Board of Directors providing for the issue of such series. A consolidation or merger of the Company with or into one or more other corporations or a sale, lease or exchange of all or substantially all of the assets of the Company will not be deemed to be a voluntary or involuntary liquidation, dissolution or winding up, within the meaning of this Article IV.

ARTICLE V

A.         Purpose. The provisions of this Article V are intended to assure that the Company remains in continuous compliance with the citizenship requirements of the Merchant Marine Act, 1920, as amended, the Merchant Marine Act, 1936, as amended, the Shipping Act, 1916, as amended, and the regulations promulgated thereunder, as such laws and regulations are amended from time to time (collectively, the "Maritime Laws"). It is the policy of the Company that Non-Citizens should not Beneficially Own, individually or in the aggregate, any shares of the Company's Capital Stock in excess of the Permitted Amount. If the Board of Directors of the Company should conclude in its sole discretion at any time that Non-Citizens have become, or are about to become, the Beneficial Owners, individually or in the aggregate, of shares of Capital Stock in excess of the Permitted Amount, the Board of Directors may by resolution duly adopted declare that any or all of the provisions of subparagraphs C, D and E of this Article V shall apply.

B.         Definitions. For purposes of this Article V, the following terms shall have the meanings specified below:

1.A Person shall be deemed to be the "Beneficial Owner" of, or to "Beneficially Own," shares of Capital Stock to the extent such Person would be deemed to be the beneficial owner thereof pursuant to Rule 11:1-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as such rule may be amended from time to time.

2."Capital Stock" shall mean any class or series of capital stock of the Company other than any class or series of capital stock of the Company that is permitted by the Maritime Administration of the United States Department of Transportation ("MARAD") to be excluded from the determination of whether the Company is in compliance with the citizenship requirements of the Maritime laws.

3."Citizen" shall mean: (a)any individual who is a citizen of the United States, by birth, naturalization or as otherwise authorized by law; (b)any corporation (i) that is organized under the laws of the United States or of a state, territory, district or possession thereof, (ii) not less than 75% of the capital Stock of which is Beneficially Owned by Persons who are Citizens, (iii) whose president or chief executive officer, chairman of the board of directors and all officers authorized to act in the absence or disability of such Persons are Citizens and (iv) of which more than 50% of the number of its directors necessary to constitute a quorum are Citizens; (c)any partnership (i) that is organized under the laws of the United States or of a state, territory, district or possession thereof, (ii) all general partners of which are Citizens and (iii) not less than a 75% interest in which is Beneficially Owned by Persons who are Citizens; (d)any association or limited liability company (i) that is organized under the laws of the United States or of a state, territory, district or possession thereof, (ii) whose president or chief executive officer (or the Person serving in an equivalent position), chairman of the board of directors (or equivalent position) and all Persons authorized to act in the absence or disability of such Persons are Citizens, (iii) not less than a 75% interest in which or 75% of the voting power of which is Beneficially Owned by Citizens and (iv) of which more than 50% of the number of its directors (or the Persons serving in equivalent positions) necessary to constitute a quorum are Citizens; (e)any joint venture (if not an association, corporation or partnership) (i) that is organized under the laws of the United States or of a state, territory, district or possession thereof and (ii) all co-venturers of which are Citizens; and (f)any trust (i) that is domiciled in and existing under the laws of the United States or of a state, territory, district or possession thereof, (ii) the trustee of which is a Citizen and (iii) of which not less than a 75% of the beneficial interests in both income and principal are held for the benefit of Citizens

4."Non-Citizen" shall mean any Person other than a Citizen.

5."Permitted Amount" shall mean shares of Capital Stock that, individually or in the aggregate (a) have Voting Power not in excess of 23% of Total Voting Power or (b) constitute not more than 23% of the total number of the issued and outstanding shares of Capital Stock; provided that, if the Maritime Laws are amended to change the amount of Capital Stock that a Non-Citizen may own or have the power to vote, then the Permitted Amount shall be changed to a percentage that is two percentage points less than the percentage that would cause the Company to be no longer qualified under the Maritime Laws, after giving effect to such amendment, as a Citizen qualified to (i) engage in coastwise trade, (ii) participate in MARAD's Title Xi or comparable financing programs, or (iii) participate in operating differential subsidies or similar programs.

6."Person' shall mean an individual, partnership, Corporation, limited liability company, trust, joint venture or other entity.

7."Total Voting Power" shall mean the total number of votes that may be cast by all outstanding shares of Capital Stock having Voting Power.

8."Voting Power" shall mean the power to vote with respect to the election of the Company's directors.

C.Restrictions on Transfer.

1.Any transfer, or attempted or purported transfer, of any shares of the Capital Stock of the Company or any interest therein or right thereof, that would result in the Beneficial Ownership by Non-Citizens, individually or in the aggregate, of shares of Capital Stock in excess of the Permitted Amount will, until such excess no longer exists, be void and ineffective as against the Company and the Company will not recognize, with respect to those shares that caused the Permitted Amount to be exceeded, the purported transferee as a stockholder of the Company for any purpose other than the transfer by the purported transferee of such excess to a person who is not a Non-Citizen or to the extent necessary to effect any other remedy available to the Company under this Article V.

2.The Board of Directors is hereby authorized to effect any and all measures necessary or desirable (consistent with applicable law and the provisions of this Certificate of Incorporation) to fulfill the purpose and implement the provisions of this Article V. including without limitation, obtaining, as a condition to recording the transfer of shares on the stock records of the Company, affidavits or other proof as to the citizenship of existing or prospective stockholders on whose behalf shares of the Capital Stock of the Company or any interest therein or right thereof are or are to be held, or establishing and maintaining a dual stock certificate system under which different forms of stock certificates representing outstanding shares of the Capital Stock of the Company are issued to Citizens or Non-Citizens.

D.Suspension of Voting. Dividend and Distribution Rights with Respect to Excess Shares. If any shares of Capital Stock in excess of the Permitted Amount are Beneficially Owned by Non-Citizens, individually or in the aggregate, any such excess shares determined in accordance with this subparagraph D (the "Excess Shares"), shall, until such excess no longer exists, not be entitled to (1) receive any dividends or distributions of assets declared payable or paid to the holders of the Capital Stock of the Company during such period or (2) vote with respect to any matter submitted to a vote of the stockholders of the Company, and such Excess Shares shall not be deemed to be outstanding for purposes of determining the vote required on any matter properly submitted to a vote of the stockholders of the Company. At such time as the Permitted Amount is no longer exceeded, full voting rights shall be restored to any shares previously deemed to be Excess Shares, and any dividends or distributions with respect thereto that have been withheld shall be due and paid to the holders of such shares. If the number of shares of Capital Stock Beneficially Owned by Non-Citizens is in excess of the Permitted Amount, the shares deemed to be Excess Shares for purposes of this Article V will be those shares Beneficially Owned by Non-Citizens that the Board of Directors determines became so Beneficially Owned most recently, and such determination shall be conclusive.

E.Redemption_of  Shares. The Company shall have the power, but not the obligation, to redeem Excess Shares subject to the following terms and conditions:

1.The per share redemption price (the "Redemption Price") to be paid for the Excess Shares to be redeemed shall be the sum of (a) the average closing sales price of the comma.' 7 Capital Stock and (b) any dividend or distribution declared with respect to such shares prior to the date such shares are called for redemption hereunder but which has been withheld by the Company pursuant to subparagraph D. As used herein, the term "average closing sales price" shall mean the average of the closing sales prices of the Capital Stock on the New York Stock Exchange during the 10 trading days immediately prior to the date the notice of redemption is given; except that, if the Capital Stock is not traded on the New York Stock Exchange then the closing sales prices of the Capital Stock on any other national securities exchange selected by the Company on which such Capital Stock is listed, and if not listed on any national securities exchange, the closing sales prices as quoted on the Nasdaq National Market, and if not so quoted, the mean between the representative bid and ask prices as quoted by Nasdaq or another generally recognized reporting system, on each of such 10 trading days, and if not so quoted, as may be determined in good faith by the Board of Directors.

2.The Redemption Price may be paid in cash or by delivery of a promissory note of the Company, at the election of the Company. Any such promissory note shall have a maturity of not more than 10 years from the date of issuance and shall bear interest at the rate equal to the then current coupon rate of a 10-year Treasury note as such rate is published in The Wall Street Journal or comparable publication.

3.A notice of redemption shall be given by first class mail, postage prepaid, mailed not less than .10 days prior to the redemption date to each holder of record of the shares to be redeemed, at such holder's address as the same appears on the stock records of the Company. Each such notice shall state (a) the redemption date, (b) the number of shares of Capital Stock to be redeemed from such holder, (c) the Redemption Price, and the manner of payment thereof, (d) the place where certificates for such shares are to be surrendered for payment of the Redemption Price, and (e) that dividends on the shares to be redeemed will cease to accrue on such redemption date.

4.From and after the redemption date, dividends on the shares of Capital Stock called for redemption shall cease to accrue and such shares shall no longer be deemed to be outstanding and all rights of the holders thereof as stockholders of the Company (except the right to receive from the Company the Redemption Price) shall cease. Upon surrender of the certificates for any shares so redeenied in accordance with the requirements of the notice of redemption (properly endorsed or assigned for transfer if the notice shall so state), such shares shall be redeemed by the Company at the Redemption Price. In case fewer than all shares represented by any such certificate are redeemed, a new certificate shall be issued representing the shares not redeemed without cost to the holder thereof.

5.Such other terms and conditions as the Board of Directors may reasonably determine.

71*.

ARTICLE VI

In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized at any regular or special meeting thereof, without stockholder approval:

1.To make By-laws for the Company, and to amend, alter or repeal any By-laws.

2.To authorize and cause to be executed mortgages and liens upon the real and personal property of the Company.

3.To authorize the borrowing of money; the issuance of bonds, notes, debentures and other obligations or evidences of indebtedness of the Company, secured or unsecured, and the inclusion of provisions as to redeemability and convertibility into shares of stock of the Company or otherwise.

4.To authorize the purchase or other acquisition of shares of stock of the Company or any of its bonds, debentures, notes or other securities or evidences of indebtedness.

5.To determine from time to time whether and to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of the Company, or any of them, shall be open to the inspection of the stockholders; and no stockholder shall have any right to inspect any account book or document of the Company, except as conferred by statute or authorized by the Board of Directors, or by resolution of the stockholders.

6.To set apart out of the funds of the Company available for dividends a reserve or reserves for any proper purposes and to abolish any such reserve in the manner in which it was created.

7.To designate one or more committees, each committee to consist of two or more directors of the Company. Any such committee, to the extent provided in the resolution or in the By-laws of the Company, shall have and may exercise the power of the Board of Directors in the management of the business and affairs of the Company, and may authorize the seal of the Company to be affixed to all papers which may require it. The Board of Directors may designate one or more of the directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee; provided, however, the By­laws may provide that in the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

8.To provide indemnification to the full extent permitted by Delaware law.

ARTICLE VII

The number of directors of the Company shall be fixed from time to time by, or in the manner provided in, its By-laws and may be increased or decreased as therein provided. Election of directors need not be by ballot unless the By-laws so provide. The directors of the Company Orli be elected Annually by the stockholders and shall hold office until their respective successors arc duly elected and qualified. The By-laws may prescribe the number of directors necessary to constitute a quorum.

ARTICLE VM

Meetings of stockholders may be held within or without the State of Delaware, as the By­laws may provide. The books of the Company may be kept (subject to any provisions contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-laws of the Company. Any corporate action .upon which a vote of stockholders is required or permitted may be taken without a meeting and vote of stockholders with the written consent of stockholders having not less than a majority of the total number of votes entitled to be cast upon the action, or such larger percentage required by statute, if a meeting were held. Prompt notice shall be given to all stockholders of the taking of corporate action without a meeting by less than unanimous written consent.

ARTICLE IX

The Company reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.

ARTICLE X

No director shall be personally liable to the Company or its stockholders for monetary damages for any breach of fiduciary duty by such director as a director, except (i) for breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this Article X shall apply to or have any effect on the liability or alleged liability of any director of the Company for or with respect to any acts or omissions of such . 'director oc.curring prior to such amendment or repeal.

6.This Restated Certificate of Incorporation shall be effective upon its filing with the Secretary of State of Delaware pursuant to Section 103 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, International Shipholding Corporation has caused this certificate to be signed by Erik F. Johnsen, its President and attested by George Denegre, its Secretary, this 17 day of April, 1996 .

INTERNATIONAL SHIPHOLDING CORPORATION

                                                                  /s/ Erik F. Johnsen

                                                             Erik F. Johnsen, President

CORPORATE SEAL

Attest:

By:               /s/ George Denegre

               George Denegre, Secretary

EXHIBIT B

Bylaws

{N1775999.21

INTERNATIONAL SEIPROLDING CORPORATION

BY-LAWS

ARTICLE I

Meetings of Stockholders

SECTION 1. ANNUAL MEETINGS.--Annual meetings of stockholders for the election of directors and for such other business as may be stated in the notice of the meeting, shall be held at the office of the Company in New Orleans, Louisiana, at 9:30 a.m.pon the fourth Thursday in April, or at such place, either within or without the State of Delaware, and at such time and date as the Board of Directors, by resolution, shall determine and set forth in the notice of the meeting.

SECTION 2. VOTING.--All elections for directors shall be decided by plurality vote; all other questions shall be decided by the vote of a majority in voting interest of the stockholders present in person or by proxy and entitled to vote thereat, a quorum being present, except as otherwise provided by the Certificate of Incorporation or the laws of the State of Delaware. The vote for directors shall be by ballot.

A complete list of the stockholders entitled to vote at the ensuing election, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting; either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

SECTION 3. QUORUM.--Except as otherwise required by law, by the Certificate of Incorporation or by these By-Laws, * the presence, in person or by proxy, of stockholders holding a majority of the stock of the Company entitled to vote shall constitute a quorum at all meetings of the stockholders. In case a quorum shall not be present at any meeting, a majority in interest of the stockholders entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcemeat at the meeting, until the requisite amount of stock entitled to vote•shall be present, except as otherwise provided by the Certificate of Incorporation or the laws of the State of Delaware.

SECTION 4. SPECIAL MEETINGS.--Special meetings of the stockhold­ers may be called by the Chairman, President, or Secretary, or by resolution of the Board of Directors, and may be held at such time and in such place and for such purpose as is specified in the notice of meeting.

SECTION 5. NOTICE OF MEETINGS.--Unless waived, written notice, stating the place, date and time of the meeting, and the general nature of the business to be considered, shall be given to each stockholder entitled to vote thereat at his address as it appears on the records of the Company, not less than ten nor .more than fifty days before the day of the meeting, and such notice shall be deemed to be given at the time when the same shall be deposited, with postage thereon prepaid, in the United States mail.

SECTION 6. ORDER OF BUSINESS.--The order of business at each meeting of the stockholders shall be determined by the chairman of such meeting, but such order of business at any meeting at which a quorum is present may be changed by the vote of a majority in voting interest of those present in person or by proxy at such meeting and entitled to vote thereat.

ARTICLE II

Directors

SECTION 1. NUMBER AND TERM.--The numer of directors shall consist of such number of persons, not less than three (3), as shall from time to time be fixed by resolution of the Board of Directors.

SECTION 2. RESIGNATIONS.--Any director, member of a committee or other officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the Chairman, President, or Secretary. The acceptance of a resignation shall be not be .necessary to make it effective.

SECTION 3. COMMITTEES.--The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board, designate one or more committees, each committee to consist of two or more of the directors of the Company. Any such committee, to the extent provided in the resolution, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Company, and may authorize the seal of the Company to be affixed to all papers which may require it. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee; provided, however, that in the absence of disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorw=, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent of disqualified member.

SECTION 4. MEETINGS.--The newly elected directors may hold their first meeting for the purpose of organization and the transaction of business after the annual meeting of the stockholders, at such time and place as may be fixed by the Board.

Regular meetings of the Board may be held without notice at such places and times as shall be determined from time to time by resolution of the Board.

Special meetings of the Board may be called by the Chairman, the President, or the Secretary, and shall be called by them on the written request of any two directors. At least 12 hours notice (or at least 36 hours notice of given by mail) shall be given to each director unless waived and such meeting shall be held at such place as may be determined by the Board or as shall be stated in the notice of the meeting.

SECTION 5. QUORUM AND MANNER OF ACTING.--A majority of the directors shall constitute a quorum for the transaction of business. The vote of a majority of a quorum of the Board shall be the act of the Board. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned.

SECTION 6. COMPENSATION.--The Board of Directors shall fix the amount of the fees or other compensation payable to each director who is not otherwise compensated as an cfficer or employee of the Company or of one of its subsidiaries. Nothing herein contained shall be construed to preclude any director from serving the Company in any other capacity as an officer, agent or otherwise, and receiving compensation therefor.

SECTION 7. INDEMNIFICATION.--(a) Right To Indemnification. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative ("proceeding"), by reason of the fact that he, or a person for whom he is the legal representative, is or was a director or officer of the Company or any of its subsidiaries (including nominees and designees who have not yet taken office) or is or was serving at the request of the Company (including any person who has not been duly elected or appointed) as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans (the "Indemnitee"), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Company to the fullest extent authorized by the Delaware General Corporation Law ("GCL"), as presently existing or as it may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than the GCL permitted the Company to provide prior to such amendment), against any and all expenses, liability and loss (including attorneys fees, judgments, fines, ERISA excise taxes or penalties, amounts paid in connection with any arbitration or investigation and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith.. Indemnitee's rights hereunder shall be contract rights and shall include the right to be paid by the Company for expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that the payment of such expenses incurred by an Indmenitee in advance of the final disposition of such proceeding, shall be made only upon delivery to the Company of an undertaking in a form satisfactory to counsel for the Company, by or on behalf of such Indemnitee, to repay all amounts so advanced if it should be ultimately determined that guch Indemnitee is not entitled to be indemnified under this provision or otherwise. For purposes of this provision the term Company shall include any resulting or constitutent entities.

(b)        Nonexclusi7itv of Rights.The rights conferred herein on any person shal: not be exclusive of_ any other right which such person may hive or hereafter acquire under any statute, provision of the Certificate of Incorporation, by-law, contract or other agreement, vote of stockholders or disinterested directors or otherwise.

(c)        Insurance.The Company may maintain insurance at its expense, to protect itself and any such director (including nominees and designees who have not yet taken office), officer, employee or agent of the Company or another corporation, partnership, joint venture, trust or other enterprise (including service with respect to employee benefit plans) against any expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under the GCL.

ARTICLE III

Officers

SECTION 1. OFFICERS.--The officers of the Company shall be a Chairman, a President, a Vice President, or more than one Vice President, a Treasurer, and a Secretary, all of whom shall be elected by the Board of Directors and who shall hold office until their successors are elected and qualified. In addition, the Board of Directors may elect a Controller, and may appoint or may delegate the appointment of one or more Assistant Secretaries, Assistant Treasurers, Assistant Controllers, and such other officers and agents as they may deem proper. The officers shall be elected at the first meeting of the Board of Directors after each annual meeting. All of the said elected officers shall hold their offices at the pleasure of the Board.

SECTION 2. CHAIRMAN.--The Chairman shall be the chief executive officer of the Company and shall have the general powers and duties of supervision and management usually vested in the office of the chief executive of a company. He shall preside at all meetings of the stockholders and of the Board of Directors, and shall have general supervision, direction and control of the business of the Company. Except as the Board of Directors shall authorize the execution thereof in some other manner, the Chairman may execute bonds, mortgages and any other contracts of any nature in behalf of the Company.

SECTION 3. PRESIDENT.--The President shall be the chief operating officer of the Company. At the request of the Chairman, or in his absence or during his disability, the President shall perform the duties and exercise the functions of the Chairman. Except as the Board of Directors shall authorize the execution thereof in some other manner, the President may execute bonds, mortgages and any other contracts of any nature in behalf of the Company.

SECTION 4. VICE PRESIDENT.--In the event of death, absence or inability of the President to perform any duties imposed upon him by these By-Laws and the order of the Board of Directors, the Vice President, or if there be more than one, the Vice Presidents in the order of senority, may exercise his powers and perform his duties subject to the control' of the Chairman and the Board of Directors. Except as the Board of Directors shall authorize the execution thereof in some other manner, any Vice President may execute bonds, mortgages and any other contracts of any nature in behalf of the Company.

SECTION 5. SECRETARY.--The ,Secretary shall give, or cause to be given, notice of all meetings of stockholders and directors, and all other notices required by law or by these By-Laws, and in case of his absence or refusal or neglect so to do, any such

notice may be given by any person thereunto directed by the Chairman, the President, or by the directors, upon whose requisition the meeting is called as provided in these By-Laws. He shall record all the proceedings of the meetings of the Company and of the directors in a book to be kept for that purpose, and shall perform such other duties as may be assigned to him by the directors or the Chairman. He shall have the custody of the seal of the Company and shall affix the same to all instruments requiring it, when authorized by the directors or the Chairman, and attest the same.

SECTION 6. TREASURER.--The Treasurer .shall have the custody of the Company funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the Company. He shall deposit all monies and other valuables in the name and to the credit of the Company in such depositaries as may be designated by the Board of Directors.

The Treasurer shall disburse the funds of the Company as may be ordered by the Board of Directors, the Chairman, or the President, taking proper vouchers for such disbursements. If required by the Board of Directors, he shall give the Company a bond for the faithful discharge of his duties in such amount and with such surety as the Board shall prescribe.

The Treasurer shall sign all checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Company in such manner as shall be determined from time to time by resolution of the Board of Directors; provided, however, that the Directors shall have power by resolution to delegate any of the duties or powers of the Treasurer to other officers.

SECTION 7, CONTROLLER.--The Controller shall be in charge of all Company accounting books, records, and procedures, shall perform internal audits, shall prepare budgets, financial statements and reports for the Chairman, the President, and the Board of Directors. He shall keep his accounts in the name of the Company and shall render such reports as may be required by the Board of Directors, the Chairman, or the President.

The Controller shall perform such other duties as may, from time to time, be assigned to him by the Chairman or by the Board of Directors; and in the .event the office of the Controller is vacant, such duties shall be performed.by such person as may be designated by the Chairman.'

SECTION 8. ASSISTANT SECRETARIES.--Assistant Secretaries, if any shall be appointed, shall, during the •absence cr disability of the Secretary, perform all the duties of the Secretary and shall have such other powers and shal: perform such other duties as shall be assigned to them.

SECTION 9. ASSISTANT TREASURERS.--Assistant Treasurers, if any shall be appointed, shall, during the absence or disability of the Treasurer, perform all the duties of the Treasurer and shall have such other powers and shall perform such other duties as shall be assigned to them.

SECTION 10. ASSISTANT CONTROLLERS.--Assistant Controllers, if any shall be appointed, Shall, during the absence or disability of the Controller, perform all the duties of the Controller and shall have such other powers and shall perform such other duties as shall be assigned to them.

ARTICLE IV

Miscellaneous

SECTION 1. STOCKHOLDERS .RECORD DATE.--In order that the Company may determine the stockholders entitled to notice of or to vote at any meeting of stockholders, or any adjournment thereof, or to express consent to Company action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board cf Directors may fix, In advance, a record date, which shall not be mOre than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of Cr to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that if the 'adjournment is for more than 30 days or if the Board of Directors fixes a new record date for the adjourned meeting, a notice thereof shall be given to each stockholder of record entitled to vote at the meeting.

SECTION 2. FISCAL YEAR.--The fiscal year of the Company shall be the calendar year, unless otherwise determined by resolution cf the Board Of Directors.

ARTICLE V

Amendments

These By-Laws may be altered or repealed and By-Laws may be made by the affirmative vote of a majority of the Board of Directors, at any regular :meeting of the Board of Directors, or at any special meeting of the Board of Directors, if notice of the proposed alteration or repeal, or By-Law or By-Laws to be made, be contained in the notice of such special meeting.

EXHIBIT C

Authorizing Resolution

RESOLVED, that Niels M. Johnsen, Chairman and Chief Executive Officer of the Company, Erik L. Johnsen, President of the Company, Manuel G. Estrada, Vice President and Chief Financial Officer of the Company, and David B. Drake, Vice President and Treasurer of the Company, (each, an "Authorized Officer") be, and each of them hereby is, authorized and directed to execute and deliver, in the name and on behalf of the Company, a Credit Agreement (the "Credit Agreement") between the Company and certain subsidiaries of the Company (the "Subsidiaries") and Regions Bank (the "Lender"), under which Credit Agreement the Lender shall agree to extend to the Company and the Subsidiaries a revolving loan in a maximum principal amount not to exceed $35,000,000; and

RESOLVED FURTHER, that the Credit Agreement shall contain such other terms, covenants, provisions and conditions in addition to those set out above as may seem necessary or desirable to the Authorized Officer executing and delivering the Credit Agreement (the execution of the Credit Agreement to be conclusive proof that all of the terms, covenants, provisions and conditions thereof are deemed necessary and desirable by said Authorized Officer); the form of the Credit Agreement presented to the undersigned directors is hereby approved, subject to such changes thereto which the Authorized Officer deems necessary and reasonable; and

RESOLVED FURTHER, that each Authorized Officer be, and each of them hereby is, authorized to execute and deliver in the name of the Company one or more promissory notes evidencing such borrowing, said notes to be in the principal amount specified in the Credit Agreement and to bear interest at the rate specified in the Credit Agreement and to contain the terms, covenants, provisions and conditions provided for in the Credit Agreement; and

RESOLVED FURTHER, that each Authorized Officer be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute and deliver a Subrogation and Contribution Agreement with the other Borrowers referred to in the Credit Agreement, the purpose of such Subrogation and Contribution Agreement being to effect an equitable sharing of the respective liabilities of the Company and the Subsidiaries, which document shall contain such terms, covenants, provisions and conditions as may seem necessary or desirable to the Authorized Officer executing and delivering the same (the execution thereof to be conclusive proof that all the terms, covenants, provisions and conditions thereof are deemed necessary and desirable by said Authorized Officer); and

RESOLVED FURTHER, that any Authorized Officer and any Assistant Treasurer of the Company be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to request disbursements of the proceeds of said borrowings and to direct the disposition of such proceeds, and to otherwise act on behalf of the Company in connection with the transactions contemplated by the Credit Agreement and the related documents, and the Lender may conclusively rely on the authority granted herein with respect to such officers until the Lender shall have received copies certified by the Secretary or any Assistant Secretary of the Company of further resolutions adopted by the Directors of the Company canceling or amending the authority granted under these resolutions; and

RESOLVED FURTHER, that any Authorized Officer be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute such certificates and instruments and do all such other acts as may be appropriate or as may be required by law or by said Lender in connection with the said borrowing and with the execution and delivery of the Credit Agreement; and

RESOLVED FURTHER, that any Authorized Officer be, and each of them hereby is, authorized and directed to take any and all actions as he, in his sole discretion, shall deem necessary or advisable in order to consummate the transactions contemplated by any of the foregoing resolutions and to perform or cause the performance of the Company's obligations thereunder; and

RESOLVED FURTHER, that any and all actions described in the foregoing resolutions heretofore taken on behalf of the Company by an Authorized Officers are hereby approved, confirmed and ratified as the valid and fully authorized act of the Corporation without the necessity of any further action by the undersigned.

OFFICER'S CERTIFICATE

In connection with the execution of that certain Credit Agreement by and among ENTERPRISE SHIP COMPANY, INC., a Delaware corporation (the "Company"), and certain of its affiliates, as co-borrowers, and REGIONS BANK, an Alabama banking corporation, as lender, dated as of March 7 , 2008, I do hereby certify as follows:

1.I am an Assistant Secretary of the Company and am duly authorized to execute and deliver this certificate.

2.Each of the following persons is a duly elected, qualified and acting officer of the Company and, as of the date hereof, has the title indicated and the signature opposite of such person's name is genuine.

Office                                               NameSignature

                     President                                    Erik L. Johnsen             /s/ Erik L. Johnsen

              Vice President and

            Chief Financial Officer                      Manuel G. Estrada          /s/ Manuel G. Estrada

       Vice President and Treasurer                  David B. Drake              /s/ David B. Drake

3.Attached hereto as Exhibit A is a true, correct and complete copy of the Amended and Restated Certificate of Incorporation of the Company and any amendments thereto (as amended, the "Certificate of Incorporation"). Said Certificate of Incorporation has not been amended or changed (except as set forth in the amendments, if any, included in Exhibit A) and is in full force and effect.

4.Attached hereto as Exhibit B is a true, correct and complete copy of the Bylaws of the Company and any amendments thereto. Said Bylaws have not been amended or changed (except as set forth in the amendments, if any, included in Exhibit B) and are in full force and effect.

5.Attached hereto as Exhibit C is a true, correct and complete copy of the authorizing resolution of the Company (the "Authorizing Resolution") duly adopted by its board of directors on March 3, 2008. The Authorizing Resolution has not been amended, changed or rescinded and is in full force and effect.

IN WITNESS WHEREOF, this certificate has been executed on behalf of the Company by the undersigned Assistant Secretary.

Dated: March  7, 2008.

                                                                                 /s/ H. Hughes Grehan

                                                                                    H. Hughes Grehan, as Assistant Secretary of

                                                                                    International Shipholding Corporation

EXHIBIT A

Certificate of Incorporation

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION OF

ENTERPRISE SHIP COMPANY, INC..

Enterprise Ship Company, Inc., a Delaware corporation (the "Corporation"), through its undersigned President and Secretary and by authority of its Board of Directors, does hereby certify that

FIRST: The Corporation was originally incorporated on May 18, 1995 and the date of filing of the Corporation's Certificate of Incorporation with the Secretary of State of Delaware was May 18, 1995.

SECOND: In accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware, the Corporation's Board of Directors has duly adopted a resolution declaring the advisability of, and directing the stockholder of the Corporation to consider amending and restating the Corporation's Certificate of Incorporation so that as amended and restated said Certificate of Incorporation shall be and read as set forth below.

THIRD: In accordance with Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware, the sole stockholder of the Corporation adopted resolutions amending and restating the Certificate of incorporation so that as amended and restated said Certificate of Incorporation shall -be and read as set forth below.

FOURTH; The Amended and Restated Certificate of Incorporation of the Corporation, adopted in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware shall be and read as follows:

FIRST:The name of this corporation is Enterprise Ship Company, Inc. (the "Corporation").

SECOND: The address of the Corporation's registered office in the State of Delaware is located at 1209 Orange Street, in the City of Wilmington, County of New Castle. The name and address of the CorporatiOn's registered -agent is The Corporation Trust Company, Corporation Truat Center, 1209 Orange Street, Wilmington, Delaware 19801, County of New Castle.

SENT BY                                              8-11-85 ; 4:41P\ ;                                                                                              JONES WALKER-, 302 739 3813:4 4/12

THIRD:The purposes for which the Corporation is

organized are to engage in the following activities:

A.To purchase, acquire, own, hold, use, pledge, hypothecate, mortgage, lease, charter, sub-charter, sell, transfer, finance, refinance and otherwise deal with (i) all right, title and interest in, to and under the S.S. ENERGY INDEPENDENCE (the "Vessel"), (ii) any and all liens, security interests and collateral security for and guarantees of the Vessel, if-any, (iii) any instruments or agreements relating to any of the foregoing, (iv) any monies due or to become due with respect to any of the foregoing, and (v) any and all proceeds of any of the foregoing (the property described in clauses (ii) through (iii) above hereinafter referred to as "Related Assets").

B.To borrow money and otherwise incur indebtedness to facilitate any activity authorized herein and to pledge or otherwise grant security interests in the Vessel and the Related Assets, and any other assets as determined by the Board of Directors, to secure such borrowings and other indebtedness.

C.To authorize, issue, sell and deliver one or more series or classes of bonds, certificates, notes, securities or other evidences of indebtedness of the Corporation, secured or collateralized by the assets of the Corporation, including, but not limited to, the Vessel and the Related Assets (the "Securities").

D.To arrange for and enter into agreements providing for credit enhancement of the Securities.

E.To issue capital stock as provided for herein.

F.To engage in any lawful act or activity and to exercise any powers permitted to corporations under the General Corporation Law of the State of Delaware which are incidental to the foregoing.

FOURTH: The total number of shares of common stock that the Corporation shall have authority to issue is 1,000 shares of common stock, no par value per share (the "Common Stock"). All voting rights shall be vested in the holders of the Common Stock, and at each meeting of stockholders of the Corporation, each holder of Common Stock shall be entitled to one vote for each-share on each matter to come before the meeting. Dividends may be declared upon and paid to the holders of the Common Stock as the Board of Directors shall determine. In the event of liquidation or dissolution of the Corporation, the holders of the common stock shall be entitled to share ratably in all assets of the Corporation.

FIrTH: The name and mailing address of the incorporator is as follows:

George Denegre

Jones, Walker, Waechter, Poitevent, Carrera & Denegre

201 St. Charles Avenue

New Orleans, Louisiana 70170-5100

SIXTH: In furtherance and not in limitation of the powers conferred by the General Corporation Law of the State of Delaware, the Board of Directors is expressly authorized (i) to exercise, in addition to the powers and authorities hereinbef ore or bylaw, conferred upon it, any such powers and authorities and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the General Corporation Law of the State of Delaware and of this Certificate of Incorporation and of the By-laws of the Corporation and (ii) to make, alter, amend or repeal the By-laws of the Corporation.

SEVENTH:

A. No person who is serving or who has served as a director of the Corporation shall be personally liable to the Corporation or any of its shareholders for monetary damages for any breach of fiduciary duty by such director as a director except to the extent provided by applicable law for (i) acts or omissions that the director at the time of such breach knew or believed were clearly in conflict with the best interests of the Corporation (iii any transaction from which the director derived an improper personal benefit, acts or omissions occurring prior to the effective date of this Article 7 or (iv) acts or omissions with respect to which the General Corporation Law of the State of Delaware does not permit the limitation of liability. As used herein, the term "improper personal benefit" does not include a director's reasonable compensation or other reasonable incidental benefit for or on account of his service as a director, officer, employee, independent contractor, attorney or consultant of the Corporation. If the General Corporation Law of the State of Delaware hereafter is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability contained herein, shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of the State of Delaware as so amended. No amendment or repeal of this Article 7, nor the adoption of any provision to this Certificate of Incorporation inconsistent with this Article 7, shall eliminate or reduce the protection granted herein with respect to any matter that occurred prior to such amendment, repeal or adoption.

B. Any person who at any time serves or has served as a director, officer or employee ot the Corporation, or who, while serving as a director, officer or employee of the Corporation, serves or has served, at the request of ehe Corporation, as a director, officer, partner, trustee, employee or agent cf another corporation, partnership, joint venture, trust or other enterprise, or as a trustee or administrator under an employee benefit plan, shall have a right to be indemnified by the Corporation to the fullest extent permitted by law against (i) reasonable expenses, including attorneys' fees, incurred by him in connection with any threatened, pending or completed civil, criminal, administrative, investigative or arbitrative aetion, suit or proceeding (and any appeal therein), whether or not brought by or on behalf of the Corporation, seeking to hold him liable by reason of the fact that he is or was acting in such capacity, and (ii) reasonable payments made by him in satisfaction of any judgment, money decree, fine (including any excise tax assessed with respect to an employee benefit plan), penalty or settlement for which he may have become liable in any such action, suit or proceeding. Such directors, officers and employees shall be entitled to recover from the Corporation, and the Corporation shall pay, all reasonable costs, expenses and attorneys' fees in connection with the enforcement of the indemnification rights granted herein.

C.The Board of Directors shall take all such action as may be necessary or appropriate to authorize the Corporation to pay the indemnification required by this Artiele 7, including without limitation making a determination that indemnification is permissible in the circumstances and a good faith evaluation of the manner in which the claimant for indemnity acted and of the reasonable amount of indemnity due him. The Board of Directors may appoint a committee or special counsel to make such determination and evaluation. To the extent needed, the Board of Directors shall give notice to, and obtain approval from, the shareholders of the Corporation for any decision to indemnify.

D.Any person who at any time after the adoption of this Article 7 serves or has served in the aforesaid capacity for or on behalf of the Corporation shall be deemed to be doing or to have done so in reliance upon, and as consideration for, the right of indemnification provided herein. Such right shall inure to the benefit of the legal representatives of any such person and shall not be exclusive of any other rights to which such person may be entitled apart from the provisions of this Article 7.

EIGHTH: A director shall be fully protected in relying in good faith upon the books of account or other records of the Corporation or statements prepared by any of its officers or by independent public accountants or by an appraiser selected with reasonable care by the Board of Directors as to the value and amount of the assets, liabilities and/or net profits of the Corporation, or any other facts pertinent to the existence and amount of surplus or Other funds from which dividends might properly be declared and paid, or with which the capital stock of the Corporation might properly be purchased or redeemed.

NINTH: The Corporation is to have perpetual existence.

TENTH: The business and affairs of the Corporation shall be managed by and under the direction of the Board of Directors. Election of directors need not be by written ballot unless the By-laws of the Corporation so provide.

ELEVENTH: Meetings of shareholder shall be held at such place, within or without the State of Delaware, as may be designated by or in the manner provided in the By-laws or, if not so designated or provided, at the registered office of the Corporation in the State of Delaware. Elections of directors need not be by ballot unless and except to the extent that the By-laws so provide. The books of the Corporation may be kept (subject to any provision contained in any applicable statute) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-laws of the Corporation.

TWELFTH: For BO long as any Securities are outstanding, in order to better preserve and ensure the Corporation's separate and distinct corporate identity, the Corporation shall: A.Establish and maintain an office through which its business shall be conducted separate and apart from those of the Parent or any Affiliate of the Corporation (such office may consist of office space shared with the Parent or an Affiliate of the Corporation, a portion of which is allocated solely to the Corporation).

B.Maintain separate corporate records and books of account from those of the Parent or any Affiliate of the Corporation.

C.Be governed by a Board of Directors, at least one member of which shall not be a director, officer or employee of the Parent or any Affiliate of the Corporation.

D.Be governed by a Board of Directors that shall hold appropriate meetings (or act by unanimous consent) to authorize all appropriate corporate actions.

For purposes of this Article 12, the following terms shall have the following meanings!

"Affiliate" means any person controlling or controlled by or under common control with the Parent, but shall not include the Corporation. For purposes of this definition, "control", when used with respect to any specified person, means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or ctherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

"Parent" means, with respect to a corporation, any other corporation owning or controlling, directly or indirectly, fifty per cent (50%) or more of the voting stock of such corporation.

THIRTICENTE:Until the retirement, discharge or redemption of all outstanding Securities, the Corporation shall not incur, assume or guaranty any indebtedness except such indebtedness as carries a rating or ratings, as determined by any nationally-recognized statistical rating agency rating the Securities, no lower than each such rating agency's rating of the Securities.

FOURTEENTH: Without the unanimous consent of all of its directors, the Corporation shall not:

A.Institute proceedings to be adjudicated bankrupt or insolvent, or consent, to the institution of bankruptcy or insolvency proceedings against it, or file a petition or, consent to a petition seeking reorganization or relief under any applicable federal or state law relating to bankruptcy or insolvency, or consent to the appointment of           a         receiver,                         liquidator,                            assignee,trustee, seguestrator (or other similar official) of the Corporation or a substantial part of its property, or make any assignment for the benefit of creditors, or, except as required by law, admit in writing its inability to pay its debts generally as they become due, or take any corporate action in furtherance of any such action.

B.Merge or consolidate with or into any other entity, or convey or transfer all or substantively all of its properties and assets to any other entity, unless;

(i)(1) the entity (if other than the Corporation) formed or surviving the merger or consolidation or which acquires the properties and assets of the Corporation is organized and existing under the laws of any State of the United States or the District of Columbia, (2) expressly assumes the due and punctual payment or performance of any and all obligations of the Corporation, and (3) has a Certificate of Incorporation containing provisions substantively identical to the provisions of Article 3, Article 12, Article 13, this Article 14 and Article 15 hereof; and

(ii)immediately after giving effect to the transaction, no default or event of default has occurred and is continuing under any indebtedness of the Corporation or any agreements relating to such indebtedness.

C.Dissolve or liquidate, in whole or in part.

D.Engage in any business activity other than the activities set forth in Article 3.

FIFTEENTH: From time to time, any provision of this Certificate of Incorporation may be amended, altered or repealed, and other provisions authorized by the General Corporation Law of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed thereunder, and all rights at any time conferred upon the stockholders of the Corporation by this Certificate of Incorporation are subject to this Article 15; provided, however, that until the retirement, discharge or redemption of all outstanding Securities, the Corporation shall not, without the prior written consent of each nationally-recognized statistical rating agency which has been requested by or on behalf of the Corporation to rate any Securities and which is then rating such Securities, amend, alter or repeal Article 3, Article 22, Article 13, Article 14 or this Article 15.

IN WITNESS WHEREOF, Enterprise Ship Company; Inc. has caused this Amendment and Restated Certificate of Incorporation to be executed in its corporate name by its President and to be attested by its Secretary, both thereunto authorized, this 31 day of July, 1995.

                                                                                    Enterprise Ship Company, Inc

                                                                                    By:    /s/ Erik F. Johnsen

                                                                                              President

Attest:

/s/ George Denegre

Secretary

EXHIBIT B

Bylaws

CONSENT OF SOLE SHAREHOLDER

OF ENTERPRISE SHIP COMPANY, INC.

APRIL 24, 2007

The undersigned, Central Gulf Lines, Inc., being the sole stockholder of Enterprise Ship Company, Inc. (the "Corporation"), hereby by this Consent in Lieu of Annual Meeting, amends the By-laws of the Corporation as follows:

Article I, Section 1 of the By-laws of the Corporation is amended and restated in its entirety to read as follows:

"ARTICLE I

OFFICES

Section 1. Registered Office. The registered office of the Corporation shall be RSA Battle House Tower Office Building, 11 North Water Street, Suite 18290, Mobile, Alabama 36602."

April 24, 2007.

                                                                                       Central Gulf Lines, Inc.

                                                                                       By: /s/ Niels M. Johnsen

                                                                                              Niels M. Johnsen, Chairman

                                                                                        By: /s/ Erik L. Johnsen

                                                                                              Erik L. Johnsen, President

AMENDED AND RESTATED BY-LAWS OF

ENTERPRISE SHIP COMPANY, INC.

ARTICLE I.

OFFICES

. Section 1.Registered Office. The registered office of Enterprise Ship Company, Inc. (the "Corporation") shall be at 650 Poydras Street in the City of New Orleans, Parish of Orleans, State of Louisiana.

Section 2. Other Offices.The Corporation may also have offices at such other places within and without the State of Louisiana as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II.

MEETINGS OF STOCKHOLDERS

Section 1.  Place.Meetings of stockholders shall be held at such place, within or without the State of Louisiana, as may be designated by resolution of the Board of Directors. In the absence of any such designation, stockholders' meetings shall be held at the registered office of the Corporation in the State of Louisiana.

Section 2. Date.The annual meeting of stockholders shall be held each year on a date and at a time designated by the Board of Directors. At each annual meeting, directors shall be elected and any other proper business may be transacted.

Section 3.Quorums. A majority of the stock issued and outstanding and entitled to vote at any meeting of stockholders the holders of which are present in person or represented by proxy, shall constitute a quorum for the transaction of business, except as otherwise provided by law, by the Certificate of Incorporation, or by these by-laws. A quorum, once established, shall not be broken by a withdrawal of votes that leaves less than a quorum and the votes present may continue to transact .business until adjournment. If, however, such quorum shall not be present or represented at any meeting of the stockholders, a majority of the voting stock represented in person or by proxy may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote thereat.

Section 4. Voting. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present, represented in person or by proxy, shall decide any question brought before such meeting, unless the question is one upon which by express provision of law, or the Certificate of Incorporation, or these By-laws (including, without limitation, Article VII), a different vote is required, in which case such express provision shall govern and control the decision of such question. Each stockholder shall have one vote for each share of stock having voting power that is registered in his or her name on the books of the Corporation on the record date set by the Board of Directors as provided in Section 6 of Article VI hereof.

Section 5.Proxies. At each meeting of the stockholders, each stockholder having the right to vote may vote in person or may authorize another person or persons to act for him by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than three years prior to said meeting, unless said instrument provides for a longer period. All proxies must be filed with the Secretary of the Corporation at the beginning of each meeting in order to be counted in any vote at such meeting.

Section 6. Special Meetings.Special meetings of the stockholders, for any purpose, or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be called by the President and shall be called by the President or the Secretary at the request in writing of a majority of the Board •of Directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the Corporation issued and outstanding, and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

Section 7.  Notice.Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given, which notice shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. The written notice of any meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his or her address as it appears on the records of the Corporation.

Section B.List of Stockholders. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least five days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least five days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

Section 9.Written Consents. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders •of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of any action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

ARTICLE III.

DIRECTORS

Section 1. Number.The number of directors which shall constitute the whole Board shall be not less than three (3) nor more than seven (7). The Board of Directors may, by resolution duly adopted, establish from time to time the number of directors which shall constitute the whole Board of Directors. The directors need not be stockholders.

Section 2. Independent Director.At any given time, at least one member of the Corporation's Board of Directors shall be an Independent Director, as defined below; provided, however, that if at any time the office of an Independent Director shall be vacant for any reason, subject to Articles TWELFTH, THIRTEENTH and FOURTEENTH of the Certificate of Incorporation, any action taken by the Board of Directors in accordance with such Certificate of Incorporation and these By-laws shall nonetheless be valid. As used herein, "Independent Dixectorn means an individual mho is not, and is not an associate (as defined below) of, (i) a direct, indirect or beneficial stockholder, director, officer, employee, affiliate, customer or supplier of International Shipholding Corporation ("ISC") and Central Gulf Lines, Inc. ("CGL"), Delaware corporations, (together with their successors-in-interest) or any of their affiliates (as defined in Article TWELFTH of the Certificate of Incorporation, other than the Corporation; or (ii) a direct, indirect or beneficial stockholder, officer, employee, affiliate, customer, or supplier of, or any person who has received any benefit (excluding, however, any compensation received by such individual in his or her capacity as a director) in any form whatever from, or any person who has provided any service (excluding, however, any service provided by such individual in his or her capacity as a director) in any form whatever to, the Corporation or any of its affiliates or associates. No Independent Director required by this Section 2 shall be a trustee in bankruptcy for ISC, CGL or any affiliate of ISC or CGL. As used in these By-laws the term "associate", when used to indicate a relationship with a person, means (A) a corporation or organization of which such person is an officer or director or is., directly or indirectlY, the beneficial owner of ten percent or more of any class of equity securities, (B) any trust or other estate in which such person serves as trustee or in a similar capacity, and (C) any relative or spouse of such person, or any relative of such spouse, who has the same home as such person.

Section 3. Election; Removal.The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 4 of this Article III, and each director elected shall hold office until his or her successor is elected and qualified; provided, however, that unless otherwise restricted by the Certificate of Incorporation or by law, any director or the entire Board of Directors may be removed, either with or without cause, from the Board of Directors at any meeting of stockholders by a majority of the stock represented and entitled to vote thereat.

Section 4.Vacancies. Vacancies on the Board of Directors by reason of death, resignation, retirement, disqualification, removal from office, or otherwise, and newly created directorships resulting from any increase in the authorized number of directors may be filled by a. majority of the directors then in office, although less than a quorum, or by a sole remaining director. The directors so chosen shall hold office until the next annual election of directors and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.

Section 5. Powers.The property and business of the Corporation shall be managed by or under the direction of its Board of Directors. In addition to the powers and authorities by these By-laws expressly conferred upon them, the Board may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-laws directed or required to be exercised or done by the stockholders.

Section 6. Location of Meetings, Offices, Books.The directors may hold their meetings and have one or more offices, and keep the books of the Corporation, outside of the State of Delaware.

Section 7.   Regular Meetings.  Regular meetings of the Board of Directors may be held without notice at such times and places as shall from time to time be determined by the Board.

Section 8. Special Meetings. Special meetings of the Board of Directors may be called by the President on 48 hours' notice to each director, either personally or by mail or by telegram; special meetings shall be called by the President or the Secretary in like manner and on like notice on the written request of two directors.

Section 9.Quorums. At all meetings of the Board of Directors a majority of the authorized number of directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and the vote of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute, by the Certificate of Incorporation or by these By-laws (including without limitation, Article VII) . If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 10.Written Consents. Unless otherwise restricted by the Certificate of Incorporation or by these By-laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee designated by the Board of Directors may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee.

Section 11. Telephonic Meetings. Unless otherwise restricted by the Certificate of Incorporation or by these By-laws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or of any such committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

Section 12. Committees.The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each such committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee to act as a replacement for any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have such power or authority in reference to the actions enumerated in Article VII of these By-laws, amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending these By­laws; and, unless the resolution or the Certificate of Incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.

Section 13.Compensation. Unless otherwise restricted by the Certificate of Incorporation or these By-laws, the Board of Directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meeti

7

Section 14.   Interests of Creditors. will, at all times, act solely in the Corporation and shall take into account creditors of the Corporation as well as Corporation. The Board of Directors best interest of the the interests of the the interests of the

Section 15.No Commingling.The Corporation's assets will not be commingled with those of any other person or entity. The Corporation will maintain separate corporate records and books of account from those of any other person or entity, and the Corporation will conduct its office so that there will be no commingling of business functions with any other entity.

ARTICLE IV.

OFFICERS

Section 1.    Titles.The officers of the Corporation shall be chosen by the Board of Directors and shall include a President and a Secretary. The Corporation may also have at the discretion of the Board of Directors, such other officers as are desired, including a Chairman of the Board, one or more Vice Presidents, a Treasurer, a Secretary, one or. more Assistant Secretaries and Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 2 of this Article IV. In the event there are two or more Vice Presidents, then one or more may be designated as Executive Vice President, Senior Vice President, or other similar or dissimilar titles. At the time of the election of officers, the directors may by resolution determine the order of their rank. Any number of offices may be held by the same person, unless the Certificate of Incorporation or these By­laws otherwise provide.

Section 2. Appointment.The Board of Directors, at its first meeting after each annual meeting of stockholders, shall choose the officers of the Corporation. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board.

Section 3.Compensation. The salaries of all officers and agents of the Corporation shall be fixed by the Board of Directors.

Section 4. Terms; Removal; Vacancies.The officers of the Corporation shall hold office until their successors are chosen and qualify in their stead. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. If the office of any officer or officers becomes vacant for any reason, the vacancy shall be filled by the Board of Directors.

Section 5.Chairman of the Board.The Chairman of the Board, if such an officer be elected, shall, if present, preside at all meetings of the Board of Directors and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by these By-laws. If there is no President, the Chairman of the Board shall, in addition, be the Chief Executive Officer of the Corporation and shall have the powers and duties prescribed in Section 6 of this Article IV.

Section 6.  President. Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there be such an officer, the President shall be the Chief Executive Officer of the Corporation and, subject to the control of the Board of Directors, shall have general supervision, direction and control of the business and officers of the Corporation. He shall preside at all meetings of the stockholders and, in the absence of the Chairman of the Board, or if there be none, at all meetings of the Board of Directors. He shall •be an ex-officio member of all committees and shall have the general powers and duties of management usually vested in the office of President and Chief Executive Officer of corporations, and shall have such other powers and duties as may be prescribed by the Board of Directors or these By-laws.

Section 7.    Vice Presidents.   In            the              absence Or disability of the President, the Vice Presidents, in order of their rank as fixed by the Board of Directors, or if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President. The Vice Presidents shall have such other duties as from time to time may be prescribed for them, respectively, by the Board of Directors.

Section 8.  Secretary.The Secretary shall attend all sessions of the Board of Directors and all meetings of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose; and shall perform like duties for the standing committees when required by the Board of Directors. He shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or these By-laws. He shall keep in safe custody the seal of the Corporation, and when authorized by the Board, affix the same to any instrument requiring it, and when so affixed it shall be attested by his or her signature or by the signature of an Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his or her signature.

Section 9.   Assistant Secretary.   The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors, or if there be no such determination, the Assistant Secretary designated by the Board of Directors, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

Section 10.    Treasurer.The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys, and other valuable effects in the name and to the credit of the Corporation, in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his or her transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, he shall give the Corporation a bond, in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors, for the faithful performance of the duties of his or her office and for the restoration to the Corporation, in case of his or her death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his or her possession or under his or her control belonging to the Corporation.

Section 11.    Ps.ssistant Treasurer.   theAssistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors, or if there be no such determination, the Assistant Treasurer designated by the Board of Directors, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

ARTICLE V.

INDEMNIFICATION; LIABILITY

Section 1.      Indemnification. The Corporation shall indemnify every person who was or is a party or is or was threatened to be made a party to any action, suit, or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director, officer or employee of the Corporation, or, while a director, officer or employee of the corporation, is or was serving at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including counsel fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding, to the fullest extent permitted by applicable law. The Corporation shall be required to indemnify a person in connection with a proceeding (or part thereof) initiated by such person only if the proceeding (or part thereof) was authorized by the Board of Directors of the Corporation.

Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a person existing at the time of such repeal or modification.

Section 2.  Limitation on Personal Liability. To the fullest extent permitted by the General Corporation Law of the State of Delaware as it now exists or may hereafter be amended and without limiting the provisions of the Certificate ' of Incorporation, no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages arising from a breach of fiduciary duty owed to the Corporation or its stockholders.

Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

ARTICLE VI.

STOCK

Section 1.Certificates. Every holder of stock of the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation by, the Chairman of the Board of Directors, or the President or a Vice President, and by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer of the Corporation, certifying the number of shares represented by the certificate owned by such stockholder in the Corporation.

Section 2.                              Signatures.Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue.

Section 3.                              Statement of Preferences and Rights.If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in Section 202 of the General Corporation Law of the State of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the Corporation will furnish without charge to each stockholder who so requests a full statement of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

•

Section 4.Lost, Stolen or Destroyed Certificates. T h e Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his or her legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

Section 5.                             Transfers.                              Upon                 surrender                          to the Corporation, or the transfer agent of the Corporation, of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

Section 6.                                Fixing Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders, or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 7.Registered Stockholders. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Delaware.

Section 8.                              Dividends.Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the Corporation's capital stock, subject to the provisions of the Certificate of Incorporation. Before payment of any dividend there may be set

. aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interests of the Corporation, and the directors may abolish any such reserve.

ARTICLE VII.

CERTAIN VOTES REQUIRED

Section 1.Bankruptcy, Mergers and Sales of Assets,Liquidations. The Corporation shall not, without the affirmative vote of each member of the Corporation's Board of Directors, including the affirmative vote of each Independent Director: (i) make an assignment for the benefit of creditors, file a petition in bankruptcy, petition or apply to any tribunal for the appointment of a custodian,. receiver, trustee or other similar official for it or for a substantial part of its property, commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute or similar law or statute of any jurisdiction, whether now or hereafter in effect, consent or acquiesce in the filing of any such petition, application, proceeding or appointment of or taking possession by the custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Corporation or any substantial part of its property, or admit its inability to pay its debts generally as they become due or authorize any of the foregoing to be done or taken on behalf of the Corporation; (ii) be a party to any merger or consolidation or sell, transfer, assign, convey or lease any substantial part of the assets of the Corporation, or directly or indirectly purchase or otherwise acquire all or substantially all of the assets or any stock of any class of any corporation, partnership, joint venture or any other entity; or (iii) dissolve or liquidate, in whole or in part; provided that if there is no Independent Director then in office and acting, a vote upon any matter set forth in this Section 1  shall not be taken unless and until an Independent Director shall have been duly elected.

Section 2.Amendment of Certificate of Incorporation and By-laws. Without (i) the affirmative vote of each member of the Corporation's Board of Directors, including, without limitation, the affirmative vote of the Independent Director, and (ii) the affirmative vote of the holders of one hundred percent (100%) of the number of shares of the Common Stock outstanding, the Corporation shall not amend either the Certificate of Incorporation or these By-laws; provided that if there is no Independent Director then in office, no vote upon any matter set forth in this Section 2 shall be taken unless and until an Independent Director shall have been duly elected.

ARTICLE VIII.

GENERAL PROVISIONS

Section 1.                                 Checks.All checks or demands for money and notes of the Corporation shall be signed by such officer or officers as the Board of Directors may from time to time designate.

Section 2.                                 Fiscal Year.                                 The              fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

Section 3.                                 Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware". Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

Section 4. Notices. Whenever, under any provisions of law or of the Certificate of Incorporation or of these By-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his or her address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram, facsimile, personal delivery or telephone. Whenever any notice is required to be given under any provisions of law or of the Certificate of Incorporation or of these By-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed to be the equivalent of the required notice.

Section 5.                              Annual Statement.The Board of Directors shall present at each annual meeting, and at any special meting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the Corporation.

ADOPTED FEBRUARY 5, 1996.

EXHIBIT C

Authorizing Resolution

RESOLVED, that Niels M. Johnsen, Chairman of the Company, Erik L. Johnsen, President of the Company, Manuel G. Estrada, Vice President and Chief Financial Officer of the Company, and David B. Drake, Treasurer of the Company, (each, an "Authorized Officer") be, and each of them hereby is, authorized and directed to execute and deliver, in the name and on behalf of the Company, a Credit Agreement (the "Credit Agreement") between the Company and certain affiliates of the Company (the "Affiliates") and Regions Bank (the "Lender"), under which Credit Agreement the Lender shall agree to extend to the Company and the Affiliates a revolving loan in a maximum principal amount not to exceed $35,000,000; and

RESOLVED FURTHER, that the Credit Agreement shall contain such other terms, covenants, provisions and conditions in addition to those set out above as may seem necessary or desirable to the Authorized Officer executing and delivering the Credit Agreement (the execution of the Credit Agreement to be conclusive proof that all of the terms, covenants, provisions and conditions thereof are deemed necessary and desirable by said Authorized Officer); the form of the Credit Agreement presented to the undersigned directors is hereby approved, subject to such changes thereto which the Authorized Officer deems necessary and reasonable; and

RESOLVED FURTHER, that each Authorized Officer be, and each of them hereby is, authorized to execute and deliver in the name of the Company one or more promissory notes evidencing such borrowing, said notes to be in the principal amount specified in the Credit Agreement and to bear interest at the rate specified in the Credit Agreement and to contain the terms, covenants, provisions and conditions provided for in the Credit Agreement; and

RESOLVED FURTHER, that each Authorized Officer be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute and deliver a Subrogation and Contribution Agreement with the other Borrowers referred to in the Credit Agreement, the purpose of such Subrogation and Contribution Agreement being to effect an equitable sharing of the respective liabilities of the Company and the Affiliates, which document shall contain such terms, covenants, provisions and conditions as may seem necessary or desirable to the Authorized Officer executing and delivering the same (the execution thereof to be conclusive proof that all the terms, covenants, provisions and conditions thereof are deemed necessary and desirable by said Authorized Officer); and

RESOLVED FURTHER, that any Authorized Officer and any Assistant Treasurer of the Company be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to request disbursements of the proceeds of said borrowings and to direct the disposition of such proceeds, and to otherwise act on behalf of the Company in connection with the transactions contemplated by the Credit Agreement and the related documents, and the Lender may conclusively rely on the authority granted herein with respect to such officers until the Lender shall have received copies certified by the Secretary or any Assistant Secretary of the Company of further resolutions adopted by the Directors of the Company canceling or amending the authority granted under these resolutions; and

RESOLVED FURTHER, that any Authorized Officer be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute such certificates and instruments and do all such other acts as may be appropriate or as may be required by law or by said Lender in connection with the said borrowing and with the execution and delivery of the Credit Agreement; and

RESOLVED FURTHER, that any Authorized Officer be, and each of them hereby is, authorized and directed to take any and all actions as he, in his sole discretion, shall deem necessary or advisable in order to consummate the transactions contemplated by any of the foregoing resolutions and to perform or cause the performance of the Company's obligations thereunder; and

RESOLVED FURTHER, that any and all actions described in the foregoing resolutions heretofore taken on behalf of the Company by an Authorized Officers are hereby approved, confirmed and ratified as the valid and fully authorized act of the Corporation without the necessity of any further action by the undersigned.

OFFICER'S CERTIFICATE

In connection with the execution of that certain Credit Agreement by and among SULPHUR CARRIERS, INC., a Delaware corporation (the "Company"), and certain of its affiliates, as co-borrowers, and REGIONS BANK, an Alabama banking corporation, as lender, dated as of March 7 , 2008, I do hereby certify as follows:

1.I am an Assistant Secretary of the Company and am duly authorized to execute and deliver this certificate.

2.Each of the following persons is a duly elected, qualified and acting officer of the Company and, as of the date hereof, has the title indicated and the signature opposite of such person's name is genuine.

Office                                               NameSignature

                     President                                    Erik L. Johnsen             /s/ Erik L. Johnsen

              Vice President and

            Chief Financial Officer                      Manuel G. Estrada          /s/ Manuel G. Estrada

       Vice President and Treasurer                  David B. Drake              /s/ David B. Drake

3.Attached hereto as Exhibit A is a true, correct and complete copy of the Certificate of Incorporation of the Company and any amendments thereto (as amended, the "Certificate of Incorporation"). Said Certificate of Incorporation has not been amended or changed (except as set forth in the amendments, if any, included in Exhibit A) and is in full force and effect.

4.Attached hereto as Exhibit B is a true, correct and complete copy of the Bylaws of the Company and any amendments thereto. Said Bylaws have not been amended or changed (except as set forth in the amendments, if any, included in Exhibit B) and are in full force and effect.

5.Attached hereto as Exhibit C is a true, correct and complete copy of the authorizing resolution of the Company (the "Authorizing Resolution") duly adopted by its board of directors on March 3, 2008. The Authorizing Resolution has not been amended, changed or rescinded and is in full force and effect.

IN WITNESS WHEREOF, this certificate has been executed on behalf of the Company by the undersigned Assistant Secretary.

Dated: March                            7                   , 2008.	/s/ H. Hughes Grehan
	H. Hughes Grehan, as Assistant Secretary of Sulphur Carriers, Inc.

EXHIBIT A

Certificate of Incorporation

I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO HERESY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF INCORPORATION OF SULPHUR CARRIERS, INC. FILED IN THIS OFFICE ON THE TWENTY-EIGHTH DAY OF AUGUST, A.D. 1991, AT 10 O'CLOCK A.M.

* * * *                      * * * * *

AU ENTICATION: *3157781

DATE:

/s/ Michael Harkins

Michael Harkins, Secretary of State

STATE OF DELAWARE

SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 10:00 AM 08/28/1991

912405136 - 2272281

CERTIFICATE OF INCORPORATION

OF

SULPHUR CARRIERS, INC.

FIRST: The name of this corporation (hereinafter, the "Corporation") shall be: ulphur Carriers, Inc.

SECOND: The address of the Corporation's registered office in the State of Delaware and its registered agent at such address is:

The Corporation Trust Company Corporation Trust Center

1209 Orange Street

Wilmington, Delaware 19801 County of New Castle

THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

FOURTH: The Corporation has authority to issue an aggregate of 1,000 shares of capital stock, all of which shall be designated common stock having no par value per share.

HFTH: The name and mailing address of the Incorporator is as follows:

George Denegre

Jones, Walker, Waechter, Poitevent, Carrere & Denegre

201 St. Charles Avenue, 50th Floor

 Ft. New Orleans, Louisiana 10170-5000

SIXTH: The number of directors of the Corporation shall be fixed from time to time by, or in the manner provided by, its By-laws and may be increased or decreased from time to time in the manner provided therein. The following person shall serve as the initial director of the Corporation, to serve in such capacity until the first annual meeting of stockholders or until their successors are duly elected and qualified:

George Den6gre

SEVENTH: In furtherance and not in limitation of the powers conferred by the General Corporation Law of the State of Delaware, the Board of Directors shall have the power to adopt, amend and repeal the By-laws of the Corporation by the affirmative vote of a majority of the entire Board of Directors at any regular or special meeting thereof.

EIGHTH: A. No director shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director, except (i) for breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct of a knowing violation of law, (iii) pursuant to Section 174 of the General Corporation Law of the State of Delaware, or (iv) for any transaction from which such director derived an improper personal benefit.

13.The Board of Directs may (i) cause the Corporation to enter into contracts

with directors providing for the limitation of liability set forth in this Article EIGHTH to the fullest extent permitted by law, (ii) adopt By-laws or resolutions, or cause the Corporation to enter into contracts, providing for indemnification of directors and officers of the Corporation and other persons (including but not limited to directors and officers of the Corporation's direct and indirect subsidiaries) to the fullest extent permitted by law, and (iii) cause the Corporation to exercise the powers set forth in Section 145(g) of the General Corporation Law of the State of Delaware, notwithstanding that some or all of the members of the Board of Directors acting with respect to the foregoing may be parties to such contracts or beneficiaries thereof. No repeal or amendment of any such By-laws or resolutions limiting the right to indemnification thereunder shall affect the entitlement of any person to indemnification whose claim thereto results from conduct occurring prior to the date of such repeal or amendment.

C.The Board of Directors may cause the Corporation to approve for its direct and indirect subsidiaries limitation of liability and indemnification provisions comparable to the foregoing.

D.Notwithstanding any other provision of this Certificate of Incorporation, the affirmative vote of at least 80% of the total voting power shall be required to amend or repeal this Article EIGHTH, and any amendment or repeal of this Article EIGHTH shall not adversely affect any elimination or limitation of liability of a director of the Corporation under this Article EIGHTH with respect to any action or inaction occurring prior to the time of such amendment or repeal.

IN WITNESS WHEREOF, the undersigned, being the hereinabove named Incorporator of the Corporation for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, does make this Certificate of Incorporation, hereby declaring and certifying that this is his act and deed and the facts herein stated are true, and accordingly the undersigned has hereunto set his hand this 27 day of August, 1991.

/s/ George Denegre

George Denegre

Incorporator

EXHIBIT B

Bylaws

CONSENT OF SOLE SHAREHOLDER

OF SULPHUR CARRIERS, INC.

APRIL 24, 2007

The undersigned, Waterman Steamship Corporation, being the sole stockholder of Sulphur Carriers, Inc. (the "Corporation"), hereby by this Consent in Lieu of Annual Meeting, amends the By-laws of the Corporation as follows:

Section 1, subsection 1.1 of the By-laws of the Corporation is amended and restated in its entirety to read as follows:

"Section 1. OFFICES

1.1 The principal office shall be located at RSA Battle House Tower Office Building, 11 North Water Street, Suite 18290, Mobile, Alabama 36602."

                                                                                      Waterman Steamship Corporation

                                                                                       By: /s/ Niels M. Johnsen

                                                                                              Niels M. Johnsen, Chairman

                                                                                        By: /s/ Erik L. Johnsen

                                                                                              Erik L. Johnsen, President

CONSENT OF SOLE SHAREHOLDER OF

SULPHUR CARRIERS, INC.

JULY 1, 2005

The undersigned, Waterman Steamship Corporation, being the sole stockholder of Sulphur Carriers, Inc. (the "Corporation"), does hereby adopt the following resolution amending the Bylaws of the Corporation, dated August 27, 1991, by written consent:

RESOLVED, that Article 3.1 of the Bylaws of the Corporation be amended and restated to read in its entirety as follows:

SECTION 3

DIRECTORS

3.1All of the corporate powers shall be vested in, and the business and affairs of the corporation shall be managed by a Board of Directors of not less than two (2) nor more than nine (9) natural persons. The Board may exercise all such powers of the corporation and do all such lawful acts and things which are not by law, the Articles of Incorporation or these By-laws directed or required to be done by the shareholders. The Directors shall be elected at the annual meeting of the shareholders and shall hold office for one year and until their successors are chosen and have qualified. No director need be a shareholder.

All other provisions of the Bylaws shall remain unchanged.

July 1, 2005

Waterman Steamship Corporation

By: /s/ Niels M. Johnsen

       Niels M. Johnsen, President

BY-LAWS

OF

SULPHUR CARRIERS, INC.

Section 1. OFFICES

1.1 The principal office shall be located at 650 Poydras Street, New Orleans, Louisiana.

1.2The corporation may have such offices at such other places as the Board of Directors may from time to time determine or the business of the corporation may require.

Section 2. SHAREHOLDERS' MEETINGS

2.1 Unless otherwise required by law or these By-laws, all meetings of the shareholders shall be held at the principal office of the corporation or at such other place, within or without the State of Louisiana, as may be designated by the Board of Directors.

2.2 An annual meeting of the shareholders shall be held on the fourth Tuesday of April in each year, or if said day be a legal holiday, then on the next succeeding day not a legal holiday, at 2:00 o'clock P.M., or on such other date or at such other time as the Board of Directors shall designate, for the purpose of electing directors and for the transaction of such other business as may properly be brought before the meeting.

2.3 Special meetings of the shareholders, for any purpose or purposes, may be called by the President or Board of Directors. At any time, upon the written request of any two directors or of any shareholder or shareholders holding in the aggregate one-fifth of the total voting power, the Secretary shall call a special meeting of shareholders to be held at the registered office of the corporation at such time as the Secretary may fix, not less than fifteen nor more than sixty days after the receipt of said request, and if the Secretary shall neglect or refuse to fix such time or to give notice of the meeting, the shareholder or shareholders making the request may do so.

2.4Except as otherwise provided in Section 2.3 hereof, or by law, the authorized person or persons calling a shareholders' meeting shall cause written notice of the time, place and purpose of the meeting to be given to all shareholders entitled to vote at such meeting, at least ten days and not more than sixty days prior to the day fixed for the meeting. Notice of the annual meeting need not state the purpose thereof, unless action is to be taken at the meeting as to which notice is required by law.

2.5 At every meeting of shareholders, a list of shareholders entitled to vote, arranged alphabetically and certified by the Secretary or by the agent of the corporation having charge of transfers of shares, showing the number and class of shares held by each such shareholder on the record date for the meeting, shall be produced on the request of any shareholder.

2.6Except as otherwise provided by law, the presence, in person or by proxy, of the holders of a majority of the total voting power shall constitute a quorum at all meetings of the shareholders.

2.7 When a quorum is present at any meeting, the vote of the holders of a majority of the voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provision of law or the Articles of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question. Directors shall be elected by plurality vote.

2.8At any meeting of the shareholders, every shareholder having the right to vote shall be entitled to vote in person, or by proxy appointed by an instrument in writing sub­scribed by such shareholder and bearing a date not more than eleven months prior to said meeting, unless said instrument provides for a longer period. The aforesaid proxy need not be a shareholder of the corporation. Each shareholder shall have one vote for each share of stock having voting power, registered in his name on the books of the corporation at the time of the said meeting or on the record date for the determination of shareholders entitled to vote at the said meeting if the Board of Directors shall have fixed such a record date. Except as the Board may provide otherwise, if no record date is fixed for the purpose of determining shareholders (a) entitled to notice of and to vote at a meeting, the close of business on the day before the notice of the meeting is mailed, or if notice is waived, the close of business on the day before the meeting, shall be the record date for such purpose, or (b) for any other purpose, the close of business on the day on which the Board of Directors adopts the resolution relating thereto shall be the record date for such purpose.

2.9 Adjournments of any annual or special meeting of shareholders may be taken without new notice being given unless a new record date is fixed for the adjourned meeting, but any meeting at which directors are to be elected shall be adjourned only from day to day until such directors shall have been elected.

2.10 The shareholders present or represented at a duly organized meeting shall constitute a quorum and may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum as fixed in Section 2.6 of these By-laws, or the refusal of any shareholders present to vote.

2.11 If a meeting cannot be organized because a quorum has not attended, those present may adjourn the meeting to such time and place as they may determine, subject, however, to the provisions of Section 2.9 hereof. In the case of any meeting called for the election of directors, those who attend the second of such adjourned meetings, although less than a quorum as fixed in Section 2.6 hereof, shall nevertheless constitute a quorum for the purpose of electing directors.

Section 3. DIRECTORS

3.1All of the corporate powers shall be vested in, and the business and affairs of the corporation shall be managed by a Board of Directors of not less than three (3) nor more than nine (9) natural persons. The Board may exercise all such powers of the corporation and do all such lawful acts and things which are not by law, the Articles of Incorporation or these By-laws directed or required to be done by the shareholders. The directors shall be elected at the annual meeting of the shareholders and shall hold office for one year and until their successors are chosen and have qualified. No director need be a shareholder.

3.2 The remaining directors, even though not constituting a quorum, may, by a majority vote, fill any vacancy on the Board (including any vacancy resulting from an increase in the authorized number of directors, or from failure of the shareholders to elect the full number of authorized directors) for an unexpired term, provided that the shareholders shall haves the right, at any special meeting called for the purpose prior to such action by the Board, to fill the vacancy.

Section 4. COMPENSATION OF DIRECTORS

4.1Directors as such, shall receive such salary for their services as may be fixed by resolution of the Board of Directors and shall receive their actual expenses of attend­ance, if any, for each regular or special meeting of the Board; provided that nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor.

Section 5. MEETINGS OF THE BOARD

5.1The meetings of the Board of Directors may be held at such place within or without the State of Louisiana as a majority of the directors may from time to time appoint.

5.2 The first meeting of each newly elected Board shall be held immediately following the annual shareholders' meeting and at the same place as the annual meeting, and no notice of such first meeting shall be necessary to the newly elected directors in order legally to constitute the meeting.

5.3 Regular meetings of the Board may be held, upon five days' written notice from the President or the Secretary at such time and place either within or without the State of Louisiana as shall from time to time be determined by the Board, provided that notice of such determination shall be given to all Directors. Directors present at any regular or special meeting shall be deemed to have received due, or to have waived, notice thereof, provided that a director who participates in a meeting by telephone shall not be deemed to have received or waived due notice if, at the beginning of the meeting, he objects to the transaction of any business because the meeting is not lawfully called.

5.4 Special meetings of the Board may be called by the President on two days' notice given to each director, either personally or by telephone, mail or by telegram. Special meetings shall be called by the President or Secretary in like manner and on like notice on the written request of two directors and if the President and Secretary fail or refuse, or are unable to call a meeting when requested by any two directors, then the two directors may call the meeting on two days' written notice given to each director.

5.5 A majority of the Board shall be necessary to constitute a quorum for thetransaction of business, and except as otherwise provided by law, the acts of a majority of the directors present at a meeting at which a quorum is present shall be the acts of the Board.

5.6If a quorum is present when the meeting is convened, the directors present may continue to do business, taking action by vote of a majority of a quorum as fixed in Section 5.5 hereof, until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum as fixed in Section 5.5 hereof or the refusal of any director present to vote.

5.7 Any action which may be taken at a meeting of the Board or any committee thereof, may be taken by a consent in writing signed by all of the directors or by all members of the committee, as the case may be, and filed with the records of proceedings of the Board or committee.

5.8 Members of the Board may participate at and be present at any meeting of the Board or any committee thereof by means of conference telephone or similar communications equipment if all persons participating in such meeting can hear and communicate with each other.

Section 6. COMMIT FEES OF THE BOARD

The Board may designate one or more committees, each committee to consist of two or more of the directors of the corporation (and one or more directors may be named as alternate members to replace any absent or• disqualified regular members), which, to the extent provided by resolution of the Board or the By-laws, shall have and may exercise the powers of the Board in the management of the business and affairs of the corporation, and may have power to authorize the seal of the corporation to be affixed to documents. Such committee or committees shall have such name or names as may be stated in the By-laws, or as may be determined, from time to time, by the Board. Any vacancy occurring in any such committee shall be filled by the Board, but the President may designate another director to serve on the committee pending action by the Board. Each such committee shall hold office during the term of the Board constituting it, unless otherwise ordered by the Board.

Section 7. REMOVAL OF BOARD MEMBER

The shareholders, by vote of a majority of the total voting power at any special meeting called for the purpose, may remove from office any one or more of the directors, notwithstanding that his or their terms of office may not have expired, and may forthwith at such meeting proceed to elect a successor for the unexpired term. Whenever the holders of the shares of any class or series or of any obligations are entitled to elect one or more directors, the provisions of this Section 7 shall apply, in respect of the removal of a director or directors so elected, and the election of a successor or successors, to the vote of the holders of the outstanding shares of that class or series or of those obligations and not to the vote of the outstanding shares as a whole. If a director has been elected by the exercise of the privilege of cumulative voting, such director may not be removed if the votes cast against his removal would be sufficient to elect him if then cumulatively voted in his favor at an election of the entire board of directors, or, if there be classes of directors, at an election of the class of directors of which he is a part.

Section 8. NOTICES

8.1Any written notice required or permitted by law, the Articles of Incorporation or the By-laws to be given to any shareholder or director shall be deemed to have been given to such shareholder or director when such notice is served upon such shareholder or director or two business days after such notice is placed in the United States mail, postage prepaid, addressed to such shareholder or director at his last known address, whichever is earlier.

8.2 Whenever any notice is required to be given by law, the Articles of Incorporation or the By-laws, a waiver thereof in writing signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

Section 9. OFFICERS

9.1The officers of the corporation shall be chosen by the directors and shall be a President, a Secretary and a Treasurer. The directors may elect one or more Vice Presi­dents. Any two offices may be held by one person, provided that no person holding more than one office may sign, in more than one capacity, any certificate or other instrument required by law to be signed by two officers.

9.2 The Board of Directors may appoint such other officers as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board.

9.3The officers of the corporation shall hold office at the pleasure of the Board of Directors.

9.4The President shall preside at all meetings of the shareholders and shall have general and active management of the business of the corporation. If a Chairman of the Board of Directors has not been elected, the President, if a director, shall preside at all meetings of the Board.

9.5The Vice-Presidents (if any) in the order specified by the Board or, if not so specified, in the order of their seniority shall, in the absence or disability of the President, perform the duties and exercise the powers of the President, and shall perform such other duties as the President or the Board of Directors shall prescribe.

  9.6 The Secretary shall attend all meetings of the Board of Directors and all meetings of the shareholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose. He shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board, and shall perform such other duties as may be prescribed by the Board or President, under whose supervision he shall be. He shall keep in safe custody the seal of the corporation, if any, and affix the same to any instrument requiring it.

9.7The Treasurer shall have the custody of the corporate funds and shall keep or cause to be kept full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all monies and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. He "shall keep a proper accounting of all receipts and disbursements and shall disburse the funds of the corporation only for proper corporate purposes or as may be ordered by the Board and shall render to the President and the Board at the regular meetings of the Board, or whenever they may require it, an account of all his transactions as Treasurer and of the financial condition of the corporation.

Section 10. STOCK

10.1 Certificates. The certificates for each class of stock of the corporation shall be numbered and shall be entered in the books of the corporation as they are issued. Every certificate of stock shall be signed by the President or a Vice-President and the Treasurer or the Secretary. If any stock certificate is signed by a transfer agent or by a registrar, other than the corporation itself or an employee of the corporation, the signature of any such officer may be a facsimile.

10.2 Missing Certificates. The officers of the corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the officers of the Corporation shall, unless dispensed with by the Board, as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as such officers shall require and/or give the corporation a bond in such sum as they may deem appropriate as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

10.3 Transfers. Upon surrender to the corporation or the transfer agent of the corporation, of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

Section 11. DETERMINATION OF SHAREHOLDERS

11.1 Record Date. For the purpose of determining shareholders entitled to notice of and to vote at a meeting, or to receive a dividend, or to receive or exercise subscription or other rights, or to participate in a reclassification of stock, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may fix in advance a record date for determination of shareholders for such purpose, such date to be not more than sixty days and, if fixed for the purpose of determining shareholders entitled to notice of and to vote at a meeting, not less than ten days, prior to the date on which the action requiring the determination of shareholders is to be taken.

11.2 Registered Shareholders. Except as otherwise provided by law, the corporation, and its directors, officers and agents, may recognize and treat a person registered on its records as the owner of shares, as the owner in fact thereof for all purposes, and as the person exclusively entitled to have and to exercise all rights and privileges incident to the ownership of such shares, and rights under this Section shall not be affected by any actual or constructive notice which the corporation, or any of its directors, officers or agents, may have to the contrary.

Section 12. MISCELLANEOUS

12.1 Dividends. Except as otherwise provided by law or the Articles of Incorporation, dividends upon the stock of the corporation may be declared by the Board of Directors at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of stock.

12.2 Checks. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

12.3 Fiscal Year. The Board of Directors may adopt for and on behalf of the corporation a fiscal or a calendar year.

12.4 SeaL The Board of Directors may adopt a corporate seal, which seal shall have inscribed thereon the name of the corporation. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Failure to affix the seal shall not, however, affect the validity of any instrument.

12.5 Gender. All pronouns and variations thereof used in these By-laws shall be deemed to refer to the masculine, feminine or neuter gender, singular or plural, as the identity of the person, persons, entity or entities referred to require.

Section 13. INDEMNIFICATION

The Corporation shall indemnify its officers and directors, and may indemnify its employees and agents, and may procure insurance on behalf of its officers, directors, em­ployees and agents to the full extent permitted by Section 83 of the Louisiana Business Corporation Law, as amended.

Section 14. AMENDMENTS

These By-laws may be amended or repealed by the Board of Directors at any regular or special meeting or by the shareholders at any annual or special meeting, provided notice of the proposed amendment or repeal be contained in the notice of such annual or special meeting of shareholders.

Adopted August 27,1991

EXHIBIT C

Authorizing Resolution

RESOLVED, that Niels M. Johnsen, Chairman of the Company, Erik L. Johnsen, President of the Company, Manuel G. Estrada, Vice President and Chief Financial Officer of the Company, and David B. Drake, Treasurer of the Company, (each, an "Authorized Officer") be, and each of them hereby is, authorized and directed to execute and deliver, in the name and on behalf of the Company, a Credit Agreement (the "Credit Agreement") between the Company and certain affiliates of the Company (the "Affiliates") and Regions Bank (the "Lender"), under which Credit Agreement the Lender shall agree to extend to the Company and the Affiliates a revolving loan in a maximum principal amount not to exceed $35,000,000; and

RESOLVED FURTHER, that the Credit Agreement shall contain such other terms, covenants, provisions and conditions in addition to those set out above as may seem necessary or desirable to the Authorized Officer executing and delivering the Credit Agreement (the execution of the Credit Agreement to be conclusive proof that all of the terms, covenants, provisions and conditions thereof are deemed necessary and desirable by said Authorized Officer); the form of the Credit Agreement presented to the undersigned directors is hereby approved, subject to such changes thereto which the Authorized Officer deems necessary and reasonable; and

RESOLVED FURTHER, that each Authorized Officer be, and each of them hereby is, authorized to execute and deliver in the name of the Company one or more promissory notes evidencing such borrowing, said notes to be in the principal amount specified in the Credit Agreement and to bear interest at the rate specified in the Credit Agreement and to contain the terms, covenants, provisions and conditions provided for in the Credit Agreement; and

RESOLVED FURTHER, that each Authorized Officer be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute and deliver a Subrogation and Contribution Agreement with the other Borrowers referred to in the Credit Agreement, the purpose of such Subrogation and Contribution Agreement being to effect an equitable sharing of the respective liabilities of the Company and the Affiliates, which document shall contain such terms, covenants, provisions and conditions as may seem necessary or desirable to the Authorized Officer executing and delivering the same (the execution thereof to be conclusive proof that all the terms, covenants, provisions and conditions thereof are deemed necessary and desirable by said Authorized Officer); and

RESOLVED FURTHER, that any Authorized Officer and any Assistant Treasurer of the Company be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to request disbursements of the proceeds of said borrowings and to direct the disposition of such proceeds, and to otherwise act on behalf of the Company in connection with the transactions contemplated by the Credit Agreement and the related documents, and the Lender may conclusively rely on the authority granted herein with respect to such officers until the Lender shall have received copies certified by the Secretary or any Assistant Secretary of the Company of further resolutions adopted by the Directors of the Company canceling or amending the authority granted under these resolutions; and

RESOLVED FURTHER, that any Authorized Officer be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute such certificates and instruments and do all such other acts as may be appropriate or as may be required by law or by said Lender in connection with the said borrowing and with the execution and delivery of the Credit Agreement; and

RESOLVED FURTHER, that any Authorized Officer be, and each of them hereby is, authorized and directed to take any and all actions as he, in his sole discretion, shall deem necessary or advisable in order to consummate the transactions contemplated by any of the foregoing resolutions and to perform or cause the performance of the Company's obligations thereunder; and

RESOLVED FURTHER, that any and all actions described in the foregoing resolutions heretofore taken on behalf of the Company by an Authorized Officers are hereby approved, confirmed and ratified as the valid and fully authorized act of the Corporation without the necessity of any further action by the undersigned.

OFFICER'S CERTIFICATE

In connection with the execution of that certain Credit Agreement by and among CG RAILWAY, INC., a Delaware corporation (the "Company"), and certain of its affiliates, as co-borrowers, and REGIONS BANK, an Alabama banking corporation, as lender, dated as of March 7 , 2008, I do hereby certify as follows:

1.I am an Assistant Secretary of the Company and am duly authorized to execute and deliver this certificate.

2.Each of the following persons is a duly elected, qualified and acting officer of the Company and, as of the date hereof, has the title indicated and the signature opposite of such person's name is genuine.

Office                                               NameSignature

                     President                                    Erik L. Johnsen             /s/ Erik L. Johnsen

              Vice President and

            Chief Financial Officer                      Manuel G. Estrada          /s/ Manuel G. Estrada

       Vice President and Treasurer                  David B. Drake              /s/ David B. Drake

fN1776868.1}

3.Attached hereto as Exhibit A is a true, correct and complete copy of the Certificate of Incorporation of the Company and any amendments thereto (as amended, the "Certificate of Incorporation"). Said Certificate of Incorporation has not been amended or changed (except as set forth in the amendments, if any, included in Exhibit A) and is in full force and effect.

4.Attached hereto as Exhibit B is a true, correct and complete copy of the Bylaws of the Company and any amendments thereto. Said Bylaws have not been amended or changed (except as set forth in the amendments, if any, included in Exhibit B) and are in full force and effect.

5.Attached hereto as Exhibit C is a true, correct and complete copy of the authorizing resolution of the Company (the "Authorizing Resolution") duly adopted by its board of directors on March 3, 2008. The Authorizing Resolution has not been amended, changed or rescinded and is in full force and effect.

OFFICER'S CERTIFICATE

In connection with the execution of that certain Credit Agreement by and among CG RAILWAY, INC., a Delaware corporation (the "Company"), and certain of its affiliates, as co-borrowers, and REGIONS BANK, an Alabama banking corporation, as lender, dated as of March , 2008, I do hereby certify as follows:

1.I am an Assistant Secretary of the Company and am duly authorized to execute and deliver this certificate.

2.Each of the following persons is a duly elected, qualified and acting officer of the Company and, as of the date hereof, has the title indicated and the signature opposite of such person's name is genuine.

Office                                               NameSignature

President Erik L. Johnsen

Vice President and

Chief Financial Officer Manuel G. Estrada

Treasurer David B. Drake

3.Attached hereto as Exhibit A is a true, correct and complete copy of the Certificate of Incorporation of the Company and any amendments thereto (as amended, the "Certificate of Incorporation"). Said Certificate of Incorporation has not been amended or changed (except as set forth in the amendments, if any, included in Exhibit A) and is in full force and effect.

4.Attached hereto as Exhibit B is a true, correct and complete copy of the Bylaws of the Company and any amendments thereto. Said Bylaws have not been amended or changed (except as set forth in the amendments, if any, included in Exhibit B) and are in full force and effect.

5.Attached hereto as Exhibit C is a true, correct and complete copy of the authorizing resolution of the Company (the "Authorizing Resolution") duly adopted by its board of directors on March , 2008. The Authorizing Resolution has not been amended, changed or rescinded and is in full force and effect.

IN WITNESS WHEREOF, this certificate has been executed on behalf of the Company by the undersigned Assistant Secretary.

Dated: March                   7                            , 2008.
		/s/ H. Hughes Grehan
	H. Hughes Grehan, as Assistant Secretary of CG Railway, Inc.

EXHIBIT A

Certificate of Incorporation

CERTIFICATE or AMENDMENT

TO THE

CERTIFICATE OF INCORPORATION

OF

CENTRAL GULF RAILWAY, INC.

Pursuant to the provisions of Section 242 and 228 of the General Corporation Law of the State of Delaware, Central Gulf Railway, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), does hereby certi fy :

FIRST:That on November 15, 2000, the Board of Directors of the Corporation, by

unanimous written consent pursuant to Section 14(1) of the General Corporation Law of the State of Delaware, adopted a resolution setting forth and declaring advisable the following proposed Amendment to the Corporation's Certificate of Incorporation:

Article 1 of the Corporation's Certificate of Incorporation be amended to read in its entirety as follows:

"1.The name of this corporation (hereinafter the "Corporation") shall be

CG Railway, Inc."

SECOND: That in lieu of a meeting and vote, the sole stockholder gave written consent to approve and adopt said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware on November 15, 2000.

THIRD:That said amendment was duly adopted in accordance with the applicable

 FOURTH: That this Certificate of Amendment shall be effective upon the filing hereof.

IN WITNESS WHEREOF, the Corporation has caused this Amendment to its Certificate of Incorporation to be executed this 15th day of November, 2000.

CENTRAL GULF RAILWAY, INC.

By:  /s/ William H. Hines

                                   William H. Hines, Assistant Secretary

SENTAW:OFEELAWARE

SECRETARY OF. STATE

DIVISIONOF CORPORATIONS

FILED 09:00 AM 01/28/2000

001045020 - 3151683

CERTIFICATE OF INCORPORATION

OF

CENTRAL GULF RAILWAY, INC.

FIRST: "-The name of this corporation (hereinafter the "corporation") shall be:

Central Gulf Railway, Inc.

SECOND:The address of the Corporation's registered office in the State of Delaware and

its registered agent at such address is:

The Corporation Trust Company Corporation Trust Center

1209 Orange Street

Wilmington, Delaware 19801 County of New Castle

THIRD:The ptuposc of the Corporation is to engage in any lawful act or activity for

which corporations may be organized under the General Corporation Law of the State of Delaware.

FOURTH:The Corporation has authority to issue an aggregate of 1,000 shares of capital

stock, all of which shall be designated common stock having no par value lacr share.

FIFTH:The name and mailing address oFthe Incorporator is as follows:

William H. Hines •

Jones, Walker, Waechter, Poitevent •Carrere & Denogre. L.L.P. 201 St. Charles Avenue, 50th Floor . New Orleans, Louisiana 70170-5100

SIXTH:In furtherance and not in limitation of the powers conferred by the General

Corporation Law of the State of Delaware, the Board of Directors shall have'thc power to adopt, amend and repeal the By-Laws of the Corporation by the affirmative vote of a majority of thc entire Board of Directors at any regular or special meeting thereof.

SEVENTH: A. No director shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director, except (i) for breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the General Corporation Law of the State of or (iv) for any transaction from which such director derived an improper personal benefit.

As used herein, the term "improper personal benefit" does not include a director's reasonable compensation or other reasonable incidental benefit for or on account of his service as a director, officer, employee, independent contractor, attorney or consultant of the Corporation. If the General Corporation Law of the State of Delaware hereatler is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability contained herein, shall be eliminated or limited to the fullest extent permitted by the General Corporation Tam of the State of Delaware as so amended.

B.The Board of Directors may (i) cause the Corporation to enter into contracts with directors providing for the limitation of liability set forth in this Article SEVENTH to the fullest extent permitted by law, (ii) adopt By-laws or resolutions, or cause the Corporation to enter into contracts, providing for indemnification of directors and officers of the Corporation and other persons (including but not limited to directors and officers of the Corporation's direct and indirect subsidiaries) to thc ful lest extent permitted by law, and (iii) cause the Corporation to exercise the powers set forth in Section 145(g) of the General Corporation Law of the State of Delaware, notwithstanding that some or all of the members of the Board of Directors acting with respect to thc foregoing may be parties to or beneficiaries of such contracts, by-laws, resolutions or other actions. No repeal or amendment of any such By-laws or resolutions limiting the right to indemnification thereunder shall affect the entitlement of any person to indemnification whose claim thereto results from conduct occurring prior to the date of such repeal or amendment.

C.The Board of Directors may cause the• Corporation to approve for its direct and indirect subsidiaries limitation of liability and indemnification provisions comparable to the foregoing.

D.Notwithstanding any other provision of this Certificate of Incorporation, the affirmative vote of at least 80% of the total voting power of the Corporation shall be required to amend or repeal this Article SEVENTH, and any amendment or repeal of this Article SEVENTH shalt not adversely affect any elimination or limitation of liability under this Article SEVENTH with respect to any action or inaction occurring prior to the time of such tunendment or repeal. -

IN WITNESS WHEREOF, the undersigned, being the hereinabovc named incorporator of the Corporation for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware. does make this Certificate of Incorporation, hereby declaring and certifying that this is his act and deed and the facts herein stated are true, and accordingly the undersigned has hereunto set his hand this 28th day of January, 2000.

/s/ William H. Hines

William H. Hines, Incorporator

EXHIBIT B

Bylaws

CONSENT OF SOLE SHAREHOLDER

OF CG RAILWAY, INC.

APRIL 24, 2007

The undersigned, International Shipholding Corporation, being the sole stockholder of CO Railway, Inc. (the "Corporation"), hereby by this Consent in Lieu of Annual Meeting, amends the By-laws of the Corporation as follows:

Section 1, subsection 1.1 of the By-laws of the Corporation is amended and restated in its entirety to read as follows:

"Section 1. OFFICES

1.1 The principal office shall be located at RSA Battle House Tower Office Building, 11 North Water Street, Suite 18290, Mobile, Alabama 36602."

International Shipholding Corporation

By: /s/ Niels M. Johnsen

Niels M. Johnsen, Chairman and Chief Executive Officer

By: /s/ Erik L. Johnsen

Erik L. Johnsen, President

BY-LAWS

OF

CG RAILWAY, INC.

(as of November 15, 2000)

Section 1. OFFICES

1.1The principal office shall be located at 650 Poydras Street, New Orleans, Louisiana,

70130.

1.2The corporation may have such offices at such other places as the Board of Directors

may from time to time determine or the business of the corporation may require.

Section 2. STOCKHOLDERS' MEETINGS

2.1Unless otherwise required by law or these By-laws, all meetings of the stockholders

shall be held at the principal office of the corporation or at such other place, within or without the State of Delaware, as may be designated by the Board of Directors.

2.2An annual meeting of the stockholders shall be held on such date and time as the

Board of Directors shall designate, for the purpose of electing directors and for the transaction of such other business as may properly be brought before the meeting.

2.3Special meetings of the stockholders, for any purpose or purposes, may be called by

the President or Board of Directors. At any time, upon the written request of any two directors or of any shareholder or stockholders holding in the aggregate one-half of the total voting power, the Secretary shall call a special meeting of stockholders to be held at the registered office of the corporation at such time as the Secretary may fix, not less than fifteen nor more than sixty days after the receipt of said request, and if the Secretary shall neglect or refuse to fix such time or to give notice of the meeting, the shareholder or stockholders making the request may do so.

2.4Except as otherwise provided in Section 2.3 hereof, or by law, the authorized person

or persons calling a stockholders' meeting shall cause written notice of the time, place and purpose of the meeting to be given to all stockholders entitled to vote at such meeting, at least ten days and not more than sixty days prior to the day fixed for the meeting. Notice of the annual meeting need not state the purpose thereof, unless action is to be taken at the meeting as to which notice is required by law.

2.5At every meeting of stockholders, a list of stockholders entitled to vote, arranged

alphabetically and certified by the Secretary or by the agent of the corporation having charge of transfers of shares, showing the number and class of shares held by each such shareholder on the record date for the meeting, shall be produced on the request of any shareholder.

2.6Except as otherwise provided by law, the presence, in person or by proxy, of the

holders of a majority of the total voting power shall constitute a quorum at all meetings of the stockholders.

2.7When a quorum is present at any meeting, the vote of the holders of a majority of the

voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provision of law or the Certificate of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question. Directors shall be elected by plurality vote.

2.8At any meeting of the stockholders, every shareholder having the right to vote shall

be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such shareholder and bearing a date not more than eleven months prior to said meeting, unless said instrument provides for a longer period. The aforesaid proxy need not be a shareholder of the corporation. Each shareholder shall have one vote for each share of stock having voting power, registered in his name on the books of the corporation at the time of the said meeting or on the record date for the determination of stockholders entitled to vote at the said meeting if the Board of Directors shall have fixed such a record date. Except as the Board may provide otherwise, if no record date is fixed for the purpose of determining stockholders (a) entitled to notice of and to vote at a meeting, the close of business on the day before the notice of the meeting is mailed, or if notice is waived, the close of business on the day before the meeting, shall be the record date for such purpose, or (b) for any other purpose, the close of business on the day on which the Board of Directors adopts the resolution relating thereto shall be the record date for such purpose.

2.9Adjournments of any annual or special meeting of stockholders may be taken without

new notice being given unless a new record date is fixed for the adjourned meeting, but any meetingat which directors are to be elected shall be adjourned only from day to day until such directors shall have been elected.

2.10 The stockholders present or represented at a duly organized meeting shall constitute a quorum and may continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum as fixed in Section 2.6 of these By-laws, or the refusal of any stockholders present to vote.

2.11 If a meeting cannot be organized because a quorum has not attended, those present may adjourn the meeting to such time and place as they may determine, subject, however, to the provisions of Section 2.9 hereof. In the case of any meeting called for the election of directors, those who attend the second of such adjourned meetings, although less than a quorum as fixed in Section 2.6 hereof, shall nevertheless constitute a quorum for the purpose of electing directors.

Section 3. DIRECTORS

3.1All of the corporate powers shall be vested in, and the business and affairs of the corporation shall be managed by a Board of Directors of not less than one (1) nor more than ten (10) natural persons. Within the limits specified above, the Board of Directors shall from time to time fix the number of directors. The Board may exercise all such powers of the corporation and do all such lawful acts and things which are not by law, the Certificate of Incorporation or these By-laws directed or required to be done by the stockholders. The directors shall be elected at the annual meeting of the stockholders and shall hold office for one year and until their successors are chosen and have qualified. No director need be a shareholder.

3.2The remaining directors, even though not constituting a quorum, may, by a majority vote, fill any vacancy on the Board (including any vacancy resulting from an increase in the autho­rized number of directors, or from failure of the stockholders to elect the full )2umber of authorized directors) for an unexpired term, provided that the stockholders shall have the right, at any special meeting called for the purpose prior to such action by the Board, to fill the vacancy.

Section 4. COMPENSATION OF DIRECTORS

4.1Directors as such, shall receive any such salary fOr their services as may be fixed by resolution of the Board of Directors and shall receive their actual expenses of attendance, if any, for each regular or special meeting of the Board; provided that nothing herein contained shall be con­strued to preclude any director from serving the corporation in any other capacity and receiving compensation therefor.

Section 5. MEETINGS OF THE BOARD

5.1The meetings of the Board of Directors may beheld at such place within or without the State of Delaware as a majority of the directors may from time to time appoint

5.2The first meeting of each newly elected Board shall be held immediately following the annual stockholders' meeting and at the same place as the annual meeting, and no notice of such first meeting shall be necessary to the newly elected directors in order legally to constitute the meeting.

5.3Regular meetings of the Board may be held, upon five days' written notice from the President, the Secretary or an Assistant Secretary at such time and place either within or without the State of Louisiana as shall from time to time be determined by the Board, provided that notice of such determination shall be given to all Directors. Directors present at any regular or special meeting shall be deemed to have received due, or to have waived, notice thereof, provided that a director who participates in a meeting by telephone shall not be deemed to have received or waived due notice if, at the beginning of the meeting, he objects to the transaction of any business because the meeting is not lawfully called.

5.4Special meetings of the Board may be called by the President on two days' notice given to each director, either personally or by telephone, mail or by telegram. Special meetings shall be called by the President, the Secretary or an Assistant Secretary in like manner and on like notice on the Written request of two directors and if the President, the Secretary and an Assistant Secretary fail or refuse, or are unable to call a meeting when requested by any two directors, then the two directors may call the meeting on two days' written notice given to each director.

5.5A majority of the Board shall be necessary to constitute a quorum for the transaction of business, and except as otherwise provided by law, the acts of a majority of the directors present at a meeting at which a quorum is present shall be the acts of the Board.

5.6If a quorum is present when the meeting is convened, the directors present may continue to do business, taking action by vote of a majority of a quorum as fixed in Section 5.5 hereof, until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum as fixed in Section 5.5 hereof or the refusal of any director present to vote.

5.7Any action which may be taken at a meeting of the Board or any committee thereof, may be taken by a consent in writing signed by all of the directors or by all members of the com­mittee, as the case may be, and filed with the records of proceedings of the Board or committee.

 • 5.8Members of the Board may participate at and be present at any meeting of the Board or any committee thereof by means of conference telephone or similar communications equipment if all persons participating in such meeting can hear and communicate with each other.

Section 6. COMMITTEES OF THE BOARD

The Board may designate one or more committees, each committee to consist of two or more of the directors of the corporation (and one or more directors may be named as alternate members to replace any absent or disqualified regular- members), which, to the extent provided by resolution of the Board or the By-laws, shall have and may exercise the powers of the Board in the management of the business and affairs of the corporation, and may have power to authorize the seal of the corporation to be affixed to documents. Such committee or committees shall have such name or names as may be stated in the By-laws, or as may be determined, from time to time, by the Board. Any vacancy occurring in any such committee shall be filled by the Board, but the President may designate another director to serve on the committee pending action by the Board. Each such committee shall hold office during the term of the Board constituting it, unless otherwise ordered by the Board.

Section 7. REMOVAL OF BOARD MEMBER

The stockholders, by vote of a majority of the total voting power at any special meeting called for the purpose, may remove from office any one or more of the directors, notwithstanding that his or their terms of office may not have expired, and may forthwith at such meeting proceed to elect a successor for the unexpired term. Whenever the holders of the shares of any class or series or of any obligations are entitled to elect one or more directors, the provisions of this Section 7 shall apply, in respect of the removal of a director or directors so elected, and the election of a successor or successors, to the vote of the holders of the outstanding shares of that class or series or of those obligations and not to the vote of the outstanding shares as a whole. If a director has been elected by the exercise of the privilege of cumulative voting, such director may not be removed if the votes cast against his removal would be sufficient to elect him if then cumulatively voted in his favor at an election of the entire board of directors, or, if there be classes of directors, at an election of the class of directors of which he is a part.

Section 8. NOTICES

8.1Any written notice required or permitted by law, the Certificate of Incorporation or the By-laws to be given to any shareholder or director shall be deemed to have been given to such shareholder or director when such notice is served upon such shareholder or director or two business days after such notice is placed in the United States mail, postage prepaid, addressed to such shareholder or director at his last known address, whichever is earlier.

8.2Whenever any notice is required to be given by law, the Certificate of Incorporation or the By-laws, a waiver thereof in writing signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

Section 9. OFFICERS

9.1 The officers of the corporation shall be chosen by the directors and shall be a President, a Secretary, one or more Assistant Secretaries and a Treasurer. The directors may elect one or more Vice Presidents or other officers. Any two offices may be held by one person, provided that no person holding more than one office may sign, in more than one capacity, any certificate or other instrument required by law to be signed by two officers.

9.2The Board of Directors may appoint such other officers as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board.

9.3The officers of the corporation shall hold office at the pleasure of the Board of Directors.

9.4The President shall preside at all meetings of the stockholders and shall have general and active management of the business of the corporation. If a Chairman of the Board of Directors has not been elected, the President, if a director, shall preside at all meetings of the Board.

9.5The Vice-Presidents (if any) in the order specified by the Board or, if not so specified, in the order of their seniority shall, in the absence or disability of the President, perform the duties and exercise the powers of the President, and shall perform such other duties as the President or the Board of Directors shall prescribe.

9.6The Secretary or an Assistant Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose. He shall give, or cause to be given, notice of all meetings of the. stockholders and special meetings of the Board, and shall perform such other duties as may be prescribed by the Board or President, under whose supervision he shall be. He shall keep in safe custody the seal of the corporation, if any, and affix the same to any instrument requiring it.

9.7The Treasurer shall have the custody of the corporate funds and shall keep or cause to be kept full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all monies and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. He shall keep a proper accounting of all receipts and disbursements and shall disburse the funds of the corporation only for proper corporate purposes or as may be ordered by the Board and shall render to the President and the Board at the regular meetings of the Board, or whenever they may require it, an account of all his transactions as Treasurer and of the financial condition of the corporation.

Section 10. STOCK

10.1 Certificates. The certificates for each class of stock of the corporation shall be numbered and shall be entered in the books of the corporation as they are issued. Every certificate of stock shall be signed by the President or a Vice-President and the Treasurer or the Secretary. If any stock certificate is signed by a transfer agent or by a registrar, other than the corporation itself or an employee of the corporation, the signature of any such officer may be a facsimile.

10.2 Missing Certificates. The officers of the corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the officers of the Corporation shall, unless dispensed with by the Board, as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as such officers shall require and/or give the corporation a bond in such sum as they may deem appropriate as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

10.3 Transfers. Upon surrender to the corporation or the transfer agent of the corporation, of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

NO581121.1

Section 11. DETERMINATION OF STOCKHOLDERS

11.1 Record Date. For the purpose of determining stockholders entitled to notice of and to vote at a meeting, or to receive a dividend, or to receive or exercise subscription or other rights, or to participate in a reclassification of stock, or in order to make a determination of stockholders for any other proper purpose, the Board of Directors may fix in advance a record date for determination of stockholders for such purpose, such date to be not more than sixty days and, if fixed for the purpose of determining stockholders entitled to notice of and to vote at a meeting, not less than ten days, prior to the date on which the action requiring the determination of stockholders is to be taken.

11.2 Registered Stockholders. Except as otherwise provided by law, the corporation, and •its directors, officers and agents, may recognize and treat a person registered on its records as the owner of shares, as the owner in fact thereof for all purposes, and as the person exclusively entitled to have and to exercise all rights and privileges incident to the ownership of such shares, and rights under this Section shall not be affected by any actual or constructive notice which the corporation, or any of its directors, officers or agents, may have to the contrary.

Section 12. MISCELLANEOUS

12.1 Dividends. Except as otherwise provided by law or the Certificate of Incorporation, dividends upon the stock of the corporation may be declared by the Board of Directors at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of stock.

12.2 Checks. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

12.3 Fiscal Year. The Board of Directors may adopt for and on behalf of the corporation a fiscal or a calendar year.

12.4 Seat. The Board of Directors may adopt a corporate seal, which seal shall have inscribed thereon the name of the corporation. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Failure to affix the seal shall not, however, affect the validity of any instrument.

12,5 Gender. All pronouns and variations thereof used in these By-laws shall be deemed to refer to the masculine, feminine or neuter gender, singular or plural, as the identity of the person, persons, entity or entities referred to require.

Section 13. INDEMNIFICATION

The Corporation shall indemnify Directors and Officers (as such terms are defined in the Certificate of Incorporation) of the Corporation as specified in the Certificate of Incorporation. In addition, to the fullest extent permitted by the Delaware General Corporation Law, the Corporation shall indemnify any current or former Director or Officer of the Corporation and may, at the discretion of the Board of Directors, indemnify any current or former employee or agent of the Corporation against all expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with any threatened, pending or completed action, suit or proceeding brought by or in the right of the Corporation or otherwise, to which he was or is a party by reason of this current or former position with the Corporation or by reason of the fact that he is or was serving, at the request of the Corporation, as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.

Expenses incurred by a person who is or was a director or officer of the Corporation in appearing at, participating in or defending any such action, suit or proceeding shall be paid by the Corporation at reasonable intervals in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized by this Article. If a claim under this Article is not paid in full by the Corporation within ninety days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law or other applicable law for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its board of directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the Delaware General Corporation Law or other applicable law, nor an actual determination by the Corporation (including its board of directors, independent legal counsel, or its stockholders) that the claimant has not met the applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

Section 14. AMENDMENTS

These By-laws may be amended or repealed by the Board of Directors at any regular or special meeting or by the stockholders at any annual or special meeting, provided notice of the proposed amendment or repeal be contained in the notice of such annual or special meeting of stockholders.

EXHIBIT C

Authorizing Resolution

RESOLVED, that Niels M. Johnsen, Chairman of the Company, Erik L. Johnsen, President of the Company, Manuel G. Estrada, Vice President and Chief Financial Officer of the Company, and David B. Drake, Treasurer of the Company, (each, an "Authorized Officer") be, and each of them hereby is, authorized and directed to execute and deliver, in the name and on behalf of the Company, a Credit Agreement (the "Credit Agreement") between the Company and certain affiliates of the Company (the "Affiliates") and Regions Bank (the "Lender"), under which Credit Agreement the Lender shall agree to extend to the Company and the Affiliates a revolving loan in a maximum principal amount not to exceed $35,000,000; and

RESOLVED FURTHER, that the Credit Agreement shall contain such other terms, covenants, provisions and conditions in addition to those set out above as may seem necessary or desirable to the Authorized Officer executing and delivering the Credit Agreement (the execution of the Credit Agreement to be conclusive proof that all of the terms, covenants, provisions and conditions thereof are deemed necessary and desirable by said Authorized Officer); the form of the Credit Agreement presented to the undersigned directors is hereby approved, subject to such changes thereto which the Authorized Officer deems necessary and reasonable; and

RESOLVED FURTHER, that each Authorized Officer be, and each of them hereby is, authorized to execute and deliver in the name of the Company one or more promissory notes evidencing such borrowing, said notes to be in the principal amount specified in the Credit Agreement and to bear interest at the rate specified in the Credit Agreement and to contain the terms, covenants, provisions and conditions provided for in the Credit Agreement; and

RESOLVED FURTHER, that each Authorized Officer be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute and deliver a Subrogation and Contribution Agreement with the other Borrowers referred to in the Credit Agreement, the purpose of such Subrogation and Contribution Agreement being to effect an equitable sharing of the respective liabilities of the Company and the Affiliates, which document shall contain such terms, covenants, provisions and conditions as may seem necessary or desirable to the Authorized Officer executing and delivering the same (the execution thereof to be conclusive proof that all the terms, covenants, provisions and conditions thereof are deemed necessary and desirable by said Authorized Officer); and

RESOLVED FURTHER, that any Authorized Officer and any Assistant Treasurer of the Company be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to request disbursements of the proceeds of said borrowings and to direct the disposition of such proceeds, and to otherwise act on behalf of the Company in connection with the transactions contemplated by the Credit Agreement and the related documents, and the Lender may conclusively rely on the authority granted herein with respect to such officers until the Lender shall have received copies certified by the Secretary or any Assistant Secretary of the Company of further resolutions adopted by the Directors of the Company canceling or amending the authority granted under these resolutions; and

RESOLVED FURTHER, that any Authorized Officer be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute such certificates and instruments and do all such other acts as may be appropriate or as may be required by law or by said Lender in connection with the said borrowing and with the execution and delivery of the Credit Agreement; and

RESOLVED FURTHER, that any Authorized Officer be, and each of them hereby is, authorized and directed to take any and all actions as he, in his sole discretion, shall deem necessary or advisable in order to consummate the transactions contemplated by any of the foregoing resolutions and to perform or cause the performance of the Company's obligations thereunder; and

RESOLVED FURTHER, that any and all actions described in the foregoing resolutions heretofore taken on behalf of the Company by an Authorized Officers are hereby approved, confirmed and ratified as the valid and fully authorized act of the Corporation without the necessity of any further action by the undersigned.

OFFICER'S CERTIFICATE

In connection with the execution of that certain Credit Agreement by and among LCI SHIPHOLDINGS, INC., a Marshall Islands corporation (the "Company"), and certain of its affiliates, as co-borrowers, and REGIONS BANK, an Alabama banking corporation, as lender, dated as of March 7 , 2008, I do hereby certify as follows:

1.I am an Assistant Secretary of the Company and am duly authorized to execute and deliver this certificate.

2.Each of the following persons is a duly elected, qualified and acting officer of the Company and, as of the date hereof, has the title indicated and the signature opposite of such person's name is genuine.

Office                                               NameSignature

                     President                                    Erik L. Johnsen             /s/ Erik L. Johnsen

              Vice President and

            Chief Financial Officer                      Manuel G. Estrada          /s/ Manuel G. Estrada

       Vice President and Treasurer                  David B. Drake              /s/ David B. Drake

3.Attached hereto as Exhibit A is a true, correct and complete copy of the Articles of Incorporation of the Company and any amendments thereto (as amended, the "Articles of Incorporation"). Said Articles of Incorporation has not been amended or changed (except as set forth in the amendments, if any, included in Exhibit A) and is in full force and effect.

4.Attached hereto as Exhibit B is a true, correct and complete copy of the Bylaws of the Company and any amendments thereto. Said Bylaws have not been amended or changed (except as set forth in the amendments, if any, included in Exhibit B) and are in full force and effect.

5.Attached hereto as Exhibit C is a true, correct and complete copy of the authorizing resolution of the Company (the "Authorizing Resolution") duly adopted by its board of directors on March 3, 2008. The Authorizing Resolution has not been amended, changed or rescinded and is in full force and effect.

IN WITNESS WHEREOF, this certificate has been executed on behalf of the Company by the undersigned Assistant Secretary.

Dated: March                           7                   , 2008.	/s/ H. Hughes Grehan
	H. Hughes Grehan, as Assistant Secretary of LCI Shipholdings, Inc.

EXHIBIT A

Certificate of Incorporation

111..E, REPUBLIC OF THE MARSHALL ISLANDS

REGISTRAR OF CORPORATIONS

CERTIFICATE OF REGISTRATION OF DOMESTICATION/REDOMICILATION I HEREBY CERTIFY, that

LCI SHIPHOLDINGS, INC.

A corporation organized (chartered, incorporated, etc) under the laws of the Republic of Liberia on November 8, 1968, has domesticated/redomiciled into the Republic of the Marshall Islands on

August 27, 2003

and that upon such examination, as indicated by the records of this Registry, said corporation continues as a Marshall Islands corporation governed by the provisions of the .Business Corporations Act.

The registered address of the Corporation in the Marshall Islands is Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960. The name of the

Corporation's registered agent at such address is The Trust Company of the Marshall Islands, Inc.

WITNESS my hand and the official seal of the Registry on August 27, 2003.

Signature on File

Deputy Registrar

THE REPUBLIC OF LIBERIA

•MINISTRY OF FOREIGN AFFAIRS

OFFICE OF DEPUTY CORPORATE REGISTRAR

CERTIFICATE OF RE-DOMICILIATION OUT OF LIBERIA •

I HEREBY CERTIFY that

LCI SHIPHOLDINGS INC.

has complied with all the requirements of the provisions of the Liberian Business Corporation Act in respect to re-domiciliation out of Liberia. The corporation is authorized to be re-domiciled out of Liberia and is re-domiciled out and has ceased to be a Liberian Corporation registered in Liberia as of September 03, 2003

WITNESS my hand and the official seal of the Ministry of Foreign Affairs this 3rd day of September, of Two Thousand Three,
	Signature On File

Deputy Registrar of Corporations Authorized Signature

ARTICLES OF DOMESTICATION

OF

LCI SHIPHOLDINGS, INC.

REPUBLIC OF THE MARSHALL ISLANDS

REGISTRAR OF CORPORATIONS

DUPLICATE COPY

NON RESIDENT The original of this Document was filed in accordance with section 127(I) of the Business Corporations Act on

August 27, 2003

                                                                                                 Deputy Registrar

ARTICLES OF DOMESTICATION OF

LCI SHIPHOLDINGS INC.

UNDER SECTION 127 OF THE

BUSINESS CORPORATIONS ACT

Pursuant to Division 14 of the Marshall Islands Business Corporations Act, I, Gary L. Ferguson, the undersigned, Vice President and Chief Financial Officer of LCI Shipholdings Inc., a Liberian Corporation, for the purpose of transferring the domicile of the Corporation to the Marshall Islands and continuing its existence, do hereby certify that:

1.   he name of the Corporation is: LCI Shipholdings Inc.

2.   The Corporation was organized (chartered, incorporated, etc.) under the laws of the Republic of Liberia, on the 8th day of November, 1968, and presently has a domicile (seat, registered office) in Monrovia, Liberia.

              3. This transfer of domicile has been approved by all necessary corporate action.

• 4. Transfer of domicile is not expressly prohibited under the law of the Corporation's present domicile.

5.   This transfer is made in good faith and will not serve to hinder, delay, or defraud existing shareholders, creditors, claimants, or other parties in interest.

6.   The registered address of the Corporation in the Marshall Islands is Trust Company Complex, Ajeltake Island, Ajeltake Road, Majuro, Marshall Islands MH96960. The name of the Corporation's Registered Agent at such address is The Trust Company of the Marshall Islands, Inc.

7.   These Articles of Domestication shall be effective upon filing with the Registrar or Deputy Registrar of Corporations of the Marshall Islands.

8.   Annexed hereto is a copy of the Articles of Incorporation and all amendments thereto as filed in the Corporation's present domicile.

IN WITNESS WHEREOF, I have executed these Articles of Domestication on this day of August, 2003.

/s/ Gary L. Ferguson

Gary L. Ferguson

Vice President and Chief Financial Officer

NOTARIAL ACKNOWLEDGMENT

UNITED STATES OF AMERICA

STATE OF LOUISIANA

PARISH OF ORLEANS

On this Vit-day of August, 2003, before me personally came Gary L. Ferguson known to me to be the individual described in and who executed the foregoing instrument and he duly acknowledged to me that the execution thereof was his act and deed.

/s/ H. Hughes Grehan

Notary Public

H HUGHES GREHAN

NOTARY PUBLIC

Parish of Orleans. State of Louisiana

ry Corarnission is issued for Liie.

HONORARY CONSULATE OF THE REPUBLIC OF LIBERIA

WM SOPHIE WRIGHT PLACE

NEW ORLEANS. LOUISIANA 70130

U. S. A.

OFFICE OF THE CONSUL VOYCE DURLJNG-JONES

HONORARY CONSUL DIRECT LINE: (504) 524-15E6

OR

CAMILLE JONES STRACHAN (504) 523-7784

CHAG

January 12, 1988

CAMILLE JONES STRACHAN, the undersigned, Charge', Honorary Consulate of the Republic of Liberia, does hereby acknowledge and legalize the attached ARTICLES OF AMENDMENT of ARTICLES OF INCORPORATION OF LASH CARRIERS, INC-, under Section 9.5 of the Business Corporation Act; and, further, does acknowledge the signatures appearing thereon.

/s/ Camille Jones Strachan

SEEN AT CONMLATE OF Mc

OF LiBMi

Camille Jones Strachan Mrs. F.D.M. Strachan III Charge'

ARTICLES OF AMENDMENT OF

ARTICLES OF INCORPORATION OF

LASH CARRIERS, INC.

UNDER SECTION 9.5 OF THE BUSINESS CORPORATION ACT

We, the undersigned, the President and the Secretary of LASH CARRIERS, INC., a corporation incorporated under the laws of the Republic of Liberia, for the purpose of amending the Articles of Incorporation of said corporation hereby certify:

1.The name of the corporation is LASH CARRIERS, INC.

2The Articles of Incorporation were filed with the

Minister of Foreign Affairs as of November 8, 1968.

3.Section A of the Articles of Incorporation is hereby amended as follows:

The name of the Corporation shall be: LCI SHIPHOLDINGS, INC.

4.The amendment to the Articles of Incorporation was authorized by vote of the holders of a majority of all outstanding shares entitled to vote thereon at a meeting of shareholders.

IN WITNESS WHEREOF the undersigned have executed these Articles of Amendment this 3o' day of December, 1987.

/s/ Erik F. Johnsen

Erik F. Johnsen, President

/s/ George Denegre

George Denegre, Secretary

STATE OF LOUISIANA PARISH OF ORLEANS

On this                    3O              day of December, 1987, before me personal-

ly came ERIK F. JOHNSEN and GEORGE DENEGRE, known to me to

be the individuals described in and who executed the foregoing

instrument a                                 they severally duly acknowledged to me that

the execuwas the act and deed of the Corporation.•

Signature on File

NOTARY PUBLIC

I, DAN FOLEY, Clerk of the Civil District Court for the Parish of Orleans, State of Louisiana, the same being a Court of Record, having probate Jurisdiction, DO HEREBY CERTIFY, that

J. Kelly Duncan

Whose name is subscribed to the certificate of proof, acknowledgment, or affidavit of the annexed instrument, and thereon written, was at the time of taking such proof, acknowledgment or affidavit a Notary Public within and for said Parish, residing in said Parish, duly appointed, commissioned and sworn, and authorized by the lawn of said State to administer oaths, and to take the acknowledgments and proofs of deeds or conveyances of lands, tenements and hereditaments, in said State, and other inetruments to be recorded therein and to certify the same: that full faith and credit are and ought to be given to his official acts; and I further certify that I have compared the isignature to the original certificate with that deposited in this office by such person and verily believe that the signature to the attached certificate is his genuine signature, and the person signing such certificate is not required by law to file in this office an impression

of his official see/.

IN TESTIMONY WHEREOF, I have he unto a t m hand and affixed the seal of said Court at the City of New Orleans in aid Pari.h d State on the

12thday of January 1988

Signature on File Clerk

•ARTICLES OF AMENDMENT

OF

LASH CARRIERS, INC.

[Missing Graphic Reference]		JAN 201988
	[Missing Graphic Reference]

REPUBLIC OF LIBERIA

MINISTRY OF FOREIGN AFFAIRS

DUPLICATE COPY

The Original Copy of this Document was filed in

accordance with Section 1.4 of the Business

Corporation Act on

ARTICLES OF AMENDMENT OF

CERTIFICATE OF INCORPORATION OF

LASH CARRIERS, INC.

UNDER SECTION 9.5 OF THE BUSINESS CORPORATION ACT.

We the undersigned, the President and the Secretary of

LASH CARRIERS, INC., a corporation incorporated under the laws of the Republic of Liberia, for the purpose of amending the Certificate of Incorporation of said corporation hereby certify:

1.The name of the corporation is LASH CARRIERS, INC. and the name under which it was formed was LASH CARRIERS, INC.

2.The Certificate of Incorporation was filed with the Secretary of State as of November 8, 1968.

3.Pursuant to Section 1.3 of the Business Corporation Act, these Articles of Amendment hereby subject this corporation to the provisions of the Business Corporation Act.

4.The amendment to the Certificate of Incorporation was authorized by vote of the holders of a majority of all outstanding shares entitled to vote thereon at a meeting of shareholders.

IN WITNESS WHEREOF the undersigned have executed these Articles of Amendment this 4th day of August, 1982.

$1.00 REVENUE STAMPS ON ORIGINAL

/s/ Erik F. Johnsen

Erik F. Johnsen, President

/s/ George Denegre

George Denegre, Secretary

STATE OF LOUISIANA PARISH OF ORLEANS

•

On this 4th day of August, 1982, before me personally came Erik F. Johnsen and George Denegre, known to me to be the individuals described in and who executed the foregoing instrument, and they severally duly acknowledged to me that th execution thereof was the act and deed of the corporation.

/s/ A.J. Waechter, Jr.

Notary Public

CONSULATE-GENERAL OF LIBERIA, NEW YORK

NOTARIAL CERTIFICATE

No 346/82 1Edith M. Thomas., Consul General

of the Republic of Liberia at New York City, New York, United States of America, do hereby certify that to the best of my knowledge and belief the signature and seal affixed on Certificate of Dan Foley, Clerk of the Civil

August 4, 1982 datedare true and correct.

No responsibility.accepted for contents of documents to which this Certificate is attached.

GIVEN under my hand and the Seal of the Consulate-General in the City of New York, N. Y., United States of America, this

6th day of August....1982.

/s/ Edith M. Thomas

              Consul-General

I, DAN FOLEY, Clerk of the Civil District Court for the Parish of Orleans,•State of Louisiana, the same being a Court of Record, having probate Jurisdiction, DO HEREBY CERTIFY, that

A. J. Waechtere Jr.

Whose name is subscribed to the certificate of proof, acknowledgment, or affidavit of the annexed instrument, and thereon written, was at the time of taking such proof, acknowledgment or affidavit a Notary Public within and for said Parish, residing in said Parish, duly appointed, commissioned and sworn, and authorized by the laws of said State to administer oaths, and to take the acknowledgments and proofs of deeds or conveyances of lands, tenements and hereditaments, in said State, and other instruments to be recorded therein and to certify the same; that full faith and credit are and ought to be given to his official acts; and I further certify that I have compared the signature to the original certificate with that deposited in this office by such person and verily believe that the signature to the attached certificate is his genuine signature, and the person signing such certificate is not required by law to ' in this office an impression of his official seal.

IN TESTIMONY WHEREOF, I have hereu of said Court at the City of New Orleans in sa o set my Parish an rid and affixed the seal State on the

4th                  day of August                                       1982

/s/ Dan Foley Clerk.

ARTICLES OF AMENDMENT• ••

OF

LASH CARRIRS INC .

REPUBLIC OF LIBERIAMINISTRY OF FOREIGN AFFAIRS

DUPLICATE COPY

The Original Copy of this Document was filed. in

accolilance with Section 1.4 of the Business

J;             Corporation Act on_                                                   •

-77

AUG 1 8 1982

Signature on File

DEPUTY. MINISTER

CERTIFICATE OF INCORPORATION

OF

LASI4 CARRIERS, INC.

PURSUANT TO SECTION TWO OF THE LIBERIAN CORPORATION

LAW OF 1948

CERTIFICATE OF INCORPORATION

OF

LASH CARRIEFS, INC.

PURSUANT TO SECTION TWO OF THE LIBERIAN CORPORATION

LAW OF 1948

We, the undersigned, for the purpose of forming a corporation pursuant to the provisions of Section Two of the Liberian Corporation Law, do hereby make, sub­scribe, acknowledge and file in the Office of the Secretary of State this.applica­tion.for that purpose, as follows:

A.The name of the Corporation shall be:

LASE CARRIERS, INC.

B.The general nature of the business to be transacted by the Corporation is:

(1)To purchase or otherwise acquire, own, use, operate, pledge, hypothecate, mortgage, lease, charter, sub-charter, sell, build, and re­pair steamships, motorships, tankers, whaling vessels, sailing vessels, tugs, lighters, barges, and all other vessels and craft of any and all mo­tive power whatsoever, including aircraft, landcraft, and any and all means of conveyance and transportation by land, water or air, together with engines, boilers, machinery equipment and appurtenances of all kinds, including masts, sails, boats, anchors, cables, tackle, furniture and all other necessities thereunto appertaining and belonging, together with all materials, articles, tools, equipment and appliances necessary, suitable or convenient for the construction, equipment, use and operation thereof; and.to equip, furnish, outfit such vessels and ships.

(2)To engage in ocean, coastwise and inland commerce, and gen­erally in the carriage of freight, goods, cargo in bulk, Passengers, mail and personal effects by water betWeen the various ports of the world and to engage generally in waterborne commerce throughout the world.

(3)To purchase or otherwise acquire, own, use, operate, lease, build, repair, sell or in any manner dispose of docks, piers, quays, wharves, dry docks, warehouses and storage facilities of all kinds, and any Property, real, personal and mixed, in connection therewith.

(4)To act as ship's husband, ship brokers, custom house brokers, ship's agents, manager of shipping property, freight contractors, forward­ing agents, warehousemen, wherfingers, ship chandlers, and general traders.

(5)To enter into, make and perform contracts of every kind and description with any person, firm, association, corporation, municipality, county, state, body politic, or government or colony or any dependency thereof.

(6)To appoint or act as an agent, broker, or representative, gen­eral or special, in respect of any or all of the powers expressed herein or implied hereby; to appoint agents, brokers or representatives.

(7)To carry on its business, to have one or more offices, and to exercise its powers in foreign countries, subject to the laws of the par­ticular country. .

(8)To borrow or raise money and contract debts, when necessary for the transaction of its business or for the exercise of its corporate rights, privileges or franchise or for any other lawful purpose of its in­corporation; to draw, make, accept, endorse, execute and issue promissory notes, bills of exchange, bonds, debentures, and other Instruments and evi­dences of indebtedness either secured by mortgage, pledge, deed of trust, or otherwise, or unsecured.

. (9) To purchase or otherwise acquire, hold, own, mortgage, sell, convey, or otherwise dispose of real and personal property of every class and description.

(10)To apply for, secure by purchase or otherwise hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the Republic of Liberia or any foreign country, patent rights, licenses, privileges, inventions, improvements and processes, copy­rights, trademarks, and trade names, relative to or useful in connection with any business of this corporation.

(11)To do all and everything lawfully necessary and proper for the accomplishment of the objects enumerated in its Certificate of Incor­poration or any amendment thereof or necessary to the protection and bene­fit of the corporation and in general to carry on any lawful business necessary to the attainment of the objects of the corporation.

The foregoing clauses shall be construed as both purposes and powers and the matters expressed in each clause shall, except as otherwise expressly pro­vided, be in no wise limited by reference or inference from the terms of any other clause, but shall be regarded as independent purposes and powers; and the enumera­tion of specific purposes and powers shall not be construed to limit or restrict

in any manner the meaning of general terms or the general powers of the Corporation; nor shall the expression of one thing be deemed to exclude another, although it be of like nature, not expressed.

Nothing herein contained shall be construed as giving the Corporation any rights, powers or privileges not now or hereafter permitted by the Liberian Corpora­tion Law of 19he to corporations formed thereund

C. The maximum number of shares of stock that the Corporation is author­ized to have outstanding at any time is Ten Thousand (10,000) shares with a par value of Ten Cents ($.10) per share.

D.The amount of capital with which the Corporation will begin business shall not be less than Five Hundred Dollars ($500).

E.The Corporation is to have perpetual existence.

P. The domicile of the Corporation shall be in Monrovia, Liberia, and its resident business agent shall be The International Trust Company of Liberia, whose domicile is in Monrovia, Liberia.

G.The number of directors shall be fixed by or in the manner provided in the by-laws, subject to the provisions of Section 25(b) of the Liberian Corporation Law of 1948.

H.The names and post-office addresses of the first Board of Directors, who, subject to the provisions of this Certificate of Incorporation, the by-laws, and the Liberian Corporation Law of 1948, shall hold office for the first year of the Corporation's existence or until their successors are elected and have'quali­fied, are as follows:

Names P. B. Seta J. D. Boyd E. K. Nugba Post Office Addresses 80 Broad Street Monrovia, Liberia 80 Broad Street Monrovia,. Liberia 80 Broad Street Monrovia, Liberia

- 4 -

I. The name and post-office address of each subscriber of this Certificate of Incorporation and the number of shares of stock of the Corporation which each agrees to take are:

No. of Shares

Names                                 Post Office Addressof Common Stock

P. B. Satia                                       BO Broad Street One

Monrovia, Iiberia

J. D. Boyd                                       80 Broad Street One

Monrovia, Iiberia

E. K. Nugba                                       80 Broad Street One

Monrovia, Liberia

J. 1. In furtherance and not in limitation of the powers conferred by the Liberian Corporation Law, the board of directors is explicitly authorized:

(a)To make, alter or repeal the by-laws of the Corporation, sub­ject to the by-laws, if any, adopted by the stockholders.

(b)To designate by resolution two or more of its number to con­stitute an executive committee, which, to the extent provided in such reso­lution or in the by-laws of the Corporation, shall have and may exercise the powers of-the board of directors in the management of the affairs and property of the Corporation, and the exercise of its corporate powers.

(c)To direct a new certificate or certificates of stock to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the board of dircctors may, in its discretion-and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or give the Cor­poration a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed.

2.The liability of the -stockholders is limited to the amount unpaid on their shares.

3.Meetings of stockholders or directors may be held either within or without the Republic of Liberia and meither stockholders nor directors nor officers - of the corporatiOn need be nationals or residents of Liberia. Voting at stock­holders and directors' meetings may be by proxy given by an instrument in writing, including telegraph, cable or radiogram. Except as may be required by statute, the books of the corporation may be kept either within or without the Republic of Liberia at such place or places as may be designated from time to time by the Board of Directors, or by the by-lays of the corporation.

4. The Corporation reserves the right to amend, alter, change or re­peal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the Liberian Corporation Law, and all rights con­ferred upon stockholders herein are granted subject to this reservation.

K. The corporation shall indemnify its directors or officers, or former directors or officers, or any person who may have served at its request as a di­rector or officer of another corporation in which it owns shares of capital stock or of which it is a creditor, against expenses actually and necessarily incurred by them in conneCtion with the defense of any action, suit or proceeding in which they, or any of them, are wade parties, or a party by reason of being or having been directors or officers of the corporation, except in relation to matters as to which any such director or officer or person shall be adjudged in such action, suit or proceeding to be liable for negligence or misconduct in performance of duty. Such indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled, under any by-law, agreement, vote of stockholders, or otherwise.

IN WITNESS WHEREOF, we have made, subscribed and acknowledged this instru­ment on this8thday ofBovember, 1968.

Signature on File

Signature on File

Signature on File

KOURY CERTIFICATE

REPUBLIC OF LIBERIA                                                 )

: SS: COMM OF MCBTSERRADO )

On this 8th day ofNovember                                                               , 1968,

before me personally came P.. B. Satia, J. D. Boyd and E. K. Nugbato me known and known

to me to be the indioriduals described in and vho'execntei the foregoing instrument and they severally duly acknovl­edged to me that they executed the same for the uses and purposes therein set forth.

/s/ Llewellyn Cooper

Llewellyn Cooper

Notary Public, Mo. Co., R.L.

THE INTERNATIONAL TRUST COMPANY OF LIBERIA

The International Trust Company of Liberia hereby accepts its appointment as Resident Business Agent for 1ASH CARRIERS, INC.

and hereby certifies that the office of The International Trust Company of Liberia is located at BO Broad Street, City of Monrovia, County of Montserrado, Republic of Liberia.

Dated: THE INMRNATIONAL TRUST COMPANY OF LIBIERIA By :/s/ H.S. Gurganus 7 H. S. Gurgams                                . Assistant Secretary

November 8, 1968

CERTIFICATE OF INCORPORATION • OF

LCI SHIPHOLDINGS, INC.

"LET THIS BE REGISTERED'.

8/8Chas H. D. Simpson, Sr.

COMMISSIONER OF PROBATE, MO. CO. -

Probated thisi3thday ofmnvmmbar

A. D. 19 68

sisSusanna E. Williams

CLERK, MONTHLY & PROBATE COURT, MO. CO.

Registered According to Law In Vol 6-CPages 3fin-3115

s/sRobert B. Anthony

REGIS1RAVa(NTSERRADO COUNTY

THE INTERNATIONAL TRUST COMPANY OF

LIBERIA

MONROVIA, LIBERIA

RESIDENT BUSINESS AGENT

EXHIBIT B

Bylaws

CONSENT OF SOLE SHAREHOLDER

OF LCI SHIPHOLDINGS, INC.

APRIL 24, 2007

The undersigned, International Shipholding Corporation, being the sole stockholder of LCI Shipholdings, Inc. (the "Corporation"), hereby by this Consent in Lieu of Annual Meeting, amends the By-laws of the Corporation as follows:

Article I of the By-laws of the Corporation is amended and restated in its entirety to read as follows:

"ARTICLE I

OFFICES

The principal office of the Corporation shall be RSA Battle House Tower Office Building, 11 North Water Street, Suite 18290, Mobile, Alabama 36602. The Corporation may also have an office or offices at such other places within or outside the Marshall Islands as the Board of Directors may from time to time appoint or the business of the Corporation require."

April 24, 2007

International Shipholding Corporation

/s/ Niels M. Johnsen

Niels M. Johnsen, Chairman and Chief Executive Officer

/s/ Erik L. Johnsen

Erik L. Johnsen, President

CONSENT OF SOLE SHAREHOLDER OF LCI SHIPHOLDINGS,

APRIL 27, 2005

The undersigned, International Shipholding Corporation, being the sole stockholder of LCI Shipholdings, Inc. (the "Corporation"), hereby by this Consent in Lieu of Annual Meeting, amends the By-laws of the Corporation as follows:

Article III, Section 1 of the By-laws of the Corporation is amended and restated in its entirety to read as follows:

"ARTICLE III

BOARD OF DIRECTORS "

SECTION 1. Number. Subject to any By-laws made by the stockholders of the Corporation, the number of Directors within the maximum and minimum limits provided for in the Certificate of Incorporation may be changed from time to time by the stockholders or by the Board of Directors by an amendment to these By­laws. Subject to amendment of these By-laws, as aforesaid, the number of Directors of the Corporation shall be a minimum of two and a maximum of nine."

April 27, 2005.

International Shipholding Corporation

/s/ Niels M. Johnsen

Niels M. Johnsen, President

CONSENT OF SOLE STOCKHOLDER OF

LCI SHIPHOLDINGS, INC.

APRIL 18, 1989

The undersigned, International Shipholding Corporation, being the sole stockholder of LCI Shipholdings, Inc., hereby by this Consent in Lieu of Annual Meeting, amends the By-laws of the Company as follows:

Article I shall be amended to read as follows:

"ARTICLE I.

OFFICES

The principal office of the Corporation shall be Suite 1700, 650 Poydras Street, New Orleans, Louisiana 70130. The Corporation may also have an office or offices at such other places within or outside Liberia as the Board of Directors may from time to time appoint or the •business of the Corporation require."

Article III, Section 1 shall be amended to read as follows: "ARTICLE III.

BOARD OF DIRECTORS.

SECTION 1. Number. Subject to any By-laws made by the stockholders of the Corporation, the number of Directors within the maximum and minimum limits provided for in the Certificate of Incorporation may be changed from time to time by the stockholders or by the Board of Directors by an amendment to these By-laws. Subject to amendment of these By-laws, as aforesaid, the number of Directors of the Corporation shall be a minimum of five and a maximum of nine."

April 18, 1989.

International Shipholding Corporation

By: /s/ E.F. Johnsen

E.F Johnsen, President

MINUTES of the Annual Meeting of the Stockholders of LASH CARRIERS, INC.

held on Monday, 4th October 1971 in

the office of the company, New Orleans Louisiana.

1.On motion Mr. N. F. Johnsen took the Chair and Mr. George Denegre acted as Secretary to the Meeting.

2.The Secretary stated that notice of the Meeting had been given in accordance with the bye-laws including notice of the proposal to amend the bye-laws and that a quorum was present so that the meeting was duly constituted for the transaction of business.

3.It was accordingly

(1)   RESOLVED that Article II Section 1 of the Bye-laws be amended by inserting in line 2 thereof after the word "place" the words "and time" and by deleting all the words after "determine" in line 3 up to and including "afternoon" in line 6 thereof.

(2)   RESOLVED that Article III Section 1 of the Bye-laws be amended by the substitution of the word "five" for the word "four" in the last line thereof.

. 4.Election of Directors

On nominations made and seconded the following were unanimously elected to serve as directors until their respective successors be electe

or appointed: W. B. Browder N. W. Johnsen E. F. Johnsen George Denegre Lawrence M. Hunter

5.There being no further business the Meeting terminated.

/s/ George Denegre

Secretary

Ltal CARRIERS, INC.

BY-LAWS

As Adopted November 9, 19 68

usN CARRIFIRS, INC.

BY-LAWS

As Adopted November 9, 1968

ARTICLE I.

OFFICES

The principal office of the Corporation shall be in 225 Baronne Street, New Or1eans4.Lou1.siara,u. s. A. The Corporation may also have an

.office or offices at such. other places within or outside Liberia as

the Board of Directors may from time to time appoint or the business of the Corporation may require.

ARTICLE IT.

STOCKHOLDERS.

. SECTION 1. Annual Meeting.annual meeting of the -

Corporation shall be held at such placeAwitftin or outside Liberia as the Board of Directors may determine-ea—tite—Th4t,

the purpose of electing Directors and of transacting such other business as may properly be brought before the meeting.

SECTION 2. Special Meetings. Special meetings of the stock­holders may be held at such places within or outside Liberia as the Board of Directors may determine upon call of the Board of Directors

or the President or the holders of record of shares entitled in the aggregate to more than a majority of the number of votes which could at the time be cast by the holders of all sharer of the capital stock of the Corporation at the time outstanding and. entitled to vote, at such time as may be fixed by the Board of Directors or the President

or such stockholders, and as may be stated in the call and notice. The purposes for which a special meeting of stockholders may be held shall include the removal from office of any or all of the Directors, whether or not any cause exists for such removal, and the election of Directors in place of those removed.

-2-

SECTION 3. Notice Of Meetings. Written notice (including • notice by telegram, cablegram or radiogram) of the time, place and purpose or purposes of every meeting of stockholders, signed by the President or

a Vice-President or the Secretary or an Assistant Secretary, shall be served upon or mailed to each stockholder of record entitled to vote at such meeting, and upon any stockholder who by reason of any action pro­posed at such meeting would be entitled to have his stock appraised if such action were taken, not less than fifteen days nor more than sixty days before the meeting. If mailed, such notice shall be directed to such stockholder at his home or post-office address as it appears upon the records of the Corporation. Such further notice shall be given by mail, publication or otherwise, as may be required by. the Certificate of Incorporation of' the Corporation or by law. Meetings may be held without notice if all of the stockholders entitled to notice of the meeting as aforesaid are present in person or represented by proxy at the meeting, or if notice is waived by those not so present or represented.

SECTION 4. Quorum. At every meeting of the stockholders the . holders of record of shares entitled in the aggregate to more than a majority of the number of votes which could at the time be cast by the holders of all shares of the capital stock of the Corporation then out­standing and entitled to vote if all such holders were present or represented at the meeting, shall constitute a quorum. If at any meeting there shall be no quorum, the holders of a majority of the shares of stock entitled to vote so present or represented may adjourn the meeting from time to tine, without notice other than announcement at the meeting, until such quorum shall have been obtained, when any business may be transacted which might have been transacted at the meeting as first convened had there been a quorum.

SECTION 5. VotinR. At all meetings of the stockholders, each holder of record of outstanding shares of stock of the Corporation; entitled to vote thereat, may so vote either in person or by proxy ap­pointed by instrument in writing (including telegraph, cable or radiogram). No proxy shall be valid after the expiration of eleven months from the

date of its execution unless the stockholder executing it shall have specified therein a longer time during which it is to continue in force.

SECTION 6. Record of Stockholders. The Board of Directors may prescribe a period, not exceeding forty days prior to any meeting of the stockholders, during which no transfer of stock on the books of the Corporation may be made. In lieu of prohibiting the transfer of stock as aforesaid, the Board of Directors may fix .a day and hour, not

more than forty days prior to the holding of any such meeting as the day as of which stockholders of record entitled to notice of and to vote at such meeting shall be determined, and all persons who were holders of record of voting stock at such time and no others shall be entitled to notice of and to-vote at such meeting.

ARTICLE III.

BOARD OF DIRECTORS.

SECTION 1. Number. Subject to any By-law made by the stock­holders of the Corporation, the number of Directors within the maximum and minimum limits provided for in the Certificate of Incorporation may be changed from time to time by the stockholders or by the Board of

Directors by an amendment to these By-Laws. Subject to amendment of these By-Lawil as aforesaid, the number of Directors of the Corporation shall

AA--

SECTION 2. Meetings of the Board. Meetings of the Board of Directors shall be held at such place within or without Liberia as may from time to time be fixed by resolution of the.Board, or as may be specified in the call of any meeting. Regular meetings of the Board of Directors shall be held at such times as may from time to time be fixed by resolution of the Board. Notice need not be given of the regular meetings of the Board held at times fixed by resolution of the Board. Special meetings of-the Board may be held at any-time upon the call of the President or any two Directors by oral, telegraphic or written notice, duly served on or sent or mailed to each Director not less than one day before such meeting. Special meetings of the Board of Directors may be held without notice, if all of the Directors are present or if those not present waive notice of the meeting in writing.

SECTION 3. Annual Meeting of Directors. An Annual meeting

of the Board of Directors shall be held in each year after the adjournment of the annual stockholders' meeting and on the same day. If a quorum of • the Directors be not present on the day appointed for the annual meeting, the meeting shall be adjourned to some convenient day. No notice.need

be given of the annual meeting of the Board of Directors.

SECTION 4. Quorum. A majority of the Directors at the time in office (but not less than one-third of the number of Directors then

provided for in these By-Laws) shall constitute a quorum for the transac­tion'of business, but if at-any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum shall have been obtained.

SECTION 5. Vacancies. Vacancies in the Board of Directors may be filled by a vote of a majority of the Directors remaining in office even though less than a quorum; provided that, in case of an increase in the number of Directors, the vacancy or vacancies so created shall be filled by the stockholders. The Directors so chosen shall hold office, unless they are theretofore removed from office by the stockholders, until the next annual election or until their successors shall be duly elected and qualified.

SECTION 6. Resignation. Any Director of the Corporation may resign at any time by giving written notice to the President or to the Secretary of the Corporation. Such resignation shall take effect at the time specified therein; and unless otherwise specified therein the ac­ceptance of such resignation shall not be necessary to make.it effective.

SECTION 7. Organization. At each meeting of the Board of Directors, the President or, in the absence of the President, a chairman chosen by a majority of the Directors present shall preside, and the Secretary of the Corporation or, in the absence of the Secretary, .a person appointed by the chairman of the meeting shall act as secretary. - The Board of Directors may adopt such rules and regulations as they shall deem proper, not inconsistent with law or with these By-Laws, for the conduct of their meetings and the management of the affairs of the Cor­poration. At all meetings of the Board of Directors, business shall be transacted in such order as the Board may determine.

SECTION 8. Pavers. The Board of Directors shall have general power to manage the business of the Corporation. The Board of Directors may authorize the President or any other officer or officers of the Corporation to confer all kinds of powers of attorney on any person, persons or entities (including power of attorney in favor of lawyers, solicitors or judicial agents, in order to enable them to carry on and perform the legal representation of the Corporation in connection with any judicial process), with all the facilities and powers that he or they may deem convenient, and also to revoke the same in whole or in part.

SECTION 9. Compensation. In addition to reimbursement for his reasonable expenses incurred in attending meetings or otherwise in connection with his attention to the affairs of the Corporation, each Director who is not a salaried officer of the Corporation shall be entitled to receive such remuneration for serving as a Director and

as a member of any committees of the Board as may be fixed from time to time by the Board of Directors. This By-Law shall not be construed to ,lreclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

ARTICLE IV.

COMMITTEES.

SECTION 1. Executive Committee. The Board of Directors may, by resolution passed by a majority of the whole Board, designate two

or more of the members of the Board to constitute an executive committee. The Executive Committee shall have and may exercise, so far as may be permitted by law, all of the powers of the Board in the management of the affairs and property of the Corporation and the exercise of its corporate powers during the intervals between meetings of the Board of Directors and shall have power to authorize the seal of the Corporation to be affixed to all papers which may require it; but the Ekecutive CoMmittee

shall not have power to fill vacancies in the Board, or to change the membership of, or to fill vacancies in, the Executive Committee, or to make or amend by-laws of the Corporation. The Board shall have the power at any time to fill vacancies in, to change the membership of, or to dissolve, the Executive Committee. The Executive Committee may hold meetings, and make rules for the conduct of its business and appoint such committees and assistants as it shall from time to time deem necessary. A majority of the members of the Executive .Committee shall constitute a quorum. All action of the Executive Committee shall be reported to the Board at its meeting next succeeding such action.

SECTION 2. Other Committees. The Board of Directors may, in its discretion, by resolution, appoint other committees which shall have and may exercise such powers as shall be conferred or authorized by the resolution appointing them. A majority of any such committee, composed of more than two members, may determine its action and fix the time and place of its meetings, unless the Board of Directors shall otherwise provide. The Board shall have power at any time to change the membership of any such committee, to fill vacancies, and to discharge any such committee.

ARTICLE V. OFFICERS.

SECTION 1. Officers and Agents. The Board of Directors shall appoint a President, a Secretary and a Treasurer for the Corporation. The Board of Directors may also appoint from time to time one or more Vice-Presidents and such Assistant Secretaries, Assistant Treasurers

and other officers, agents, factors and employees as may be deemed necessary. No officer except the President need be a Director of the Corporation. The salaries of all officers shall be fixed by the Board of Directors, and the fact that any officer is a Director shall not preclude him from receiving a salary or from voting from the resolution providing the same. Any person may hold two or more offices. Officers,

agents, factors or employees of the Corporation may be of any nationality and need not be residents of Liberia.

SECTION 2. Term of Office. The term of office of all officers shall.be one year or until their respective successors are chosen and qualify, but any officer elected or appointed by the Board of Directors may be removed, with or without cause: at any time by the affirmative vote of a majority of the members of the Board then in office.

SECTION 3. Powers and Duties. The officers, agents, factors and employees of the Corporation shall each have such powers and duties in the management of the property and affairs of the Corporation, subject to the control of the Board of Directors, as generally pertain to their respective offices, as well as such powers and duties as from time to time may be prescribed by the Board of Directors. The Board of Directors may require any such officer, agent, factor or employee to give security for the faithful performance of his duties.

ARTICLE VI. CAPITAL STOCK.

SECTION 1. Certificates of Shares. The interest of each stockholder shall be evidenced by a certificate or certificates for shares of stock of the Corporation in such form as the Board of Directors may from time to time prescribe. The certificates of stock shall be signed by the President or a Vice-President and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary and sealed with the seal of the Corporation, and shall be countersigned and registered in such manner, if any, as the Board may by resolution pre­scribe; provided that,. in case such certificates are required by such resolution to be signed by a Transfer Agent or Transfer Clerk and by

a Registrar, the signatures of the President or a Vice-President and

the Treasurer or an Assistant Treasurer or the Secretary of an Assistant Secretary and the seal of the Corporation upon such certificates may be facsimiles, engraved or printed.

SECTION 2. Transfers. Shares in the capital stock of the Corporation shall be transferred only on the books of the Corporation, by the holder thereof in person or by his attorney, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require.

SECTION 3. Lost or Destroyed Stock Certificates. No certificates for shares of stock of the Corporation shall be issued in • place of any certificate alleged to have been lost, stolen or destroyed, except upon production of such evidence of the loss, theft or destruction and upon indemnification of the Corporation and its agents to such extent and in such manner as the Board of Directors may from time to time prescribe.

ARTICLE VII.

CHECKS, NOTES, ETC.

All checks and drafts on the Corporation's Bank accounts and all bills of exchange and promissory notes and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers or agent or agents as shall be thereunto authorized from time to time by the Board of Directors.

ARTICLE VIII. FISCAL YEAR.

The fiscal year of the Corporation shall begin on the first day of January in each year and shall end on the thirty-first day of December following.

ARTICLE IX.

CORPORATE SEAL.

The corporate seal shall have inscribed thereon the name of the Corporation and such other appropriate legend as the Board of Directors

may from time to time determine. In lieu of the corporate seal, when so authorized by the Board of Directors or a duly empowered committee thereof, a facsimile thereof may be impressed or affixed or reproduced.

ARTICLE X. AMENDMENTS.

The By-Laws of the Corporation may be amended, added to rescinded or repealed at any meeting of the stockholders by the vote of the holders of record of shares entitled in the aggregate to more than a majority of the number of votes which could at the time be cast by the holders of all shares of the capital stock of the Corporation then out­standing and entitled to vote if all such holders were present or represented at the meeting, provided notice of the proposed change is given in the notice of the meeting. The Board of Directors may from time to time amend these By-Lams or make additional by-laws for the Corporation

at any regular or special meeting at which notice of the proposed change is given, subject, however, to the power of the stockholders to alter, amend, or repeal any by-laws made by the Board of Directors.

EXHIBIT C

Authorizing Resolution

RESOLVED, that Niels M. Johnsen, Chairman of the Company, Erik L. Johnsen, President of the Company, Manuel G. Estrada, Vice President and Chief Financial Officer of the Company, and David B. Drake, Treasurer of the Company, (each, an "Authorized Officer") be, and each of them hereby is, authorized and directed to execute and deliver, in the name and on behalf of the Company, a Credit Agreement (the "Credit Agreement") between the Company and certain affiliates of the Company (the "Affiliates") and Regions Bank (the "Lender"), under which Credit Agreement the Lender shall agree to extend to the Company and the Affiliates a revolving loan in a maximum principal amount not to exceed $35,000,000; and

RESOLVED FURTHER, that the Credit Agreement shall contain such other terms, covenants, provisions and conditions in addition to those set out above as may seem necessary or desirable to the Authorized Officer executing and delivering the Credit Agreement (the execution of the Credit Agreement to be conclusive proof that all of the terms, covenants, provisions and conditions thereof are deemed necessary and desirable by said Authorized Officer); the form of the Credit Agreement presented to the undersigned directors is hereby approved, subject to such changes thereto which the Authorized Officer deems necessary and reasonable; and

RESOLVED FURTHER, that each Authorized Officer be, and each of them hereby is, authorized to execute and deliver in the name of the Company one or more promissory notes evidencing such borrowing, said notes to be in the principal amount specified in the Credit Agreement and to bear interest at the rate specified in the Credit Agreement and to contain the terms, covenants, provisions and conditions provided for in the Credit Agreement; and

RESOLVED FURTHER, that each Authorized Officer be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute and deliver a Subrogation and Contribution Agreement with the other Borrowers referred to in the Credit Agreement, the purpose of such Subrogation and Contribution Agreement being to effect an equitable sharing of the respective liabilities of the Company and the Affiliates, which document shall contain such terms, covenants, provisions and conditions as may seem necessary or desirable to the Authorized Officer executing and delivering the same (the execution thereof to be conclusive proof that all the terms, covenants, provisions and conditions thereof are deemed necessary and desirable by said Authorized Officer); and

RESOLVED FURTHER, that any Authorized Officer and any Assistant Treasurer of the Company be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to request disbursements of the proceeds of said borrowings and to direct the disposition of such proceeds, and to otherwise act on behalf of the Company in connection with the transactions contemplated by the Credit Agreement and the related documents, and the Lender may conclusively rely on the authority granted herein with respect to such officers until the Lender shall have received copies certified by the Secretary or any Assistant Secretary of the Company of further resolutions adopted by the Directors of the Company canceling or amending the authority granted under these resolutions; and

RESOLVED FURTHER, that any Authorized Officer be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute such certificates and instruments and do all such other acts as may be appropriate or as may be required by law or by said Lender in connection with the said borrowing and with the execution and delivery of the Credit Agreement; and

RESOLVED FURTHER, that any Authorized Officer be, and each of them hereby is, authorized and directed to take any and all actions as he, in his sole discretion, shall deem necessary or advisable in order to consummate the transactions contemplated by any of the foregoing resolutions and to perform or cause the performance of the Company's obligations thereunder; and

RESOLVED FURTHER, that any and all actions described in the foregoing resolutions heretofore taken on behalf of the Company by an Authorized Officers are hereby approved, confirmed and ratified as the valid and fully authorized act of the Corporation without the necessity of any further action by the undersigned.

OFFICER'S CERTIFICATE

In connection with the execution of that certain Credit Agreement by and among CENTRAL GULF LINES, INC., a Delaware corporation (the "Company"), and certain of its affiliates, as co-borrowers, and REGIONS BANK, an Alabama banking corporation, as lender, dated as of March , 2008, I do hereby certify as follows:

1.I am an Assistant Secretary of the Company and am duly authorized to execute and deliver this certificate.

2.Each of the following persons is a duly elected, qualified and acting officer of the Company and, as of the date hereof, has the title indicated and the signature opposite of such person's name is genuine.

Office                                               NameSignature

                     President                                    Erik L. Johnsen             /s/ Erik L. Johnsen

              Vice President and

            Chief Financial Officer                      Manuel G. Estrada          /s/ Manuel G. Estrada

       Vice President and Treasurer                  David B. Drake              /s/ David B. Drake

{N1776835.1}

3.Attached hereto as Exhibit A is a true, correct and complete copy of the Certificate of Incorporation of the Company and any amendments thereto (as amended, the "Certificate of Incorporation"). Said Certificate of Incorporation has not been amended or changed (except as set forth in the amendments, if any, included in Exhibit A) and is in full force and effect.

4.Attached hereto as Exhibit B is a true, correct and complete copy of the Bylaws of the Company and any amendments thereto. Said Bylaws have not been amended or changed (except as set forth in the amendments, if any, included in Exhibit B) and are in full force and effect.

5.Attached hereto as Exhibit C is a true, correct and complete copy of the authorizing resolution of the Company (the "Authorizing Resolution") duly adopted by its board of directors on March 3, 2008. The Authorizing Resolution has not been amended, changed or rescinded and is in full force and effect.

IN WITNESS WHEREOF, this certificate has been executed on behalf of the Company by the undersigned Assistant Secretary.

Dated: March, 2008.	/s/ H. Hughes Grehan
	H. Hughes Grehan, as Assistant Secretary of Central Gulf Lines, Inc.

EXHIBIT A

Certificate of Incorporation

CERTIFICATE OF INCORPORATION

OF

CENTRAL GULF LINES, INC.

FIRST: The name of this corporation shall be CENTRAL GULF LINES, INC. (As amended June 30, 1972)

SECOND: Its principal office in the State of Delaware is to be located at 100 West Tenth Street, in the City of Wilmington, County of New Castle. The agent in Charge thereof is The Corporation Trust Company, 100 West Tenth Street, Wilmington, New Castle County, Delaware.

THIRD: The nature of the business and the objects and pur­poses to be transacted, promoted and carried on, are to do any or all of the things herein mentioned, as fully and to the same extent as natural persons might or could do, and in any part of the world, viz:

To acquire, buy, hold, own, sell, time charter, bareboat Charter, exchange, dispose of, use and operate steam, motor, sailing vessels or barges, self-propelled and non-propelled, in the carrying of freight, Passengers or mail In coastwise, intercoastal, interocean and worldwide trading.

To promote, own, operate and carry on a general steamship business; to engage in the purchase and sale of ships; to operate an the berth And in tramp or charter trade; to Charter; subcharter and re-

Charter ships; to operate a general steamship agency, representing other steamship lines or companies on commission or fee basis; to act as chartering or ship brokers on commission or fee basis.

To borrow and lead money on collateral or otherwise; to issue bonds, promissory notes, bills of exchange, debentures and other obligations and evidence of indebtedness.

To own, lease, sell, hire and operate terminal,

wharf, or pier facilities; to engage in the stevedoring business in loading and unloading vessels, and to engage in all other allied activities generally carried on by a stevedoring company.

To carry freight, passengers, and/or mail by air, on scheduled or on non-scheduled flights, subject to the laws of the State of Delaware or other sovereign authority of the United States of America.

To acquire, buy, hold, own, lease, sell, manage and control lands, interest in lands, concessions, railroads, canals, water courses, dams, buildings and interest in buildings.

To purchase or otherwise acquire its own shares of stock (so far as may be permitted by law) and its bonds, de­bentures, notes, scrip or other securities, or evidences of indebtedness.

To have one or more offices, conduct and carry on its buisness and operations and promote its objects within and with­out the State of Delaware, in other states, the District of Columbia, the territories, colonies and dependencies of the United States, and in foreign countries, without restriction

as to place or amount, but subject to the laws of such state, district, territory, colony, dependency or country.

IN GENERAL to do any or all of the things herein set forth to the same extent as natural persons might or could do

and in any part of the world, as principals, agents, contractors, trustees, or otherwise, within or without the State of Delaware, either alone or in company with others, and to carry on any other business in connection therewith, whether manufacturing or other­wise, and to do all things not forbidden, and with all the

powers conferred upon corporations by the laws of the State of Delaware

The foregoing clauses shall be construed as objects, purposes and powers, and it is hereby expressly provided that the foregoing enumeration of specific powers shall not be held

to limit or restrict in any manner the powers of the corporation.

FOURTH: The total number of shares of stock which the corporation shall have authority to issue is 150,000 shares of common stock of the par value of .10 each. Any and all such

shares issued and for which the full consideration has been paid or delivered, shall be deemed full paid stock and the holders

of such shares shall not be liable for any further call or assessment or any other payment thereon.

No sale, transfer, alienation or other disposition of any of the capital stock of this corporation by any means other than inheritance or gift to members of the shareholder's immediate family shall be valid unless the stockholder wishing to dispose of his stock shall first offer it for sale to the corporation and thereafter to the other shareholders of the

corporation giving written notification to the Secretary of the corporation, specifying the number of shares offered and the price and terms on which they are offered. The corporation shall have the right to acquire all or part of the said stock at the offered price and terms. If the corporation fails to exercise this right within fifteen (15) days, the stock shall be offered

to the •other shareholders who shall have the right within a thirty (30) day period to acquire all or part of the stock in the pro­portion that the holdings of each bear to the total number of shares of the corporation other than those offered for sale.

In the event that any or all of the offered shares are not acquired by the corporation or other shareholders, the selling shareholder may thereafter sell all of such unpurchased shares to any other purchaser during a period of sixty (6o) days following the termination of the above specified periods at a price not less than and upon terms not more favorable than those offered to the corporation and other shareholders. Any shares not disposed of in such sixty (6o) day period, must be re-offered as hereinabove provided before they can thereafter be sold or disposed of.

(As amended October 10, 1947, October 4, 1948, November 27, 1950, December 18, 1958, October 12, 1962 and August 27, 1968)

FIFTH: The minimum amount of capital with which the corporation will commence business is One Thousand Dollars ($1,000.00).

SIXTH: The names and places of residence of each of the incorporators are as follows:

NAMERESIDENCE

E. G. Salmons Dover, Delaware

E. R. Steele, Jr.Dover, Delaware

G. F. Bowdle Dover, Delaware

SEVENTH: The existence of the corporation is to be perpetual.

EIGHTH: The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whatsoever.

NINTH: (a) Subject to the provisions of the General Corporation Law of the State of Delaware, the number of directors of the corporation shall be determined as provided in the By-Laws.

(b) The election of directors need not be by ballot.

TENTH: IN FURTHERANCE AND NOT IN LIMITATION of the general powers conferred by the laws of the State of Delaware, the Board. of Directors is expressly authorized:

(a) To make, alter, •or repeal the By-Laws of the corporation, to fix the amount to be reserved as or for working capital or for any other proper purpose, to fund such reserve or reserves, and to abolish any such reserve or reserves, fund or funds; to authorize and cause to be executed mortgages and liens upon the real and personal property of this corporation.

(b) From time to time to determine pursuant to the . provisions of the By-laws, whether and to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of the corporation (other than the

stock ledger), or any of them, shall be open to inspection of stockholders; and no stockholder shall have any right of inspecting any account, book or document of the corporation except as conferred by statute, unless duly authorized so to do by a resolution of the stockholders or directors.

(u) Subject to the provisions of the statutes of Delaware, to exercise any and all other powers, in addition to the powers expressly conferred by law and by this Certificate of Incorporation, which may be conferred upon it by the cor­poration through appropriate By-law provisions.

ELEVENTH: Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stock­holders or any class of them, any court of equitable juris­diction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this corporation under the provisions of Section 3883 of the Revised Code of 1915 of said State or on the application of trustees in dissolution or of any reciver Or receivers appointed for this corporation under the provisions of Section 43 of the General Corporation Law of the State of Delaware order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said Court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the Court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stock­holders of this corporation, as the case may be, and also on this corporation.

TWELFTH: No contract or other transaction between the corporation and any other corporation, whether or not a majority of the shares of the capital stock of such other corporation is owned by the corporation, and no act of the corporation shall in any way be affected or invalidated by the fact that any of the directors of the corporation are pecuniarily or otherwise interested in,or are directors or of­ficers of, such other corporation; any director individually, or any firm of which such director may be a member, may be a party to, or may be pecuniarily or otherwise interested in, any contract or transaction of the corporation, provided that the fact that he or such firm is so interested shall be dis­closed or shall have been known to the Board of Directors, or a majority thereof; and any director of the corporation who is also a director or officer of such other corporation, or who is so interested, may be counted in determining the existence of a quorum at any meeting of the Board of Directors of the corporation which shall authorize such contract or transaction, and may vote thereat to authorize such contract or transaction, with like force and effect as if he were not such director or officer of such other corporation or not so interested.

THIRTEENTH: The stockholders and directors shall have power to hold their meetings if the Hy-laws so provide, and keep the books except the original or duplicate stock ledger, documents and papers of the corporation, outside of the State of Delaware, at suCh places as may be from time to time designated by the By-laws or by resolution required by the laws of Delaware.

FOURTEENTH: The corporation reserves the right to amend, alter or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed by the statutes of Delaware, and all rights and powers con­ferred on directors and stockholders herein are granted subject to this reservation.

WE, THE UNDERSIGNED, for the purpose of forming a corporation under the laws of the State of Delaware, do make, file and record this Certificate, and do certify that the facts herein stated are true, and we have accordingly hereunto set our respective hands and seals.

Dated at Dover, Delaware April 18, 1947 E. G. Salmons(L.S.) E. R. Steele, Jr.(L.S.) G. F. Bowdle(L.S.)

EXHIBIT B

Bylaws

CONSENT OF SOLE SHAREHOLDER

OF CENTRAL GULF LINES, INC.

APRIL 24, 2007

The undersigned, International Shipholding Corporation, being the sole stockholder of Central Gulf Lines, Inc. (the "Corporation"), hereby by this Consent in Lieu of Annual Meeting, amends the By-laws of the Corporation as follows:

Article II, Section 1 of the By-laws of the Corporation is amended and restated in its entirety to read as follows:

1. ALL MEETINGS OF THE STOCKHOLDERS SHALL BE held at the office of the corporation, RSA Battle House Tower Office Building, 11 North Water Street, Suite 18290, Mobile, Alabama 36602, or at such other place as the Board of Directors may designate, and the place at which such meeting shall be held shall be stated in the notice and call of the meeting. A change in the place of meeting shall not be made within sixty (60) days next before the day on which an election of directors is to be held, and a notice of any change shall be given to each stockholder twenty (20) days before the election is to be held.

April 24, 2007.

International Shipholding Corporation

By: /s/ Niels M. Johnsen

Niels M. Johnsen, Chairman and Chief Executive Officer

By: /s/ Erik L. Johnsen

Erik F. Johnsen, President

CONSENT OF SOLE SHAREHOLDER

OF CENTRAL GULF LINES, INC.

APRIL 27, 2005

The undersigned, International Shipholding Corporation, being the sole stockholder of Central Gulf Lines, Inc. (the "Corporation"), hereby by this Consent in Lieu of Annual Meeting, amends the By-laws of the Corporation as follows:

Article III, Sections 1 and 2 of the By-laws of the Corporation are amended and restated in their entirety to read as follows:

1.THE MANAGEMENT of all of the affairs, property and business of the corporation shall be vested in a Board of Directors, consisting of at least two (2) and not more than eleven (11) persons, who shall be elected at the annual meeting of the stockholders by the plurality vote, for a term of one year, and shall hold office until their successors are elected and qualify. In addition to the powers and authorities by these By-laws and the Certificate of Incorporation expressly conferred upon it, the Board of Directors may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-laws directed or required to be exercised or done by the stockholders.

2.THE NUMBER OF DIRECTORS may at any time be increased or decreased, but never to less than two (2) nor more than eleven (11) by vote of a majority of the stockholders entitled to vote at any regular or special meeting if the notice of such meeting contains a statement of the proposed increase or decrease, and in case of any such increase, the stockholders at any general or special meeting shall have power to elect such additional directors to hold office until the next annual meeting of the stockholders and until their successors are elected and qualified.

All other provisions of the By-laws shall remain unchanged.

April 27, 2005.

International Shipholding Corporation

By: /s/ Niels M. Johnsen

Niels M. Johnsen, President

CONSENT OF SOLE STOCKHOLDER

OF CENTRAL GULF LINES, INC.

APRIL 18, 1989

The undersigned, International Shipholding Corporation, being the sole stockholder of Central Gulf Lines, Inc., hereby by this Consent in Lieu of Annual Meeting, amends the By-laws of the Company as follows:

Article I, 1 is amended to read as follows:

"1. THE PRINCIPAL OFFICE shall be in the City of Wilmington, Delaware and the name of the resident agent in charge thereof is The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801."

Article II, 1 is amended to read as follows:

1. ALL MEETINGS OF THE STOCKHOLDERS SHALL BE held at the office of the corporation, 650 Poydras Street, New Orleans, Louisiana, or at such other place as the Board of Directors may designate, and the place at which such meeting shall be held shall be stated in the notice and call of the meeting. A change in the place of meeting shall not be made within sixty (60) days next before the day on which an election of directors is to be held, and a notice of any change shall be given to each stockholder twenty (20) days before the election is to be held."

Article III, 1 and 2 are amended to read as follows:

"1. THE MANAGEMENT of all of the affairs, property and business of the corporation shall be vested in a Board of Directors, consisting of at least five (5) and not more than eleven (11) persons, who shall be elected at the annual meeting of the stockholders by the plurality vote, for a term of one year, and shall hold office until their successors are elected and qualify. In addition to the powers and authorities by these By-laws and the Certificate of Incorporation expressly conferred upon it, the Board of Directors may exercise all such powers of the corporation and do all such lawful acts and things as are not by statue or by the Certificate of Incorporation or by these By-laws directed or required to be exercised or done by the stockholders.

2. THE NUMBER OF DIRECTORS may at any time be increased or decreased, but never to less than five (5) nor more than eleven 11 by vote of a majority of the stockholders entitled to vote at any regular or special meeting if the notice of such meeting contains a statement of the proposed increase or decrease, and in case of any such increase, the stockholders at any general or special meeting shall have power to elect such additional directors to hold office until the next annual meeting of the stockholders and until their successors are elected and qualified."

All other provisions of the By-laws shall remain unchanged. April 18, 1989.

International Shipholding Corporation

Signature on File

President

BY—LAWS

OF

CENTRAL GULF STEAMSHIP CORPORATION

**********

ARTICLE I — OFFICES

1.THE PRINCIPAL OFFICE shall be in the City of Dover, County of Kent, State of Delaware and the name of the resident agent in charge thereof is The Prentice-Hall Corporation System, Inc., 317-325 South State Street, Dover, Kent County, Delaware.

2.THE CORPORATION may also have offices at such other places as the Board of Directors may from time to time appoint, or the business of the corporation may require.

ARTICLE II — THE STOCKHOLDERS' MEETINGS

1. ALL MEETINGS OF THE STOCKHOLDERS SHALL BE held at the office of the corporation, Two Canal Street, New Orleans, Louisiana, or at such o ther place as the Board of Directors may designate, and the place at which such meeting shall be held shall be stated in the notice and call of the meeting. A change in the place of meeting shall not be made within sixty (60) days next before the day on which an election of directors is to be held, and a notice of any change shall be given to each stockholder twenty (20) days before the election is to be held.

2. An Annual Meeting of the stockholders of the -corporation for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held on the fourth Thursday in April at a time to be set by the officers of the corporation. If the annual meeting of stockholders be not held as herein prescribed, the election of directors may be held at any meeting thereafter called pursuant to these By-Laws.

At all meetings of stockholders the voting may be viva voce, but any qualified voter may demand a stock vote whereupon such stock vote shall be taken by ballot, each of which shall state the name of the stockholder voting and the number of shares voted by him, and, if such ballot be cast by a proxy, it shall also state the name of such proxy.

At any meeting of the stockholders every stockholder having the right to vote shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such Stockholder and bearing a date not more than three years prior to said meeting, unless said instrument provides for a longer period. Each common stockholder shall have one vote for each share of stock registered in his name on the books of the corporation, and, except where the transfer books of the corporation shall have been closed or a date shall have been fixed as a record date for the determination of its stockholders entitled to vote, no share of stock shall be voted on which shall have been transferred on the books of the corporation within twenty days next preceding such election of directors.

A complete list of the stockholder entitled to vote at the ensuing election arranged in alphabetical order with. the number of voting shares held by each shall be prepared by the Secretary, who shall have charge of the stock ledger, and shall be filed in the office where the election is to be held at least ten days before every election, and shall during the usual hours for business, and during the whole time of said election, be open to the examination of any stockholder.

3. ORDER OF BUSINESS - At the annual meeting of the stockholders, the order of business shall be as follows:

1.   Calling the meeting to order.

        2.Proof of notice of meeting.

3.   Reading of minutes of last previous annual meeting.

4.   Reports of officers.

5.   Reports of committees.

6.   Election of directors.

7.   Miscellaneous business.

4. SPECIAL MEETINGS of the stockholders for any purpose or purposes, unless otherwise prescribed by statute, may be called by the President.

5. BUS/NESS TRANSACTED at all special meetings shall be confined to the objects stated in the call.

6. NOTICE OF THE TIME and place of the annual meeting of stockholders shall be given by mailing written or printed notice of the same at least ten days and not more than fifty days prior to the meeting, and notice of the time and place of special meetings shall be given by written or printed notice of the same at least ten days and not more than fifty days prior to the -meeting, with postage prepaid to each stockholder of record of the corporation entitled to vote at such meeting and addressed to the stockholder's last known post-office address, or to the address appearing on the corporate books of the corporation. The Board of Directors may fix in advance a date, not exceeding fifty days preceding. the date of any meeting of stockholders, as a record date for the determination of the stockholders entitled to notice of, and to vote, at any such meeting.

7. A QUORUM at any annual or special meeting of stockholders shall constitute of stockholders representing, either in person or by proxy, a majority of the outstanding capital stock •of the corporation entitled to vote at such meeting, except as otherwise specially provided by law or in the Certificate of Incorporation.

If a quorum be not present at a properly called stockholders' meeting, the meeting may be adjourned by those present and if a notice of such adjourned meeting sent to all stockholders entitled to vote thereat contain the time and place of holding such adjourned meeting and a statement of the purpose of the meeting and that the previous meeting failed for lack of a quorum and that under the provisions of this section it is proposed to hold the adjourned meeting with a quorum of those present, then, at such adjourned meeting, except as may be otherwise required by law or provided in the Certificate of Incorporation, any number of stockholders entitled to vote thereat represented in person or by proxy shall constitute a quorum and the votes of a majority in interest of those present at such meeting shall be sufficient to transact business.

 8. TWO INSPECTORS of election shall be appointed by the Board of Directors before or at such meeting of the Stockholders of the Corporation at which an election of directors shall take place; if no such appointment shall have been made or if the inspectors appointed by the Board of Directors refuse to act or fail to attend then the appointment shall be made by the presi­ding officer at the meeting. The inspectors shall receive and take in charge all proxies and ballots and shall decide all questions touching upon the qualification of voters•the validity of proxies, and the acceptance and rejection of votes. In case ofa tie vote by the inspectors on any question, the presiding officer shall decide.

ARTICLE III - BOARD OF DIRECTORS

1.THE MANAGEMENT of all of the affairs, property, and business of the corporation shall be vested in a Board of Directors, consisting of at least five and not more than seven persons, who shall be elected at the annual meeting of the stockholders by the plurality vote, for a term of one year, and shall hold office until their successors are elected and qualify. In addition to the powers and authorities by these By-laws and the Certificate of Incorporation expressly conferred upon it, the Board of Directors may exercise all such powers of the corporation and do all such lawful acts and things as are not by -statute or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the stockholders.

2.THE NUMBER OF DIRECTORS may at any time be increased or decreased, but never to less than five nor more than seven by vote of a majority of the stockholders entitled to vote at any regular or special meeting if the notice of such meeting contains a statement of the proposed increase or decrease, and in case of any such increase, the stockholders at any general or special meeting shall have power to elect such additional directors to hold office until the next annual meeting of the stockholders and until their successors are elected and qualify.

3.ALL VACANCIES in the Board of Directors, whether caused by registration, death or otherwise, may be filled by the remaining director or a majority of the remaining directors attending a stated or special meeting called for the purpose even though less than a quorum of .directors be present. A director thus elected to fill any vacancy shall hold office for the unexpired term of his predecessor and until his successor is elected and qualifies.

4.THE FIRST MEETING of each newly elected Board shall be held at such time and place either within or without the State of Delaware as shall be fixed by the vote of the stockholders at the annual meeting, and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting; PROVIDED, a majority of the -whole Board shall be present; or they may meet in such a place and time as shall be fixed by the consent in writing of all the directors.

5.Regular meetings of the Board of Directors shall be held quarterly on such dates as shall be from time to time designated by the Board of Directors upon five days notice at the office of the corporation, New Orleans, Louisiana, or such other places within or without the State of Delaware as the Board of Directors may from time to time designate.

6.SPECIAL MEETINGS of the Board of Directors may be called at any time by the President at the office of the corporation in New Orleans, Louisiana or at such other place or places within or without the State of Delaware as the directors may from time to time designate.

7.NOTICE OF all special meetings of the Board of Directors shall be given to each director by five days' service of the same by telegram, by letter, or personally.

8.A MAJORITY of the whole Board of Directors shall be necessary at all meetings to constitute a quorum for the transaction of business; but less than a quorum may adjourn any meeting, which may be held on a subsequent date without further notice, provided a quorum be present at such deferred meeting.

9.STANDING or TEMPORARY COMMITTEES may be appointed from its own number by the Board of Directors from time to time and the Board of Directors may from time to time invest such committees with such powers as it may see fit, subject to such -conditions as may be prescribed by such Board.

10. NO STATED SALARY shall be paid directors, as such, for their services, but by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of such Board; provided, that nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

ARTICLE IV — OFFICERS

1.OFFICERS. The officers of the Company shall be a chairman, a President, a Vice President, or more than one Vice President, a Treasurer, and a Secretary, all of whom shall be elected by the Board of Directors and who shall hold office until their successors are elected and qualified. In addition, the Board of Directors. may elect a Controller, and may appoint or.may delegate the appointment of one or more Assistant Secretaries, Assistant Treasurers, Assistant Controllers, and such other officers and agents as they may deem proper. The officers shall be elected at the first meeting of the Board of Directors after each annual meeting. All of the said elected officers shall hold their offices at the pleasure of the Board.

2.CHAIRMAN. The Chairman shall be the chief executive officer of the company and shall have the general powers and duties of supervision and management usually vested in the office of the chief executive of a company. He shall preside at all meetings of the stockholders and of the Board of Directors, and shall have general supervision, direction and control of the business of the company. Except as the Board of Directors shall authorize the execution thereof in some other manner, the Chairman may execute bonds, mortgages and any other contracts of any nature in behalf of the Company.

3.PRESIDENT.The President shall be the chief operating officer of the Company. At the request of the Chairman, or in his absence or during his disability, the President shall perform the duties and exercise the functions of the Chairman. Except as the Board of Directors shall authorize the execution thereof in some other manner, the President may execute bonds, mortgages and any other contracts of any nature in behalf of the Company.

4.EXECUTIVE VICE PRESIDENT.In the event of the death, absence or inability of the Chairman or the President to perform any duties, the Executive Vice President may exercise the powers of the Chairman and President and perform such duties subject to the control of the Board of Directors.

5.SENIOR VICE PRESIDENT. The Senior Vice President shall perform such duties as may be authorized by the Board of Directors, but shall not succeed to the authority of the Chairman, the President or the Executive Vice President and shall not have authority to effect the policies or practices of the Company.

6.OTHER VICE PRESIDENTS. The other Vice Presidents shall perform such duties as may be assigned to them by the Board of Directors, but shall not succeed to the authorities and duties of the Chairman, President or Executive Vice President.

7.SECRETARY. The Secretary shall give, or cause to be given, notice of all meetings of stockholders and directors, and all other notices required by law or by these By-Laws, and in case of his absence or refusal or neglect so to do, any such notice may be given by any person thereunto directed by the Chairman, the President, or by the directors, upon whose requisition the meeting is called as provided in these By-Laws. He shall record all the proceedings of the meetings and of the directors in a book to be kept for that purpose and shall perform such other duties as may be assigned to him by the directors or the Chairman.He shall have the custody of the seal of the Company and shall affix the same to all instruments requiring it, when authorized by the directors or the Chairman and attest the same.

B.          TREASURER.The Treasurer shall have the custody of the Company funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the Company. Be shall deposit all moneys and other valuables in the name and to the credit of the Company in such depositaries as may be designated by the Board of Directors.

The Treasurer shall disburse the funds of the Company as may be ordered by the Board of Directors, the Chairman, or the President, taking proper vouchers for such disbursements. If required by the Board of Directors, he shall give the Company a bond for the faithful discharge of his duties in such amount and with such surety as the Board shall prescribe.

The Treasurer shall sign all checks, drafts or other orders for the payment of money, notes or other evidence of indebtedness issued in the name of the Company in such manner as shall be determined from time to time by resolution of the Board of Directors; provided, however, that the Directors shall have power by resolution to delegate any of the duties or power of the Treasurer to other officers.

9.CONTROLLER                         The Controller shall be in charge of all Company accounting books, records and procedures, shall perform internal audits, shall prepare burdgets, financial statements and reports for the Chairman, the President, and the Board of Directors. He shall keep his accounts in the name of the Company and shall render such reports as may be required by the Board of Directors, the Chairman, or the President.

10.ASSISTANT SECRETARIES. Assistant Secretaries, if any shall be appointed, shall, during the absence or disability of the Secretary, perform all the duties of the Secretary and shall have such other powers- and shall perform such other duties as shall be assigned to them.

11.ASSISTANT TREASURERS.Assistant Treasurers, if any shall be appointed, shall, during the absence or disability of the Treasurer, perform all the duties of the Treasurer and shall have such other powers and shall perform such other duties ...as shall be assigned to them. .

12.ASSISTANT CONTROLLERS. Assistant Controllers, if any shall be appointed, shall, during the absence or disability of the Controller, perform all the duties of the Controller and shall have such other powers and shall perform such other duties as shall be assigned to them.

(Amended by Unanimous Consent of Stockholders February 13, 1984.)

ARTICLE V - REIMBURSEMENT AND INDEMNIFICATION

OF DIRECTORS AND OFFICERS

1.Any and all of the directors or officers or former

directors or officers of the corporation or any preson who may have served at the request of the corporation as a director or officer of another corporation in which it owns shares of capital stock or of which it is a creditor shall be indemnified against expenses actually and necessarily incurred by them in connection with the defense of any action, suit or proceeding in which they, or any of them, are made parties, or a party, by reason of being or having been directors or officers or a director or officer of the corporation, or of such other corporation, except in relation to matters as to which any such director or officer or former director or officer or person shall be adjudged in such action,. suit or proceeding to be liable for negligence or misconduct in the performance of duty. Such indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled, under any By-Law, agreement, vote of stockholders, or otherwise.

ARTICLE VI - STOCK

1.CERTIFICATES OF STOCK shall be issued in numerical order, and each stockholder shall be entitled to a certificate signed by the President, and the Secretary-Treasurer, certifying to the number of shares owned by him.Where, however, such certificate is signed (1) by a transfer agent or an assistant transfer agent, or (2) by a transfer clerk acting on behalf of the corporation and a registrar, the signature of any of the above named officers may be facsimile.

In case any, officer who has signed, or whose facsimile signature has been used on a certificate, has ceased to be an officer before the certificate has been delivered, such certificate may nevertheless be adopted and issued and delivered by the corporation, as though the officer who signed such certificate or certificates, or whose facsimile signature or signatures shall have been used thereon, had not owned to be such officer of the corporation.

2.TRANSFERS OF STOCK shall be made only upon the transfer books of the corporation kept at the office of the corporation or the respective transfer agents designated to transfer the several classes of stock, if any, and before a new certificate is issued, the old certificate shall be surrendered for cancellation.

3.REGISTERED STOCKHOLDERS only shall be entitled to be treated by the corporation as the holders in fact of the stock standing in their respective names and the corporation shall not be bound to recognize any equitable or other claim to or interest in any share on the part of any other person, whether or not it shall have express or other notice thereof, except as expressly provided by the laws of Delaware.

4.IN CASE OF LOSS OR DESTRUCTION of any certificate of stock another may be issued in its place upon proof of such•loss or destruction and upon the giving of a satisfactory bond of indemnity to the corporation and/or to the transfer agent and registrar of such stock, in such sum as the Board of Directors may provide.

5.REGULATIONS                            The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer, conversion and registration of certificates for shares of the capital stock of the corporation, not inconsistent with the laws of Delaware, the Certificate of Incorporation of the corporation and these By-Laws.

6.CLOSING OF TRANSFER BOOKS The Board of Directors. shall have power to close the stock transfer books of the corporation for a period not exceeding fifty days preceding the date of any meeting of stockholders, or the date for payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or for a period of not exceeding fifty days in connection with obtaining the consent of stockholders for any purpose; provided, however, that in lieu of closing the stock transfer books as aforesaid, the Board of Directors may fix in advance a date, not exceeding fifty days preceding the date of any meeting of stockholders or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining such consent, as a record date for the determination of the stockholders entitled to notice of, and to vate at, any such meeting, and any adjournment thereof, or entitled to receive payment of any such dividend, or to receive such allotment of rights, or to exercise such rights, or to give such consent, as the case may be notwithstanding any transfer of any stock on the books of the corporation after such record date fixed as aforesaid.

• ARTICLE VII - DIVIDENDS AND FINANCE

1.DIVIDENDS may be declared by the Board of Directors and paid out of the annual net profits of the corporation or out of its net assets in excess of its capital, subject to the conditions and limitations imposed by the Certificate of Incorporation of the corporation.

2.BEFORE MAKING ANY DISTRIBUTION OF PROFITS there may be set aside out of the net profits of the corporation such sum or sums as the directors from time to time in their absolute discretion deem expedient as a reserve fund to meet contingencies, or for equalizing dividends, or for maintaining any property of the corporation, or for any other purpose, and any profits of any -year not distributed as dividends shall be deemed to have been thus set apart until otherwise disposed of by the Board of Directors.

3.THE MONEYS of the corporation shall be deposited in the name of the corporation in such bank or banks or trust company or trust companies as the Board of Directors shall designate, and shall be drawn out only by check signed by the President, the Vice-President or the Secretary-Treasurer or otherwise as directed by a properly approved resolution of the Board of Directors.

4.THE FISCAL YEAR of the corporation shall begin on the first day of April in each year unless otherwise provided by the Board of Directors. (Amended at meeting of Board of Directors April 24, 1962)

ARTICLE VIII - BOOKS AND RECORDS

1. THE BOOKS, ACCOUNTS AND RECORDS of the corporation, except as may be otherwise required by the laws of the State of Delaware,, may be kept outside of the State of Delaware, at such place or places as the Board of Directors may from time to time support. The Board of Directors shall determine whether and to what extent the accounts and books of the corporation, or any of them shall be •open to the inspection of the stockholders, and no stockholder shall have any right •to

inspect any account or book or document of the corporation, except as conferred by law or by resolution of the stockholders or directors.

ARTICLE IX - NOTICES

1.WHENEVER THE PROVISIONS of the statute or these By-Laws require notice to be given to any director, officer or stockholder, they shall not be construed to mean personal notice; such notice may be given in writing by depositing the same in a postoffice or letter box, in a post paid, sealed wrapper, addressed to such director, officer or stockholder at his or her address as the same appears in the books of the corporation, and the time when the same shall be mailed shall be deemed to be the time of the giving of such notice.

2.A WAIVER of any notice in writing, signed by a stockholder, director or officer, whether before or after the time stated in said waiver for holding a meeting, shall be deemed equivalent to a notice required to be given to any director, officer or stockholder.

ARTICLE X - SEAL

I. THE CORPORATE SEAL of the corporation shall consist of two concentric circles, between which shall be the name of the corporation, and in the center shall be inscribed the year of its incorporation and the words, "Corporate Seal, Delaware."

ARTICLE XI - AMENDMENTS

1. ALTERATIONS, AMENDMENTS OR REPEALS of these By-

•

Laws may be made by a majority of the stockholders entitled to vote at any regular or special meeting if the notice of such meeting contains a statement of the proposed alteration, amendment -or repeal, or by the Board of Directors by a majority vote of the whole Board of Directors at any regular or special meeting, provided notice of such alteration, amendment or. repeal has been given to each director in writing at least three days prior to said meeting.

EXHIBIT C

Authorizing Resolution

RESOLVED, that Niels M. Johnsen, Chairman of the Company, Erik L. Johnsen, President of the Company, Manuel G. Estrada, Vice President and Chief Financial Officer of the Company, and David B. Drake, Treasurer of the Company, (each, an "Authorized Officer") be, and each of them hereby is, authorized and directed to execute and deliver, in the name and on behalf of the Company, a Credit Agreement (the "Credit Agreement") between the Company and certain affiliates of the Company (the "Affiliates") and Regions Bank (the "Lender"), under which Credit Agreement the Lender shall agree to extend to the Company and the Affiliates a revolving loan in a maximum principal amount not to exceed $35,000,000; and

RESOLVED FURTHER, that the Credit Agreement shall contain such other terms, covenants, provisions and conditions in addition to those set out above as may seem necessary or desirable to the Authorized Officer executing and delivering the Credit Agreement (the execution of the Credit Agreement to be conclusive proof that all of the terms, covenants, provisions and conditions thereof are deemed necessary and desirable by said Authorized Officer); the form of the Credit Agreement presented to the undersigned directors is hereby approved, subject to such changes thereto which the Authorized Officer deems necessary and reasonable; and

RESOLVED FURTHER, that each Authorized Officer be, and each of them hereby is, authorized to execute and deliver in the name of the Company one or more promissory notes evidencing such borrowing, said notes to be in the principal amount specified in the Credit Agreement and to bear interest at the rate specified in the Credit Agreement and to contain the terms, covenants, provisions and conditions provided for in the Credit Agreement; and

RESOLVED FURTHER, that each Authorized Officer be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute and deliver a Subrogation and Contribution Agreement with the other Borrowers referred to in the Credit Agreement, the purpose of such Subrogation and Contribution Agreement being to effect an equitable sharing of the respective liabilities of the Company and the Affiliates, which document shall contain such terms, covenants, provisions and conditions as may seem necessary or desirable to the Authorized Officer executing and delivering the same (the execution thereof to be conclusive proof that all the terms, covenants, provisions and conditions thereof are deemed necessary and desirable by said Authorized Officer); and

RESOLVED FURTHER, that any Authorized Officer and any Assistant Treasurer of the Company be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to request disbursements of the proceeds of said borrowings and to direct the disposition of such proceeds, and to otherwise act on behalf of the Company in connection with the transactions contemplated by the Credit Agreement and the related documents, and the Lender may conclusively rely on the authority granted herein with respect to such officers until the Lender shall have received copies certified by the Secretary or any Assistant Secretary of the Company of further resolutions adopted by the Directors of the Company canceling or amending the authority granted under these resolutions; and

RESOLVED FURTHER, that any Authorized Officer be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute such certificates and instruments and do all such other acts as may be appropriate or as may be required by law or by said Lender in connection with the said borrowing and with the execution and delivery of the Credit Agreement; and

RESOLVED FURTHER, that any Authorized Officer be, and each of them hereby is, authorized and directed to take any and all actions as he, in his sole discretion, shall deem necessary or advisable in order to consummate the transactions contemplated by any of the foregoing resolutions and to perform or cause the performance of the Company's obligations thereunder; and

RESOLVED FURTHER, that any and all actions described in the foregoing resolutions heretofore taken on behalf of the Company by an Authorized Officers are hereby approved, confirmed and ratified as the valid and fully authorized act of the Corporation without the necessity of any further action by the undersigned.

OFFICER'S CERTIFICATE

In connection with the execution of that certain Credit Agreement by and among WATERMAN STEAMSHIP CORPORATION, a New York corporation (the "Company"), and certain of its affiliates, as co-borrowers, and REGIONS BANK, an Alabama banking corporation, as lender, dated as of March , 2008, I do hereby certify as follows:

1.I am an Assistant Secretary of the Company and am duly authorized to execute and deliver this certificate.

2.Each of the following persons is a duly elected, qualified and acting officer of the Company and, as of the date hereof, has the title indicated and the signature opposite of such person's name is genuine.

                     President                                    Erik L. Johnsen             /s/ Erik L. Johnsen

              Vice President and

            Chief Financial Officer                      Manuel G. Estrada          /s/ Manuel G. Estrada

       Vice President and Treasurer                  David B. Drake              /s/ David B. Drake

Office                                               NameSignature

3.Attached hereto as Exhibit A is a true, correct and complete copy of the Certificate of Incorporation of the Company and any amendments thereto (as amended, the "Certificate of Incorporation"). Said Certificate of Incorporation has not been amended or changed (except as set forth in the amendments, if any, included in Exhibit A) and is in full force and effect.

4.Attached hereto as Exhibit B is a true, correct and complete copy of the Bylaws of the Company and any amendments thereto. Said Bylaws have not been amended or changed (except as set forth in the amendments, if any, included in Exhibit B) and are in full force and effect.

5.Attached hereto as Exhibit C is a true, correct and complete copy of the authorizing resolution of the Company (the "Authorizing Resolution") duly adopted by its board of directors on March 3, 2008. The Authorizing Resolution has not been amended, changed or rescinded and is in full force and effect.

IN WITNESS WHEREOF, this certificate has been executed on behalf of the Company by the undersigned Assistant Secretary.

Dated: March                                              , 2008.	/s/ H. Hughes Grehan
	H. Hughes Grehan, as Assistant Secretary of Waterman Steamship Corporation

EXHIBIT A

Certificate of Incorporation

CERTIFICATE OF =CORPORATION

of

WATERMAN STEAMSEIP.C.ORPORATION

•

Ender Section 402 of the Business Corporation Law

The undersigned, a natural person of the age of twenty-one years or over, desiring to fora a corporation

pursuant to the provisions of the Business Corporation Law of the State of New York, does hereby certify as

follows:.,53

FIRST:• The name of the corporation is U

•

WATERMAN STEAMSNIP.CORFORATION

•

SECOND: The purposes for 'which it is formed are:

(a) To carry on the general business of ship owners, ship buildings, ship repairers, ship chand­lers, ship brokers, custom house brokers, ship

and cargo agents, agents for shipowrers and opera­tors, managers of shipping property, freight con­tractors, barge owners, lightermen, stevedoring, Xreight forwarding agents, import and export. agents, factors, insurance brokers, warehousemen and whar­fingers.

I.

(t) To buy, sell, charter, sub-charter, own, lease, mortgage, operate, navigate, build, equip, furnish, fit, lay down, design, overhauleiMEZEMMI repair and otherwise deal in and with (as principal, - agents, brokers, independent contractors or otherwise) steamships, motor ships, tankers and vessels and craft of any and all motive power whatever, sailing vessels, tugs, barges, lighters and all other vessels and craft, as well asany and all aircraft, land vehicles and other craft and any and all means of conveyance, transportation or lading of piisengers freight, mails and property of any character whatever, by land, water or air, together with all materials, articles, tools, machinery, engines, rigging,

tackle furnishings equipment and supplies entering into or suitable or convenient for the construction, equipment, use or operation of any of the foregoing.

(c)To carry on the business of freight and forwarding agents and brokers, and in the fur-

- therance of that business, to solicit, purchase, rent or otherwise contract for freight shipping space on all vessels, railroads and aircraft and all freight carriers of every kind and description whatever, whether operating by land, air or water routes, and to sell, sublet or otherwise dispose of such shipping space to shippers of all kinds of freight: and in general to act in every possible manner as agent and broker for all persons or companies desiring to obtain freight shipping accommodations and for- all land,. air and water transportation companies desiring to sell, let or otherwise dispose of shipping space.

(d)To do a storage, wharfage, warehousing and forwarding business, and to own, buy, sell, deal in and with, lease, hold, erect and maintain, docks, bulk-heads, piers, basins and warehouses; to store all kinds of goods, wares and merchandise; to store and dock ships, vessels and boats of every kind and description; to load and unload the same; to issue storage, dock and warehouse receipts, and to collect dockage, wharfage and storage dues.

(e)To purchase, own, lease, operate, maintain, buy and sell, deal in and with, shipyards, idock.s,'dry docks, wharves, terWinale, elevators, coal bins, pockets, chutes, plants, bangers, airports and factories, for the building, repairing, storing, loading, unloading and equipping of any and all kinds of boats, vessels and aircraft of every class and - description and of any and every motive power and for the storing of all goods, wares and merchandise.

(0 TO purchase, own, lease, operate, maintain,

buy and sell, 'deal in and with, any and all dredgers, dredging machinery and other materials, machinery and . appliaaces, used in dredging operations.

(g)To constnnt, repair and rebuild steer engines, boilers, motors, parts and any and all other machinery and appliances used in dredging operations.

(h)To carry on the business of pilotage; to use and operate tow boats and engage in the general business of towing; to carry on a general salvage and wrecking business and to do all things incident thereto; to search for, locate, rescue, raise, repair, scrap or turn to account in any lawful manner, vessels, cargoes, and marine or other property of all kinde which may have been lost, sunk, grounded or in any may incapacitated on land or water.

(1) To establish and maintain an oil busineas with . authority to contract for the lease and purchase of and

to prospect for, develop and Use coal and other minimal, petroleum and gas; to erect, build and own all necessary oil tanks, cars and pipes- necessary for the operation

of the business of the same.

--

(j)To act as agents or brokers in the business of Marine, fire, life, health, accident and disability in­surance and in any other kind of insurance in all its branches and in particular to'act as brokers and agents in obtaiLing insurance for all shipments of freight made through the agency of the company as freight forwarding agent and custom house brokers; to engage in the busi­ness cf underwriting any such insurance.

(k)TO purthese, lease, or otherwise acquire,. hold, own, improve, maintain, develop, encumber, mortgage, pledge, sell, exchange, lease or otherwise dispose of, and to deal and trade in, any and all lands, real property, leaseholds, and any and all interests and rights in land or other property, real, personal or mixed, wheresoever sitnated; to design, build, erect, construct, purchase, lease or otherwise enquire, hold, own, maintain, operate, develop, improve, alter,-repair, lease, mortgage, pledge, sell, convey, exchange or otherwise dispose o. buildings, plants, structures, facilities and improvements of every kind and description

(1) To acquire or become interested whether by subscrIption, pur:hase, or loan, tC OUT, hold, rel:, assign, or otherwise dispose

o: stocks, tonds, debentures warrants, rights, scrip, notes, evidences of iildebtedness; or other securities or obligations of any kind by whomso­ever issued; to exercise in respect thereof all .powers and privileges of individual ownership or interest therein, including the right to vote thereon for any and all purposes, to consent, or otherwise-act with respect thereto without limitation; and to issue in exchange therefor the corporation's stock, bonds, debentures, warrants, rights, scrip, notes, evidencesoof indebtedness or other securities or obligations of any kind or otterwiee pay therefor.

(m) Subject to the limitations prescribed by statute, to aceuirt by purchase, exchange or other­wise, all, or any part of, or any interest in, the properties, aseets, business and good-will of any one or more corporations, associations, partner­ships, firms, syndicates or individuals and to pay for the same in cash, property or its own or other securities or otherwise; to hold, operate, re­organize, liquidate, mortgage, pledge, sell, exchange, or in any manner dispose of the whole or any part thereof; and, in connectiod therewith, to assume or guarantee performance of any liabilities, obligationsor contracts of corporations associations, partner­ships, firms, syndicates or individuals, and to . conduct in any lawful manner the whole or any part of any similar business thus acqtired.

(n) Tc purchase, manufacture, produce, assemble, receive; lease or in any manner acquire, hold, own, use, operate, install, maintain, service, repair, process, alter, improve, import, export, sell, lease, assign, transfer and generally to trade and deal in and with, raw materials, natural or manufactured articles or products, machinery, equipment, devices, systems, parts, supplies, apparatus and personal property of every kind, nature or description, tangible or intangible, used or capable of being used for any purpose whatsoever and to engage and participate in any mercantile, manufacturing or trading business

or any kind or character.,

 (o)To adopt, apply for, obtain, register, pur­chase, lease or otherwise acquire and to maintain, protect, hold, usee.own, exercise, develop, manufacture under, operate and introduce, and to sell and grant licenses or other rights in respect of, assign or otherwise dispose of, turn to account, or in any manner deal with and contract with reference to, any trade­marks, trade names patents patent rights, concessions, franchises, designs, copyrights and distinctive marks and rights analogous thereto, and inventions, devices, improvements, processes, recipes, formulae and the like, including such thereof as may be covered by, used in connection with, or secured or received under, Letters Patent of the United States of America or elsew..tre or otherwise, and any licenses In respect thereof and any or all rights connected therewith or appertainimg coereto.

 (p)TO carry out all or any part of the foregoing purposes as principal, factor, agent, broker, con­tractor, consultant or otherwise, either alone or in conjunction with any persons, firms, association., corporations or others in any part of the world; and In carrying on its business and for the purpose of attaining or furthering any of its purposes, to maintain offices and agencies within or outside the State of New York, to make and perform contracts of any kind and - description, and to do anything and everything necessary; suitable, convenient or proper for the accomplishment of any of the purposes herein enumerated.

 (q)For the accomplishment or the aforesaid pur­poses, and in furtherance thereof, the corporation shall hale and may exercise all of the powers conferred by ' the Business Corporation Law upon corporations formed thereunder, subject to any limitations contained in Article 2 of said law and in accordance with the pro­visions of the statutes of the State of New York.

THIRD: The office of the corporation is to be located in the City of New York, County of New York, State of New York.

FOURTH: The aggregate number or which the corpora:ion shall have the authority to issue is One .Hundred (100) shares without par value, all of one class which shall be designated Common Stook.

FIFTH: No holder of shares of stock now or hereafter authorized of the corporation shall have any preferential or preemptive right to aubscribe for, pur­chase or receive any shares of stock of the corporation of any class or series, whether now or hereafter authorized, which may-at any time be issued, sold or offered for sale by the corporation, or any options or warrants for such shares, or any rights to subscribe to or purchase such shares, or any bonds, debentures or other securities convertible into-or exchangeable for such shares.

SIXTH: The Secretary of State of the State

of New York is hereby designated as the agent of the -

corporation upon whom process against it may be seived..

The post office address to which the Secretary of State shall mail a copy of any process against the corporation served upon him is

_ WATERMAN STEAMSHIP co:

19 Rector Street

New York. N. Y.

Attention: The President

IN WITNESS WHEREOF, 1 have signed andacknowl­led ed4 this certificate of incorporation this aakday 0

Inccrporator

/s/ Garvin F. Kiernan

Garvin F. Kiernan

50 Broad Street

New York, N. Y. 10004

4.

ETA IE CFIEW YORK                                               )

WI.:

COUNTY OF NEW YORK )

On this iY:trIchty of 4404"? , 1965, before me personally cane GARVIN P. NAN, to pm known and known to me to be the person described in and yho 'executed the foregoing certificate of inoorporation, and he thereupon duly acknowledged to me that be executed the same.

Signature on File

Notary Public

.41.1.p.

-.CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATIOn

.0

OF

.WATERMAN STEAMSHIP CORPORATION (New York)

•

Under Section 805 of the Business Corporation Law

The undersigned, being the President and the ; Secretary of Waterman Steamship Corporation, do hereby

"!'lly

FIRST: The name of the Corporation is WATERMAN STEAMSHIP CORPORATION SECOND:— The Certificate of Incorporation of. Waterman Steamship Corportition was filed by the Department of State on the 27th day of April. 1965. THIRD: The Certificate of Incorporation of Waterman Steamship Corporation is'bereby amended to effect an increase in the aggregate ntaber of shares which the Corporation shall have authority to issue from One Hundred (100) shares without par value, all of one class designated • as Common Stock to One Thousand (1,000) shares without par
value, all of one•clasa designated as Common
			P
.1,11.11.n	4, •
		• -t                                                              •.. •

•

.    

- .

;•••

•

rowitH: Accordingly. paragraph FOURTH of the

_

Certificate-Of-Incorporation which sets forth the number of authorized shires is hereby amended to read in its entirety as follows:

FOURTH: he aggragate-number-of-shares-----------

which the Cofporation shall have the

authority to issue is One Thousand .(1,000) shares without pr value, all Of one class which shall be designated Common Stock.—

FIFTH: The manner in which this amendment to the

0.11111Wal”WeilmlWah !ItnAMnhip Cnrpnro-

tion was authorized was by the unanimous written consent of

the shareholder of the Corporation.

IN WITNESS WHEREOF, the undersigned have executed and signed this Certificate this (''J.(day of October,

19•0.

W 4FAMAN STEAMSHIP CORPORATIal

•

e,

"

Secretary

STATE OF NEW YORK

COUNTY OF NEW YORK                                                      •

RICHARD S. wALSH, being duly sworn, deposes and saYs that he is the Secretary of WATERHAN STEAMSHIP CORPORATION, the Corporation mentioned and described in the iuleyulny instrument; that he has read and signed the same. and that the statements contained therein are true.

Richard S Walsh

Sworn to before me this

4-,aday of October,

1970:

/s/ William A. Grodzicki

Notary Public

oo

^

CERTIFICATE OF_CH.ANGE •

_

OF

WATERMAN STEAMSHIP -CORPORATION

UNDER SECTION 805-A OF THE BUSINESS CORPORATION LAW

cy)WE, THE UNDERSIGNED, Gary, L Ferguson and George Denegre, being

O .)respectively the Executive Vice-President and the Secretary of Waterman Steamship

0)                                              . • .        .                   .           . .

tr-)Corporation, hemby certify:

1.The name of the c-orporatiorcis Waterman Steamship Corporation (the "Corporation").

7.The Certificate 'of Incorporation of the •Corporation was filed by the Department of State on April 27, 1961. The following amendments to the Certificate of Incorporation of the Corporation listed below havebeen BI6c) with the Department of State.

A.Certificate of Mergor. of Waterman_Steamship,Corporation (an Alabama corp., not authorized) with the Corporation filed May II, 1965;

B.Certificate of Amendment of Certificate of Incorporation filed

C.Certificate of-Merger- of Wate,rman_Co ..ration•-(a Delaware corp., not authorized) with the Corporationiffed am-la:4-16; 1971;and

D.Certificate of Arnencirngnt of Certificate IncOrpoiation tired July 30, 1986

3.The following was authorized by the Board of Directors-of the Corporation; -

•

•

To change the-address to which the Sedetary orState of New York shall -trail- a copy-of-process-in-any- action or.. proceeding against the :Corporation-which .thaylie istvid. on him from 19 Rector St., New York, New 'York to International Shipholding Corporation, One ,Whitehall Street, Suite:2:000, New York, New York 10004FAttention: gielS.M. Jansen_

13NIG Ill

47.

:

.       . .

To designate Niels M. Johnsen, Ono Whitehall -Street,

Suite MOO, New York, New York 10c04 as itsl.titiitiod-agett-

in New York upon,whom ill process against the Corporation

may. he served.. .

L..:

IN WITNESS WHERg0F, we have signed this Certiheate • On- the 1- —day of May, 1990 and we affirm the statements contained herein as true under penalties of

perjury.

EXHIBIT B

Bylaws

CONSENT OF SOLE STOCKHOLDER OF

WATERMAN STEAMSHIP CORPORATION

AUGUST 31, 2007

The undersigned, International Shipholding Corporation, being the sole stockholder of Waterman Steamship Corporation (the "Corporation"), does hereby adopt the following resolutions amending the Bylaws of the Corporation as follows:

RESOLVED, that Article 3.06 of the Bylaws of the Corporation be amended and restated to read in its entirety as follows:

3.06 Vice-Presidents. The Vice-President or, if there be more than one, the Vice-Presidents in the order of their seniority, shall, in the absence or incapacity of the President, perform the duties of President, and shall perform such other duties as may be prescribed or assigned to them from time to time by the Chairman of the Board, the President or the Board of Directors; provided that, in no event shall any Vice President that is not a citizen of the United States of America have the authority or otherwise be allowed to perform the duties of (a) the President or (b) any other chief executive officer of the Corporation.

RESOLVED, that Article 3.09 of the Bylaws of the Corporation be amended and restated to read in its entirety as follows:

3.09 Delegation of Duties., Other Officers. The Board of Directors may, from time to time, create such other office or offices and define the duties of the individual or individuals chosen by the Board therefor as it may, in its discretion, deem advisable. In the case of the absence of any officer of the Corporation or for any other reason that the Board may deem sufficient, the Board may delegate for a prescribed period the powers or duties, or any of them, of such officer to any other officer, or to any director, provided that a majority of the Board concur therein; and provided further that, in no event shall the Board delegate to a person that is not a citizen of the United States of America any powers or duties delegated to the President or any other chief executive officer of the Corporation.

All other provisions of the Bylaws shall remain unchanged.

(NI702440.1)

August 31, 2007

International Shipholding Corporation

By: /s/ Niels M. Johnsen

Niels M. Johnsen, Chairman and Chief Executive Officer

CONSENT OP SOLE SHAREHOLDER OP

WATERMAN STEAMSHIP CORPORATION

JUNE 5, 1992

The undersigned, being the sole Shareholder of Waterman Steamship Corporation, hereby by this Unanimous Consent, amend the By-laws of the Corporation as follows:

ARTICLE I, SHAREHOLDERS, Section 1.05 shall be amended to read as follows:

"1.05.                   Annual Meetings.The Annual Meeting of

Shareholders for the election of Directors and for the transaction of such other business as may properly come before the meeting shall be held on the fourth Thursday in April in each year at the office of the Company in New Orleans, Louisiana, at such time as shall be designated by the Directors, or at such other place, time and date as determined by the Board of Directors and set forth in the notice of meeting."

June 5, 1992.

Waterman Marine Corporation

By: /s/ Erik F. Johnsen

Erik F. Johnsen, President

CONSENT OF SOLE SHAREHOLDER OF

OF WATERMAN STEAMSHIP CORPORATION

The undersigned, being the Sole Shareholder of Waterman Steamship Corporation, hereby by this Unanimous Consent amend the By-laws of the Corporation as follows:

Article II, BOARD OF DIRECTORS, Section 2.01 shall be amended to read as follows:

"2.01. Number.The business of the Corporation shall

be managed by its Board of Directors. The number of Directors shall be not less than three nor more than ten. The number of Directors may be increased or decreased from time to by amendment to these By-laws made by vote of a majority of the entire Board of Directors or by vote of the shareholders entitled to vote; provided, however, that the number of directors shall not be less than three, except that, where all the shares of the Corporation are owned beneficially and of record by less than three shareholders, the number of directors may be less than three, but not less than the number of shareholders. Each director shall be at least twenty-one years of age. Directors need not be shareholders."

Waterman Marine Corporation

By: /s/ Erik F. Johnsen

Erik F. Johnsen, President

WATERMAN STEAMSHIP CORPORATION

BY-LAWS

ARTICLE I ' SHAREHOLDERS

1.01. Place of Meetings. _Annual and special meetings of shareholders shall be held at the office of the Corporation in the City of New York or at such other place within or without the State of New York as shall be determined from time to time by the Board of Directors or, in the case of special meetings, by such person or persons

as may be authorized to call a meeting. The Place at which such meeting is to be held shall be specified in the notice of such meeting.

1.02. Notice of Meetinr,s. Whenever shareholders are required or permitted to take any action at a meeting, except as otherwise expressly provided by statute, by the Certificate of Incorporation, or by the By-Laws, a copy of the written notice of the place, date and hour of the meet­ing shall be given personally or by mail, not less than ten nor more than fifty days before the date of the meeting, to each shareholder of record entitled to vote at such meeting. Notice of a special meeting shall indicate that it is being issued by or .at the direction of the person or persons calling the meeting and shall also state the purpose or purposes for which the meeting is called. Notice of any meeting at which it is proposed to take action which would entitle any shareholder to receive payment for his shares pursuant to statutory !Provisions must specify the proposed action and state that fact: If mailed, such no­tices of the annual and each special meeting are given when deposited in the United States mail, postage prepaid, directed to the shareholder at his address as it appears on the record of shareholders unless he shall have filed with the Secretary of the Corporation a written request that notices intended for him be mailed to some other address, in which case it shall be directed to him at such other. address.

1.03. 'Waiver of Notice. Notice of meeting need not be given to any shareholder who submits a signed waiver. of notice, in person or by proxy, whether before or after the meeting. The attendance of any shareholder at a meet­ing, in person or by proxy, without protesting prior to the conclusion of the meeting the lack of notice of such meeting, shall constitutn a waiver of notice by him.

1.04. Quorum. The presence, in person or by proxy, of the holders of a majority of the shares entitled to vote thereat shall constitute .a quorum at a meetinc of shareholders for the transaction of business, except as otherwise provided •by statute or by the Certificate of In­corporation or by the By-Laws. The shareholders present in person or by proxy and entitled to vote at any meeting, despite the absence of a quorum, shall have power to adjourn the meeting from time to time, to a designated time and place, without notice other than announcement at the meet­ing, and at any adjourned meeting any business may be trans-acted that might have been transacted on the original date of the meeting. However, if after the adjournment the Board of Directors fixes a new record date for the adjourned meet­ing, a notice of the adjourned meeting shall be given to each shareholder of record on the new record date entitled to notice.

1.05. Annual Meetings. The annual meeting of shareholders for the election of directors and for the trans­action of such other business as may properly come before the meeting shall be held on the first Thursday in April in . each year commencing in the year 1966, if not a legal holi­day, and if a legal holiday then on the next succeeding business day, at such hour as shall be designated by the - Board of Directors. If no other hour shall be so designated sue] meetinu shall be held at 2:30 P.M.

1.06. Special Meetinus. Special meetings of tho shareholder, except as otherwise regulated by statute, may be ea1106 by th.7 flonr6 Directors, cne Chairman of ulw Board, the President or any Vice President, and shall be called by the President or the Secretary upon the written . request of the holders of record of a majority of the outstanding shares entitled to vote at any such meeting.

1.07. Voting. At each meeting of shareholders, except as otherwise provided by statute, by the Certificate of Incorporation or the By-Laws, every holder of record' of shares entitled to vote-shall be entitled to one vote in person or by proxy for each such share standing in his name on the record of shareholders: At a meeting of share­holders, election of directors shall be by a plurality of the votes cast by the holders of shares entitled to vote in such election and all other corporate action, except as otherwise required by statute or the Certificate of Incor­poration, may be authorized by a majority of the votes cast by the holders of shares entitled to vote thereon. Each proxy to vote shall be in writingand signed by the share-- holder or by his duly authorized attorney-in-fact. No proxy shall be valid after the expiration of eleven months from the date thereof unless otherwise provided in the proxy.

1.08. Action by Written Consent of Shareholders. Whenever by any provision of statute or by the Certificate of Incorporation or or the By-Laws, holders are required or permitted to take any action by vote, such action may be taken without a meeting on written consent(s), setting forth the action so taken, signed by the holders of all out­standing shares entitled to vote thereon.

ARTICLE II

BOARD OF DIRECTORS

2.01. Number. The businessfthe.CorporritiOn shall be managed by its Board of Directors, the number of which shall be three (3). The number of directors may be increased or decreased from time to time by amendment to

these By-Laws made by vote of a majority of the entire Board of Directors or by vote of the shareholders entitled to vote; provided, however, that the number of directors shall not be less than three, except that, where all the shares of the Corporation are owned beneficially and of record by less

than three shareholders, the number of directors may be

less than three but not less than the number of shareholders. Each director shall be at least twenty-one years of age. Directors need not be shareholders.

2:02. Election. The members of the Board of Directors shall be elected at the annual meeting of share­holder: by a plurality of the votes at such election, to hold office until the next annual meeting. Subject to the provisions of the statute, of the Certificate of Incorpora­tion and of the By-Laws, each director shall hold office until the expiration of the term for which elected, and until his successor has been elected and qualified.

2.03. Vacancies. Vacancies in the Board of Direc­tors, whether caused by resignation, death, increase in number of directors, or otherwise, excluding the removal of directors without cause, may be filled by a majority of the directors in office, though less than a quorum exists, or by vote of the shareholders at any special meeting.

2.04. Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such places and times as may be fixed from time to time by resolution of the Board.

2.05. Special Meetings. Special meetings of the Board of Directors may be held at any time upon the call of the President or the Secretary or any director by oral, tele­graphic or written notice, given to each director not less than twenty-four hours before such meeting. Notice of a

• special meeting need not be given to any director who sub­mits a signed waiver of notice whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to him.

2.06. Place of Meetinr. The directors may hold their regular or special meetings, have one or more offices, and keep the books of the Corporation (except as may be provided by law) at any place, either within or without the State of New York, as they may from time to timc- detrmine.

 2.07. Quorum and Vote. At all meetings of the Board of Directors the presence of a majority of the direc­tors shall be necessary and sufficient to constitute a quorum for the transaction of business. The vote of a majorityof the directors present at the time of the vote, if a quorum is present at such time, shall be the act of the Board of Directors, except as may be otherwise provided by statute, by the Certificate of Incorporation, or by other provisions of the By-Laws.

2.08. Void or Voidable Transactions. No con­tract or other transaction between this Corporation and one or more of its directors, or between this Corporation and any other corporation, firm, association or other entity in which one or more of its directors are directors or offi­cers, or are financially interested, shall be either void or voidable for this reason alone or by reason alone that such director or directors are present at the meeting of the Board of Directors which approves such contract or transaction, or that his or their votes are counted for such purpose, provided that

(a) the fact of such common directorship, officership or financial interest is disclosed or known to the Board of Directors, and the Board ap­proves such contract or transaction by a vote suf­ficient for such purpose without counting the vote or votes of the interested director or directors;

(b)such common directorship, officership or financial interest is disclosed or known to the shareholders entitled to vote thereon, and such contract or transaction is approved by vote of the shareholders; or

(c)the contract or transaction is fair and reasonable as to the Corporation at the time it is approved by the Board of Directors or the shareholders.

2.09. Quorum May Include Common or Interested  Directors. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors which approves the contract or trans­action concerning such common or interested directors.

2.10. Removal. Any or all of the directors may be removed at any time either for or without cause at any special meeting of shareholders by vote of the shareholders. Each vacancy caused by such removal may be filled at such meeting by vote of the shareholders present and entitled to vote for the removal.

2.11. Executive Committee. The Board of Direc­tors may, by resolution adopted by a majority of the entire Board, designate from among its members an Executive Com­mittee _consisting of three or more directors, to serve dur­ing the pleasure of the Board. The Chairman of the Executive Committee shall be designated by the Board of Directors. Subject to such limitations, if any, as may be prescribed by resolution adopted by a majority of the entire Board of Directors, the Executive Committee, by a vote of a majority of its members, shall fix its own times and places of meet-ing, shall determine the number of its members constituting a quorum for the transaction of business, and shall pre­scribe its own rules of procedure. During the intervals between the meetings of the Board of Directors, the Executive Committee shall have, except as otherwise provided by statute, all the authority of the Board in the management and direc­tion of the business and affairs of the Corporation, pro­vided, however, that the Executive Committee may be abolished or its authority diminished by a resolution adopted by a majority of the entire Board of Directors. The Executive Committee shall keep regular minutes of its proceedings and report the same to the Board of Directors when required.

ARTICLE III.

OFFICERS .

3.01 Titles and Election.The officers of the Corporation, who shall be chosen by the Board of Directors at its annual meeting, shall be a Chairman of the Board, a President, one or more Vice Presidents, a Secretary and a Treasurer. The Board of Directors from time to time may choose one or more Assistant Secretaries, Assistant Treasurers and such other officers and agents as it shall deem necessary, and may define their powers and duties. - One person may hold any two offices except those of Chairman of the Board or President and Secretary.The officers need not be directors.

3.02 Terms of Office. The officers shall hold office at the pleasure of the Board of Directors.

3.03 Removal. Any officer may be removed, either with or without cause, at any time, by the action of the Board of Directors.

3.04 Chairman of the Board. The Chairman of the Board shall be the chief executive officer of the Corporation and shall exercise all the powers and perform all the duties usual to such office. He shall preside at all meetings of the shareholders and of the Board of Directors. Subject to the direction of the Board of Directors, he shall have the general management of the affairs of the Corporation.

3.05 President,. The President shall be the chief administrative officer of the Corporation, and, subject to the direction of the Board of Directors and the Chairman of the Board, shall direct and supervise the adminir.t•ation of the affairs and business of the Corporation, and shall, in the absence or incapacity of the Chairman of the Board, perform the duties of the Chairman of the Board. The President shall perform such other duties as may be prescribed or assigned to him from time to time by the Board of Directors or the Chairman of the Board.

3.06 Vice-Presidepts. The Vice-President or, if there be more than one, the Vice-Presidents in the order of their seniority, shall, in the absence or incapacity of the President,. perform the-duties_of President, and shall perform such other duties as may be prescribed or assigned to them from time to time by the Chairman of the Board, the President or the Board of Directors.

3.07 Secretary. The Secretary shall keep the minutes of the meetings of the Board of Directors and of the shareholders. He shall have custody of the seal of the Corporation and shall affix the seal to documents when authorized to do so. He shall have such other powers and duties as are usual to the office and, in addition,: such as are prescribed from time to time by the Chairman of*the Board, the President or the Board of Directors.

3.08 Treasurer. The Treasurer shall perform all the duties customary to that office, shall have the care and custody of the funds and securities of the Corporation except as otherwise.ordered by the Board of Directors, and shall deposit the same in the name and to the credit of the Corporation in such depositories as may be designated by the Board. He shall keep or cause to be kept complete and accurate books of account. He shall give such bonds for the faithful performance of his duties as the Board of Directors may prescribe.

3.09 Delegation of Duties; Other Officers. The Board of Directors may, from time to time, create such other office or offices and define the duties of the individual or Individuals chosen by the Board therefor as it may, in its discretion, deem advisable., In the case of the absence of any officer of the Corporation or for any other reason that the Board may deem sufficient, the Board may delegate for a prescribed period the powers or duties, or any of them, of such officer to any other officer, or to any director, provided that a majority of the Board concur therein.

ARTICLE IV

SEAL

•

14.01 Corporate Seal. The seal of the Corporation shall have inscribed thereon the name of the Corporation and the. year and State of its incorporation. Such seal may be altered from time to time at the discretion of the Board of Directors.

ARTICLE V

CHECKS, DRAFTS, NOTES ETC.

5.01 Execution of Checks, Drifts, Notes, Etc. All checks, drafts, notes and other instruments or orders for the payment of money shall be signed by such officer or officers or other person or persons as the Board of Directors from time to time may designate.

ARTICLE VI

CERTIFICATES OF STOCK AND TRANSFER OF STOCK

6.01 Certificates of Stock. The interest of each shareholder shall be evidenced by a certificate or

-certificates for shares of stock of the Corporation in such form as the Board of, Directors may from time to time prescribe.Each certificate shall be signed by the

Chairman of the Board or the President or a Vice-President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed with the seal of the Corporation.

6.02 Transfers of Stock. Transfers of shares of stock shall be made only upon the books of the Corporation by the registered holder in person or by attorney, duly • authorized, and upon surrender for cancellation of the certificate or certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity or the signature as the Corporation-or its agents may reasonably require.

6.03 Lost or Destroyed Stock Certificntes. No certificates of shares of stock of the Corporation shall be issued in place of any certificate alleged to have been lost, stolen or destroyed, except upon production of such evidence of the loss, theft or destruction and upon indemnification of the Corporation and its agents to such extent and in such manner as the Board of Directors may from time to time prescribe.

ARTICLE VII .RECORD DATE

-

7-01 Record Date. The Board of Directors may fix in advance a date as the record date for the deter­mination of shareholders entitled to receive notice of, or to vote at, any meeting of shareholders., or to express consent to or dissent from any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action. Such date shall not be more than fifty nor less than ten days before the date of such theeting, nor more than fifty days prior:'to any other action.

ARTICLE VIII FISCAL YEAR

8.01 Pis(!al Year. The fiscal year of the Corporation shall end on the 31st day of December.

15

ARTICLE IX

INDEMNIFICATION

9.01 Indemnification of Directors and Officers. The Corporation shall indemnify its directors and officers and every other person whom the Corporation may indemnify under the indemnification provisions for directors and officers of the Business Corporation Law of New York as now in effect or as hereafter amended to the full extent permissible under and 'consistent with such provisions. The right of indemnificatioa provided in this Section shall not be deemed excluLave of any other right to which.said director or officer may be entitled apart from this Section.

ARTICLE X

AMENDMENT

. 10.02 Amendment of By-Laws. -Except as other­wise provided by statute or by the Certificate of Incorporation these By-Laws may be amended, repealed or added to by vote of the holders of shares at the time entitled to-vote in the election of any directors.The Board of Directors may also amend, repeal or add to these By-Laws, hut any By-Law adopted by the Board of Directors may be amended or repealed by shareholders entitled to vote ther3on as provided herein.If any By-Law regulat-ing an impendin: election of directors is adopted, amended or repoLtld by 1.n,, 11:)nrrl, thnre ohall be set forth in the notici:! of tLLf71,-otl.nff, of srFtreholde.,r:: for thv election of diri.,(:Lo:; trwadopt(A, amvnded or rucaled,

EXHIBIT C

Authorizing Resolution

RESOLVED, that Niels M. Johnsen, Chairman of the Company, Erik L. Johnsen, President of the Company, Manuel G. Estrada, Senior Vice President and Chief Financial Officer of the Company, and David B. Drake, Vice President and Treasurer of the Company, (each, an "Authorized Officer") be, and each of them hereby is, authorized and directed to execute and deliver, in the name and on behalf of the Company, a Credit Agreement (the "Credit Agreement") between the Company and certain affiliates of the Company (the "Affiliates") and Regions Bank (the "Lender"), under which Credit Agreement the Lender shall agree to extend to the Company and the Affiliates a revolving loan in a maximum principal amount not to exceed $35,000,000; and

RESOLVED FURTHER, that the Credit Agreement shall contain such other terms, covenants, provisions and conditions in addition to those set out above as may seem necessary or desirable to the Authorized Officer executing and delivering the Credit Agreement (the execution of the Credit Agreement to be conclusive proof that all of the terms, covenants, provisions and conditions thereof are deemed necessary and desirable by said Authorized Officer); the form of the Credit Agreement presented to the undersigned directors is hereby approved, subject to such changes thereto which the Authorized Officer deems necessary and reasonable; and

RESOLVED FURTHER, that each Authorized Officer be, and each of them hereby is, authorized to execute and deliver in the name of the Company one or more promissory notes evidencing such borrowing, said notes to be in the principal amount specified in the Credit Agreement and to bear interest at the rate specified in the Credit Agreement and to contain the terms, covenants, provisions and conditions provided for in the Credit Agreement; and

RESOLVED FURTHER, that each Authorized Officer be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute and deliver a Subrogation and Contribution Agreement with the other Borrowers referred to in the Credit Agreement, the purpose of such Subrogation and Contribution Agreement being to effect an equitable sharing of the respective liabilities of the Company and the Affiliates, which document shall contain such terms, covenants, provisions and conditions as may seem necessary or desirable to the Authorized Officer executing and delivering the same (the execution thereof to be conclusive proof that all the terms, covenants, provisions and conditions thereof are deemed necessary and desirable by said Authorized Officer); and

RESOLVED FURTHER, that any Authorized Officer and any Assistant Treasurer of the Company be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to request disbursements of the proceeds of said borrowings and to direct the disposition of such proceeds, and to otherwise act on behalf of the Company in connection with the transactions contemplated by the Credit Agreement and the related documents, and the Lender may conclusively rely on the authority granted herein with respect to such officers until the Lender shall have received copies certified by the Secretary or any Assistant Secretary of the Company of further resolutions adopted by the Directors of the Company canceling or amending the authority granted under these resolutions; and

RESOLVED FURTHER, that any Authorized Officer be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute such certificates and instruments and do all such other acts as may be appropriate or as may be required by law or by said Lender in connection with the said borrowing and with the execution and delivery of the Credit Agreement; and

RESOLVED FURTHER, that any Authorized Officer be, and each of them hereby is, authorized and directed to take any and all actions as he, in his sole discretion, shall deem necessary or advisable in order to consummate the transactions contemplated by any of the foregoing resolutions and to perform or cause the performance of the Company's obligations thereunder; and

RESOLVED FURTHER, that any and all actions described in the foregoing resolutions heretofore taken on behalf of the Company by an Authorized Officers are hereby approved, confirmed and ratified as the valid and fully authorized act of the Corporation without the necessity of any further action by the undersigned.

Delaware  PAGE 1

The First State

HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY "INTERNATIONAL SHIPHOLDING CORPORATION" IS DULY INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL CORPORATE EXISTENCE SO FAR AS THE RECORDS OF THIS OFFICE SHOW, AS OF THE TWENTY—EIGHTH DAY OF FEBRUARY, A.D. 2008.

AND I DO HEREBY FURTHER CERTIFY THAT THE SAID "INTERNATIONAL SHIPHOLDING CORPORATION" WAS INCORPORATED ON THE TWENTIETH DAY OF OCTOBER, A. D. 1978.

AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL REPORTS HAVE BEEN FILED TO DATE.

AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES HAVE BEEN PAID TO DATE.

0861721 8300

080248933

You may verify this certificate online at corp.delaware.gov/authver.shtml

Jit

Harriet Smith Windsor, Secretary of State

AUTHENTICATION: 6414548

DATE: 02-28-08

Business Privilege Tax Phone: 334-353-7923

Request Date: March 05, 2008

Request Code: 803051686763

State of Alabama

Department of Revenue

Certificate of Good Standing

International Shipholding Corporation is in compliance with the requirements in Chapter 14, Title 40, Code of Alabama 1975, prior to its repeal (relating to Franchise Tax) and Chapter 14A, Title 40, Code of Alabama 1975 relating to (Business Privilege and Corporate Shares Tax), as applicable through the taxable year 07/10/2008.

IN WITNESS WHEREOF, I hereunto set my hand this date of March 06, 2008.

                                        Signature on File

Director, Individual and Corporate Tax Division ATTEST:

Signature on File

Secretary

Beth Chapman Secretary of State P.O. Box 5616 Montgomery, AL 36103-5616

Beth Chapman Secretary of State P.O. Box 5616 Montgomery, AL 36103-5616

STATE OF ALABAMA

I, Beth Chapman, Secretary of State of the State of Alabama, having custody of the Great and Principal Seal of said State, do hereby certify that

the foreign corporation records on file in this office disclose that International Shipholding Corporation, a Delaware corporation, qualified in the State of Alabama on July 10, 2007. I further certify that the records do not disclose that said International Shipholding Corporation has been withdrawn.

In Testimony Whereof, I have hereunto set my hand and affixed the Great Seal of the State, at the Capitol, in the City of Montgomery, on this day.

February 29, 2008

Date

Beth Chapman Secretary of State

Delaware PAGE 1

(The First State

I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY "ENTERPRISE SHIP COMPANY, INC." IS DULY INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL CORPORATE EXISTENCE SO FAR AS THE RECORDS OF THIS OFFICE SHOW, AS OF THE TWENTY—EIGHTH DAY OF FEBRUARY, A.D. 2008.

AND I DO HEREBY FURTHER CERTIFY THAT THE SAID "ENTERPRISE SHIP COMPANY, INC." WAS INCORPORATED ON THE EIGHTEENTH DAY OF MAY, A.D. 1995.

AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL REPORTS HAVE BEEN FILED TO DATE.

AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES HAVE BEEN PAID TO DATE.

2508398 8300

080248933

You may verify this certificate online at corp.delaware.gov/authver.shtml

Harriet Smith Windsor, Secretary of State

AUTHENTICATION: 6414549

DATE: 02-28-08

Business Privilege Tax

Request Date: February 29, 2008 Request Code: 8022973396

Phone: 334-353-7923

• State of Alabama

Department of Revenue

Certificate of Good Standing

Enterprise Ship Company, Inc. is in compliance with the

• requirements in Chapter 14, Title 40, Code of Alabama 1975, prior to its repeal (relating to Franchise Tax) and Chapter 14A, Title 40, Code of Alabama 1975 relating to (Business Privilege and Corporate Shares Tax), as applicable through the taxable year 12/31/2007.

IN WITNESS WHEREOF, I hereunto set my hand this date of February 29, 2008.

Signature on File

Director, Individual and Corporate Tax Division ATTEST:

Signature on File

Secretary

In Testimony Whereof, I have hereunto set my hand and affixed the Great Seal of the State, at the Capitol,

41-

in the City of Montgomery, on this day.

February 29, 2008

/s/ Beth Chapman

Beth Chapman Secretary of State

Beth ChapmanP,O. Box 5616

Secretary of State Montgomery, AL 36103-5616

STATE OF ALABAMA

I, Beth Chapman, Secretary of State of the State of Alabama, having custody of the Great and Principal Seal of said State, do hereby certify that

the foreign corporation records on file in this office disclose that Enterprise Ship Company, Inc., a Delaware corporation, qualified in the State of Alabama on July 10, 2007. I further certify that the records do not disclose that said Enterprise Ship Company, Inc. has been withdrawn.

-A-

Delaware PAGE 1

The First State

I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY "SULPHUR CARRIERS, INC." IS DULY INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL CORPORATE EXISTENCE SO FAR AS THE RECORDS OF THIS OFFICE SHOW, AS OF THE TWENTY—EIGHTH DAY OF FEBRUARY, A.D. 2008.

AND I DO HEREBY FURTHER CERTIFY THAT THE SAID "SULPHUR CARRIERS, INC." WAS INCORPORATED ON THE TWENTY—EIGHTH DAY OF AUGUST, A.D. 1991.

AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL REPORTS HAVE BEEN FILED TO DATE.

AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES HAVE BEEN PAID TO DATE.

2272281 8300

080248933

You may verify this certificate online at corp.delaware.goviauthver.shtml

Harriet Smith Windsor, Secretary of State

AUTHENTICATION: 6414550

DATE: 02-28-08

Business Privilege Tax

Request Date: February 29, 2008 Request Code: 80229743763

Phone: 334-353-7923

State of Alabama

Department of Revenue

Certificate of Good Standing

Sulphur Carriers, Inc. is in compliance with the requirements in Chapter 14, Title 40, Code of Alabama 1975, prior to its repeal (relating to Franchise Tax) and Chapter 14A, Title 40, Code of Alabama 1975 relating to (Business Privilege and Corporate Shares Tax), as applicable through the taxable year 12/31/2007.

IN WITNESS WHEREOF, I hereunto set my hand this date of February 29, 2008.

Signature on File

Director, Individual and Corporate Tax Division ATTEST:

Signature on File

Secretary

Beth Chapman P.O. Boa 5616

Secretary of State Montgomery, AL 36103-5616

STATE OF ALABAMA

I, Beth Chapman, Secretary of State of the State of Alabama, having custody of the Great and Principal Seal of said State, do hereby certify that

the foreign corporation records on file in this office disclose that Sulphur Carriers, Inc., a Delaware corporation, qualified in the state of Alabama on May 15, 2007. I further certify that the records do not discloSe that said Sulphur Carriers, Inc. has been withdrawn.

In Testimony Whereof, I have hereunto set my hand and affixed the Great Seal of the State, at the Capitol, in-the-City-of Montgomery,-on-this- day.

February 29, 2008

Date

/s/ Beth Chapman

Beth Chapman Secretary of State

Delaware  PAGE 1

Tile First State

I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY "CG RAILWAY, INC." IS DULY INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL CORPORATE EXISTENCE SO FAR AS THE RECORDS OF THIS OFFICE SHOW, AS OF THE TWENTY—EIGHTH DAY OF FEBRUARY, A.D. 2008.

AND I DO HEREBY FURTHER CERTIFY THAT THE SAID "CG RAILWAY, INC." WAS INCORPORATED ON THE TWENTY—EIGHTH DAY OF JANUARY, A.D. 2000.

AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL REPORTS HAVE BEEN FILED TO DATE.

AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES HAVE BEEN PAID TO DATE.

3151683 8300

080248933

You may verify this certificate online at corp.delaware.goviauthver.shtml

/s/ Harriet Smith Windsor

Harriet Smith Windsor, Secretary of State

AUTHENTICATION: 6414551

DATE: 02-28-08

Business Privilege Tax

Request Date: February 29, 2008 Request Code: 8022974969

Phone: 334-353-7923

State of Alabama

Department of Revenue

Certificate of Good Standing

CG Railway, Inc. is in compliance with the requirements in Chapter 14, Title 40, Code of Alabama 1975, prior to its repeal (relating to Franchise Tax) and Chapter 14A, Title 40, Code of Alabama 1975 relating to (Business Privilege and Corporate Shares Tax), as applicable through the taxable year 12/31/2007.

IN WITNESS WHEREOF, I hereunto set my hand this date of February 29, 2008.

Signature on File

Director, Individual and Corporate Tax Division ATTEST:

Signature on File

Secretary

Beth Chapman P.O. Box 5616

Secretary of State Montgomery, AL 36103-5616

STATE OF ALABAMA

I, Beth Chapman, Secretary of State of the State of Alabama, having custody of the Great and Principal Seal of said State, do hereby certify that

/s/Beth Chapman

Beth Chapman Secretary of State

In Testimony Whereof, I have hereunto set my hand and affixed the Great Seal of the State, at the Capitol, in the City of Montgomery, on this day.

February 29, 2008

Date

the foreign corporation records on file in this office disclose that CG Railway, Inc., a Delaware corporation, qualified in the State of Alabama on May 15, 2007. I further certify that the records do not disclose that said CG Railway, Inc. has been withdrawn.

Delaware  PAGE 1

(The First State

I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY "CENTRAL GULF LINES, INC." IS DULY INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL CORPORATE EXISTENCE SO FAR AS THE RECORDS OF THIS OFFICE SHOW, AS OF THE TWENTY—EIGHTH DAY OF FEBRUARY, A.D. 2008.

AND I DO HEREBY FURTHER CERTIFY THAT THE SAID "CENTRAL GULF LINES, INC." WAS INCORPORATED ON THE NINETEENTH DAY OF APRIL, A.D. 1947.

AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL REPORTS HAVE BEEN FILED TO DATE.

AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES HAVE BEEN PAID TO DATE.

0412806 8300

080248933

You may verify this certificate online at corp.delaware.gov/authver.shtml

/s/ Harriet Smith Windsor

Harriet Smith Windsor, Secretary of State

AUTHENTICATION: 6414552

DATE: 02-28-08

Business Privilege Tax

Request Date: February 29, 2008 Request Code: 80229761879

Phone: 334-353-7923

State of Alabama

Department of Revenue

Certificate of Good Standing

Central Gulf Lines, Inc. is in compliance with the requirements in Chapter 14, Title 40, Code of Alabama 1975, prior to its repeal (relating to Franchise Tax) and Chapter 14A, Title 40, Code of Alabama 1975 relating to (Business Privilege and Corporate Shares Tax), as applicable through the taxable year 12/31/2007.

IN WITNESS WHEREOF, I hereunto set my hand this date of February 29, 2008.

Signature on File

Director, Individual and Corporate Tax Division ATTEST:

Signature on File

Secretary

/s/ Beth Chapman

Beth Chapman Secretary of State

Beth ChapmanP.O. Box 5616

Secretary of State Montgomery, AL 36103-5616

STATE OF ALABAMA

I, Beth Chapman, Secretary of State of the State of Alabama, having custody of the Great and Principal Seal of said State, do hereby certify that

the foreign corporation records on file in this office disclose that Central Gulf Lines, Inc., a Delaware corporation, qualified in the State of Alabama on July 10, 2007. I further certify that the records do not disclose that said Central Gulf Lines, Inc. has been withdrawn.

In Testimony Whereof, I have hereunto set my hand and affiied the Great Seal of the State, at the Capitol, in the City of Montgomery, on this day.

February 29, 2008

Date

State of New York

Department of State } ss:

I hereby certify, that the Certificate of Incorporation of WATERMAN STEAMSHIP CORPORATION was filed on 04/27/1965, with perpetual duration, and that a diligent examination has been made of the Corporate index for documents filed with this Department for a certificate, order, or record of a dissolution, and upon such examination, no such certificate, order or record has been found, and that so far as indicated by the records of this Department, such corporation is an existing corporation.

Witness my hand and the oficial seal

of the Department of State at the City

of Albany, this 2 7th day of February

two thousand and eight.

/s/ Daniel Shapiro

Daniel Shapiro

Special Deputy Secretary of State

Business Privilege Tax Phone: 334-353-7923

Request Date: March 07, 2008

Request Code: 803071472607

State of Alabama

Department of Revenue

Certificate of Good Standing

WATERMAN STEAMSHIP CORPORATION, INC. is in compliance with the requirements in Chapter 14, Title 40, Code of Alabama 1975, prior to its repeal (relating to Franchise Tax) and Chapter 14A, Title 40, Code of Alabama 1975 relating to (Business Privilege and Corporate Shares Tax), as applicable through the taxable year 12/31/2007.

IN WITNESS WHEREOF, I hereunto set my hand this date of March 07, 2008.

Signature on file•

Director, Individual and Corporate Tax Division ATTEST:

Signature on File

Secretary

Beth Chapman P.O. Box 5616

Secretary of State Montgomery, AL 36103-5616

STATE OF ALABAMA

I, Beth Chapman, Secretary of State of the State of Alabama, having custody of the Great and Principal Seal of said State, do hereby certify that

the foreign corporation records on file in this office disclose that Waterman Steamship Corporation, a New York corporation, qualified in the State of Alabama on March 24, 1966. I further certify that the records do not disclose that said Waterman Steamship Corporation has been withdrawn.

In Testimony Whereof, I have hereunto set my hand and affixed the Great Seal of the State, at the Capitol, in the City of Montgomery, on this day.
	February 29, 2008
Date
		/s/ Beth Chapman
Beth Chapman'Secretary of State

March 7, 2008

Regions Bank (the "New Lender") LCI Shipholdings, Inc.

Central Gulf Lines, Inc.

Waterman Steamship Corporation

Re: Credit Agreement dated December 6, 2004, as heretofore amended, by and among LCI Shipholdings, Inc., Central Gulf Lines, Inc. and Waterman Steamship Corporation (collectively, the "Borrowers"), as borrowers, Whitney National Bank and The Frost National Bank (collectively, the "Lenders"), as the financial institutions party thereto as Lenders, Whitney National Bank, as Administrative Agent, Security Trustee and Arranger, and International Shipholding Corporation, Enterprise Ship Company, Inc., Sulphur Carriers, Inc., Gulf South Shipping Pte Ltd. and CG Railway, Inc., as guarantors (the "Credit Agreement")

Ladies and Gentlemen:

Reference is hereby made to the Credit Agreement and capitalized terms used but not defined herein have the meanings assigned to such terms in the Credit Agreement. You have notified us that the Borrowers desire to terminate in full the rights, obligations and liabilities of the parties under the Credit Agreement, including, without limitation, the right of the Borrowers to request that the Lenders make Advances and the right of the Borrowers to request that the Letter of Credit Issuer issue Letters of Credit. The Lenders and the Administrative Agent hereby confirm to you that, as of the date hereof, there are no outstanding Obligations under the Credit Agreement, the Note or the Security Documents, and that all outstanding Letters of Credit have been terminated as of the date hereof. You have further requested that the Administrative Agent, the Lenders and/or the Letter of Credit Issuer cancel the Note and any outstanding Letters of Credit as of the date hereof and terminate all liens securing the Borrowers' Obligations under the Credit Agreement, the Note and the Letters of Credit.

The Lenders certify that they are the sole holders of the two promissory notes made by Borrowers to evidence the Borrowers' indebtedness under the Credit Agreement which currently comprise the Note described in the Credit Agreement and that there are no amounts due thereunder as of the date hereof.

In connection herewith, the Administrative Agent and the Lenders hereby:

(i) agree that any interest of the Security Trustee in any security interests or other liens that the Borrowers or any other person may have granted to the Security Trustee as collateral for any and all Obligations of the Borrowers to the Lenders, the Security Trustee or the Letter of Credit Issuer or in the property subject thereto (the "Liens") shall be and are hereby released and terminated, and

(ii) agree that the Note and all related instruments, agreements and other documents are hereby terminated and that none of the Administrative Agent, the Lenders nor the Borrowers shall have any further rights or obligations one to the other, except as expressly set forth herein.

The Administrative Agent, the Security Trustee or the Lenders, as applicable, will promptly deliver to the Borrowers (i) the two promissory notes made by the Borrowers comprising the Note as described in the Credit Agreement marked "Paid in Full" and (ii) authorize the filing of any UCC-3 and other termination statements or satisfactions of mortgage, duly executed by the Security Trustee if required, to release the Liens. The Security Trustee will also, upon the written request of the Borrowers, authorize the filing of, execute (if required) and deliver any additional termination statements under the Uniform Commercial Code with respect to any filings naming the Borrowers as debtor and the Security Trustee as secured party, releases and satisfactions of deeds to secure debt, deeds of trust or mortgages with respect to any mortgages from the Borrowers in favor of the Security Trustee, and any other releases, terminations, reconveyances or other documents that may be reasonably required to terminate, reconvey, satisfy or otherwise remove of record any lien of the Security Trustee on the properties and assets of the Borrowers.

We understand that each of you will rely upon this letter in connection with the financing to be provided by the New Lender to the Borrowers and certain of their affiliates.

Sincerely,

WHI'TNEY NATIONAL BANK,

as Administrative Agent, Security Trustee, Letter of

Credit Issuer, and as a Lender

By: /s/ Phillip E. Gordillo

Name: Phillip E. Gordillo

Title: Vice President

THE FROST NATIONAL BANK,

as a Lender

By: /s/ Gregg Chino

Name: Gregg Chino

Title: Senior Vice President

{N1777670.1)

SATISFACTION OF MORTGAGE

VESSEL NAME:GREEN POINT

OFFICIAL NUMBER:1065555

NAME & ADDRESS OF MORTGAGOR(S):SULPHUR CARRIERS, INC.

11 North Water Street, Suite 18290 Mobile, Alabama 36602

NAME & ADDRESS OF MORTGAGEE:WHITNEY NATIONAL BANK

228 St. Charles Avenue

New Orleans, Louisiana 70130

DATE OF MORTGAGE:September 11, 2007

AMOUNT OF ORIGINAL MORTGAGE:                                                                           $35,000,000.00

DATE & TIME OF RECORDATION:

Preferred Mortgage recorded on the le day of September, 2007 with the National Vessel Documentation Center, Falling Waters, West Virginia, in Batch 604815, Document ID No. 7767592, at 11:08 a.m. Eastern time, as the same may have been amended from time to time.

********** ******* ******************** ********* * ****** *** ******** ******* ***** ***************Ar*****************

Mortgagee does hereby consent that the Preferred Mortgage and any amendments, modifications, supplements or other similar types of instruments, as they pertain to the above named vessel, be released from the record on this the 7th day of March, 2008.

WHITNEY NATIONAL BANK

By: /s/ Phillip E. Gordillo

Philip E.Gordillo

Vice Pr dent

********* ***** ******* ********* ** ******** * ********* ***************** ******** ** ***** **** ***************** ******

STATE OF LOUISIANA

PARISH OF ORLEANS

ACKNOWLEDGMENT OR NOTARIZATION

BE IT KNOWN, that on this 7th day of March, 2008, personally appeared before me, Philip E. Gordillo, a Vice President of WHITNEY NATIONAL BANK, the aforesaid officer being personally well known to me as the person who executed the foregoing Satisfaction of Mortgage, and acknowledged the same to be his/her act and deed as said officer.

IN TESTIMONY WHEREOF, I have hereunto set my hand and seal this 7th day of March,

2008.

NOTARY PUBLIC

H. HUGHES GREHAN

NOTARY PUBLIC

State of Louisiana

My Commission Is Issued For Life

La. Bar Roll No. 20839

{N1777583.1)

SATISFACTION OF MORTGAGE

VESSEL NAME: ENERGY ENTERPRISE

OFFICIAL NUMBER: 657540

NAME & ADDRESS OF MORTGAGOR(S):ENTERPRISE SHIP COMPANY, INC.

11 North Water Street, Suite 18290 Mobile, Alabama 36602

NAME & ADDRESS OF MORTGAGEE:WHITNEY NATIONAL BANK

228 St. Charles Avenue

New Orleans, Louisiana 70130

DATE OF MORTGAGE:December 6, 2004

AMOUNT OF ORIGINAL MORTGAGE:                                                                                     $50,000,000.00

DATE & TIME OF RECORDATION:

Preferred Mortgage recorded on the 7th day of December, 2004 with the National Vessel Documentation Center, Falling Waters, West Virginia, in Book 04-106, Page 395, at 2:12 p.m. Eastern time, as the same may have been amended from time to time.

Mortgagee does hereby consent that the Preferred Mortgage and any amendments, modifications, supplements or other similar types of instruments, as they pertain to the above named vessel, be released from the record on this the 7'h day of March, 2008.

WHITNEY NATIONAL BANK

By: /s/ Phillip E. Gordillo

Phillip E. Gordillo

Vice President

STATE OF LOUISIANA

PARISH OF ORLEANS

ACKNOWLEDGMENT OR NOTARIZATION

BE IT KNOWN, that on this rh day of March, 2008, personally appeared before me, Philip E. Gordillo, a Vice President of WHITNEY NATIONAL BANK, the aforesaid officer being personally well known to me as the person who executed the foregoing Satisfaction of Mortgage, and acknowledged the same to be his/her act and deed as said officer.

IN TESTIMONY WHEREOF, I have hereunto set my hand and seal this 7`h day of March,2008.

NOTARY PUBLIC

H. HUGHES GRERAN

NOTARY PUBLIC

State of Louisiana

My Commission Is Issued For Life

La. Bar Roll No. 20899

LOAN CLOSING STATEMENT

*******************************************

DATE: March 7, 2008

BORROWERS: International Shipholding Corporation, Enterprise Ship Company, Inc., Sulphur Carriers, Inc., Gulf South Shipping Pte Ltd., CG Railway, Inc., LCI Shipholdings, Inc., Central Gulf Lines, Inc., and Waterman Steamship Corporation

LENDER: Regions Bank

ATTORNEY FOR LENDER: J. Kris Lowry Maynard, Cooper & Gale, P.C. 1901 6th Avenue North 2400 Regions Harbert Plaza Birmingham, Alabama 35203-2618

REVOLVING LOAN AMOUNT: $35,000,0001

For a list of the closing costs payable in connection with the revolving loan, see Exhibit A attached hereto and made a part hereof.

01612544.1

The foregoing statement having been examined and found to be correct, the disbursement of the loan proceeds as above stated is hereby authorized and directed. Receipt of the loan proceeds as above stated and a copy of this statement are hereby acknowledged by Borrowers. Borrowers acknowledge that no advice or certifications have been made to the Borrowers with regard to these loans. If any of the costs, prorations, or disbursements reflected above are based upon incorrect information or if any additional amounts are needed to close these loans in accordance with the terms of the credit documents, Borrowers agree to pay the same immediately upon demand.

BORROWERS:

INTERNATIONAL SHIPHOLDING CORPORATION,

By:      /s/ Erik L. Johnsen

Its:       President

ENTERPRISE SHIP COMPANY, INC.,

By:      /s/ Erik L. Johnsen

Its:       President

SULPHUR CARRIERS, INC.,

By:      /s/ Erik L. Johnsen

Its:       President

GULF SOUTH SHIPPING PTE LTD.,

By:      /s/ Erik L. Johnsen

Its:       Director

 CG RAILWAY, INC.,

 By:      /s/ Erik L. Johnsen

 Its:       President

 LCI SHIPHOLDINGS, INC.,

By:      /s/ Erik L. Johnsen

  Its:       President

 CENTRAL GULF LINES, INC.,

 By:      /s/ Erik L. Johnsen

 Its:       President

 WATERMAN STEAMSHIP CORPORATION,

 By:      /s/ Erik L. Johnsen

 Its:       President

 REGIONS BANK

 By  /s/ Russ Ford

 Its Senior Vice President

EXHIBIT A

          PayeeAmountPurpose

(a)Regions Bank $50,000.00 Origination Fee

(b)Regions Bank $35,000.00 Commitment Fee

(c)Regions Bank $63,000.00 Letter of Credit Fee

(d)Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.

(e)Maynard, Cooper & Gale, P.C.2

(f)Maynard, Cooper & Gale, P.C.2

Total Initial Advance

POC Legal Fees for Borrower's Counsel

$22, 1.00 Legal Fees for Lender's Counsel

''5.i%

0          ut of pocket expenses

$171,250.00

2 See wiring instructions on Schedule I

SCHEDULE I

(Maynard, Cooper & Gale, P.C. Wiring Instructions - $23,250.00)

Maynard, Cooper & Gale, P.C.

General Operating Account

Regions Bank

Birmingham, Alabama

Routing # 062000019

Account # 0001323776

File No.: 2-3047

1

POST-CLOSING ITEMS AGREEMENT

THIS POST-CLOSING ITEMS AGREEMENT dated March 7, 2008 ("this Agreement") is entered into by INTERNATIONAL SHIPHOLDING CORPORATION, a Delaware corporation ("ISC"), ENTERPRISE SHIP COMPANY, INC., a Delaware corporation ("Enterprise"), SULPHUR CARRIERS, INC., a Delaware corporation ("Sulphur Carriers"), GULF SOUTH SHIPPING PTE LTD., a Singapore corporation ("Gulf South"), CG RAILWAY, INC., a Delaware corporation ("CG Railway"), LCI SHIPHOLDINGS, INC., a Marshall Islands corporation ("LCI"), CENTRAL GULF LINES, INC., a Delaware corporation ("Central Gulf"), and WATERMAN STEAMSHIP CORPORATION, a New York corporation ("Waterman"; ISC, Enterprise, Sulphur Carriers, Gulf South, CG Railway, LCI, Central Gulf, and Waterman are, collectively, referred to as the "Borrowers"), and REGIONS BANK, an Alabama banking corporation (the "Lender").

Recitals

A.The Lender and the Borrowers have entered into a Credit Agreement dated as of March 7, 2008 (the "Credit Agreement"), pursuant to which the Lender will make a revolving loan to the Borrowers in the maximum principal amount of $35,000,000. Capitalized terms not defined herein shall, when used herein, have the respective meanings accorded to them in the Credit Agreement.

B.The Borrowers have requested the Lender to enter into the Credit Agreement and make the Loans notwithstanding the fact that certain conditions precedent to making the Loans under the Credit Agreement, as more particularly set out in Exhibit A attached hereto, have not been met (the "Unmet Conditions Precedent").

C.The Lender is willing to make the Loans notwithstanding the fact that the Unmet Conditions Precedent have not been met, provided that, among other things, the Borrowers execute this Agreement.

Agreement

NOW, THEREFORE, in consideration of the foregoing recitals and in order to induce the Lender to make the Loans notwithstanding the fact that the Unmet Conditions Precedent have not been met, the parties hereby agree that if all of the Unmet Conditions Precedent have not been met to the Lender's satisfaction in accordance with the requirements of the Credit Agreement, on or before May 7, 2008, the Letter of Credit fee under the Credit Agreement shall increase from one percent (1.0%) per annum of the stated amount of the Letter of Credit being issued or renewed to one and twenty-five hundredths percent (1.25%) per annum.

01612171.1

IN WITNESS WHEREOF, each of the Borrowers and the Lender have caused this Agreement to be executed in its name and on its behalf by its representative thereunto duly authorized, as of the date first above written.

INTERNATIONAL SHIPHOLDING CORPORATION,

By:      /s/ Erik L. Johnsen

Its:       President

ENTERPRISE SHIP COMPANY, INC.,

By:      /s/ Erik L. Johnsen

Its:       President

SULPHUR CARRIERS, INC.,

By:      /s/ Erik L. Johnsen

Its:       President

GULF SOUTH SHIPPING PTE LTD.,

By:      /s/ Erik L. Johnsen

Its:       Director

 CG RAILWAY, INC.,

 By:      /s/ Erik L. Johnsen

 Its:       President

 LCI SHIPHOLDINGS, INC.,

 By:      /s/ Erik L. Johnsen

 Its:       President

 CENTRAL GULF LINES, INC.,

 By:      /s/ Erik L. Johnsen

 Its:       President

 WATERMAN STEAMSHIP CORPORATION,

 By:      /s/ Erik L. Johnsen

 Its:       President

 REGIONS BANK

 By  /s/ Russ Ford

 Its Senior Vice President

EXHIBIT A

Unmet Conditions Precedent

1.Good Standing Certificate for Waterman Steamship Corporation from the State of Alabama.

2.Good standing certificate for Gulf South Shipping Pte Ltd. from the Republic of Singapore.

3.Officer's Certificate and attachments thereto for Gulf South Shipping Pte Ltd.

7/30/2009

FIRST AMENDMENT TO CREDIT AGREEMENT

THIS FIRST AMENDMENT TO CREDIT AGREEMENT ("this Amendment") dated as of March 3rd2009, is entered into by INTERNATIONAL SHIPHOLDING CORPORATION, a Delaware corporation ("ISC"), ENTERPRISE SHIP COMPANY, INC., a Delaware corporation ("Enterprise"), SULPHUR CARRIERS, INC., a Delaware corporation ("Sulphur Carriers"), GULF SOUTH SHIPPING PTE LTD., a Singapore corporation ("Gulf South"), CG RAILWAY, INC., a Delaware corporation ("CG Railway"), LCI SIDEPHOLDINGS, INC„ a Marshall Islands corporation ("LCI"), CENTRAL GULF LINES, INC., a Delaware corporation ("Central Gulf'”), and WATER1VIAN STEAMSHIP CORPORATION, a New York corporation ("Waterman"; ISC, Enterprise, Sulphur Carriers, Gulf South, CG Railway, LCI, Central Gulf, and Waterman are, collectively, referred to as the "Borrowers"), and REGIONS BANK, an Alabama banking corporation (the "Lender")

Recitals

A.The Borrowers and the Lender are parties to a certain Credit Agreement dated as of March 7, 2008 (the "Credit Agreement").

B.The Borrowers have requested that the Leader make certain modifications to the Credit Agreement as set forth herein,

C.The Lender has agreed to make such modifications, provided that the Borrowers and the Lender enter into this Amendment.

Agreement

NOW, THEREFORE, in consideration of the foregoing recitals and in further consideration of the mutual agreements set forth herein, the Borrowers and the Lender hereby agree as follows:

1.         Rules of Construction, This Amendment is subject to the rules of construction set forth in Section 1.1 of the Credit Agreement.

2.         Definitions, Capitalized terms used in this Amendment and not otherwise defined herein have the meanings defined for them in the Credit Agreement.

3.          Representations and Warranties of Borrowers. The Borrowers represent and warrant to the Lender as follows:

(a)          Representations and Warranties in Credit Documents, All of the representations and warranties set forth in the Credit Documents are true and correct on and as of the date of this Amendment, except to the extent that such representations and warranties expressly relate to an earlier date.

(b)          No Default.As of the date of this Amendment, the Borrowers are in compliance with all the terms and provisions set forth in the Credit Documents on their part to be observed or performed, and no Event of Default, nor any event that upon notice or lapse of time or both would constitute such an Event of Default, has occurred and is continuing,

(c)          No Misleading Information.To the best knowledge of the Borrowers, neither this Amendment nor any certificate, written statement or other document furnished to the Lender by or on behalf of the Borrowers in connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading, and there is no fact known to the Borrowers that the Borrowers have not disclosed to the Lender that materially adversely affects or, so far as the Borrowers can now reasonably foresee, will materially adversely affect the properties, or financial or other condition of the Borrowers or the ability of the Borrowers to perform their obligations hereunder and under the other Credit Documents,

(d)          Borrowers' Organizational Documents.The organizational documents of the Borrowers have not been amended since March 7, 2008.

4.       Amendments to Credit Agreement.The Credit Agreement is hereby amended as follows:

(a)Section 1.2(d) is hereby amended to read, in its entirety, as follows:

(d)      Applicable Margin means four and one half percent (450 basis points)                            per annum.

(b)Section 1.2(q) is hereby amended to read, in its entirety, as follows:

(q)     Default Ratemeans the rate of interest equal to four percentage points (400 basis points) in excess of the Prime Rate or the maximum rate permitted by law, whichever is less.

(c)Section 1,2(xx) is hereby amended to read, in its entirety, as follows:

(xx) Termination Datemeans the maturity date of the Revolving Loan (which is April 7, 2011) as such date may be extended from time to time pursuant to Section 2.5 or accelerated pursuant to Section 6,2.

(d)Schedule I of the Credit Agreement is hereby deleted in its entirety.

5.       Fees and Legal Expenses.The Borrowers hereby agree to pay all legal costs and

expenses inemred in connection with the review, analysis and preparation of this Amendment Such expenses and legal costs shall be payable upon the execution of this Amendment and shall be non-refundable,

6.       References in Credit Documents.All references in the Credit Documents to the "Credit Agreement" shall mean the Credit Agreement as amended by this Amendment.

7.       Credit Documents to Remain in EffectExcept as specifically modified by this Amendment, the Credit Agreement and the other Credit Documents shall remain in full force and effect in accordance with their respective terms.

8.       No Novation, etc.Nothing contained in this Amendment shall be deemed to constitute a novation of the terms of the Credit Documents, nor impair any Liens granted to the Lender thereunder, nor release any obligor from liability for any of the Obligations, nor affect any of the rights, powers or remedies of the Lender under the Credit Documents, nor constitute a waiver of any provision thereof, except as specifically set forth in this Amendment

9.       Governing Law, Successors and Assigns, etc.This Amendment shall be governed by and construed in accordance with the laws of the State of Alabama and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

10.       Headings.The descriptive headings of the sections of this Amendment are for convenient reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.

11.                  Entire Agreement.This Amendment constitutes the entire understanding to date of the parties hereto regarding the subject matter hereof and supersedes all prior and contemporaneous oral and written agreements of the parties thereto with respect to the subject matter hereof.

12.       Severability,If any provision of this Amendment shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

13.       Counterparts,This Amendment may be executed in any number of counterparts, each of which so executed shall be deemed an original, but all snob counterparts shall together constitute but one and the same instrument.

14.       No Waiver.Nothing contained herein shall be construed as a waiver or acknowledgement of, or consent to any breach of or Event of Default under the Credit Agreement and the Credit Documents not specifically mentioned herein, and the waivers and consents granted herein are effective only in the specific instance and for the purposes for which given.

15. Effect of this Amendment.This Amendment amends and supplements the Credit Agreement and shall be construed as if it were a part thereof for all purposes. Any representation or warranty contained herein that is determined by the Lender to have been misleading or untrue in any material respect at the time made shall constitute an Event of Default under the Credit Agreement and the other Credit Documents in accordance with the Credit Agreement as if such representation or warranty had been contained in the Credit Agreement, and any default by the Borrowers in the performance or observance of any provision of this Amendment shall constitute an Event of Default under that section as if such provision had been contained in the Credit Agreement.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the Borrowers and the Lender have executed this Amendment as of the day and year first above written by their duly authorized representatives.

 "BORROWERS"

 INTERNATIONAL SHIPHOLDING CORPORATION

 By: /s/ Manuel G. Estrada

     Its: Vice President – Chief Financial Officer

ENTERPRISE SHIP COMPANY, INC

By: /s/ Manuel G. Estrada

    Its: Vice President – Chief Financial Officer

SULPHUR CARRIERS, INC.

By: /s/ Manuel G. Estrada

    Its: Vice President – Chief Financial Officer

GULF SOUTH SHIPPING PTE LTD.

By: /s/ Manuel G. Estrada

    Its: Vice President – Chief Financial Officer

CG RAILWAY, INC.

By: /s/ Manuel G. Estrada

    Its: Vice President – Chief Financial Officer

LCI SHIPHOLDINGS, INC.

By: /s/ Manuel G. Estrada

    Its: Vice President – Chief Financial Officer

CENTRAL GULF LINES, INC.

By: /s/ Manuel G. Estrada

    Its: Vice President – Chief Financial Officer

WATERMAN STEAMSHIP CORPORATION

By: /s/ Manuel G. Estrada

    Its: Vice President – Chief Financial Officer

“LENDER”

REGIONS BANK

By: /s/ James F. Currie, Jr.

    Its: Senior Vice President

SECOND AMENDMENT TO CREDIT AGREEMENT

THIS SECOND AMENDMENT TO CREDIT AGREEMENT ("this Amendment") dated August 13, 2009 (the "Effective Date") is entered into by INTERNATIONAL SHIPHOLDING CORPORATION, a Delaware corporation ("ISC"), ENTERPRISE SHIP COMPANY, INC., a Delaware corporation ("Enterprise"), SULPHUR CARRIERS, INC., a Delaware corporation ("Sulphur Carriers"), GULF SOUTH SHIPPING PTE LTD., a Singapore corporation ("Gulf South"), CG RAILWAY, INC., a Delaware corporation ("CG Railway"), LCI SHIPHOLDINGS, INC., a Marshall Islands corporation ("LCI"), CENTRAL GULF LINES, INC., a Delaware corporation ("Central Gulf"), and WATERMAN STEAMSHIP CORPORATION, a New York corporation ("Waterman"; ISC, Enterprise, Sulphur Carriers, Gulf South, CG Railway, LCI, Central Gulf, and Waterman are, collectively, referred to as the "Borrowers"), and REGIONS BANK, an Alabama banking corporation (the "Lender").

Recitals

A.The Borrowers and the Lender are parties to that certain Credit Agreement dated March 7, 2008, as amended pursuant to that certain First Amendment to Credit Agreement dated March 3, 2009 (as further amended from time to time, the "Credit Agreement").

B.Gulf South and certain other related affiliates have requested that the Bank make available to them a separate future advance credit facility to be guaranteed by ISC and governed by a separate credit agreement dated of even date herewith (the "Future Advance Credit Facility").

C.The Lender has agreed to make available the Future Advance Credit Facility, provided the Borrowers and the Lender enter into this Amendment.

Agreement

NOW, THEREFORE, in consideration of the foregoing recitals and in further consideration of the mutual agreements set forth herein, the Borrowers and the Lender hereby agree as follows, with such agreements to become effective as of the Effective Date:

1. Rules of Construction. This Amendment is subject to the rules of construction

set forth in the Credit Agreement.

2.                               Definitions. Capitalized terms used in this Amendment and not otherwise defined herein have the meanings defined for them in the Credit Agreement.

                                                                                                                                                                       3. Representations and Warranties of Borrower. The Borrowers represent and warrant to the Lender as follows:

(a)            Representations and Warranties in Credit Documents. All of the representations and warranties set forth in the Credit Documents are true and correct on and as of the Effective Date, except to the extent that such representations and warranties expressly relate to an earlier date.

(b)            No Default. As of the Effective Date, the Borrowers are in compliance with all the terms and provisions set forth in the Credit Documents on their part to be observed or performed, and no Event of Default, nor any event that upon notice or lapse of time or both would constitute such an Event of Default, has occurred and is continuing.

4.Amendments to Credit Agreement.

(a)In the definition of "Maximum Facility Amount" set forth in Section 1.1

(Id() of the Credit Agreement, the term 135,000,000" is hereby amended to read "$30,000,000".

(b)The following new definitional paragraphs are added to the end of Section

"(yy) Capital Expenditures means with respect to ISC and the Subsidiaries, on a consolidated basis, for any period (without duplication), any expenditure for fixed assets or that is properly chargeable to capital account in accordance with GAAP.

(zz) EBITDAR means, with respect to ISC and the Subsidiaries, on a consolidated basis, for any period (without duplication) the sum of (i) Consolidated EBITDA; and (ii) Lease Expense; less maintenance Capital Expenditures (calculated at 30% of their depreciation expense).

(aaa) Fixed Charges means with respect to ISC and the Subsidiaries, on a consolidated basis, for any period (without duplication), the sum of (i) Interest Expense; (ii) Lease Expense; and (iii) required principal payments for any outstanding debt during the applicable reporting period.

(bbb) Lease Expense means with respect to ISC and the Subsidiaries, on a consolidated basis, for any period (without duplication), all amounts payable under any operating leases and time charter agreements which may be classified as operating lease expenses, charter hire expenses or rent as determined in accordance with GAAP during the period in question."

(c)   The following new paragraph (m) is hereby added to the end of Section 5.15:

"(m) EBITDAR to Fixed Charges. Maintain a ratio of EBITDAR to Fixed Charges of not less than 1.40 to 1.00, for ISC and the Subsidiaries on a consolidated basis for the four most recent fiscal quarters for which financial information is available."

5.           Fees and Legal Expenses. The Borrowers hereby agree to pay all reasonable invoiced legal costs and expenses incurred in connection with the review, analysis and preparation of this Amendment. Such expenses and legal costs shall be payable upon the execution of this Amendment and shall be non-refundable.

6.           References in Credit Documents. All references in the Credit Documents to the "Credit Agreement" shall mean the Credit Agreement as amended by this Amendment.

7.           Credit Documents to Remain in Effect. Except as specifically modified by this Amendment, the Credit Agreement and the other Credit Documents shall remain in full force and effect in accordance with their respective terms.

8.           No Novation, etc. Nothing contained in this Amendment shall be deemed to constitute a novation of the terms of the Credit Documents, nor impair any Liens granted to the Lender thereunder, nor release any obligor from liability for any of the Obligations, nor affect any of the rights, powers or remedies of the Lender under the Credit Documents, nor constitute a waiver of any provision thereof, except as specifically set forth in this Amendment.

9.           Governing Law, Successors and Assigns, etc. This Amendment shall be governed by and construed in accordance with the laws of the State of Alabama and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

10.           Headings. The descriptive headings of the sections of this Amendment are for convenient reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof

11.           Entire Agreement. This Amendment constitutes the entire understanding to date of the parties hereto regarding the subject matter hereof and supersedes all prior and contemporaneous oral and written agreements of the parties thereto with respect to the subject matter hereof

12.           Severability. If any provision of this Amendment shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

13.           Counterparts. This Amendment may be executed in any number of

counterparts, each of which so executed shall be deemed an original, but all such counterparts shall together constitute but one and the same instrument.

14.           No Waiver. Nothing contained herein shall be construed as a waiver or

acknowledgement of, or consent to any breach of or Event of Default under the Credit Agreement and the Credit Documents not specifically mentioned herein, and the waivers and consents granted herein are effective only in the specific instance and for the purposes for which given.

 15. Effect of this Amendment. This Amendment amends and supplements the Credit Agreement and shall be construed as if it were a part thereof for all purposes. Any representation or warranty contained herein that shall prove to be false or misleading in any material respect at the time made shall constitute an Event of Default under the Credit Agreement and the other Credit Documents in accordance with the Credit Agreement as if such representation or warranty had been contained in the Credit Agreement, and any default by the Borrowers in the performance or observance of any provision of this Amendment shall constitute an Event of Default under that section as if such provision had been contained in the Credit Agreement.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the Borrowers and the Lender have caused this Amendment to be executed and delivered by their duly authorized representatives to be effective as of the Effective Date.

 INTERNATIONAL SHIPHOLDING CORPORATION

 By: /s/ Manuel G. Estrada

     Its: Chief Financial Officer

ENTERPRISE SHIP COMPANY, INC

By: /s/ Manuel G. Estrada

Its: Chief Financial Officer

SULPHUR CARRIERS, INC

By: /s/ Manuel G. Estrada

    Its: Chief Financial Officer

GULF SOUTH SHIPPING PTE LTD.

By: /s/ Manuel G. Estrada

    Its: Chief Financial Officer

     CG RAILWAY, INC

      By: /s/ Manuel G. Estrada

           Its: Chief Financial Officer

      LCI SHIPHOLDINGS, INC

       By: /s/ Manuel G. Estrada

           Its: Chief Financial Officer

     CENTRAL GULF LINES, INC

      By: /s/ Manuel G. Estrada

                                                                                 Its: Chief Financial Officer

      WATERMAN STEAMSHIP CORPORATION

       By: /s/ Manuel G. Estrada

                                                                                   Its: Chief Financial Officer

REGIONS BANK

       By: /s/ James F. Currie, Jr.

                                                                                   Its: Senior Vice President

01937150.2

THIRD AMENDMENT TO CREDIT AGREEMENT

THIS THIRD AMENDMENT TO CREDIT AGREEMENT ("this Amendment") dated as of March 31, 2010 (the "Effective Date") is entered into by and among INTERNATIONAL SHIPHOLDING CORPORATION, a Delaware corporation ("ISC"), ENTERPRISE SHIP COMPANY, INC., a Delaware corporation ("Enterprise"), SULPHUR CARRIERS, INC., a Delaware corporation ("Sulphur Carriers"), GULF SOUTH SHIPPING PTE LTD., a Singapore corporation ("Gulf South"), CG RAILWAY, INC., a Delaware corporation ("CG Railway"), LCI SHIPHOLDINGS, INC., a Marshall Islands corporation ("LCI"), CENTRAL GULF LINES, INC., a Delaware corporation ("Central Gulf"), and WATERMAN STEAMSHIP CORPORATION, a New York corporation ("Waterman"; ISC, Enterprise, Sulphur Carriers, Gulf South, CG Railway, LO, Central Gulf, and Waterman are, collectively, referred to as the "Borrowers"), and REGIONS BANK, an Alabama banking corporation (the "Lender").

Recitals

A.The Borrowers and the Lender are parties to that certain Credit Agreement dated March 7, 2008, as amended by a First Amendment thereto dated March 3, 2009 and by a Second Amendment thereto dated August 13, 2009 (as further amended from time to time, the "Credit Agreement").

B.The Borrowers have requested that the Lender make certain modifications to the Credit Agreement as set forth herein.

C.The Lender has agreed to make such modifications, provided that the Borrowers and the Lender enter into this Amendment.

Agreement

NOW, THEREFORE, in consideration of the foregoing recitals and in further consideration of the mutual agreements set forth herein, the Borrowers and the Lender hereby agree as follows, with such agreements to become effective as of the Effective Date:

1.           Rules of Construction. This Amendment is subject to the rules of construction set forth in the Credit Agreement.

2.           Definitions. Capitalized terms used in this Amendment and not otherwise

defined herein have the meanings defined for them in the Credit Agreement.

3.           Representations and Warranties of Borrower. The Borrowers represent and warrant to the Lender as follows:

 (a) Representations and Warranties in Credit Documents. All of the representations and warranties set forth in the Credit Documents are true and correct on and as of the Effective Date, except to the extent that such representations and warranties expressly relate to an earlier date.

(b)           No Default. As of the Effective Date, the Borrowers are in compliance with all the terms and provisions set forth in the Credit Documents on their part to be observed or performed, and no Event of Default, nor any event that upon notice or lapse of time or both would constitute such an Event of Default, has occurred and is continuing.

(c)           No Misleading Information. To the best knowledge of the Borrowers, neither this Amendment nor any certificate, written statement or other document furnished to the Lender by or on behalf of the Borrowers in connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading, and there is no fact known to the Borrowers that the Borrowers have not disclosed to the Lender that materially adversely affects or, so far as the Borrowers can now reasonably foresee, will materially adversely affect the properties, or financial or other condition of the Borrowers or the ability of the Borrowers to perform their obligations hereunder and under the other Credit Documents.

(d)           Borrowers' Organizational Documents. The organizational documents of the Borrowers have not been amended since March 7, 2008, except that ISC amended and restated its Bylaws on October 28, 2009. A true and correct copy of ISC's amended and restated Bylaws, which are in full force and effect as of the date hereof, is attached hereto as Exhibit A.

4.Amendments to Credit Agreement.

(a)   Section 1.2(kk) is hereby amended to read, in its entirety, as follows: (kk) Maximum Facility Amount means $35,000,000.

(b)   Section 1.2(xx) is hereby amended to read, in its entirety, as follows:

  (xx) Termination Date means the maturity date of the Revolving Loan (which is April 6, 2012) as such date may be extended from time to time pursuant to Section 2.5 or accelerated pursuant to Section 6.2.

(c)The first sentence of Section 2.7(d) is hereby amended to read, in its entirety, as follows:

(d)For each Letter of Credit the Lender issues and all renewals thereof, the Lender shall receive from the Borrowers, a letter of credit fee equal to the rate mutually agreed to by the Lender and the Borrowers.

(d)Section 5.5(c) is hereby amended to read, in its entirety, as follows:

(c) not later than 45 days after the end of each March, June and

September and not later than 90 days after the end of each December, a compliance certificate duly executed by an Authorized Representative of ISC substantially in the form of Schedule 5.5 attached hereto;

(e)The following Section 5.17 is hereby added to the Credit Agreement:

SECTION 5.17Creation or Acquisition of Subsidiaries.

The Borrowers will inform the Lender as to the acquisition or creation of any new wholly-owned subsidiary which at the time of acquisition directly owns, or after the time of creation will directly own, a vessel and will cause each such wholly-owned subsidiary that is hereafter acquired or created, promptly (but in no event more than 30 days) after such wholly-owned subsidiary is acquired or created, to become a Borrower under this Agreement by execution of an Assumption Agreement (in form reasonably acceptable to the Lender), and all other documents necessary to cause it to become jointly and severally liable for the Obligations (subject to the limitations provided in the Assumption Agreement).

5.Fees and Legal Expenses. The Borrowers hereby agree to pay all reasonable invoiced legal costs and expenses incurred in connection with the review, analysis and preparation of this Amendment. Such expenses and legal costs shall be payable upon the execution of this Amendment and shall be non-refundable.

6.References in Credit Documents. All references in the Credit Documents to the "Credit Agreement" shall mean the Credit Agreement as amended by this Amendment.

7.Credit Documents to Remain in Effect. Except as specifically modified by this Amendment, the Credit Agreement and the other Credit Documents shall remain in full force and effect in accordance with their respective terms.

8.No Novation, etc. Nothing contained in this Amendment shall be deemed to constitute a novation of the terms of the Credit Documents, nor impair any Liens granted to the Lender thereunder, nor release any obligor from liability for any of the Obligations, nor affect any of the rights, powers or remedies of the Lender under the Credit Documents, nor constitute a waiver of any provision thereof, except as specifically set forth in this Amendment

9.Governing Law, Successors and Assigns, etc. This Amendment shall be

governed by and construed in accordance with the laws of the State of Alabama and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

10.Headings. The descriptive headings of the sections of this Amendment are for convenient reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.

 11.Entire Agreement. This Amendment constitutes the entire understanding to date

of the parties hereto regarding the subject matter hereof and supersedes all prior and contemporaneous oral and written agreements of the parties thereto with respect to the subject matter hereof

12.Severabilitv. If any provision of this Amendment shall be invalid, illegal or

unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

13.Counterparts. This Amendment may be executed in any number of

counterparts, each of which so executed shall be deemed an original, but all such counterparts shall together constitute but one and the same instrument.

14.No Waiver. Nothing contained herein shall be construed as a waiver or

acknowledgement of, or consent to any breach of or Event of Default under the Credit Agreement and the Credit Documents not specifically mentioned herein, and the waivers and consents granted herein are effective only in the specific instance and for the purposes for which given.

15.Effect of this Amendment. This Amendment amends and supplements the

Credit Agreement and shall be construed as if it were a part thereof for all purposes. Any representation or warranty contained herein that shall prove to be false or misleading in any material respect at the time made shall constitute an Event of Default under the Credit Agreement and the other Credit Documents in accordance with the Credit Agreement as if such representation or warranty had been contained in the Credit Agreement, and any default by the Borrowers in the performance or observance of any provision of this Amendment• shall constitute an Event of Default under that section as if such provision had been contained in the Credit Agreement.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the Borrowers and the Lender have caused this Amendment to be executed and delivered by their duly authorized representatives to be effective as of the Effective Date.

INTERNATIONAL SHIPHOLDING CORPORATION

By: /s/ Manuel G. Estrada

    Its: Vice President-Chief Financial Officer

ENTERPRISE SHIP COMPANY, INC

By: /s/ Manuel G. Estrada

    Its: Vice President-Chief Financial Officer

SULPHUR CARRIERS, INC

By: /s/ Manuel G. Estrada

    Its: Vice President-Chief Financial Officer

GULF SOUTH SHIPPING PTE LTD.

By: /s/ Manuel G. Estrada

     Its: Vice President-Chief Financial Officer

CG RAILWAY, INC.

By: /s/ Manuel G. Estrada

     Its: Vice President-Chief Financial Officer

LCI SHIPHOLDINGS, INC

By: /s/ Manuel G. Estrada

     Its: Vice President-Chief Financial Officer

CENTRAL GULF LINES, INC

By: /s/ Manuel G. Estrada

     Its: Vice President-Chief Financial Officer

WATERMAN STEAMSHIP CORPORATION

By: /s/ Manuel G. Estrada

     Its: Vice President-Chief Financial Officer

REGIONS BANK

By: /s/ James F. Currie, Jr.

     Its: Senior Vice President

EX-10.8

Exhibit 10.8

December 15, 2010

Mr. Erik F. Johnsen

P.O. Box 196

Covington, LA  70434

Reference: Erik F. Johnsen Consulting Agreement

This letter will confirm that International Shipholding Corporation has agreed to retain you as a consultant for a period of time commencing January 1, 2011, and ending December 31, 2011.  Your consulting compensation, which has been discounted to take into consideration a prepaid lump sum payment, will be fee of $250,000, and will be paid to you on December 29, 2010. Reasonable out of pocket expenses incurred while performing your consulting services will be reimbursed as submitted throughout the 2011 year.

Furthermore, we have agreed that the period of time commencing January 1, 2011, and ending December 31, 2011, will be the last year of your consultant services to International Shipholding Corporation.

Please sign below to acknowledge your agreement and acceptance of the foregoing terms and conditions.

Sincerely,

/s/ Niels M. Johnsen

N. M. Johnsen

Chairman of the Board

AGREED AND ACCEPTED:

/s/ Erik F. Johnsen

Erik. F. Johnsen

12/20/10

Date

EX-10.13

Exhibit 10.13

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

RESTRICTED STOCK AGREEMENT

UNDER THE INTERNATIONAL SHIPHOLDING CORPORATION

2009 STOCK INCENTIVE PLAN

This RESTRICTED STOCK AGREEMENT (this “Agreement”) is entered into as of January 25, 2011, by and between International Shipholding Corporation (“ISC”) and _______________ (“Award Recipient”).

WHEREAS, ISC maintains the 2009 Stock Incentive Plan (the “Plan”), under which the Compensation Committee of the Board of Directors of ISC (the “Committee”) may, among other things, grant shares of ISC’s common stock, $1.00 par value per share (the “Common Stock”), to key employees, officers, and directors of ISC or its subsidiaries (collectively, the “Company”), and persons providing services as consultants or advisors to the Company as the Committee may determine, subject to the Plan and such other terms, conditions, or restrictions as it may deem appropriate; and

WHEREAS, pursuant to the Plan, the Committee has awarded to the Award Recipient restricted shares of Common Stock on the terms and conditions specified below;

NOW, THEREFORE, in consideration of the premises, the parties agree as follows:

1.

AWARD OF SHARES AND VESTING SCHEDULE

1.1.Under the terms of the Plan and this Agreement, the Committee hereby awards to the Award Recipient, in consideration of future services, _________ restricted shares of Common Stock (the “Restricted Stock”).

1.2.The Restricted Stock is subject to the terms, conditions, and restrictions set forth in the Plan and in this Agreement.  The definition of all capitalized terms used but not otherwise defined in this Agreement shall be as provided in the Plan.

1.3.Subject to (a) the provisions of the Plan, (b) the other provisions of this Agreement, and (c) the Award Recipient remaining employed by the Company on the vesting date, the shares of Restricted Stock shall vest on the date the Company files its Annual Report on Form 10-K for 2011 with the Securities and Exchange Commission, if the Company’s 2011 income before taxes is equal to at least $21,594,000 (the “Performance Target”).  If the Performance Target is not met, the shares of Restricted Stock will be forfeited on the date of the Company’s filing of its Annual Report on Form 10-K for 2011 with the Securities and Exchange Commission.

2.

RESTRICTIONS ON RESTRICTED STOCK

2.1.Subject to the restrictions provided in this Section 2, the Award Recipient shall be entitled to all rights of a stockholder of ISC with respect to the Restricted Stock, including the right to vote the shares.

2.2.All dividends paid and distributions made on unvested shares of Restricted Stock shall be held by the Company until the vesting of the related shares of Restricted Stock on which such dividends were paid or distributions were made.  No interest shall accrue on such amounts prior to payout by the Company.  All dividends and distributions on the Restricted Stock shall be paid to the Award Recipient promptly upon the vesting of the related Restricted Stock, but in no event later than 2 ½ months following such vesting date.

2.3.In addition to the conditions and restrictions provided in the Plan, the shares of Restricted Stock, the right to vote the Restricted Stock, and the right to receive dividends may not be sold, assigned, donated, transferred, exchanged, pledged, hypothecated, or otherwise encumbered prior to vesting.

3.

EFFECT OF CHANGE OF CONTROL OR TERMINATION OF EMPLOYMENT

3.1.Prior to the vesting date set forth in Section 1.3, the shares of Restricted Stock shall vest and all restrictions set forth in Section 2 shall lapse on the earlier of:

(a)the date on which the employment of the Award Recipient terminates as a result of (i) death; (ii) disability within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”); or (iii) retirement on or after reaching age 65; or

(b)the occurrence of a Change of Control of ISC, as described in Section 12.10 of the Plan.

3.2.All unvested Restricted Stock and related rights to dividends and distributions shall automatically terminate and be forfeited if the employment of the Award Recipient terminates for any reason, unless and to the extent otherwise provided in Section 3.1.

4.

CLAWBACK OR FORFEITURE OF AWARD

4.1.This award of Restricted Stock is recoverable by the Company under the following circumstances:

(a)If the Company’s financial statements are required to be restated at any time within a three (3) year period following the vesting date set forth in Section 1.3 as a result of fraud or intentional misconduct, the Committee may, in its discretion, based on the facts and circumstances surrounding the restatement, direct the Company to recover all or a portion of the shares from the Award Recipient if the Award Recipient’s conduct directly caused or partially caused the need for the restatement.

(b)This award of Restricted Stock is also subject to any clawback policies the Company may adopt in order to conform to the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and resulting rules issued by the Securities and Exchange Commission or national securities exchanges thereunder and that the Company determines should apply to this award of Restricted Stock.

4.2.The Company reserves the right to recover this award of Restricted Stock pursuant to this Section 4 by (a) seeking recovery of the vested shares from the Award Recipient; (b) reducing the amount that would otherwise be payable to the Award Recipient under another Company benefit plan or compensation program to the extent permitted by applicable law; (c) withholding future annual and long-term incentive awards or salary increases; or (d) taking any combination of these actions.

5.

EVIDENCE OF STOCK OWNERSHIP

5.1.Ownership of the Restricted Stock by the Award Recipient shall be reflected by the issuance of stock certificates or by book entry evidence of ownership.  Any stock certificates evidencing the Restricted Stock shall be retained by ISC until the lapse of restrictions under the terms of this Agreement.  ISC shall place a legend, in the form specified in Section 7.3 of the Plan, on any stock certificates and a similar notation of restrictions on any book entry evidence of ownership restricting the transferability of the shares of Restricted Stock.

5.2.Upon the lapse of restrictions on shares of Restricted Stock, ISC shall cause a stock certificate or book entry evidence of ownership without a restrictive legend to be issued with respect to the vested Restricted Stock in the name of the Award Recipient or his or her nominee within 30 days, subject to the other terms and conditions hereof, including any withholding of shares under Section 6 below.  Upon receipt of such stock certificate, the Award Recipient is free to hold or dispose of the shares represented by such certificate, subject to (a) applicable securities laws, (b) ISC’s insider trading policy, and (c) any applicable stock retention policies that ISC may adopt in the future.

6.

TAXES

6.1.Unless an Award Recipient timely makes the election described in Section 6.2, at the time that all or any portion of the Restricted Stock vests, the Award Recipient must deliver to ISC the amount of income tax withholding required by law.  The Award Recipient shall have the right to fully satisfy this tax withholding obligation by requesting ISC to withhold (from the shares the Award Recipient otherwise would receive upon vesting) that number of shares of Common Stock having an aggregate value (as determined under the Plan) equal to the minimum amount required to be withheld; provided, however, that to prevent the issuance of fractional shares and the under-withholding of taxes, the Award Recipient agrees that the number of shares withheld shall be rounded up to the next whole number of shares.  The Committee does not have the right to disapprove of an election by the Award Recipient to have shares withheld in satisfaction of the withholding tax obligation.

6.2.The Award Recipient understands that the Award Recipient (and not the Company) shall be responsible for the Award Recipient’s own tax liability that may arise as a result of the transactions contemplated by this Agreement.  The Award Recipient understands that Section 83 of the Code taxes as ordinary income the Fair Market Value of the Restricted Stock as of the date any restrictions on the shares lapse.  The Award Recipient understands that the Award Recipient may elect to be taxed at the time the Restricted Stock is granted rather than upon vesting by filing an election under Section 83(b) of the Code with the I.R.S. within 30 days from the date of grant.  The form for making this election is available from the Company’s Secretary upon the Award Recipient’s request.

7.

NO CONTRACT OF EMPLOYMENT INTENDED

Nothing in this Agreement shall confer upon the Award Recipient any right to continue in the employment of the Company, or to interfere in any way with the right of the Company to terminate the Award Recipient’s employment relationship with the Company at any time.

8.

BINDING EFFECT

This Agreement shall inure to the benefit of and be binding upon the parties to this agreement and their respective heirs, executors, administrators, legal representatives, and successors.

9.

INCONSISTENT PROVISIONS

The Restricted Stock is subject to the provisions of the Plan as in effect on the date of this Agreement and as it may be amended.  If any provision of this Agreement conflicts with a provision of the Plan, the Plan provision shall control.

10.

ATTORNEYS’ FEES AND EXPENSES

Should any party to this Agreement retain counsel for the purpose of enforcing, or preventing the breach of, any provision of this Agreement, including but not limited to the institution of any action or proceeding in court (a) to enforce any provision of this Agreement, (b) to obtain monetary or liquidated damages for failure to perform under this Agreement, (c) for a declaration of such parties’ rights or obligations with respect to this Agreement, or (d) for any other judicial remedy, then the prevailing party shall be entitled to be reimbursed by the losing party for all costs and expenses incurred thereby, including, but not limited to, attorneys’ fees (including costs of appeal).

11.

GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.

12.

SEVERABILITY

If any term or provision of this Agreement, or the application thereof to any person or circumstance, shall at any time or to any extent be invalid, illegal, or unenforceable in any respect as written, the Award Recipient and ISC intend for any court construing this Agreement to modify or limit such provision so as to render it valid and enforceable to the fullest extent allowed by law.  Any such provision that is not susceptible of such reformation shall be ignored so as to not affect any other term or provision of this Agreement, and the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid, illegal, or unenforceable, shall not be affected thereby and each term and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.

13.

ENTIRE AGREEMENT; MODIFICATION

The Plan and this Agreement contain the entire agreement between the parties with respect to the subject matter contained herein and may not be modified, except as provided in the Plan, as it may be amended from time to time in the manner provided by the Plan, or in this Agreement, as it may be amended from time to time by a written document signed by each of the parties to this Agreement.  Any oral or written agreements, representations, warranties, written inducements, or other communications made prior to the execution of the Agreement shall be void and ineffective for all purposes.

By signature below, the Award Recipient represents that he or she is familiar with the terms and provisions of the Plan, and hereby accepts this Agreement subject to all of those terms and provisions.  The Award Recipient has reviewed the Plan and this Agreement in their entirety and fully understands all provisions of each.  The Award Recipient agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee upon any questions arising under the Plan or this Agreement.

{N2256259.3}

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

 INTERNATIONAL SHIPHOLDING CORPORATION

By:

By:           __________________

Award Recipient

EX-10.14

Exhibit 10.14

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

RESTRICTED STOCK AGREEMENT

UNDER THE INTERNATIONAL SHIPHOLDING CORPORATION

2009 STOCK INCENTIVE PLAN

This RESTRICTED STOCK AGREEMENT (this “Agreement”) is entered into as of January 25, 2011, by and between International Shipholding Corporation (“ISC”) and ________ (“Award Recipient”).

WHEREAS, ISC maintains the 2009 Stock Incentive Plan (the “Plan”), under which the Compensation Committee of the Board of Directors of ISC (the “Committee”) may, among other things, grant shares of ISC’s common stock, $1.00 par value per share (the “Common Stock”), to key employees, officers, and directors of ISC or its subsidiaries (collectively, the “Company”), and persons providing services as consultants or advisors to the Company as the Committee may determine, subject to the Plan and such other terms, conditions, or restrictions as it may deem appropriate; and

WHEREAS, pursuant to the Plan, the Committee has awarded to the Award Recipient restricted shares of Common Stock on the terms and conditions specified below;

NOW, THEREFORE, in consideration of the premises, the parties agree as follows:

1.

AWARD OF SHARES AND VESTING SCHEDULE

1.1.Under the terms of the Plan and this Agreement, the Committee hereby awards to the Award Recipient, in consideration of future services, __________ restricted shares of Common Stock (the “Restricted Stock”).

1.2.The Restricted Stock is subject to the terms, conditions, and restrictions set forth in the Plan and in this Agreement.  The definition of all capitalized terms used but not otherwise defined in this Agreement shall be as provided in the Plan.

1.3.Subject to (a) the provisions of the Plan, (b) the other provisions of this Agreement, and (c) the Award Recipient remaining employed by the Company on the vesting date, the shares of Restricted Stock shall vest on the date the Company files its Annual Report on Form 10-K for 2011 with the Securities and Exchange Commission, if the Company’s 2011 income before taxes is equal to at least $21,594,000 (the “Performance Target”).  If the Performance Target is not met, the shares of Restricted Stock will be forfeited on the date of the Company’s filing of its Annual Report on Form 10-K for 2011 with the Securities and Exchange Commission.

2.

RESTRICTIONS ON RESTRICTED STOCK

2.1.Subject to the restrictions provided in this Section 2, the Award Recipient shall be entitled to all rights of a stockholder of ISC with respect to the Restricted Stock, including the right to vote the shares.

2.2.All dividends paid and distributions made on unvested shares of Restricted Stock shall be held by the Company until the vesting of the related shares of Restricted Stock on which such dividends were paid or distributions were made.  No interest shall accrue on such amounts prior to payout by the Company.  All dividends and distributions on the Restricted Stock shall be paid to the Award Recipient promptly upon the vesting of the related Restricted Stock, but in no event later than 2 ½ months following such vesting date.

2.3.In addition to the conditions and restrictions provided in the Plan, the shares of Restricted Stock, the right to vote the Restricted Stock, and the right to receive dividends may not be sold, assigned, donated, transferred, exchanged, pledged, hypothecated, or otherwise encumbered prior to vesting.

3.

EFFECT OF CHANGE OF CONTROL OR TERMINATION OF EMPLOYMENT

3.1.Prior to the vesting date set forth in Section 1.3, the shares of Restricted Stock shall vest and all restrictions set forth in Section 2 shall lapse on the earlier of:

(a)the date on which the employment of the Award Recipient terminates as a result of (i) death; or (ii) disability within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”); or

(b)the occurrence of a Change of Control of ISC, as described in Section 12.10 of the Plan.

3.2.All unvested Restricted Stock and related rights to dividends and distributions shall automatically terminate and be forfeited if the employment of the Award Recipient terminates for any reason, unless and to the extent otherwise provided in Section 3.1.

4.

CLAWBACK OR FORFEITURE OF AWARD

4.1.This award of Restricted Stock is recoverable by the Company under the following circumstances:

(a)If the Company’s financial statements are required to be restated at any time within a three (3) year period following the vesting date set forth in Section 1.3 as a result of fraud or intentional misconduct, the Committee may, in its discretion, based on the facts and circumstances surrounding the restatement, direct the Company to recover all or a portion of the shares from the Award Recipient if the Award Recipient’s conduct directly caused or partially caused the need for the restatement.

(b)This award of Restricted Stock is also subject to any clawback policies the Company may adopt in order to conform to the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and resulting rules issued by the Securities and Exchange Commission or national securities exchanges thereunder and that the Company determines should apply to this award of Restricted Stock.

4.2.The Company reserves the right to recover this award of Restricted Stock pursuant to this Section 4 by (a) seeking recovery of the vested shares from the Award Recipient; (b) reducing the amount that would otherwise be payable to the Award Recipient under another Company benefit plan or compensation program to the extent permitted by applicable law; (c) withholding future annual and long-term incentive awards or salary increases; or (d) taking any combination of these actions.

5.

EVIDENCE OF STOCK OWNERSHIP

5.1.Ownership of the Restricted Stock by the Award Recipient shall be reflected by the issuance of stock certificates or by book entry evidence of ownership.  Any stock certificates evidencing the Restricted Stock shall be retained by ISC until the lapse of restrictions under the terms of this Agreement.  ISC shall place a legend, in the form specified in Section 7.3 of the Plan, on any stock certificates and a similar notation of restrictions on any book entry evidence of ownership restricting the transferability of the shares of Restricted Stock.

5.2.Upon the lapse of restrictions on shares of Restricted Stock, ISC shall cause a stock certificate or book entry evidence of ownership without a restrictive legend to be issued with respect to the vested Restricted Stock in the name of the Award Recipient or his or her nominee within 30 days, subject to the other terms and conditions hereof, including any withholding of shares under Section 6 below.  Upon receipt of such stock certificate, the Award Recipient is free to hold or dispose of the shares represented by such certificate, subject to (a) applicable securities laws, (b) ISC’s insider trading policy, and (c) any applicable stock retention policies that ISC may adopt in the future.

6.

TAXES

6.1.Unless an Award Recipient timely makes the election described in Section 6.2, at the time that all or any portion of the Restricted Stock vests, the Award Recipient must deliver to ISC the amount of income tax withholding required by law.  The Award Recipient shall have the right to fully satisfy this tax withholding obligation by requesting ISC to withhold (from the shares the Award Recipient otherwise would receive upon vesting) that number of shares of Common Stock having an aggregate value (as determined under the Plan) equal to the minimum amount required to be withheld; provided, however, that to prevent the issuance of fractional shares and the under-withholding of taxes, the Award Recipient agrees that the number of shares withheld shall be rounded up to the next whole number of shares.  The Committee does not have the right to disapprove of an election by the Award Recipient to have shares withheld in satisfaction of the withholding tax obligation.

6.2.The Award Recipient understands that the Award Recipient (and not the Company) shall be responsible for the Award Recipient’s own tax liability that may arise as a result of the transactions contemplated by this Agreement.  The Award Recipient understands that Section 83 of the Code taxes as ordinary income the Fair Market Value of the Restricted Stock as of the date any restrictions on the shares lapse.  The Award Recipient understands that the Award Recipient may elect to be taxed at the time the Restricted Stock is granted rather than upon vesting by filing an election under Section 83(b) of the Code with the I.R.S. within 30 days from the date of grant.  The form for making this election is available from the Company’s Secretary upon the Award Recipient’s request.

7.

NO CONTRACT OF EMPLOYMENT INTENDED

Nothing in this Agreement shall confer upon the Award Recipient any right to continue in the employment of the Company, or to interfere in any way with the right of the Company to terminate the Award Recipient’s employment relationship with the Company at any time.

8.

BINDING EFFECT

This Agreement shall inure to the benefit of and be binding upon the parties to this agreement and their respective heirs, executors, administrators, legal representatives, and successors.

9.

INCONSISTENT PROVISIONS

The Restricted Stock is subject to the provisions of the Plan as in effect on the date of this Agreement and as it may be amended.  If any provision of this Agreement conflicts with a provision of the Plan, the Plan provision shall control.

10.

ATTORNEYS’ FEES AND EXPENSES

Should any party to this Agreement retain counsel for the purpose of enforcing, or preventing the breach of, any provision of this Agreement, including but not limited to the institution of any action or proceeding in court (a) to enforce any provision of this Agreement, (b) to obtain monetary or liquidated damages for failure to perform under this Agreement, (c) for a declaration of such parties’ rights or obligations with respect to this Agreement, or (d) for any other judicial remedy, then the prevailing party shall be entitled to be reimbursed by the losing party for all costs and expenses incurred thereby, including, but not limited to, attorneys’ fees (including costs of appeal).

11.

GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.

12.

SEVERABILITY

If any term or provision of this Agreement, or the application thereof to any person or circumstance, shall at any time or to any extent be invalid, illegal, or unenforceable in any respect as written, the Award Recipient and ISC intend for any court construing this Agreement to modify or limit such provision so as to render it valid and enforceable to the fullest extent allowed by law.  Any such provision that is not susceptible of such reformation shall be ignored so as to not affect any other term or provision of this Agreement, and the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid, illegal, or unenforceable, shall not be affected thereby and each term and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.

13.

ENTIRE AGREEMENT; MODIFICATION

The Plan and this Agreement contain the entire agreement between the parties with respect to the subject matter contained herein and may not be modified, except as provided in the Plan, as it may be amended from time to time in the manner provided by the Plan, or in this Agreement, as it may be amended from time to time by a written document signed by each of the parties to this Agreement.  Any oral or written agreements, representations, warranties, written inducements, or other communications made prior to the execution of the Agreement shall be void and ineffective for all purposes.

By signature below, the Award Recipient represents that he or she is familiar with the terms and provisions of the Plan, and hereby accepts this Agreement subject to all of those terms and provisions.  The Award Recipient has reviewed the Plan and this Agreement in their entirety and fully understands all provisions of each.  The Award Recipient agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee upon any questions arising under the Plan or this Agreement.

{N2259913.1}

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

INTERNATIONAL SHIPHOLDING CORPORATION

By:

By:           _____________

Award Recipient

EX-21.1

EXHIBIT 21.1

INTERNATIONAL SHIPHOLDING CORPORATION

SUBSIDIARIES OF THE REGISTRANT

AS OF DECEMBER 31, 2010

	Jurisdiction Under
	Which Organized
International Shipholding Corporation (Registrant)	Delaware
Waterman Steamship Corporation	New York
Sulphur Carriers, Inc.	Delaware
Central Gulf Lines, Inc.	Delaware
Enterprise Ship Company, Inc.	Delaware
Material Transfer, Inc.	Delaware
CG Railway, Inc.	Delaware
RTI Logistics, L.L.C. (1)	Louisiana
Terminales Transgolfo, S.A. de C.V(2)	Mexico
Bay Insurance Company Limited	Bermuda
LCI Shipholdings, Inc.	Marshall Islands
Cape Holding, Ltd.	Cayman Islands
Dry Bulk  Cape Holding, Inc. (3)	Panama
Dry Bulk Africa LTD. (3)	British Virgin Islands
Dry Bulk Australia LTD. (3)	British Virgin Islands
Dry Bulk Cedar LTD. (3)	British Virgin Islands
Dry Bulk Fern LTD. (3)	British Virgin Islands
Dry Bulk Oceanis LTD. (3)	British Virgin Islands
Dry Bulk Americas LTD. (3)	British Virgin Islands
Gulf South Shipping Pte. Ltd.	Singapore
Marco Shipping Co. Pte. Ltd.	Singapore
Marco Ocean Pte. Ltd.	Singapore
N. W. Johnsen & Co., Inc.	New York
East Gulf Shipholding, Inc.	Marshall Islands
Resource Carriers, Inc.	Delaware
LMS Shipmanagement, Inc.	Louisiana
LMS Manila, Inc. (4)	Philippines
MPV, Inc.	Marshall Islands
Bulk Shipholding, Inc.	Marshall Islands
Oslo Bulk AS (5)	Oslo, Norway
Belbulk Shipping Pte. Ltd.(5)	Singapore
Oslo Bulk Shipping AS (5)	Oslo, Norway
HAV Ship management AS (5)	Nesttun, Norway
Tony Bulkers Pte. Ltd. (5)	Singapore
(1)            50% owned by CG Railway, Inc.
(2)            49% owned by CG Railway, Inc.
(3)            50% owned by Cape Holding, Ltd.
(4)            40% owned by LMS Shipmanagement, Inc.
(5)           25% owned by Bulk Shipholding, Inc.

All of the subsidiaries listed above are wholly-owned subsidiaries and are included in the consolidated financial statements incorporated by reference herein unless otherwise indicated.

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

(1)   Registration Statement (Form S-3 No. 333-169899) of International Shipholding Corporation, and

(2)   Registration Statement (Form S-8 No. 333-158916) pertaining to the International Shipholding Corporation 2009 Stock Incentive Plan;

of our reports dated March 14, 2011, with respect to the consolidated financial statements and schedule of International Shipholding Corporation and the effectiveness of internal control over financial reporting of International Shipholding Corporation included in this Annual Report (Form 10-K) of International Shipholding Corporation for the year ended December 31, 2010.

/s/ Ernst & Young LLP

New Orleans, Louisiana

March 14, 2011

EX-31.1

EXHIBIT  31.1

CERTIFICATION

I, Niels M. Johnsen, certify that:

1. I have reviewed this annual report on Form 10-K of International Shipholding Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13(a)-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

  c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report change, if any, in the registrant's internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

a) All significant deficiencies and material weaknesses, if any, in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Fraud, if any, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 11, 2011

/s/ Niels M. Johnsen

______________________________

Niels M. Johnsen

Chairman of the Board of Directors and Chief Executive Officer

International Shipholding Corporation

EX-31.2

EXHIBIT  31.2

CERTIFICATION

I, Manuel G. Estrada, certify that:

1. I have reviewed this annual report on Form 10-K of International Shipholding Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13(a)-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) Disclosed in this report change, if any, in the registrant's internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over  financial reporting.

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

a) All significant deficiencies and material weaknesses, if any, in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Fraud, if any, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 11, 2011

/s/ Manuel G. Estrada

______________________________

Manuel G. Estrada

Vice President and Chief Financial Officer

International Shipholding Corporation

EX-32.1

Exhibit 32.1

Certification of CEO Pursuant to 18 U.S.C. Section 1350

(Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Annual Report on Form 10-K of International Shipholding Corporation (the “Company”) for the period ending December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Niels M. Johnsen, as Chairman and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  March 11, 2011

/s/ Niels M. Johnsen

                                                                                                  _______________________________

Niels M. Johnsen

Chairman of the Board of Directors and

Chief Executive Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

EX-32.2

Exhibit 32.2

Certification of CFO Pursuant to 18 U.S.C. Section 1350

(Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Annual Report on Form 10-K of International Shipholding Corporation (the “Company”) for the period ending December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Manuel G. Estrada, as Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 11, 2011

/s/ Manuel G. Estrada

                                                                                       ____________________________________

                    Manuel G. Estrada

Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.