<PAGE>   1
                                                                      4.01.01(a)




                   ASSIGNMENT, ASSUMPTION AND SUPPLEMENT NO. 2

                                     TO THE

                                 TRUST INDENTURE


                             DATED NOVEMBER 25, 1980

                                     BETWEEN

                      STATE STREET BANK AND TRUST COMPANY,
                  NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS
                     OWNER TRUSTEE UNDER THE TRUST AGREEMENT
                 DATED AS OF NOVEMBER 13, 1980, AS AMENDED, FOR
               THE BENEFIT OF THE OWNER PARTICIPANT NAMED THEREIN,
                                                      ASSIGNING SHIPOWNER


                           FRANCES OWNER CORPORATION,
                                                       ASSUMING SHIPOWNER

                                       AND


                      U.S. BANK TRUST NATIONAL ASSOCIATION,
                                                        INDENTURE TRUSTEE



                               SEPTEMBER 29, 1999



                               ITB FRANCES HAMMER
                      (TO BE RENAMED SMT CHEMICAL EXPLORER)




<PAGE>   2
                             ASSUMPTION, ASSIGNMENT,
                              AND SUPPLEMENT NO. 2
                               TO TRUST INDENTURE

                               ITB FRANCES HAMMER
                      (TO BE RENAMED SMT CHEMICAL EXPLORER)

         THIS ASSUMPTION, ASSIGNMENT, AND SUPPLEMENT NO. 2 (this "Agreement") to
the Trust Indenture dated November 25, 1980, as supplemented by Supplement No. 1
thereto dated October 18, 1991 (the "Original Indenture", and, as supplemented
hereby, the "Indenture"), among (i) STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, not in its individual capacity but solely as owner
trustee under the Trust Agreement dated as of November 13, 1980, as amended, for
the benefit of the owner participant named therein (the "Assigning Shipowner"),
FRANCES OWNER CORPORATION, a Delaware corporation (the "Assuming Shipowner"),
and U.S. BANK TRUST NATIONAL ASSOCIATION (successor trustee to Bankers Trust
Company of California National Association), a national banking association (the
"Indenture Trustee"), is made on _____________ _____, 1999.

                                   WITNESSETH:

         WHEREAS, the Assigning Shipowner has heretofore entered into the
Original Indenture and issued its Obligations for the purpose of financing a
portion of the cost of construction of the Vessel, and the Obligations are
guaranteed by the United States of America, represented by the Secretary of
Transportation, acting by and through the Maritime Administrator, successor to
the Secretary of Commerce, acting by and through the Assistant Secretary of
Commerce for Maritime Affairs (the "Secretary");

         WHEREAS, the Secretary has guaranteed, under Title XI of the Merchant
Marine Act, 1936, as amended (the "Act"), all unpaid interest on, and the unpaid
balance of the principal of, the Bonds as provided in an Authorization Agreement
dated November 25, 1980, Contract No. MA-9891 (the "Original Authorization
Agreement");

         WHEREAS, the Assigning Shipowner is selling all of its right, title,
and interest in and to the Vessel to the Assuming Shipowner, on the terms and
conditions, among other things, that the (x) Assuming Shipowner shall assume,
subject to the terms hereof, all obligations and liabilities under the Original
Indenture and the Outstanding Obligations, and (y) the Assigning Shipowner be
released from such obligations and liabilities;

         WHEREAS, subject to the terms hereof, the Assuming Shipowner is willing
to assume all obligations and liabilities of the Assigning Shipowner under the
Original Indenture and the Obligations in consideration of the transfer of all
right, title and interest in and to the Vessel;

<PAGE>   3

         WHEREAS, Section 10.01 of Exhibit 1 to the Original Indenture provides
that the Assigning Shipowner and the Indenture Trustee may, without the consent
of or notice to any of the Obligees, enter into a Supplemental Indenture to
evidence the succession pursuant to Article VIII of said Exhibit 1 of another
corporation or entity to obligations and liabilities of the Assigning Shipowner
under the Original Indenture, provided that such Supplemental Indenture does not
adversely affect the interests of the Obligees;

         WHEREAS, pursuant to said Section 10.01 the Assigning Shipowner and the
Indenture Trustee desire to enter into this agreement for the purpose of
supplementing and carrying out the terms of Article VIII of Exhibit 1 to the
Original Indenture to set forth the provisions necessary for the assumption and
release referred to above;

         WHEREAS, the Secretary is willing to consent to this Agreement pursuant
to Section 10.05 of Exhibit 1 to the Original Indenture;

         WHEREAS, all requirements of law and of the Original Indenture and of
the respective Certificates of Incorporation and By-laws of the Assigning
Shipowner and the Assuming Shipowner have been fully complied with, and all
other acts and things necessary to make this instrument a valid, binding and
legal instrument have been done and performed.

         NOW THEREFORE, in consideration of the premises and the mutual and
dependent covenants, promises and agreements hereinafter set forth, the parties
agree as follows:


                                    ARTICLE I

                            ASSIGNMENT AND ASSUMPTION

         SECTION 1. The Assigning Shipowner hereby transfers, assigns, sets
over, confirms and conveys to the Assuming Shipowner, without limitation, all of
its right, title, and interest in, and all of its duties and obligations under
the Original Indenture, and the Assuming Shipowner hereby accepts such transfer,
assignment and conveyance, without limitation, subject to the terms and
conditions of the Original Indenture and accepts and assumes all of the right,
title, interest, duties and obligations of the Assigning Shipowner under the
Original Indenture with the same force and effect as if the Assuming Shipowner
had been named as Shipowner therein, including without limitation, the
obligation to pay any amounts which, but for this Agreement, would have been
payable after the Effective Date by the Assigning Shipowner under the Original
Indenture and the Obligations. As of the Effective Date, the Assigning Shipowner
shall have no further obligations under the Indenture.



                                       2
<PAGE>   4

         SECTION 2. From and after the Effective Date, the term "Shipowner" as
used in the Original Indenture and the Obligations or any other agreement or
instrument related to the transactions contemplated thereby shall mean and refer
to the Assuming Shipowner and its successors and assigns.

         SECTION 3. The transfer, assignment, conveyance, acceptance, assumption
and release provided in Section 1 above shall become effective on the Effective
Date and shall be of no force or effect prior thereto. Notwithstanding any
provision of this Agreement to the contrary (i) the rights of the respective
parties under the Original Indenture which shall have unconditionally accrued at
any time up to and including the Effective Date shall survive the Effective Date
and (ii) neither the assignment, assumption, and release effected hereby nor any
proceedings arising from the Original Indenture shall (x) relieve any party
thereto from the observance or performance of any obligation required to be
performed on or prior to the Effective Date, or from liability for any acts or
omissions of such party which were performed or required to be performed on or
prior to the Effective Date, or (y) serve as a defense against any claim for
breach of or failure to perform any such obligation, or against any claim for
indemnification under the Indenture arising out of any matter occurring on or
prior to the Effective Date.

         SECTION 5. The Original Indenture and the Original Authorization
Agreement and the terms thereof are and shall be deemed to be hereby amended in
all respects to conform with the provisions of this Agreement, and all
provisions thereof inconsistent with the provisions hereof shall be read and
interpreted so as to conform to the provisions hereof. The rights and
obligations of all Persons respecting the Obligations shall continue to be
governed by the Original Indenture, as amended hereby.


                                   ARTICLE II

                                 THE OBLIGATIONS

         SECTION 1. The Assigning Shipowner hereby certifies to the Indenture
Trustee and the Assuming Shipowner that the total principal amount of
Outstanding Obligations on the date hereof is $10,969,000. The Indenture Trustee
and the Assuming Shipowner shall be entitled to rely conclusively on such
certification.

         SECTION 2. (a) This Section 2 is entered into pursuant to Section 10.01
of Exhibit 1 to the Original Indenture as a Supplemental Indenture for the
purpose of supplementing and carrying out the provisions of Article VIII of
Exhibit 1 to the Original Indenture and to provide for (i) the assumption by the
Assuming Shipowner of the payment of the principal of, and interest (and
premium, if any) on, the Outstanding Obligations in accordance with the terms of
the Obligations and of the Indenture and of the performance of the agreements of
the Assigning Shipowner in the

                                       3
<PAGE>   5
Original Indenture and (ii) the release of the Assigning Shipowner as of the
Effective Date from all such obligations with respect to the Obligations up to
and including the Effective Date.

         (b) The Indenture Trustee shall (i) place a notation in the Obligation
Register that payment of the Outstanding Obligations has been assumed on the
date hereof by the Assuming Shipowner and (ii) within 10 days of the date
hereof, notify the Holders of such assumption.

         (c) When at any time after the Effective Date a Holder of an
Outstanding Obligation shall surrender such Obligation to the Indenture Trustee
for any purpose other than payment in full of the principal thereof in
accordance with Sections 2.09, 2.10, 2.12 and 3.09(b) of Exhibit 1 to the
Indenture (and such Obligation has not previously been cancelled and replaced
pursuant to the provisions of said sections and this Section 2.02(c)), the
Indenture Trustee shall cancel such Obligation and issue to the Holder or his
assigns in exchange therefor a new Obligation showing the Assuming Shipowner as
the Shipowner.


                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

      SECTION 1. The Assigning Shipowner hereby represents and warrants in its
individual capacity, and in its capacity as owner trustee under the Trust
Agreement, that:

                  (a) The Assigning Shipowner is a trust company duly organized,
         validly existing and in good standing under the laws of the
         Commonwealth of Massachusetts, with full power, authority and legal
         right to execute and deliver this Agreement and to perform its
         obligations hereunder, and this Agreement has been duly authorized,
         executed and delivered by the Assigning Shipowner and, assuming the due
         authorization, execution and delivery by the other parties hereto,
         constitutes the legal, valid and binding obligation of the Assigning
         Shipowner enforceable in accordance with its terms.

                  (b) The Assigning Shipowner has all necessary approvals,
         authorizations, licenses and permits, under the laws of the State of
         Connecticut, the Commonwealth of Massachusetts, and the United States
         regulating banking or trust powers, to enter into and perform its
         obligations under this Agreement. Other than the approvals of the
         Secretary and the Board and the instruction of the Owner Participant,
         no consent, authorization or approval of, or filing with, any federal,
         state, municipal or other governmental department, commission, board,
         bureau, agency or instrumentality, domestic or foreign, is or has been
         required in connection with any of the transactions contemplated hereby
         in respect of it.


                                       4
<PAGE>   6
                  (c) The execution and delivery of this Agreement, and the
         performance by the Assigning Shipowner of its obligations under this
         Agreement will not result in a violation of, or be in conflict with, or
         constitute a default or any event which would with notice or lapse of
         time or both become a default under, any provision of the charter
         documents or the by-laws of the Assigning Shipowner, or a default under
         any indenture, contract, agreement or other instrument to which the
         Assigning Shipowner is a party or by which it or its property is bound,
         and the execution and delivery of this Agreement and the performance by
         the Assigning Shipowner of its obligations under this Agreement will
         not result in a violation of any statute, rule or regulation applicable
         to the Assigning Shipowner or its property or by which it or its
         property may be bound and will not result in a violation of or be in
         conflict with, or result in a breach of, any term or provision of any
         judgment, order, decree or award of any court, arbitrator or
         governmental or public instrumentality binding upon the Assigning
         Shipowner or its property.

                  (d) The Assigning Shipowner is not in default in any material
         way, and no condition exists which with notice or lapse of time or both
         will constitute a material default, under the Original Indenture or any
         indenture, agreement, instrument or evidence of indebtedness to which
         it is a party or by which it is bound, and it is not in default in any
         material respect under any judgment, order, writ, injunction, decree,
         rule or regulation of any court or governmental department, commission,
         board, agency or instrumentality, domestic or foreign.

                  (e) There is no action, suit, proceeding, inquiry or
         investigation, at law or in equity, or before or by any court, public
         board or body, pending against the Assigning Shipowner or of which it
         has otherwise received official notice or which to its knowledge is
         threatened against it wherein an unfavorable decision, ruling or
         finding would materially adversely affect its ability to perform its
         obligations under this Agreement.

                  (f) The location of the office at which the Assigning
         Shipowner keeps or will keep its records concerning this Agreement is:
         Goodwin Square, 23rd Floor, 225 Asylum Street, Hartford, CT 06103.

                  (g) The Assigning Shipowner is a "citizen of the United
         States" within the meaning of Section 2 of the Shipping Act, 1916, as
         amended, qualified to engage in the coastwise trade and has been such a
         citizen at all relevant times qualified to operate the Vessel in the
         trades in which the Vessel has operated from time to time.

                  (h) The Assigning Shipowner is the sole legal owner of the
         Vessel and the Vessel is duly and validly documented in the name of the
         Assigning Shipowner.


                                       5
<PAGE>   7
                  (i) The Original Indenture and the Obligations are the only
         agreements, undertakings, understandings, or arrangements concerning
         the payment of the Outstanding Obligations, and there are no other
         agreements, undertakings, understandings, or arrangements that provide
         for the payment of additional consideration to the Holder of an
         Obligation or otherwise relating to the Obligations.

         SECTION 2. The Assuming Shipowner hereby represents and warrants that:

                  (a) The Assuming Shipowner is a corporation duly organized,
         validly existing and in good standing under the laws of the State of
         Delaware, and has full power, authority and legal right to execute and
         deliver this Agreement and to perform its obligations hereunder and
         under the Indenture, and this Agreement has been duly authorized,
         executed and delivered by the Assuming Shipowner and, assuming the due
         authorization, execution and delivery by the other parties hereto,
         constitutes the legal, valid and binding obligation of the Assuming
         Shipowner enforceable in accordance with its terms.

                  (b) Other than the approvals of the Secretary and the Board
         and the instruction of the Owner Participant, no consent, authorization
         or approval of, or filing with, any federal, state, municipal or other
         governmental department, commission, board, bureau, agency or
         instrumentality, domestic or foreign, is or has been required in
         connection with any of the transactions contemplated hereby in respect
         of it.

                  (c) The execution and delivery of this Agreement and the
         performance by the Assuming Shipowner of its obligations under this
         Agreement will not result in a violation of, or be in conflict with, or
         constitute a default or any event which would with notice or lapse of
         time or both become a default under, any provision of the certificate
         of incorporation or the by-laws of the Assuming Shipowner, or a default
         under any mortgage, indenture, contract, agreement or other instrument
         to which the Assuming Shipowner is a party or by which it or its
         property is bound, and the execution and delivery of this Agreement and
         the performance by the Assuming Shipowner of its obligations under this
         Agreement will not result in a violation of any statute, rule or
         regulation applicable to the Assuming Shipowner or its property or by
         which it or its property may be bound and will not result in a
         violation of or be in conflict with, or result in a breach of, any term
         or provision of any judgment, order, decree or award of any court,
         arbitrator or governmental or public instrumentality binding upon the
         Assuming Shipowner or its property.

                  (d) The Assuming Shipowner is not in default in any material
         way, and no condition exists which with notice or lapse of time or both
         will constitute a material default, under any mortgage, loan agreement,
         indenture, evidence of indebtedness or other instrument to which it is
         a party or by which it is bound, and it is not in default in

                                       6
<PAGE>   8
         any material respect under any judgment, order, writ, injunction,
         decree, rule or regulation of any court or governmental department,
         commission, board, agency or instrumentality, domestic or foreign.

                  (e) There is no action, suit, proceeding, inquiry or
         investigation, at law or in equity, or before or by any court, public
         board or body, pending against the Assuming Shipowner or of which it
         has otherwise received official notice or which to its knowledge is
         threatened against it wherein an unfavorable decision, ruling or
         finding would materially adversely affect its ability to perform its
         obligations under this Agreement (including the operation of the
         Vessel).

                  (f) The location of the office at which the Assuming Shipowner
         keeps or will keep its records concerning this Agreement is: 1200
         Harbor Boulevard, 9th Floor, C-901, Weehawken, New Jersey 07087,
         Attention: General Counsel.

                  (g) The Assuming Shipowner is a "citizen of the United States"
         within the meaning of Section 2 of the Shipping Act, 1916, as amended,
         qualified to engage in the coastwise trade and covenants that it shall
         remain such a citizen for operation in the trades in which the Vessel
         is operated from time to time.


                                   ARTICLE IV

                      AMENDMENTS TO THE ORIGINAL INDENTURE

     SECTION 1. Article Fifth (a) of the Special Provisions of the Original
Indenture is amended by changing the addresses for the giving of notice to the
Shipowner and Indenture Trustee to read:

         The Shipowner as:           FRANCES OWNER CORPORATION
                                     1200 Harbor Boulevard, 9th Floor, C-901
                                     Weehawken, New Jersey 07087
                                     Attention: General Counsel.

         The Indenture Trustee as:   U.S. BANK TRUST NATIONAL ASSOCIATION
                                     One California Street, 4th Floor
                                     San Francisco, CA 94111
                                     Attention: Corporate Trust
                                     Reference: Vessel SMT CHEMICAL EXPLORER
                                         (formerly ITB FRANCES HAMMER)

                                       7
<PAGE>   9
         SECTION 2. Schedule A to the Original Indenture is amended by changing
the definitions of "Indenture Trustee" and "Shipowner" to conform to this
Agreement.

                                       8
<PAGE>   10

         SECTION 3. Article Fifth (r) of the Special Provisions of the Original
Indenture is hereby deleted in its entirety, and Article Fifth (s) is hereby
amended by re-lettering it as Article Fifth (r).


                                    ARTICLE V

                                     GENERAL

         SECTION 1. Except as otherwise expressly provided herein, all terms
which are defined in the Original Indenture, including Schedule A thereto, when
used herein, shall have the meanings specified in said Original Indenture,
including Schedule A thereto, unless the context otherwise requires.

         SECTION 2. This Agreement shall be construed in connection with and as
part of the Original Indenture.

         SECTION 3. The recitals and statements contained in this Agreement
shall be taken as the recitals and statements of the Assigning Shipowner or the
Assuming Shipowner, as the case may be, and the Indenture Trustee assumes no
responsibility for the correctness of the same.

         SECTION 4. This Agreement may be executed in any number of
counterparts. All such counterparts shall be deemed to be originals and shall
together constitute but one and the same instrument.

         SECTION 5. The Original Indenture, as amended and supplemented by this
Agreement, is in all respects confirmed and shall, as so amended and
supplemented, remain in full force and effect.

         SECTION 6. From and after the Effective Date, the Indenture, this
Agreement and the rights and obligations of the parties hereto, shall in all
respects be governed by, construed and enforced in accordance with the federal
laws of the United States of America, but if they are inapplicable, then in
accordance with the laws of the State of New York, including Section 5-1401 of
the General Obligations Law of the State of New York.

         SECTION 7. If any term of the Indenture, or any application thereof
shall be invalid or unenforceable, the remainder of the Indenture and any other
application of such term shall not be affected thereby.



                                       9
<PAGE>   11
                                   ARTICLE VI

                                   GUARANTEES

         The assumption of all obligations with respect to the Outstanding
Obligations by the Assuming Shipowner, and the release therefrom of the
Assigning Shipowner, pursuant to the terms of this Agreement shall not discharge
or in any manner affect the obligations of the United States to honor the
Guarantees on all of the Outstanding Obligations, after demand duly made in
accordance with the provisions of the Indenture.



                                       10
<PAGE>   12




         IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties hereto to be effective as of the day and year first above
written.

                                            STATE  STREET BANK AND TRUST
                                                   COMPANY, not in its
                                                   individual capacity but
                                                   solely as owner trustee under
                                                   the Trust Agreement dated as
                                                   of November 13, 1980, as
                                                   amended, for the benefit of
                                                   the owner participant named
                                                   therein,

                                                        Assigning Shipowner


                                      By:  ------------------------------------
 Attest:                              Name:  ----------------------------------
                                      Title: ----------------------------------

------------------------------------

<PAGE>   13



COUNTY OF _________________         )
                                    )  ss:
STATE OF ___________________        )


         On this ----- day of -------------_, 1999, before me personally
appeared------------------------, to me known, who being by me duly sworn, did
depose and say that he is -----------------------------_ of State Street Bank
and Trust Company, the Massachusetts trust company which is described in and
executed the instrument annexed hereto, and that he signed the instrument
annexed hereto by order of the Board of Directors of the said trust company and
acknowledged the instrument annexed hereto to be the free act and deed of the
said trust company.

         In testimony whereof, I have hereunto set my hand and seal this------
day of--------------------, 1999.




                                            ------------------------------------
                                                       Notary Public

(Notarial Stamp and Seal)

<PAGE>   14
                                       FRANCES OWNER CORPORATION,
                                                          Assuming Shipowner


                                         By: ---------------------------------
 Attest:                                 Name: -------------------------------
                                         Title:--------------------------------
-----------------------

<PAGE>   15




WASHINGTON                          )
                                    )  ss:
DISTRICT OF COLUMBIA                )

         On this ------day of ----------------, 1999, before me personally
appeared------------------------, to me known, who being by me duly sworn, did
depose and say that he resides at----------------------------------; that he is
the----------------------- of Frances Owner Corporation; that he knows the seal
of said corporation; that the seal affixed to said instrument is such
corporation's seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.

         In testimony whereof, I have hereunto set my hand and seal this _____
day of--------------------, 1999.

                                           ------------------------------------
                                                         Notary Public

(Notarial Stamp and Seal)

<PAGE>   16




                              U.S. BANK TRUST
                              NATIONAL ASSOCIATION,
                                                           Indenture Trustee

                                                By:  --------------------------
                                                Name:--------------------------
                                                Title:-------------------------

<PAGE>   17
ACKNOWLEDGEMENT


COUNTY OF ------------)
                      )  ss:
STATE OF CALIFORNIA   )

         I, the undersigned, a Notary Public in and for the County of
--------------, do hereby certify that ------------------------------ of
----------------------------, personally appeared before me in said County, the
aforesaid officer being personally well known to me as the person who executed
the instrument annexed hereto, and acknowledged the same to be his act and deed
as said officer.

         Given my hand and seal this ------ day of ---------------, 1999.

                                                  -----------------------
                                                      Notary Public

(Notarial Stamp and Seal)


My Commission expires:-------------------

<PAGE>   18
                                     CONSENT


         The United States of America, represented by the Secretary of
Transportation, acting by and through the Maritime Administrator, hereby (i)
approves the form of the Agreement, (ii) consents to the execution and delivery
by STATE STREET BANK AND TRUST COMPANY, not in its individual capacity but
solely as owner trustee under the Trust Agreement dated as of November 13, 1980,
as amended, for the benefit of the owner participant named therein, FRANCES
OWNER CORPORATION, and U.S. BANK TRUST NATIONAL ASSOCIATION, of the Agreement,
and (iii) affirms that the Guarantees will remain in full force and effect
following execution of the Agreement.


                                         UNITED STATES OF AMERICA
                                         SECRETARY OF TRANSPORTATION
                                         Maritime Administrator


                                         By:  --------------------------------
 Attest:                                 Name:--------------------------------
                                         Assistant Secretary
                                         Maritime Administration
-------------------------

<PAGE>   19
                                                                     4.01.01(b)
===============================================================================

                   ASSIGNMENT, ASSUMPTION AND SUPPLEMENT NO. 2

                                     TO THE

                                 TRUST INDENTURE


                             Dated November 25, 1980

                                     between

                      STATE STREET BANK AND TRUST COMPANY,
                  NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS
                     OWNER TRUSTEE UNDER THE TRUST AGREEMENT
                 DATED AS OF NOVEMBER 13, 1980, AS AMENDED, FOR
               THE BENEFIT OF THE OWNER PARTICIPANT NAMED THEREIN,
                                                             ASSIGNING SHIPOWNER


                            JULIUS OWNER CORPORATION,
                                                              ASSUMING SHIPOWNER

                                       and


                      U.S. BANK TRUST NATIONAL ASSOCIATION,
                                                               INDENTURE TRUSTEE



                               SEPTEMBER 29, 1999



                                ITB JULIUS HAMMER
                       (TO BE RENAMED SMT CHEMICAL TRADER)

===============================================================================


<PAGE>   20
                             ASSUMPTION, ASSIGNMENT,
                              AND SUPPLEMENT NO. 2
                               TO TRUST INDENTURE

                                ITB JULIUS HAMMER
                       (TO BE RENAMED SMT CHEMICAL TRADER)

         THIS ASSUMPTION, ASSIGNMENT, AND SUPPLEMENT NO. 2 (this "Agreement") to
the Trust Indenture dated November 25, 1980, as supplemented by Supplement No. 1
thereto dated October 18, 1991 (the "Original Indenture", and, as supplemented
hereby, the "Indenture"), among (i) STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, not in its individual capacity but solely as owner
trustee under the Trust Agreement dated as of November 13, 1980, as amended, for
the benefit of the owner participant named therein (the "Assigning Shipowner"),
JULIUS OWNER CORPORATION, a Delaware corporation (the "Assuming Shipowner"), and
U.S. BANK TRUST NATIONAL ASSOCIATION (successor trustee to Bankers Trust Company
of California National Association), a national banking association (the
"Indenture Trustee"), is made on _____________ _____, 1999.

                                   WITNESSETH:

         WHEREAS, the Assigning Shipowner has heretofore entered into the
Original Indenture and issued its Obligations for the purpose of financing a
portion of the cost of construction of the Vessel, and the Obligations are
guaranteed by the United States of America, represented by the Secretary of
Transportation, acting by and through the Maritime Administrator, successor to
the Secretary of Commerce, acting by and through the Assistant Secretary of
Commerce for Maritime Affairs (the "Secretary");

         WHEREAS, the Secretary has guaranteed, under Title XI of the Merchant
Marine Act, 1936, as amended (the "Act"), all unpaid interest on, and the unpaid
balance of the principal of, the Bonds as provided in an Authorization Agreement
dated November 25, 1980, Contract No. MA-9879 (the "Original Authorization
Agreement");

         WHEREAS, the Assigning Shipowner is selling all of its right, title,
and interest in and to the Vessel to the Assuming Shipowner, on the terms and
conditions, among other things, that the (x) Assuming Shipowner shall assume,
subject to the terms hereof, all obligations and liabilities under the Original
Indenture and the Outstanding Obligations, and (y) the Assigning Shipowner be
released from such obligations and liabilities;

         WHEREAS, subject to the terms hereof, the Assuming Shipowner is willing
to assume all obligations and liabilities of the Assigning Shipowner under the
Original Indenture and the Obligations in consideration of the transfer of all
right, title and interest in and to the Vessel;
<PAGE>   21

         WHEREAS, Section 10.01 of Exhibit 1 to the Original Indenture provides
that the Assigning Shipowner and the Indenture Trustee may, without the consent
of or notice to any of the Obligees, enter into a Supplemental Indenture to
evidence the succession pursuant to Article VIII of said Exhibit 1 of another
corporation or entity to obligations and liabilities of the Assigning Shipowner
under the Original Indenture, provided that such Supplemental Indenture does not
adversely affect the interests of the Obligees;

         WHEREAS, pursuant to said Section 10.01 the Assigning Shipowner and the
Indenture Trustee desire to enter into this agreement for the purpose of
supplementing and carrying out the terms of Article VIII of Exhibit 1 to the
Original Indenture to set forth the provisions necessary for the assumption and
release referred to above;

         WHEREAS, the Secretary is willing to consent to this Agreement pursuant
to Section 10.05 of Exhibit 1 to the Original Indenture;

         WHEREAS, all requirements of law and of the Original Indenture and of
the respective Certificates of Incorporation and By-laws of the Assigning
Shipowner and the Assuming Shipowner have been fully complied with, and all
other acts and things necessary to make this instrument a valid, binding and
legal instrument have been done and performed.

         NOW THEREFORE, in consideration of the premises and the mutual and
dependent covenants, promises and agreements hereinafter set forth, the parties
agree as follows:

                                    ARTICLE I

                            ASSIGNMENT AND ASSUMPTION

         SECTION 1. The Assigning Shipowner hereby transfers, assigns, sets
over, confirms and conveys to the Assuming Shipowner, without limitation, all of
its right, title, and interest in, and all of its duties and obligations under
the Original Indenture, and the Assuming Shipowner hereby accepts such transfer,
assignment and conveyance, without limitation, subject to the terms and
conditions of the Original Indenture and accepts and assumes all of the right,
title, interest, duties and obligations of the Assigning Shipowner under the
Original Indenture with the same force and effect as if the Assuming Shipowner
had been named as Shipowner therein, including without limitation, the
obligation to pay any amounts which, but for this Agreement, would have been
payable after the Effective Date by the Assigning Shipowner under the Original
Indenture and the Obligations. As of the Effective Date, the Assigning Shipowner
shall have no further obligations under the Indenture.
                                       2
<PAGE>   22

         SECTION 2. From and after the Effective Date, the term "Shipowner" as
used in the Original Indenture and the Obligations or any other agreement or
instrument related to the transactions contemplated thereby shall mean and refer
to the Assuming Shipowner and its successors and assigns.

         SECTION 3. The transfer, assignment, conveyance, acceptance, assumption
and release provided in Section 1 above shall become effective on the Effective
Date and shall be of no force or effect prior thereto. Notwithstanding any
provision of this Agreement to the contrary (i) the rights of the respective
parties under the Original Indenture which shall have unconditionally accrued at
any time up to and including the Effective Date shall survive the Effective Date
and (ii) neither the assignment, assumption, and release effected hereby nor any
proceedings arising from the Original Indenture shall (x) relieve any party
thereto from the observance or performance of any obligation required to be
performed on or prior to the Effective Date, or from liability for any acts or
omissions of such party which were performed or required to be performed on or
prior to the Effective Date, or (y) serve as a defense against any claim for
breach of or failure to perform any such obligation, or against any claim for
indemnification under the Indenture arising out of any matter occurring on or
prior to the Effective Date.

         SECTION 4. The Original Indenture and the Original Authorization
Agreement and the terms thereof are and shall be deemed to be hereby amended in
all respects to conform with the provisions of this Agreement, and all
provisions thereof inconsistent with the provisions hereof shall be read and
interpreted so as to conform to the provisions hereof. The rights and
obligations of all Persons respecting the Obligations shall continue to be
governed by the Original Indenture, as amended hereby.


                                   ARTICLE II

                                 THE OBLIGATIONS

         SECTION 1. The Assigning Shipowner hereby certifies to the Indenture
Trustee and the Assuming Shipowner that the total principal amount of
Outstanding Obligations on the date hereof is $10,401,000. The Indenture Trustee
and the Assuming Shipowner shall be entitled to rely conclusively on such
certification.

         SECTION 2. (a) This Section 2 is entered into pursuant to Section 10.01
of Exhibit 1 to the Original Indenture as a Supplemental Indenture for the
purpose of supplementing and carrying out the provisions of Article VIII of
Exhibit 1 to the Original Indenture and to provide for (i) the assumption by the
Assuming Shipowner of the payment of the principal of, and interest (and
premium, if any) on, the Outstanding Obligations in accordance with the terms of
the Obligations and of the Indenture and of the performance of the agreements of
the Assigning Shipowner in the

                                       3
<PAGE>   23
Original Indenture and (ii) the release of the Assigning Shipowner as of the
Effective Date from all such obligations with respect to the Obligations up to
and including the Effective Date.

         (b) The Indenture Trustee shall (i) place a notation in the Obligation
Register that payment of the Outstanding Obligations has been assumed on the
date hereof by the Assuming Shipowner and (ii) within 10 days of the date
hereof, notify the Holders of such assumption.

         (c) When at any time after the Effective Date a Holder of an
Outstanding Obligation shall surrender such Obligation to the Indenture Trustee
for any purpose other than payment in full of the principal thereof in
accordance with Sections 2.09, 2.10, 2.12 and 3.09(b) of Exhibit 1 to the
Indenture (and such Obligation has not previously been cancelled and replaced
pursuant to the provisions of said sections and this Section 2.02(c)), the
Indenture Trustee shall cancel such Obligation and issue to the Holder or his
assigns in exchange therefor a new Obligation showing the Assuming Shipowner as
the Shipowner.


                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

         SECTION 1. The Assigning Shipowner hereby represents and warrants in
its individual capacity, and in its capacity as owner trustee under the Trust
Agreement, that:

                  (a) The Assigning Shipowner is a trust company duly organized,
         validly existing and in good standing under the laws of the
         Commonwealth of Massachusetts, with full power, authority and legal
         right to execute and deliver this Agreement and to perform its
         obligations hereunder, and this Agreement has been duly authorized,
         executed and delivered by the Assigning Shipowner and, assuming the due
         authorization, execution and delivery by the other parties hereto,
         constitutes the legal, valid and binding obligation of the Assigning
         Shipowner enforceable in accordance with its terms.

                  (b) The Assigning Shipowner has all necessary approvals,
         authorizations, licenses and permits, under the laws of the State of
         Connecticut, the Commonwealth of Massachusetts, and the United States
         regulating banking or trust powers, to enter into and perform its
         obligations under this Agreement. Other than the approvals of the
         Secretary and the Board and the instruction of the Owner Participant,
         no consent, authorization or approval of, or filing with, any federal,
         state, municipal or other governmental department, commission, board,
         bureau, agency or instrumentality, domestic or foreign, is or has been
         required in connection with any of the transactions contemplated hereby
         in respect of it.

                                       4
<PAGE>   24
                  (c) The execution and delivery of this Agreement, and the
         performance by the Assigning Shipowner of its obligations under this
         Agreement will not result in a violation of, or be in conflict with, or
         constitute a default or any event which would with notice or lapse of
         time or both become a default under, any provision of the charter
         documents or the by-laws of the Assigning Shipowner, or a default under
         any indenture, contract, agreement or other instrument to which the
         Assigning Shipowner is a party or by which it or its property is bound,
         and the execution and delivery of this Agreement and the performance by
         the Assigning Shipowner of its obligations under this Agreement will
         not result in a violation of any statute, rule or regulation applicable
         to the Assigning Shipowner or its property or by which it or its
         property may be bound and will not result in a violation of or be in
         conflict with, or result in a breach of, any term or provision of any
         judgment, order, decree or award of any court, arbitrator or
         governmental or public instrumentality binding upon the Assigning
         Shipowner or its property.

                  (d) The Assigning Shipowner is not in default in any material
         way, and no condition exists which with notice or lapse of time or both
         will constitute a material default, under the Original Indenture or any
         indenture, agreement, instrument or evidence of indebtedness to which
         it is a party or by which it is bound, and it is not in default in any
         material respect under any judgment, order, writ, injunction, decree,
         rule or regulation of any court or governmental department, commission,
         board, agency or instrumentality, domestic or foreign.

                  (e) There is no action, suit, proceeding, inquiry or
         investigation, at law or in equity, or before or by any court, public
         board or body, pending against the Assigning Shipowner or of which it
         has otherwise received official notice or which to its knowledge is
         threatened against it wherein an unfavorable decision, ruling or
         finding would materially adversely affect its ability to perform its
         obligations under this Agreement.

                  (f) The location of the office at which the Assigning
         Shipowner keeps or will keep its records concerning this Agreement is:
         Goodwin Square, 23rd Floor, 225 Asylum Street, Hartford, CT 06103.

                  (g) The Assigning Shipowner is a "citizen of the United
         States" within the meaning of Section 2 of the Shipping Act, 1916, as
         amended, qualified to engage in the coastwise trade and has been such a
         citizen at all relevant times qualified to operate the Vessel in the
         trades in which the Vessel has operated from time to time.

                  (h) The Assigning Shipowner is the sole legal owner of the
         Vessel and the Vessel is duly and validly documented in the name of the
         Assigning Shipowner.

         (i) The Original Indenture and the Obligations are the only agreements,
         undertakings, understandings, or arrangements concerning the payment of
         the Outstanding Obligations,


                                      5
<PAGE>   25

and there are no other agreements, undertakings, understandings, or arrangements
that


                                       6
<PAGE>   26
         provide for the payment of additional consideration to the Holder of an
         Obligation or otherwise relating to the Obligations.

         SECTION 2. The Assuming Shipowner hereby represents and warrants that:

                  (a) The Assuming Shipowner is a corporation duly organized,
         validly existing and in good standing under the laws of the State of
         Delaware, and has full power, authority and legal right to execute and
         deliver this Agreement and to perform its obligations hereunder and
         under the Indenture, and this Agreement has been duly authorized,
         executed and delivered by the Assuming Shipowner and, assuming the due
         authorization, execution and delivery by the other parties hereto,
         constitutes the legal, valid and binding obligation of the Assuming
         Shipowner enforceable in accordance with its terms.

                  (b) Other than the approvals of the Secretary and the Board
         and the instruction of the Owner Participant, no consent, authorization
         or approval of, or filing with, any federal, state, municipal or other
         governmental department, commission, board, bureau, agency or
         instrumentality, domestic or foreign, is or has been required in
         connection with any of the transactions contemplated hereby in respect
         of it.

                  (c) The execution and delivery of this Agreement and the
         performance by the Assuming Shipowner of its obligations under this
         Agreement will not result in a violation of, or be in conflict with, or
         constitute a default or any event which would with notice or lapse of
         time or both become a default under, any provision of the certificate
         of incorporation or the by-laws of the Assuming Shipowner, or a default
         under any mortgage, indenture, contract, agreement or other instrument
         to which the Assuming Shipowner is a party or by which it or its
         property is bound, and the execution and delivery of this Agreement and
         the performance by the Assuming Shipowner of its obligations under this
         Agreement will not result in a violation of any statute, rule or
         regulation applicable to the Assuming Shipowner or its property or by
         which it or its property may be bound and will not result in a
         violation of or be in conflict with, or result in a breach of, any term
         or provision of any judgment, order, decree or award of any court,
         arbitrator or governmental or public instrumentality binding upon the
         Assuming Shipowner or its property.

                  (d) The Assuming Shipowner is not in default in any material
         way, and no condition exists which with notice or lapse of time or both
         will constitute a material default, under any mortgage, loan agreement,
         indenture, evidence of indebtedness or other instrument to which it is
         a party or by which it is bound, and it is not in default in any
         material respect under any judgment, order, writ, injunction, decree,
         rule or regulation of any court or governmental department, commission,
         board, agency or instrumentality, domestic or foreign.



                                       7
<PAGE>   27
                  (e) There is no action, suit, proceeding, inquiry or
         investigation, at law or in equity, or before or by any court, public
         board or body, pending against the Assuming Shipowner or of which it
         has otherwise received official notice or which to its knowledge is
         threatened against it wherein an unfavorable decision, ruling or
         finding would materially adversely affect its ability to perform its
         obligations under this Agreement (including the operation of the
         Vessel).

                  (f) The location of the office at which the Assuming Shipowner
         keeps or will keep its records concerning this Agreement is: 1200
         Harbor Boulevard, 9th Floor, C-901, Weehawken, New Jersey 07087,
         Attention: General Counsel.

                  (g) The Assuming Shipowner is a "citizen of the United States"
         within the meaning of Section 2 of the Shipping Act, 1916, as amended,
         qualified to engage in the coastwise trade and covenants that it shall
         remain such a citizen for operation in the trades in which the Vessel
         is operated from time to time.


                                   ARTICLE IV

                      AMENDMENTS TO THE ORIGINAL INDENTURE

         SECTION 1. Article Fifth (a) of the Special Provisions of the Original
Indenture is amended by changing the addresses for the giving of notice to the
Shipowner and Indenture Trustee to read:

         The Shipowner as:             JULIUS OWNER CORPORATION
                                       1200 Harbor Boulevard, 9th Floor, C-901
                                       Weehawken, New Jersey 07087
                                       Attention:  General Counsel.

         The Indenture Trustee as:     U.S. BANK TRUST NATIONAL ASSOCIATION
                                       One California Street, 4th Floor
                                       San Francisco, CA  94111
                                       Attention: Corporate Trust
                                       Reference: Vessel SMT CHEMICAL TRADER
                                                   (formerly ITB JULIUS HAMMER)

         SECTION 2. Schedule A to the Original Indenture is amended by changing
the definitions of "Indenture Trustee" and "Shipowner" to conform to this
Agreement.


                                       8
<PAGE>   28
         SECTION 3. Article Fifth (r) of the Special Provisions of the Original
Indenture is hereby deleted in its entirety, and Article Fifth (s) is hereby
amended by re-lettering it as Article Fifth (r).


                                    ARTICLE V

                                     GENERAL

         SECTION 1. Except as otherwise expressly provided herein, all terms
which are defined in the Original Indenture, including Schedule A thereto, when
used herein, shall have the meanings specified in said Original Indenture,
including Schedule A thereto, unless the context otherwise requires.

         SECTION 2. This Agreement shall be construed in connection with and as
part of the Original Indenture.

         SECTION 3. The recitals and statements contained in this Agreement
shall be taken as the recitals and statements of the Assigning Shipowner or the
Assuming Shipowner, as the case may be, and the Indenture Trustee assumes no
responsibility for the correctness of the same.

         SECTION 4. This Agreement may be executed in any number of
counterparts. All such counterparts shall be deemed to be originals and shall
together constitute but one and the same instrument.

         SECTION 5. The Original Indenture, as amended and supplemented by this
Agreement, is in all respects confirmed and shall, as so amended and
supplemented, remain in full force and effect.

         SECTION 6. From and after the Effective Date, the Indenture, this
Agreement and the rights and obligations of the parties hereto, shall in all
respects be governed by, construed and enforced in accordance with the federal
laws of the United States of America, but if they are inapplicable, then in
accordance with the laws of the State of New York, including Section 5-1401 of
the General Obligations Law of the State of New York.

         SECTION 7. If any term of the Indenture, or any application thereof
shall be invalid or unenforceable, the remainder of the Indenture and any other
application of such term shall not be affected thereby.

                                       9
<PAGE>   29

                                   ARTICLE VI

                                   GUARANTEES

         The assumption of all obligations with respect to the Outstanding
Obligations by the Assuming Shipowner, and the release therefrom of the
Assigning Shipowner, pursuant to the terms of this Agreement shall not discharge
or in any manner affect the obligations of the United States to honor the
Guarantees on all of the Outstanding Obligations, after demand duly made in
accordance with the provisions of the Indenture.

                                       10
<PAGE>   30


IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
parties hereto to be effective as of the day and year first above written.

                                    STATE STREET BANK AND TRUST COMPANY,

                                         not in its individual capacity but
                                         solely as owner trustee under the Trust
                                         Agreement dated as of November 13,
                                         1980, as amended, for the benefit of
                                         the owner participant named therein,

                                                          Assigning Shipowner


                                    By:
 Attest:                                Name:
                                        Title:






<PAGE>   31




COUNTY OF___________________)
                            )  ss:
STATE OF____________________)

         On this _____ day of ______________, 1999, before me personally
appeared _______________________, to me known, who being by me duly sworn, did
depose and say that he is ______________________________ of State Street Bank
and Trust Company, the Massachusetts trust company which is described in and
executed the instrument annexed hereto, and that he signed the instrument
annexed hereto by order of the Board of Directors of the said trust company and
acknowledged the instrument annexed hereto to be the free act and deed of the
said trust company.

         In testimony whereof, I have hereunto set my hand and seal this _____
day of ___________________, 1999.




                                                      __________________________
                                                                 Notary Public

(Notarial Stamp and Seal)


<PAGE>   32




                                                     JULIUS OWNER CORPORATION,
                                                              Assuming Shipowner


                                                     By:
 Attest:                                                 Name:
                                                         Title:





<PAGE>   33




WASHINGTON                          )
                                    )  ss:
DISTRICT OF COLUMBIA                )

         On this _____ day of ________________, 1999, before me personally
appeared _______________________, to me known, who being by me duly sworn, did
depose and say that he resides at _________________________________; that he is
the ______________________ of Julius Owner Corporation; that he knows the seal
of said corporation; that the seal affixed to said instrument is such
corporation's seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.

         In testimony whereof, I have hereunto set my hand and seal this _____
day of ___________________, 1999.

                                                       _________________________
                                                                 Notary Public

(Notarial Stamp and Seal)


<PAGE>   34




                                                     U.S. BANK TRUST
                                                       NATIONAL ASSOCIATION,
                                                               Indenture Trustee

                                                     By:
                                                         Name:
                                                         Title:




<PAGE>   35



ACKNOWLEDGEMENT


COUNTY OF__________________)
                           )  ss:
STATE OF CALIFORNIA        )

         I, the undersigned, a Notary Public in and for the County of
______________, do hereby certify that ______________________________ of
____________________________, personally appeared before me in said County, the
aforesaid officer being personally well known to me as the person who executed
the instrument annexed hereto, and acknowledged the same to be his act and deed
as said officer.

         Given my hand and seal this ______ day of _______________, 1999.



                                                         _______________________
                                                                Notary Public

(Notarial Stamp and Seal)


My Commission expires:___________________



<PAGE>   36



                                     CONSENT


         The United States of America, represented by the Secretary of
Transportation, acting by and through the Maritime Administrator, hereby (i)
approves the form of the Agreement, (ii) consents to the execution and delivery
by STATE STREET BANK AND TRUST COMPANY, not in its individual capacity but
solely as owner trustee under the Trust Agreement dated as of November 13, 1980,
as amended, for the benefit of the owner participant named therein, JULIUS
OWNER CORPORATION, and U.S. BANK TRUST NATIONAL ASSOCIATION, of the Agreement,
and (iii) affirms that the Guarantees will remain in full force and effect
following execution of the Agreement.


                                                UNITED STATES OF AMERICA
                                                SECRETARY OF TRANSPORTATION
                                                Maritime Administrator


                                                By:
 Attest:                                           Name:
                                                         Assistant Secretary
                                                         Maritime Administration




<PAGE>   37

                                                                         4.02(a)


                                                                    CONTRACT NO.
                                                                         MA-9892



                   ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 2

                                     TO THE

                               SECURITY AGREEMENT

                      RELATING TO UNITED STATES GOVERNMENT
                      GUARANTEED SHIP FINANCING OBLIGATIONS


                                     BETWEEN


                      STATE STREET BANK AND TRUST COMPANY,
                  NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS
                     OWNER TRUSTEE UNDER THE TRUST AGREEMENT
                 DATED AS OF NOVEMBER 13, 1980, AS AMENDED, FOR
               THE BENEFIT OF THE OWNER PARTICIPANT NAMED THEREIN,
                                                             ASSIGNING SHIPOWNER


                           FRANCES OWNER CORPORATION,
                                                              ASSUMING SHIPOWNER

                                       AND


                          THE UNITED STATES OF AMERICA


                               SEPTEMBER 29, 1999





                               ITB FRANCES HAMMER
                      (TO BE RENAMED SMT CHEMICAL EXPLORER)


<PAGE>   38


                   ASSIGNMENT, ASSUMPTION, AND AMENDMENT NO. 2
                                     TO THE
                               SECURITY AGREEMENT

                               ITB FRANCES HAMMER
                   (to be renamed SMT CHEMICAL EXPLORER (tug)
                              and SMT ONE (barge))


     THIS ASSIGNMENT, ASSUMPTION, AND AMENDMENT NO. 2 (this "Amendment"), to the
SECURITY AGREEMENT, Contract No. MA-9892, dated as of November 25, 1980, by
STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its
individual capacity but solely as owner trustee under the Trust Agreement dated
as of November 13, 1980, as amended, for the benefit of the owner participant
named therein (the "Assigning Shipowner"), FRANCES OWNER CORPORATION, a Delaware
corporation (the "Assuming Shipowner"), and the UNITED STATES OF AMERICA (the
"United States"), represented by the Secretary of Transportation, acting by and
through the Maritime Administrator (the "Secretary"), pursuant to the provisions
of Title XI of the Merchant Marine Act, 1936, as amended, is made on
_____________ _____, 1999.


                                   WITNESSETH:

     WHEREAS, the Assigning Shipowner is the sole legal owner of the Vessel;

     WHEREAS, the Assigning Shipowner and the Secretary are parties to the
Security Agreement, Contract No. MA-9892, dated as of November 25, 1980,
pursuant to which the Assigning Shipowner granted to the Secretary a security
interest in the Security as collateral security for the obligations of the
United States upon Guarantees made by the Secretary pursuant to Title XI with
respect to the Obligations and for the payment of the principal of and interest
on the Secretary's Note;

     WHEREAS, the Assigning Shipowner has, as further security to the Secretary
pursuant to the provisions of the Security Agreement, executed and delivered on
the Delivery Date to the Secretary, as mortgagee, a first preferred fleet
mortgage, Contract No. MA-9893 (as the same may have been amended, modified or
supplemented, the "Mortgage"), covering the Vessel;

     WHEREAS, Suwannee River Phosphate Lines, Inc., a California corporation
(the "Original Bareboat Charterer"), entered into a Bareboat Charter of the
Vessel dated as of September 16, 1981 (as supplemented and amended to date, the
"Original Bareboat Charter"), with the Assigning Shipowner, and the Original
Bareboat Charter was assigned to the Secretary as further security pursuant to
the provisions of the Security Agreement;

<PAGE>   39

     WHEREAS, Occidental Petroleum Corporation, a Delaware corporation (as
successor to Occidental Petroleum Corporation, a California corporation, herein
"Occidental"), is the guarantor under a Bareboat Charter Guarantee dated as of
September 16, 1981, relating to the Original Bareboat Charter (the "Old Bareboat
Charter Guarantee"), and the Old Bareboat Charter Guarantee has been assigned to
the Secretary as further security under the Security Agreement;

     WHEREAS, simultaneously with the execution and delivery of this Amendment,
the Assigning Shipowner is transferring 100% of its interest in the Vessel to
the Assuming Shipowner on the terms and conditions, among others, that the
Assuming Shipowner shall assume all obligations and liabilities of the Assigning
Shipowner under the Mortgage, the Security Agreement, the Obligations, and the
Secretary's Note, and that the Assigning Shipowner shall, simultaneously with
such assumption, be released from all obligations and liabilities under the
Mortgage, the Security Agreement, the Obligations and the Secretary's Note;

     WHEREAS, by an Assignment, Assumption and Supplement No. 2 to Trust
Indenture dated the date hereof between and among the Indenture Trustee, the
Assigning Shipowner and the Assuming Shipowner (the "Indenture Assumption
Agreement"), the Assuming Shipowner has, with the written consent of the
Secretary, assumed responsibility for payment of the principal of and interest
on the Outstanding Obligations and the performance of the agreements of the
Assigning Shipowner under the Original Indenture and the Assigning Shipowner has
been released from such payment obligations and the performance of such
agreements;

     WHEREAS, on the date hereof, the Original Bareboat Charter is being
terminated and the Original Bareboat Charterer is being released from its
obligations thereunder and the Assuming Shipowner is entering into a new
bareboat charter (the "Bareboat Charter") with Frances ODS Corporation, a
Delaware corporation (the "Bareboat Charterer") and the same is being assigned
to the Secretary hereunder as security for the Guarantees;

     WHEREAS, concurrently with termination of the Original Bareboat Charter and
the release of the Original Bareboat Charterer from its obligations thereunder,
Occidental is being released from its obligations under the Old Bareboat Charter
Guarantee and (i) Marine Transport Corporation, a Delaware corporation ("MTC")
is entering into a guarantee of 75% of the obligations of the Assuming Shipowner
under the Secretary's Note (the "MTC Guarantee"), (ii) Stolt-Nielsen
Transportation Group Ltd., a Liberian corporation ("SNTG"), is entering into a
guarantee of 25% of the obligations of the Assuming Shipowner under the
Secretary's Note (the "SNTG Guarantee"), the liability of MTC and SNTG under
such guarantees being several but not joint, and (iii) Occidental is entering
into a Contingent Guarantee of certain of the obligations of the Bareboat
Charterer under the Bareboat Charter (the "Contingent Guarantee");

     WHEREAS, this Amendment is made for the purpose of confirming, affirming,
and reaffirming the Security Agreement as hereby amended and continuing the
grant of the collateral security interest of the Secretary in the Security to
secure the payment of the principal of and

                                       2
<PAGE>   40

interest on the Secretary's Note in accordance with the terms of the Security
Agreement, as amended by this Amendment and as provided in the Secretary's Note;

     WHEREAS, the execution and delivery of this Amendment has been duly
authorized and all conditions and requirements necessary to make this instrument
a legal, valid, and binding agreement have been duly performed and complied
with; and

     WHEREAS, on the date hereof, the Assuming Shipowner is changing the name of
the Vessel from ITB FRANCES HAMMER to SMT CHEMICAL EXPLORER (tug) and SMT ONE
(barge).

     NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:



                                  ARTICLE FIRST

                       ASSIGNMENT, ASSUMPTION AND RELEASE

     SECTION 1. The Assigning Shipowner hereby transfers, assigns, sets over,
confirms and conveys to the Assuming Shipowner, without limitation, all of its
right, title, and interest in, and all of its duties and obligations under the
Security Agreement, and the Assuming Shipowner hereby accepts such transfer,
assignment and conveyance, without limitation, subject to the terms and
conditions of the Security Agreement and accepts and assumes all of the right,
title, interest, duties and obligations of the Assigning Shipowner under the
Security Agreement with the same force and effect as if the Assuming Shipowner
had been named as Shipowner therein, including without limitation, the grant of
the security interests in the Granting Clause thereof and the obligation to pay
any amounts payable by the Assigning Shipowner under the Security Agreement. As
of the Effective Date, the Assigning Shipowner shall have no further obligations
under the Security Agreement.

     SECTION 2. From and after the Effective Date, the term "Shipowner" as used
in the Security Agreement or any other agreement or instrument related to the
transactions contemplated thereby shall mean and refer to the Assuming Shipowner
and its successors and assigns.

     SECTION 3. The Assuming Shipowner (i) acknowledges receipt of notice of and
hereby confirms, consents and agrees in all respects to the grant, sale,
conveyance, assignment, transfer, mortgage and pledge to the Secretary of all of
the Assigning Shipowner's right, title and interest in and to the Security and
all monies payable thereunder to the extent set forth in the Security Agreement,
and (ii) agrees, pursuant to this Amendment, to assume all of the duties and


                                       3
<PAGE>   41

obligations of the Assigning Shipowner prescribed by the Security Agreement.

     SECTION 4. The transfer, assignment, conveyance, acceptance, assumption and
release provided in Section 1 above shall become effective on the Effective Date
and shall be of no force or effect prior thereto. Notwithstanding any provision
of this Amendment to the contrary (i) the rights and obligations of the
respective parties under the Security Agreement which shall have unconditionally
vested at any time up to and including the Effective Date shall survive the
Effective Date, and (ii) neither the assignment, assumption, and release
effected hereby nor any proceedings arising from the Security Agreement shall
(x) relieve any party thereto from the observance or performance of any
obligation required to be performed on or prior to the Effective Date, or from
liability for any acts or omissions of such party which were performed or
required to be performed on or prior to the Effective Date, or (y) serve as a
defense against any claim for breach of or failure to perform any such
obligation, or against any claim for indemnification under the Security
Agreement arising out of any matter occurring on or prior to the Effective Date.



                                 ARTICLE SECOND

                         REPRESENTATIONS AND WARRANTIES

     SECTION 1. The Assigning Shipowner hereby represents and warrants in its
individual capacity and in its capacity as owner trustee under the Trust
Agreement, that:

          (a) The Assigning Shipowner is a trust company duly organized, validly
     existing and in good standing under the laws of the Commonwealth of
     Massachusetts, with full power, authority and legal right to execute and
     deliver this Amendment and to perform its obligations hereunder, and this
     Amendment has been duly authorized, executed and delivered by the Assigning
     Shipowner and, assuming the due authorization, execution and delivery by
     the other parties hereto, constitutes the legal, valid and binding
     obligation of the Assigning Shipowner enforceable in accordance with its
     terms.

          (b) The Assigning Shipowner has obtained all necessary approvals,
     authorizations, licenses and permits, under the laws of the State of
     Connecticut, the Commonwealth of Massachusetts and the United States
     regulating banking or trust powers, to enter into and perform its
     obligations under this Amendment. Other than the approval of the Secretary
     and the Board and the instruction of the Owner Participant, no consent,
     authorization or approval of, or filing with, any federal, state, municipal
     or other governmental department, commission, board, bureau, agency or
     instrumentality, domestic or foreign, is or has been required in connection
     with any of the transactions contemplated hereby in respect of the
     Assigning Shipowner.



                                       4
<PAGE>   42

          (c) The execution and delivery of this Amendment, and the performance
     by the Assigning Shipowner of its obligations under this Amendment will not
     result in a violation of, or be in conflict with, or constitute a default
     or any event which would with notice or lapse of time or both become a
     default under, any provision of the charter documents or the by-laws of the
     Assigning Shipowner, or a default under any indenture, contract, agreement
     or other instrument to which the Assigning Shipowner is a party or by which
     it or its property is bound, and the execution and delivery of this
     Amendment and the performance by the Assigning Shipowner of its obligations
     under this Amendment will not result in a violation of any statute, rule or
     regulation applicable to the Assigning Shipowner or its property or by
     which it or its property may be bound and will not result in a violation of
     or be in conflict with, or result in a breach of, any term or provision of
     any judgment, order, decree or award of any court, arbitrator or
     governmental or public instrumentality binding upon the Assigning Shipowner
     or its property.

          (d) The Assigning Shipowner is not in default in any material way, and
     no condition exists which with notice or lapse of time or both will
     constitute a material default, under the Security Agreement or any
     indenture, agreement, instrument or evidence of indebtedness to which it is
     a party or by which it is bound, and it is not in default in any material
     respect under any judgment, order, writ, injunction, decree, rule or
     regulation of any court or governmental department, commission, board,
     agency or instrumentality, domestic or foreign.

          (e) There is no action, suit, proceeding, inquiry or investigation, at
     law or in equity, or before or by any court, public board or body, pending
     against the Assigning Shipowner or of which it has otherwise received
     official notice or which to its knowledge is threatened against it wherein
     an unfavorable decision, ruling or finding would materially adversely
     affect its ability to perform its obligations under this Amendment.

          (f) The location of the office at which the Assigning Shipowner keeps
     or will keep its records concerning this Amendment is: Goodwin Square, 23rd
     Floor, 225 Asylum Street, Hartford, CT 06103.

          (g) The Assigning Shipowner is a "citizen of the United States" within
     the meaning of Section 2 of the Shipping Act, 1916, as amended, qualified
     to engage in the coastwise trade and has been such a citizen at all
     relevant times qualified to operate the Vessel in the trades in which the
     Vessel has operated from time to time.

          (h) The Assigning Shipowner is the sole legal owner of the Vessel and
     the Vessel is duly and validly documented in the name of the Assigning
     Shipowner.

     SECTION 2. The Assuming Shipowner hereby represents and warrants that:


                                       5
<PAGE>   43


          (a) The Assuming Shipowner is a corporation duly organized, validly
     existing and in good standing under the laws of the State of Delaware, and
     has full power, authority and legal right to execute and deliver this
     Amendment and to perform its obligations hereunder and under the Security
     Agreement, and this Amendment has been duly authorized, executed and
     delivered by the Assuming Shipowner and, assuming the due authorization,
     execution and delivery by the other parties hereto, constitutes the legal,
     valid and binding obligation of the Assuming Shipowner enforceable in
     accordance with its terms.

          (b) Other than the approvals of the Secretary and the Board and the
     instruction of the Owner Participant, no consent, authorization or approval
     of, or filing with, any federal, state, municipal or other governmental
     department, commission, board, bureau, agency or instrumentality, domestic
     or foreign, is or has been required in connection with any of the
     transactions contemplated hereby in respect of the Assuming Shipowner.

          (c) The execution and delivery of this Amendment and the performance
     by the Assuming Shipowner of its obligations under this Amendment will not
     result in a violation of, or be in conflict with, or constitute a default
     or any event which would with notice or lapse of time or both become a
     default under, any provision of the certificate of incorporation or the
     by-laws of the Assuming Shipowner, or a default under any mortgage,
     indenture, contract, agreement or other instrument to which the Assuming
     Shipowner is a party or by which it or its property is bound, and the
     execution and delivery of this Amendment and the performance by the
     Assuming Shipowner of its obligations under this Amendment will not result
     in a violation of any statute, rule or regulation applicable to the
     Assuming Shipowner or its property or by which it or its property may be
     bound and will not result in a violation of or be in conflict with, or
     result in a breach of, any term or provision of any judgment, order, decree
     or award of any court, arbitrator or governmental or public instrumentality
     binding upon the Assuming Shipowner or its property.

          (d) The Assuming Shipowner is not in default in any material way, and
     no condition exists which with notice or lapse of time or both will
     constitute a material default, under any mortgage, loan agreement,
     indenture, evidence of indebtedness or other instrument to which it is a
     party or by which it is bound, and it is not in default in any material
     respect under any judgment, order, writ, injunction, decree, rule or
     regulation of any court or governmental department, commission, board,
     agency or instrumentality, domestic or foreign.

          (e) There is no action, suit, proceeding, inquiry or investigation, at
     law or in equity, or before or by any court, public board or body, pending
     against the Assuming Shipowner or of which it has otherwise received
     official notice or which to its knowledge is threatened against it wherein
     an unfavorable decision, ruling or finding would materially adversely
     affect its ability to perform its obligations under this Amendment


                                       6
<PAGE>   44

     (including the ability to own and operate the Vessel).

          (f) The location of the office at which the Assuming Shipowner keeps
     or will keep its records concerning this Amendment is: 1200 Harbor
     Boulevard, 9th Floor, C-901, Weehawken, New Jersey 07087, Attention:
     General Counsel.

          (g) The Assuming Shipowner is a "citizen of the United States" within
     the meaning of Section 2 of the Shipping Act, 1916, as amended, qualified
     to engage in the coastwise trade and covenants that it shall remain such a
     citizen for operation in the trades in which the Vessel is operated from
     time to time.



                                  ARTICLE THIRD

                       CONDITIONS PRECEDENT TO ASSIGNMENT,
                             ASSUMPTION AND RELEASE

     The Secretary hereby consents to and approves the transfer of the Vessel by
the Assigning Shipowner to the Assuming Shipowner, the termination of the
Original Bareboat Charter and the release of the Assigning Shipowner and the
Original Bareboat Charterer from their respective obligations thereunder on the
following conditions:

     1. The Vessel shall be transferred by the Assigning Shipowner to the
Assuming Shipowner by a Bill of Sale on Coast Guard form CG-1340, warranteeing
the Assigning Shipowner's title to the Vessel and its freedom from liens,
charges and encumbrances of any kind other than the Mortgage and liens permitted
by the Security Agreement, and such Bill of Sale shall otherwise be in form and
substance satisfactory to the Secretary, and shall be recorded in the National
Vessel Documentation Center.

     2. The Vessel shall be duly and properly documented in the name of the
Assuming Shipowner.

     3. The parties thereto shall execute the Indenture Assumption Agreement
referred to in the Seventh Recital above.

     4. The Assuming Shipowner shall assume the Mortgage and an instrument
evidencing such assumption shall be executed, delivered and duly recorded in the
National Vessel Documentation Center.

     5. The Assuming Shipowner, the Bareboat Charterer, and the Time Charterer
shall have assumed the Title XI Reserve Fund and Financial Agreement, Contract
No. 9894, by an instrument in form and substance satisfactory to the Secretary.



                                       7
<PAGE>   45

     6. The Assuming Shipowner shall execute and deliver an appropriate
endorsement to the Secretary's Note to evidence its assumption of the Assigning
Shipowner's obligations thereunder.

     7. The Vessel shall be free and clear of any and all liens, claims, charges
and encumbrances (except for the Mortgage) and the Assuming Shipowner and the
Secretary shall have received such evidence thereof as they may reasonably
request.

     8. All other matters incident to the transfer of the Vessel and the
assignment and assumption of the obligations contemplated by this Amendment
shall be reasonably satisfactory to the Secretary and the Assuming Shipowner.

     9. The Contingent Guarantee and the Second Mortgage shall have been
executed and delivered by the parties thereto.


                                 ARTICLE FOURTH

                                 GRANTING CLAUSE

     In order to create a present security interest in favor of the Secretary,
the Assuming Shipowner does hereby grant, sell, convey, assign, transfer,
mortgage, pledge, set over, and confirm unto the Secretary continuing security
interests in all of the right, title, and interest of the Shipowner in and to
all of the following, whether now owned or existing or hereafter arising or
acquired:

     I. The Bareboat Charter and all moneys payable to the Assuming Shipowner
thereunder and the Time Charter and any future time charter and all moneys
payable to the Bareboat Charterer thereunder. Said right, title and interest in
and to (a) the Bareboat Charter and all moneys payable thereunder, together with
the Consent to Bareboat Charter Assignment and (b) the Time Charter and any
future time charter and all moneys payable thereunder as pledged by Bareboat
Charterer in the Assignment of Time Charter effective as of the Effective Date,
are herein collectively referred to as the "Rights Under the Bareboat Charter
and Related Contracts". The Secretary agrees that, pursuant to the terms of the
Security Agreement as amended hereby and the Consent to Bareboat Charter
Assignment all moneys payable to the Assuming Shipowner hereunder, under the
Time Charter and under the Bareboat Charter will be paid directly to the
Depository for application in accordance with the Security Agreement as amended
hereby and the Depository Agreement.

     II. All proceeds of the collateral described in Paragraph I above.



                                       8
<PAGE>   46


     The right, title, and interest of the Secretary mentioned in Paragraphs I
and II constitute and shall be considered part of the "Security," as such term
is defined in the Security Agreement as amended hereby and shall be held by the
Secretary pursuant to the provisions of the Security Agreement as amended
hereby.

     Irrespective of the foregoing, (1) the Secretary shall not, by virtue of
this Amendment, have any obligations under any of the documents referred to in
Paragraph I or be required to make any payment owing by the Shipowner
thereunder, and (2) if there is no existing Default, the Shipowner shall
(subject to the rights of the Secretary hereunder) be entitled to exercise all
of its rights under each of the documents referred to in Paragraph I above and
with respect to other property referred to in the Granting Clauses hereof, and
shall be entitled to receive all of the benefits accruing to it thereunder as if
the foregoing were not applicable.



                                  ARTICLE FIFTH

                          SECURITY AGREEMENT CONFIRMED

     The Security Agreement as amended hereby is in all respects confirmed,
affirmed, and reaffirmed, including all of the covenants and agreements and
representations on the part of the Shipowner which are set forth therein and all
the rights, privileges, powers and immunities of the Secretary which are
provided for therein, and the grant of the collateral security interest of the
Secretary in the Security is continued.


                                  ARTICLE SIXTH

                        AMENDMENTS TO SECURITY AGREEMENT

     SECTION 1. Section 2.04(b) of Exhibit 1 to the Security Agreement - General
Provisions Incorporated into the Security Agreement ("Exhibit 1") is hereby
amended by deleting the word "or" before clause (F) thereof and inserting the
following before the period at the end thereof: ", or (G) the Second Mortgage."

     SECTION 2. Section 6.01 of Exhibit 1 is hereby amended by adding the
following paragraph to the end of such section:

          "In the event that a Default shall occur, the Secretary shall be
     entitled, but not be required, to deliver to the Depository a written
     notice that the Secretary is thereby exercising exclusive control over the
     Securities Accounts (as such term is defined in the Depository Agreement)
     ("Notice of Exclusive Control"). As further provided in the Depository
     Agreement following the Depository's receipt

                                       9
<PAGE>   47

     of and pursuant to said Notice of Exclusive Control, the Secretary and the
     Shipowner hereby acknowledge and agree that (i) the Secretary shall be
     entitled, but not be required, to issue to the Depository an instruction,
     notice or any other type of directive that would constitute an "entitlement
     order" within the meaning of Section 8-102(a)(8) of the New York Uniform
     Commercial Code (collectively, an "Entitlement Order") concerning the
     Securities Accounts and (ii) the Depository shall immediately cease
     complying with any Request, Request for Payment, instruction, notice or any
     other type of directive that would constitute an Entitlement Order from the
     Shipowner. In the event that a Default has been cured or waived as provided
     in Article VI hereof, the Secretary and the Shipowner hereby acknowledge
     and agree that the Secretary shall deliver a written notice to the
     Depository that (i) the Secretary is no longer exercising exclusive control
     over the Securities Accounts and that the Notice of Exclusive Control
     previously delivered is theretofore without effect and (ii) the Depository
     shall thereafter comply with any Request, Request for Payment, instruction,
     notice or any other type of directive that would constitute an Entitlement
     Order from the Shipowner."

     SECTION 3. The "Notice of Preferred Mortgages and Charter" referred to in
Section 2.12 of Exhibit 1 of the Security Agreement is hereby amended in its
entirety to conform to the form of such notice set forth in the Bareboat Charter
of even date herewith.

     SECTION 4. Article Fifth (y) of the Special Provisions of the Security
Agreement is hereby deleted in its entirety and Article Fifth (z) is hereby
amended by re-lettering it as Article Fifth (y).



                                 ARTICLE SEVENTH

                                  MISCELLANEOUS

     SECTION 1. Schedule X to the Security Agreement is hereby deleted and
substituted by Schedule X in the form attached hereto.

     SECTION 2. This Amendment is executed as and shall constitute an amendment
to and be incorporated into and made a part of the Security Agreement. All of
the terms and provisions of the Security Agreement as supplemented hereby shall
continue to be and shall remain in full force and effect.

     SECTION 3. For all purposes of this Amendment, unless otherwise expressly
provided or unless the context otherwise requires, the terms used herein which
are defined in Schedule X to the Security Agreement, Contract No. MA-9892, dated
as of November 25, 1980, including Amendment No. 1 thereto dated October 18,
1991, and this Amendment, between the United States

                                       10
<PAGE>   48

and the Assuming Shipowner, or by reference therein to other instruments or
agreements, shall have the respective meanings stated in said Schedule X to the
Security Agreement or such other instruments or agreements.
















                                       11
<PAGE>   49


     SECTION 4. This Amendment may be executed in any number of counterparts,
and each such counterpart shall for all purposes be deemed to be an original.

     SECTION 5. This Amendment and the rights and obligations of the parties
hereto, shall in all respects be governed by, construed and enforced in
accordance with the federal laws of the United States of America, but if they
are inapplicable, then in accordance with the laws of the State of New York,
including Section 5-1401 of the General Obligations Law of the State of New
York.

     SECTION 6. If any term of the Security Agreement, as amended by this
Amendment, or any application thereof shall be invalid or unenforceable, the
remainder of the Security Agreement, as amended hereby, and any other
application of such term shall not be affected thereby.








                                       12
<PAGE>   50







     IN WITNESS WHEREOF, this Amendment has been executed by the parties hereto
as of the day and year first above written.


                                          STATE STREET BANK AND TRUST COMPANY,
                                          not in its individual capacity but
                                          solely as owner trustee under the
                                          Trust Agreement dated as of November
                                          13, 1980, as amended, for the benefit
                                          of the owner participant named
                                          therein, Assigning Shipowner


                                          By:    ______________________________
                                                 Name:_________________________
                                                 Title:________________________



Attest:

By:      ________________________


<PAGE>   51


                                                 FRANCES OWNER CORPORATION,
                                                         Assuming Shipowner



                                                 By:____________________________
                                                     Name:______________________
                                                     Title:_____________________



Attest:


By:______________________





<PAGE>   52


                                                  UNITED STATES OF AMERICA
                                                  SECRETARY OF TRANSPORTATION

                                                  By:  MARITIME ADMINISTRATION



(Seal)                                            By: __________________________


Attest:


By:________________________




<PAGE>   53

                                                                         4.02(b)



                                                                    CONTRACT NO.
                                                                         MA-9880



                   ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 2

                                     TO THE

                               SECURITY AGREEMENT

                      RELATING TO UNITED STATES GOVERNMENT
                      GUARANTEED SHIP FINANCING OBLIGATIONS


                                     BETWEEN


                      STATE STREET BANK AND TRUST COMPANY,
                  NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS
                     OWNER TRUSTEE UNDER THE TRUST AGREEMENT
                 DATED AS OF NOVEMBER 13, 1980, AS AMENDED, FOR
               THE BENEFIT OF THE OWNER PARTICIPANT NAMED THEREIN,
                                                             ASSIGNING SHIPOWNER


                            JULIUS OWNER CORPORATION,
                                                              ASSUMING SHIPOWNER

                                       AND


                          THE UNITED STATES OF AMERICA


                               SEPTEMBER 29, 1999





                                ITB JULIUS HAMMER
                       (TO BE RENAMED SMT CHEMICAL TRADER)


<PAGE>   54


                   ASSIGNMENT, ASSUMPTION, AND AMENDMENT NO. 2
                                     TO THE
                               SECURITY AGREEMENT

                                ITB JULIUS HAMMER
                    (TO BE RENAMED SMT CHEMICAL TRADER (tug)
                              AND SMT TWO (barge))


     THIS ASSIGNMENT, ASSUMPTION, AND AMENDMENT NO. 2 (this "Amendment"), to the
SECURITY AGREEMENT, Contract No. MA-9880, dated as of November 25, 1980, by
STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its
individual capacity but solely as owner trustee under the Trust Agreement dated
as of November 13, 1980, as amended, for the benefit of the owner participant
named therein (the "Assigning Shipowner"), JULIUS OWNER CORPORATION, a Delaware
corporation (the "Assuming Shipowner"), and the UNITED STATES OF AMERICA (the
"United States"), represented by the Secretary of Transportation, acting by and
through the Maritime Administrator (the "Secretary"), pursuant to the provisions
of Title XI of the Merchant Marine Act, 1936, as amended, is made on
_____________ _____, 1999.


                                   WITNESSETH:

     WHEREAS, the Assigning Shipowner is the sole legal owner of the Vessel;

     WHEREAS, the Assigning Shipowner and the Secretary are parties to the
Security Agreement, Contract No. MA-9880, dated as of November 25, 1980,
pursuant to which the Assigning Shipowner granted to the Secretary a security
interest in the Security as collateral security for the obligations of the
United States upon Guarantees made by the Secretary pursuant to Title XI with
respect to the Obligations and for the payment of the principal of and interest
on the Secretary's Note;

     WHEREAS, the Assigning Shipowner has, as further security to the Secretary
pursuant to the provisions of the Security Agreement, executed and delivered on
the Delivery Date to the Secretary, as mortgagee, a first preferred fleet
mortgage, Contract No. MA-9881 (as the same may have been amended, modified or
supplemented, the "Mortgage"), covering the Vessel;

     WHEREAS, Suwannee River Lines, Inc., a California corporation (the
"Original Bareboat Charterer"), entered into a Bareboat Charter of the Vessel
dated as of March 18, 1981 (as supplemented and amended to date, the "Original
Bareboat Charter"), with the Assigning Shipowner, and the Original Bareboat
Charter was assigned to the Secretary as further security pursuant to the
provisions of the Security Agreement;


<PAGE>   55

     WHEREAS, Occidental Petroleum Corporation, a Delaware corporation (as
successor to Occidental Petroleum Corporation, a California corporation, herein
"Occidental"), is the guarantor under a Bareboat Charter Guarantee dated as of
March 18, 1981, relating to the Original Bareboat Charter (the "Old Bareboat
Charter Guarantee"), and the Old Bareboat Charter Guarantee has been assigned to
the Secretary as further security under the Security Agreement;

     WHEREAS, simultaneously with the execution and delivery of this Amendment,
the Assigning Shipowner is transferring 100% of its interest in the Vessel to
the Assuming Shipowner on the terms and conditions, among others, that the
Assuming Shipowner shall assume all obligations and liabilities of the Assigning
Shipowner under the Mortgage, the Security Agreement, the Obligations, and the
Secretary's Note, and that the Assigning Shipowner shall, simultaneously with
such assumption, be released from all obligations and liabilities under the
Mortgage, the Security Agreement, the Obligations and the Secretary's Note;

     WHEREAS, by an Assignment, Assumption and Supplement No. 2 to Trust
Indenture dated the date hereof between and among the Indenture Trustee, the
Assigning Shipowner and the Assuming Shipowner (the "Indenture Assumption
Agreement"), the Assuming Shipowner has, with the written consent of the
Secretary, assumed responsibility for payment of the principal of and interest
on the Outstanding Obligations and the performance of the agreements of the
Assigning Shipowner under the Original Indenture and the Assigning Shipowner has
been released from such payment obligations and the performance of such
agreements;

     WHEREAS, on the date hereof, the Original Bareboat Charter is being
terminated and the Original Bareboat Charter is being released from its
obligations thereunder and the Assuming Shipowner is entering into a new
bareboat charter (the "Bareboat Charter") with Frances ODS Corporation, a
Delaware corporation (the "Bareboat Charterer") and the same is being assigned
to the Secretary hereunder as security for the Guarantees;

     WHEREAS, concurrently with termination of the Original Bareboat Charter and
the release of the Original Bareboat Charterer from its obligations thereunder,
Occidental is being released from its obligations under the Old Bareboat Charter
Guarantee and (i) Marine Transport Corporation,  a Delaware corporation ("MTC")
is entering into a guarantee of 75% of the obligations of the Assuming Shipowner
under the Secretary's Note (the "MTC Guarantee"), (ii) Stolt-Nielsen
Transportation Group Ltd., a Liberian corporation ("SNTG"), is entering into a
guarantee of 25% of the obligations of the Assuming Shipowner under the
Secretary's Note (the "SNTG Guarantee"), the liability of MTC and SNTG under
such guarantees being several but not joint, and (iii) Occidental is entering
into a Contingent Guarantee of certain of the obligations of the Bareboat
Charterer under the Bareboat Charter (the "Contingent Guarantee");

     WHEREAS, this Amendment is made for the purpose of confirming, affirming,
and reaffirming the Security Agreement as hereby amended and continuing the
grant of the collateral security interest of the Secretary in the Security to
secure the payment of the principal of and interest on the Secretary's Note in
accordance with the terms of the Security Agreement, as amended by this
Amendment and as provided in the Secretary's Note;

                                       2



<PAGE>   56
         WHEREAS, the execution and delivery of this Amendment has been duly
authorized and all conditions and requirements necessary to make this instrument
a legal, valid, and binding agreement have been duly performed and complied
with; and

                                       3
<PAGE>   57
         WHEREAS, on the date hereof, the Assuming Shipowner is changing the
name of the Vessel from ITB JULIUS HAMMER to SMT CHEMICAL TRADER (tug) and SMT
TWO (barge).

         NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and of other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereby agree
as follows:

                                  ARTICLE FIRST

                       ASSIGNMENT, ASSUMPTION AND RELEASE

         SECTION 1. The Assigning Shipowner hereby transfers, assigns, sets
over, confirms and conveys to the Assuming Shipowner, without limitation, all of
its right, title, and interest in, and all of its duties and obligations under
the Security Agreement, and the Assuming Shipowner hereby accepts such transfer,
assignment and conveyance, without limitation, subject to the terms and
conditions of the Security Agreement and accepts and assumes all of the right,
title, interest, duties and obligations of the Assigning Shipowner under the
Security Agreement with the same force and effect as if the Assuming Shipowner
had been named as Shipowner therein, including without limitation, the grant of
the security interests in the Granting Clause thereof and the obligation to pay
any amounts payable by the Assigning Shipowner under the Security Agreement. As
of the Effective Date, the Assigning Shipowner shall have no further obligations
under the Security Agreement.

         SECTION 2. From and after the Effective Date, the term "Shipowner" as
used in the Security Agreement or any other agreement or instrument related to
the transactions contemplated thereby shall mean and refer to the Assuming
Shipowner and its successors and assigns.

         SECTION 3. The Assuming Shipowner (i) acknowledges receipt of notice of
and hereby confirms, consents and agrees in all respects to the grant, sale,
conveyance, assignment, transfer, mortgage and pledge to the Secretary of all of
the Assigning Shipowner's right, title and interest in and to the Security and
all monies payable thereunder to the extent set forth in the Security Agreement,
and (ii) agrees, pursuant to this Amendment, to assume all of the duties and
obligations of the Assigning Shipowner prescribed by the Security Agreement.

         SECTION 4. The transfer, assignment, conveyance, acceptance, assumption
and release provided in Section 1 above shall become effective on the Effective
Date and shall be of no force or effect prior thereto. Notwithstanding any
provision of this Amendment to the contrary (i) the rights and obligations of
the respective parties under the Security Agreement which shall have
unconditionally vested at any time up to and including the Effective Date shall
survive the Effective Date, and (ii) neither the assignment, assumption, and
release effected hereby nor any

                                       4
<PAGE>   58
proceedings arising from the Security Agreement shall (x) relieve any party
thereto from the observance or performance of any obligation required to be
performed on or prior to the Effective Date, or from liability for any acts or
omissions of such party which were performed or required to be performed on or
prior to the Effective Date, or (y) serve as a defense against any claim for
breach of or failure to perform any such obligation, or against any claim for
indemnification under the Security Agreement arising out of any matter occurring
on or prior to the Effective Date.


                                 ARTICLE SECOND

                         REPRESENTATIONS AND WARRANTIES

         SECTION 1. The Assigning Shipowner hereby represents and warrants in
its individual capacity and in its capacity as owner trustee under the Trust
Agreement, that:

                  (a)      The Assigning Shipowner is a trust company duly
         organized, validly existing and in good standing under the laws of the
         Commonwealth of Massachusetts, with full power, authority and legal
         right to execute and deliver this Amendment and to perform its
         obligations hereunder, and this Amendment has been duly authorized,
         executed and delivered by the Assigning Shipowner and, assuming the due
         authorization, execution and delivery by the other parties hereto,
         constitutes the legal, valid and binding obligation of the Assigning
         Shipowner enforceable in accordance with its terms.

                  (b)      The Assigning Shipowner has obtained all necessary
         approvals, authorizations, licenses and permits, under the laws of the
         State of Connecticut, the Commonwealth of Massachusetts and the United
         States regulating banking or trust powers, to enter into and perform
         its obligations under this Amendment. Other than the approval of the
         Secretary and the Board and the instruction of the Owner Participant,
         no consent, authorization or approval of, or filing with, any federal,
         state, municipal or other governmental department, commission, board,
         bureau, agency or instrumentality, domestic or foreign, is or has been
         required in connection with any of the transactions contemplated hereby
         in respect of the Assigning Shipowner.

                  (c)      The execution and delivery of this Amendment, and the
         performance by the Assigning Shipowner of its obligations under this
         Amendment will not result in a violation of, or be in conflict with, or
         constitute a default or any event which would with notice or lapse of
         time or both become a default under, any provision of the charter
         documents or the by-laws of the Assigning Shipowner, or a default under
         any indenture, contract, agreement or other instrument to which the
         Assigning Shipowner is a party or by which it or its property is bound,
         and the execution and delivery of this Amendment and the performance by
         the Assigning Shipowner of its obligations under this Amendment will
         not result in a violation of any statute, rule or regulation applicable
         to the Assigning Shipowner or its property or by which it or its
         property may be bound and

                                       5
<PAGE>   59
         will not result in a violation of or be in conflict with, or result in
         a breach of, any term or provision of any judgment, order, decree or
         award of any court, arbitrator or governmental or public
         instrumentality binding upon the Assigning Shipowner or its property.

                  (d)      The Assigning Shipowner is not in default in any
         material way, and no condition exists which with notice or lapse of
         time or both will constitute a material default, under the Security
         Agreement or any indenture, agreement, instrument or evidence of
         indebtedness to which it is a party or by which it is bound, and it is
         not in default in any material respect under any judgment, order, writ,
         injunction, decree, rule or regulation of any court or governmental
         department, commission, board, agency or instrumentality, domestic or
         foreign.

                  (e)      There is no action, suit, proceeding, inquiry or
         investigation, at law or in equity, or before or by any court, public
         board or body, pending against the Assigning Shipowner or of which it
         has otherwise received official notice or which to its knowledge is
         threatened against it wherein an unfavorable decision, ruling or
         finding would materially adversely affect its ability to perform its
         obligations under this Amendment.

                  (f)      The location of the office at which the Assigning
         Shipowner keeps or will keep its records concerning this Amendment is:
         Goodwin Square, 23rd Floor, 225 Asylum Street, Hartford, CT 06103.

                  (g)      The Assigning Shipowner is a "citizen of the United
         States" within the meaning of Section 2 of the Shipping Act, 1916, as
         amended, qualified to engage in the coastwise trade and has been such a
         citizen at all relevant times qualified to operate the Vessel in the
         trades in which the Vessel has operated from time to time.

                  (h)      The Assigning Shipowner is the sole legal owner of
         the Vessel and the Vessel is duly and validly documented in the name of
         the Assigning Shipowner.

         SECTION 2. The Assuming Shipowner hereby represents and warrants that:

                  (a)      The Assuming Shipowner is a corporation duly
         organized, validly existing and in good standing under the laws of the
         State of Delaware, and has full power, authority and legal right to
         execute and deliver this Amendment and to perform its obligations
         hereunder and under the Security Agreement, and this Amendment has been
         duly authorized, executed and delivered by the Assuming Shipowner and,
         assuming the due authorization, execution and delivery by the other
         parties hereto, constitutes the legal, valid and binding obligation of
         the Assuming Shipowner enforceable in accordance with its terms.

                  (b)      Other than the approvals of the Secretary and the
         Board and the instruction of the Owner Participant, no consent,
         authorization or approval of, or filing with, any federal, state,
         municipal or other governmental department, commission, board, bureau,

                                       6
<PAGE>   60
         agency or instrumentality, domestic or foreign, is or has been required
         in connection with any of the transactions contemplated hereby in
         respect of the Assuming Shipowner.

                  (c)      The execution and delivery of this Amendment and the
         performance by the Assuming Shipowner of its obligations under this
         Amendment will not result in a violation of, or be in conflict with, or
         constitute a default or any event which would with notice or lapse of
         time or both become a default under, any provision of the certificate
         of incorporation or the by-laws of the Assuming Shipowner, or a default
         under any mortgage, indenture, contract, agreement or other instrument
         to which the Assuming Shipowner is a party or by which it or its
         property is bound, and the execution and delivery of this Amendment and
         the performance by the Assuming Shipowner of its obligations under this
         Amendment will not result in a violation of any statute, rule or
         regulation applicable to the Assuming Shipowner or its property or by
         which it or its property may be bound and will not result in a
         violation of or be in conflict with, or result in a breach of, any term
         or provision of any judgment, order, decree or award of any court,
         arbitrator or governmental or public instrumentality binding upon the
         Assuming Shipowner or its property.

                  (d)      The Assuming Shipowner is not in default in any
         material way, and no condition exists which with notice or lapse of
         time or both will constitute a material default, under any mortgage,
         loan agreement, indenture, evidence of indebtedness or other instrument
         to which it is a party or by which it is bound, and it is not in
         default in any material respect under any judgment, order, writ,
         injunction, decree, rule or regulation of any court or governmental
         department, commission, board, agency or instrumentality, domestic or
         foreign.

                  (e)      There is no action, suit, proceeding, inquiry or
         investigation, at law or in equity, or before or by any court, public
         board or body, pending against the Assuming Shipowner or of which it
         has otherwise received official notice or which to its knowledge is
         threatened against it wherein an unfavorable decision, ruling or
         finding would materially adversely affect its ability to perform its
         obligations under this Amendment (including the ability to own and
         operate the Vessel).

                  (f)      The location of the office at which the Assuming
         Shipowner keeps or will keep its records concerning this Amendment is:
         1200 Harbor Boulevard, 9th Floor, C-901, Weehawken, New Jersey 07087,
         Attention: General Counsel.

                  (g)      The Assuming Shipowner is a "citizen of the United
         States" within the meaning of Section 2 of the Shipping Act, 1916, as
         amended, qualified to engage in the coastwise trade and covenants that
         it shall remain such a citizen for operation in the trades in which the
         Vessel is operated from time to time.

                                       7
<PAGE>   61
                                  ARTICLE THIRD

                       CONDITIONS PRECEDENT TO ASSIGNMENT,
                             ASSUMPTION AND RELEASE

         The Secretary hereby consents to and approves the transfer of the
Vessel by the Assigning Shipowner to the Assuming Shipowner, the termination of
the Original Bareboat Charter and the release of the Assigning Shipowner and the
Original Bareboat Charterer from their respective obligations thereunder on the
following conditions:

         1.       The Vessel shall be transferred by the Assigning Shipowner to
the Assuming Shipowner by a Bill of Sale on Coast Guard form CG-1340,
warranteeing the Assigning Shipowner's title to the Vessel and its freedom from
liens, charges and encumbrances of any kind other than the Mortgage and liens
permitted by the Security Agreement, and such Bill of Sale shall otherwise be in
form and substance satisfactory to the Secretary, and shall be recorded in the
National Vessel Documentation Center.

         2.       The Vessel shall be duly and properly documented in the name
of the Assuming Shipowner.

         3.       The parties thereto shall execute the Indenture Assumption
Agreement referred to in the Seventh Recital above.

         4.       The Assuming Shipowner shall assume the Mortgage and an
instrument evidencing such assumption shall be executed, delivered and duly
recorded in the National Vessel Documentation Center.

         5.       The Assuming Shipowner, the Bareboat Charterer, and the Time
Charterer shall have assumed the Title XI Reserve Fund and Financial Agreement,
Contract No. 9882, by an instrument in form and substance satisfactory to the
Secretary.

         6.       The Assuming Shipowner shall execute and deliver an
appropriate endorsement to the Secretary's Note to evidence its assumption of
the Assigning Shipowner's obligations thereunder.

         7.       The Vessel shall be free and clear of any and all liens,
claims, charges and encumbrances (except for the Mortgage) and the Assuming
Shipowner and the Secretary shall have received such evidence thereof as they
may reasonably request.

         8.       All other matters incident to the transfer of the Vessel and
the assignment and assumption of the obligations contemplated by this Amendment
shall be reasonably satisfactory to the Secretary and the Assuming Shipowner.

         9.       The Contingent Guarantee and the Second Mortgage shall have
been executed and delivered by the parties thereto.

                                       8
<PAGE>   62
                                 ARTICLE FOURTH

                                 GRANTING CLAUSE

         In order to create a present security interest in favor of the
Secretary, the Assuming Shipowner does hereby grant, sell, convey, assign,
transfer, mortgage, pledge, set over, and confirm unto the Secretary continuing
security interests in all of the right, title, and interest of the Shipowner in
and to all of the following, whether now owned or existing or hereafter arising
or acquired:

         I.       The Bareboat Charter and all moneys payable to the Assuming
Shipowner thereunder and the Time Charter and any future time charter and all
moneys payable to the Bareboat Charterer thereunder. Said right, title and
interest in and to (a) the Bareboat Charter and all moneys payable thereunder,
together with the Consent to Bareboat Charter Assignment and (b) the Time
Charter and any future time charter and all moneys payable thereunder as pledged
by Bareboat Charterer in the Assignment of Time Charter effective as of the
Effective Date, are herein collectively referred to as the "Rights Under the
Bareboat Charter and Related Contracts". The Secretary agrees that, pursuant to
the terms of the Security Agreement as amended hereby and the Consent to
Bareboat Charter Assignment all moneys payable to the Assuming Shipowner
hereunder, under the Time Charter and under the Bareboat Charter will be paid
directly to the Depository for application in accordance with the Security
Agreement as amended hereby and the Depository Agreement.

         II.      All proceeds of the collateral described in Paragraph I above.

         The right, title, and interest of the Secretary mentioned in Paragraphs
I and II constitute and shall be considered part of the "Security," as such term
is defined in the Security Agreement as amended hereby and shall be held by the
Secretary pursuant to the provisions of the Security Agreement as amended
hereby.

         Irrespective of the foregoing, (1) the Secretary shall not, by virtue
of this Amendment, have any obligations under any of the documents referred to
in Paragraph I or be required to make any payment owing by the Shipowner
thereunder, and (2) if there is no existing Default, the Shipowner shall
(subject to the rights of the Secretary hereunder) be entitled to exercise all
of its rights under each of the documents referred to in Paragraph I above and
with respect to other property referred to in the Granting Clauses hereof, and
shall be entitled to receive all of the benefits accruing to it thereunder as if
the foregoing were not applicable.

                                       9
<PAGE>   63
                                  ARTICLE FIFTH

                          SECURITY AGREEMENT CONFIRMED

         The Security Agreement as amended hereby is in all respects confirmed,
affirmed, and reaffirmed, including all of the covenants and agreements and
representations on the part of the Shipowner which are set forth therein and all
the rights, privileges, powers and immunities of the Secretary which are
provided for therein, and the grant of the collateral security interest of the
Secretary in the Security is continued.


                                  ARTICLE SIXTH

                        AMENDMENTS TO SECURITY AGREEMENT

         SECTION 1. Section 2.04(b) of Exhibit 1 to the Security Agreement -
General Provisions Incorporated into the Security Agreement ("Exhibit 1") is
hereby amended by deleting the word "or" before clause (F) thereof and inserting
the following before the period at the end thereof: ", or (G) the Second
Mortgage."

         SECTION 2. Section 6.01 of Exhibit 1 is hereby amended by adding the
following paragraph to the end of such section:

                  "In the event that a Default shall occur, the Secretary shall
         be entitled, but not be required, to deliver to the Depository a
         written notice that the Secretary is thereby exercising exclusive
         control over the Securities Accounts (as such term is defined in the
         Depository Agreement) ("Notice of Exclusive Control"). As further
         provided in the Depository Agreement following the Depository's receipt
         of and pursuant to said Notice of Exclusive Control, the Secretary and
         the Shipowner hereby acknowledge and agree that (i) the Secretary shall
         be entitled, but not be required, to issue to the Depository an
         instruction, notice or any other type of directive that would
         constitute an "entitlement order" within the meaning of Section
         8-102(a)(8) of the New York Uniform Commercial Code (collectively, an
         "Entitlement Order") concerning the Securities Accounts and (ii) the
         Depository shall immediately cease complying with any Request, Request
         for Payment, instruction, notice or any other type of directive that
         would constitute an Entitlement Order from the Shipowner. In the event
         that a Default has been cured or waived as provided in Article VI
         hereof, the Secretary and the Shipowner hereby acknowledge and agree
         that the Secretary shall deliver a written notice to the Depository
         that (i) the Secretary is no longer exercising exclusive control over
         the Securities Accounts and that the Notice of Exclusive Control
         previously delivered is theretofore without effect and (ii) the
         Depository shall thereafter comply with any Request, Request for
         Payment, instruction, notice or any other

                                       10
<PAGE>   64
         type of directive that would constitute an Entitlement Order from the
         Shipowner."

         SECTION 3. The "Notice of Preferred Mortgages and Charter" referred to
in Section 2.12 of Exhibit 1 of the Security Agreement is hereby amended in its
entirety to conform to the form of such notice set forth in the Bareboat Charter
of even date herewith.

         SECTION 4. Article Fifth (y) of the Special Provisions of the Security
Agreement is hereby deleted in its entirety and Article Fifth (z) is hereby
amended by re-lettering it as Article Fifth (y).



                                 ARTICLE SEVENTH

                                  MISCELLANEOUS

         SECTION 1. Schedule X to the Security Agreement is hereby deleted and
substituted by Schedule X in the form attached hereto.

         SECTION 2. This Amendment is executed as and shall constitute an
amendment to and be incorporated into and made a part of the Security Agreement.
All of the terms and provisions of the Security Agreement as supplemented hereby
shall continue to be and shall remain in full force and effect.

         SECTION 3. For all purposes of this Amendment, unless otherwise
expressly provided or unless the context otherwise requires, the terms used
herein which are defined in Schedule X to the Security Agreement, Contract No.
MA-9880, dated as of November 25, 1980, including Amendment No. 1 thereto dated
October 18, 1991, and this Amendment, between the United States and the Assuming
Shipowner, or by reference therein to other instruments or agreements, shall
have the respective meanings stated in said Schedule X to the Security Agreement
or such other instruments or agreements.

         SECTION 4. This Amendment may be executed in any number of
counterparts, and each such counterpart shall for all purposes be deemed to be
an original.

         SECTION 5. This Amendment and the rights and obligations of the parties
hereto, shall in all respects be governed by, construed and enforced in
accordance with the federal laws of the United States of America, but if they
are inapplicable, then in accordance with the laws of the State of New York,
including Section 5-1401 of the General Obligations Law of the State of New
York.

         SECTION 6. If any term of the Security Agreement, as amended by this
Amendment, or any application thereof shall be invalid or unenforceable, the
remainder of the Security Agreement, as amended hereby, and any other
application of such term shall not be affected thereby.

                                       11
<PAGE>   65
         IN WITNESS WHEREOF, this Amendment has been executed by the parties
hereto as of the day and year first above written.


                                    STATE STREET BANK AND TRUST COMPANY, not in
                                    its individual capacity but solely as owner
                                    trustee under the Trust Agreement dated as
                                    of November 13, 1980, as amended, for the
                                    benefit of the owner participant named
                                    therein,
                                                  Assigning Shipowner


                                    By:      ______________________________
                                             Name:_________________________
                                             Title:________________________



Attest:

By:      ________________________
<PAGE>   66
                                    JULIUS OWNER CORPORATION,
                                    Assuming Shipowner



                                    By:_____________________________
                                       Name:________________________
                                       Title:_________________________



Attest:


By:______________________
<PAGE>   67
                                    UNITED STATES OF AMERICA
                                    SECRETARY OF TRANSPORTATION

                                    By:  MARITIME ADMINISTRATION



(Seal)                              By: ______________________________


Attest:


By:      ________________________
<PAGE>   68
                                                                   4.02.01(a)

                               SECOND ENDORSEMENT
                               TO SECRETARY'S NOTE

                              (ITB FRANCES HAMMER)
                      (TO BE RENAMED SMT CHEMICAL EXPLORER)

         The undersigned, Frances Owner Corporation, a Delaware corporation (the
"Assuming Shipowner"), hereby assumes the obligations of State Street Bank and
Trust Company, a Massachusetts trust company, not in its individual capacity but
solely as owner trustee under the Trust Agreement dated as of November 13, 1980,
as amended (the "Trust Agreement"), for the benefit of the owner participant
named therein, as shipowner, under the promissory note dated September 16, 1981
(the "Secretary's Note"), made by Hartford National Bank and Trust Company, not
in its individual capacity but solely as owner trustee under the Trust Agreement
to the United States of America represented by the Secretary of Transportation,
acting by and through the Maritime Administrator (the "Secretary"), which
Secretary's Note was made pursuant to the provisions of the Security Agreement
hereinafter referred to, and was previously endorsed in a First Endorsement to
Secretary's Note dated October 18, 1991, by The Connecticut National Bank, not
in its individual capacity but solely as owner trustee under the Trust
Agreement.

         Capitalized terms used herein and not separately defined herein have
the respective meanings set forth in Schedule X to the Security Agreement,
Contract No. MA-9892, dated as of November 25, 1980, including Amendment No. 1
thereto dated October 18, 1991, and Amendment No. 2 thereto dated the date
hereof, between the Shipowner and the Secretary.

         The Assuming Shipowner hereby confirms that as assumed hereby the
Secretary's Note remains in full force and effect. As of the date of this Second
Endorsement, the Assuming Shipowner and the Secretary agree that the outstanding
amount of the Secretary's Note is $10,969,000.

         Dated:   _________________, 1999

                                       FRANCES OWNER CORPORATION,
                                                              Assuming Shipowner

                                       By:_____________________________
                                          Name:________________________
                                          Title:_________________________

Attest:

______________________


<PAGE>   69
                                                                    4.02.01(b)

                               SECOND ENDORSEMENT
                               TO SECRETARY'S NOTE

                               (ITB JULIUS HAMMER)
                       (TO BE RENAMED SMT CHEMICAL TRADER)

         The undersigned, Julius Owner Corporation, a Delaware corporation (the
"Assuming Shipowner"), hereby assumes the obligations of State Street Bank and
Trust Company, a Massachusetts trust company, not in its individual capacity but
solely as owner trustee under the Trust Agreement dated as of November 13, 1980,
as amended (the "Trust Agreement"), for the benefit of the owner participant
named therein, as shipowner, under the promissory note dated March 18, 1981 (the
"Secretary's Note"), made by Hartford National Bank and Trust Company, not in
its individual capacity but solely as owner trustee under the Trust Agreement to
the United States of America represented by the Secretary of Transportation,
acting by and through the Maritime Administrator (the "Secretary"), which
Secretary's Note was made pursuant to the provisions of the Security Agreement
hereinafter referred to, and was previously endorsed in a First Endorsement to
Secretary's Note dated October 18, 1991, by The Connecticut National Bank, not
in its individual capacity but solely as owner trustee under the Trust
Agreement.

         Capitalized terms used herein and not separately defined herein have
the respective meanings set forth in Schedule X to the Security Agreement,
Contract No. MA-9880, dated as of November 25, 1980, including Amendment No. 1
thereto dated October 18, 1991, and Amendment No. 2 thereto dated the date
hereof, between the Shipowner and the Secretary.

         The Assuming Shipowner hereby confirms that as assumed hereby the
Secretary's Note remains in full force and effect. As of the date of this Second
Endorsement, the Assuming Shipowner and the Secretary agree that the outstanding
amount of the Secretary's Note is $10,401,000.

         Dated:   _________________, 1999

                                       JULIUS OWNER CORPORATION,
                                                              Assuming Shipowner

                                       By:_____________________________
                                          Name:________________________
                                          Title:_________________________

Attest:

______________________



<PAGE>   70
                                                                         4.03(a)



                                BAREBOAT CHARTER


                                     BETWEEN


                           FRANCES OWNER CORPORATION,
                                                      OWNER

                                       AND


                            FRANCES ODS CORPORATION,
                                         BAREBOAT CHARTERER







                               SEPTEMBER 29, 1999







                               ITB FRANCES HAMMER
                      (TO BE RENAMED SMT CHEMICAL EXPLORER)



<PAGE>   71

                               TABLE OF CONTENTS
                               BAREBOAT CHARTER

ARTICLE 1  -- DEFINITIONS...................................................   1

ARTICLE 2  -- DELIVERY AND ACCEPTANCE OF THE VESSEL.........................   2

ARTICLE 3  -- USE AND OPERATION OF THE VESSEL; COMPLIANCE WITH LAWS.........   3

ARTICLE 4  -- MAINTENANCE, CLASSIFICATION AND REPAIRS, INSPECTION...........   6

ARTICLE 5  -- USE OF STORES AND EQUIPMENT...................................   9

ARTICLE 6  -- BAREBOAT CHARTERER'S CHANGES; INSTALLATION OF EQUIPMENT
               AND REMOVAL OF PARTS.........................................  11

ARTICLE 7  -- LIENS AND ATTACHMENTS.........................................  13

ARTICLE 8  -- INSURANCE.....................................................  16

ARTICLE 9  -- TERM OF BAREBOAT CHARTER, OPTION TO RENEW AND BASIC HIRE......  28

ARTICLE 10 -- EVENT OF LOSS AND RIGHT TO TERMINATE..........................  33

ARTICLE 11 -- [RESERVED]....................................................  37

ARTICLE 12 -- REQUISITION OF USE............................................  37

ARTICLE 13 -- REDELIVERY....................................................  42

ARTICLE 14 -- ASSIGNMENTS...................................................  44

ARTICLE 15 -- EVENTS OF BAREBOAT DEFAULT....................................  46

ARTICLE 16 -- REPLACEMENT OF THE BAREBOAT CHARTERER.........................  55

ARTICLE 17 -- MISCELLANEOUS.................................................  55

ARTICLE 18 -- NOTICES.......................................................  58

<PAGE>   72

                                BAREBOAT CHARTER

                               ITB FRANCES HAMMER
                      (TO BE RENAMED SMT CHEMICAL EXPLORER)

        THIS BAREBOAT CHARTER is made on __________, 1999, by and between
Frances Owner Corporation, a Delaware corporation (the "Shipowner"), and Frances
ODS Corporation, a Delaware corporation (the "Bareboat Charterer").

                                   WITNESSETH
         WHEREAS, the Shipowner desires to demise charter the Vessel to the
Bareboat Charterer and the Bareboat Charterer desires to demise charter the
Vessel from the Shipowner, in each case on the terms and conditions hereinafter
set forth; and

         WHEREAS, the Shipowner, on the date hereof, is changing the name of the
Vessel to SMT CHEMICAL EXPLORER (tug) and SMT ONE (barge);

         NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Shipowner agrees to let and
demise charter and the Bareboat Charterer agrees to hire and demise charter the
Vessel on the terms and conditions hereinafter set forth.

                                    ARTICLE 1
                                   DEFINITIONS

         The capitalized terms used herein which are defined in, or defined by
reference to, Schedule X attached hereto, as said Schedule X may be amended from
time to time as herein provided, have the meanings specified in said Schedule X.



<PAGE>   73

                                    ARTICLE 2
                      DELIVERY AND ACCEPTANCE OF THE VESSEL

         (a) Notwithstanding any other provision in this Bareboat Charter, the
Shipowner shall be deemed to have tendered, and the Bareboat Charterer shall be
deemed to have unconditionally accepted, delivery of the Vessel under this
Bareboat Charter "as is, where is" in whatever condition it may be, AND IT IS
AGREED THAT SHIPOWNER DOES NOT MAKE NOR SHALL BE DEEMED TO HAVE MADE ANY
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE TITLE, DESIGN,
CONDITION, VALUE, MERCHANTABILITY, OPERATION OR SEAWORTHINESS OF THE VESSEL OR,
AS TO THE QUALITY OF THE MATERIAL, EQUIPMENT OR WORKMANSHIP IN, OR AS TO THE
CONSUMABLE STORES ON BOARD, THE VESSEL, OR AS TO THE FITNESS OF THE VESSEL FOR
ANY PARTICULAR USE OR AS TO THE ELIGIBILITY OF THE VESSEL FOR ANY PARTICULAR
TRADE, OR ANY OTHER WARRANTY OR REPRESENTATION WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE VESSEL. The Bareboat Charterer's acceptance of the Vessel
under this Bareboat Charter, as provided in this Article 2(a), shall confirm and
be conclusive evidence, as between the Shipowner and the Bareboat Charterer,
that the Vessel is in all respects satisfactory to the Bareboat Charterer and in
compliance with all requirements of this Bareboat Charter, and the Bareboat
Charterer will not assert any claim of any nature whatsoever against the
Shipowner based on any of the foregoing matters in this Article 2(a). Nothing in
this Article 2(a) shall be construed as a waiver of any right that either the
Bareboat Charterer or the Shipowner may have against any person other than the
Shipowner or the Bareboat Charterer.


                                       2
<PAGE>   74
         (b) The Shipowner hereby agrees to provide to the Bareboat Charterer a
full set of general and detailed Plans and Specifications correct to the Vessel
as built, which shall be returned to the Shipowner upon termination of this
Bareboat Charter or replacement of the Bareboat Charterer as bareboat charterer
of the Vessel.

                                    ARTICLE 3
                        USE AND OPERATION OF THE VESSEL;
                              COMPLIANCE WITH LAWS

         (a) Subject to the terms and conditions of this Bareboat Charter, the
Bareboat Charterer shall have the full use of the Vessel and may employ the
Vessel in any part of the world and in such lawful trades and carrying such
lawful cargoes as the Time Charterer may direct and as otherwise required to
perform the Time Charter, subject to the limits of the American Institute of
Trade Warranties (the "Institute Warranties"). However, upon reasonable advance
notice to the Shipowner, the Bareboat Charterer may breach those Institute
Warranties, provided that the Bareboat Charterer shall pay any additional
premiums assessed by the Vessel's insurers for breach of the Institute's
Warranties, provided further that the Vessel shall not be operated in any area
in which the insurance required by Article 8 of this Bareboat Charter would not
be in full force and effect.

         (b) Subject to the terms and conditions of this Bareboat Charter, the
Bareboat Charterer shall have exclusive possession and control of the Vessel,
and shall man, victual, equip, supply, furnish, outfit, maintain and repair,
navigate and operate the Vessel at its own expense or by its own procurement
throughout the Charter Period. The Master, officers and crew of the Vessel shall
be engaged and employed as directed by the Bareboat Charterer and


                                       3
<PAGE>   75
shall remain the Bareboat Charterer's servants, navigating and working the
Vessel on behalf of and at the risk of the Bareboat Charterer. The Shipowner
shall not have any interest in any salvage moneys earned by the Vessel or
received by the Bareboat Charterer during the Charter Period. The Bareboat
Charterer assumes and shall satisfy all costs and liabilities incurred in
connection with all salvage services rendered by the Vessel. The Shipowner shall
not be required to pay any port charges, pilotages, or any other costs, charges
and expenses whatsoever incident to the use, operation and maintenance of the
Vessel during the Charter Period.

         (c) The Bareboat Charterer shall, at the Bareboat Charterer's expense,
throughout the Charter Period maintain, or cause to be maintained, the
documentation of the Vessel under the laws and flag of the United States in the
name of the Shipowner, and the Shipowner shall upon the request of the Bareboat
Charterer execute such documents and furnish such information, or cause to be
executed or furnished by the Shipowner or the Secretary, as the Bareboat
Charterer may reasonably require to enable the -Bareboat Charterer to maintain,
or cause to be maintained, such documentation.

         (d) The Vessel shall, and the Bareboat Charterer covenants that it
will, at the Bareboat Charterer's cost and expense, at all times comply with the
requirements of all applicable laws, treaties and conventions, and all
applicable rules, regulations and orders issued thereunder, including
particularly, but without limitation by this enumeration, the International
Convention for Safety of Life at Sea, 1960, as amended, and all applicable laws,
rules, regulations and orders administered by the United States Maritime
Administration, Coast Guard, Federal Maritime Commission, Customs Service,
Environmental Protection Agency,

                                       4
<PAGE>   76
ABS and any other United States agency, or their respective successors, having
jurisdiction in connection with the use, operation and maintenance of the Vessel
and the Bareboat Charterer covenants that it will have on board, when required
thereby, valid certificates showing compliance therewith. The Bareboat Charterer
will not suffer or permit anything to be done which might injuriously affect the
documentation of the Vessel under the laws and regulations of the United States
or the validity or the preferred status of the Mortgage or the Second Mortgage
on the Vessel under the Ship Mortgage Act, and the Bareboat Charterer will not
abandon the Vessel in a foreign port (unless advisable in connection with an
Event of Loss), engage in any unlawful trade under, or violate, any applicable
law, treaty, convention, rule, regulation or order or carry any cargo that may
expose the Vessel to penalty, forfeiture or seizure or expose the Shipowner to
penalty.

         (e) The cargo principally to be carried shall be superphosphoric acid.
However, the Bareboat Charterer shall have the option of shipping petroleum
products or any other lawful cargo in bulk for which the Vessel and its tanks
are suitable, as well as any lawful merchandise in containers in the Vessel's
forehold, between decks or other suitable space available, subject to the
Master's approval as to kind, character, amount and stowage.


         (f) The Shipowner and the Bareboat Charterer, each respectively, hereby
represents that it is, and covenants that it shall remain during the Charter
Period, a Citizen of the United States. In the event that the Shipowner or the
Bareboat Charterer shall fail to remain, or an event shall occur which will
cause either to no longer remain, a Citizen of the United States, then it shall
notify the other party hereto as soon as it obtains knowledge of such fact.

                                       5
<PAGE>   77
         (g) The Bareboat Charterer agrees that it shall, to the extent the
Shipowner reasonably requests, assist the Shipowner in enforcing and asserting
all rights of warranty, guarantee, indemnity, royalty, liability, patent
liability and claims of patent infringement and any other rights which it may
have with respect to the Vessel or its equipment. The Bareboat Charterer further
agrees that it shall, to the extent it has knowledge, notify the Shipowner of
any information in connection with such rights or claims.

                                    ARTICLE 4
                           MAINTENANCE; CLASSIFICATION
                             AND REPAIRS; INSPECTION

      (a) The Bareboat Charterer shall be charged with full responsibility
for  and repair of the Vessel throughout the Charter Period and shall
at all times, at its own risk, expense and procurement, without expense to the
Shipowner, maintain and preserve, or cause to be maintained and preserved, the
Vessel in good condition, working order and repair, ordinary wear and tear
excepted, so that the Vessel shall be, insofar as due diligence can make it so,
tight, staunch, strong and well and sufficiently tackled, appareled, furnished,
equipped and supplied and in every respect seaworthy and in a good operating
condition. Furthermore, the Bareboat Charterer shall maintain, or cause to be
maintained, the Vessel so as to entitle it to the highest classification and
rating of ABS for vessels of the same age and type, submitting the Vessel to all
required surveys of ABS (giving the Shipowner prior written notice thereof, 45
days in advance if practicable, but otherwise as long in advance as may be
practicable under the circumstances), and annually, during the Charter Period,
shall furnish to the Shipowner copies of all certificates issued by ABS, within
20 days from receipt, evidencing the maintenance of

                                       6
<PAGE>   78
such classification and rating. The Bareboat Charterer shall also furnish to the
Shipowner copies of all other survey and inspection reports within 20 days of
the Bareboat Charterer's receipt thereof. The cost of all repairs or changes
necessary to cause the Vessel to comply with the requirements of ABS, including
changes or additions to such requirements, shall be for the Bareboat Charterer's
account.

         (b) The Vessel shall be repaired and overhauled, or caused to be
repaired and overhauled, by the Bareboat Charterer, and for the Bareboat
Charterer's account, whenever reasonably necessary, but at least as often as may
be required by applicable regulations of both the United States Coast Guard and
by ABS. The Bareboat Charterer shall, at its expense, promptly and duly comply
with all requirements of ABS in order to maintain class as provided in this
Article, including those resulting from each special survey of the Vessel. The
Vessel shall be drydocked, cleaned and the bottom painted, whenever necessary to
keep the Vessel in the condition required by the first sentence of Article 4(a)
hereof by the Bareboat Charterer, but at least as often as may be required by
applicable regulations of both the United States Coast Guard and by ABS and at
such intervals thereafter as the Shipowner shall from time to time determine.
The Bareboat Charterer shall give the Shipowner written notice of the time and
place of each such proposed drydocking 45 days in advance if practicable, but
otherwise as long in advance as may be practicable under the circumstances, in
order that the Shipowner may, if it so desires, have authorized representatives
present at such drydocking and otherwise inspect the Vessel at its own expense.

         (c) Subject to any applicable laws and regulations, the Shipowner, the
Time Charterer, the Secretary, Occidental, or their authorized representatives,
shall have the right at


                                       7
<PAGE>   79
reasonable times, on reasonable notice and at their own expense, without causing
undue delay to the Vessel's operation, to inspect the Vessel in order to
ascertain its condition and to ascertain that the Vessel is being properly
repaired and maintained in accordance with this Article 4, but inspection in
drydock shall be made only when the Vessel shall be in drydock under the
provisions of Article 4(b) hereof. The Bareboat Charterer shall make, or cause
to be made, all repairs, without expense to the Shipowner, as such inspection
may show to be required in order to meet the requirements of this Article 4. The
Bareboat Charterer shall (i) permit the Shipowner, the Secretary, Occidental, or
the Time Charterer, or their authorized representatives, to inspect the Vessel's
logs and papers whenever requested, on reasonable notice, and to a reasonable
extent, without causing undue delay to the Vessel's operation, and (ii) furnish
the Shipowner, the Secretary, Occidental, and the Time Charterer with full
information regarding any casualties or other accidents or damage to the Vessel.

         (d) Within 45 days after the end of each calendar year, the Bareboat
Charterer shall deliver an Officer's Certificate to the Shipowner stating for
the portion of the Calendar Year ended during which Bareboat Charterer had
possession of the Vessel pursuant to the provisions of this Bareboat Charter:

             (i) whether the Vessel has been maintained and repaired in
accordance with this Bareboat Charter;

             (ii) the specifics of any material changes and any repairs
involving an amount in excess of $250,000 which have been made to the Vessel;
and
             (iii) whether any drydocking occurred and the actions taken during
such drydocking.

                                       8
<PAGE>   80

             (e) Neither the Shipowner nor the Time Charterer shall have any
obligation hereunder to make any inspection or examination or shall incur any
liability or obligation by reason of not making any inspection or examination
under this Article 4.

                                    ARTICLE 5
                           USE OF STORES AND EQUIPMENT

         (a) A complete inventory of the Vessel's entire equipment, outfit,
appliances and of all consumable stores on board the Vessel shall be made by the
Bareboat Charterer in conjunction with the Shipowner or its designee on or
before the commencement of this Bareboat Charter and again upon termination of
this Bareboat Charter or replacement of the Bareboat Charterer as bareboat
charterer of the Vessel. The Shipowner and the Bareboat Charterer acknowledge
that such fuel, diesel oil, fresh water, lubricating oil, greases and consumable
stores as may be on board the Vessel at the time of delivery thereof to the
Bareboat Charterer will be the property of the Time Charterer, but may be
utilized by the Bareboat Charterer in performing its obligations under the
provisions of this Bareboat Charter. On redelivery or retaking of the Vessel any
such fuel, diesel oil, fresh water, lubricating oil, greases and consumable
stores that may be on board the Vessel shall become the property of the
Shipowner.


         (b) The Bareboat Charterer shall have the use, without additional
payment to the Shipowner, of all outfit, equipment (including cabin, crew and
galley equipment), furniture, furnishings, appliances, spare and replacement
parts and non-consumable stores as shall have been on board the Vessel at the
time of delivery thereof to the Bareboat Charterer, as evidenced by the
inventory of such items supplied by the Shipowner on the Delivery Date. The same
or

                                       9
<PAGE>   81
their substantial equivalent shall be returned to the Shipowner upon
redelivery of the Vessel pursuant to Article 13 hereof in the same good order
and condition as received, ordinary wear and tear excepted. Any such items
damaged or so worn in service as to be unfit for use or for use as a spare part
for replacement purposes, or lost or destroyed, shall be replaced or made good
by the Bareboat Charterer in kind at or before redelivery or, at the Shipowner's
option, the Bareboat Charterer may pay the Shipowner for such items which are
not required for the operation of the Vessel at the current market prices
therefor (including transportation and installation costs) at the port and time
of redelivery.

         (c) The Bareboat Charterer shall provide, or cause to be provided, at
its own expense, such additional outfit, furniture, furnishings, appliances,
spare and replacement parts, tools and stores, not required by Articles 3(d) or
4(a) hereof, as may be required for the operation of the Vessel under the Time
Charter. Such additional property so provided shall not become part of the
Vessel but shall remain the property of the Bareboat Charterer, and the Bareboat
Charterer may, but need not, remove the same, without expense to the Shipowner,
at or before such redelivery, provided that if such property is removed the
Vessel shall be restored prior to redelivery to the condition it would have been
in if such property had never been installed, ordinary wear and tear excepted.
Any item of such property which is on board the Vessel and not so removed at the
time of such redelivery shall become the property of the Shipowner.

         (d) All outfit, equipment, furniture, furnishings, appliances, spare
and replacement parts, tools and stores as shall be installed or placed on board
the Vessel in order to comply with Articles 3(d) or 4(a) hereof shall,
immediately upon such installation or replacement on

                                       10
<PAGE>   82
board and without necessity of further act, become part of the Vessel and the
property of the Shipowner.

                                    ARTICLE 6
                   BAREBOAT CHARTERER'S CHANGES; INSTALLATION
                        OF EQUIPMENT AND REMOVAL OF PARTS

     (a) The Bareboat Charterer shall make, or cause to be made, at its sole
cost and expense, any structural change or alteration in the Vessel and install
any additional equipment on the Vessel, which is required by Articles 3(d) or
4(a) hereof. In addition to any changes in the Vessel required to comply with
the provisions of Articles 3(d) or 4(a) hereof, the Bareboat Charterer may,
subject to the approval of the Secretary to the extent required by the Security
Agreement or of Occidental to the extent required by the Second Mortgage, at its
sole cost and expense, make any additional structural changes and alterations in
the Vessel, but with the prior written consent of the Shipowner; provided,
however, that such changes and alterations do not (i) diminish the
seaworthiness, utility or market value of the Vessel, (ii) adversely affect the
ABS classification and rating required to be maintained hereunder, (iii)
conflict with or result in a violation of any other provisions of this Bareboat
Charter or (iv) require the Vessel to be re-documented. All such changes and
alterations shall be expeditiously completed in good and workmanlike manner, and
all equipment and material installed in connection therewith shall, without
necessity of further act, become part of the Vessel and the property of the
Shipowner.

         (b) Subject to the provisions of Articles 3(d) and 4(a) hereof and with
the written permission of the Time Charterer, the Bareboat Charterer may install
or cause to be installed any pumps, gear or equipment it may require in addition
to that on board the Vessel at the time

                                       11
<PAGE>   83
of delivery thereof, provided that such installations are accomplished without
expense to the Shipowner. Pumps, gear and equipment so installed shall without
necessity of further act, become part of the Vessel and the property of the
Shipowner; provided, however, that any time prior to redelivery of the Vessel
pursuant to Article 13 hereof, and so long as no event of Bareboat Default shall
have occurred and be continuing, any such pumps, gear or equipment not required
to be installed in order to meet the requirements of Article 3(d) or of Article
4(a) hereof and not installed as replacement for property on board the Vessel at
the time of delivery thereof, may be removed by the Bareboat Charterer, at its
own expense, provided that the Vessel is restored prior to such redelivery to
the condition it would have been in if such pumps, gear or other equipment had
never been installed, ordinary wear and tear excepted; otherwise such pumps,
gear and equipment remaining on board at such redelivery shall, without
necessity of further act, remain the property of the Shipowner.


         (c) Subject to provisions of Articles 3(d) and 4(a) hereof, the
Bareboat Charterer may, in the ordinary course of maintenance, repair or
overhaul of the Vessel, remove or cause to be removed any item of property
constituting a part of the Vessel, provided such item of property, other than
pumps, gear or equipment installed pursuant to Article 6(b) hereof, is replaced
as promptly as possible by an item of property which is free and clear of all
security interests, liens, encumbrances and rights of others, is in a good
operating condition, renders the Vessel as seaworthy and has a value and utility
at least equal to the item of property being replaced. Any item of property
removed from the Vessel as provided in the preceding sentence shall be disposed
of in a good faith manner with any proceeds resulting therefrom being

                                       12
<PAGE>   84
credited against Operating Costs. Any such replacement item of property shall,
without necessity of further act, become part of the Vessel and the property of
the Shipowner.

         (d) The Bareboat Charterer shall have the right to paint the Vessel in
its own colors or those of any subcharterer or other user of the Vessel, to name
or re-name the Vessel or permit any such subcharterer or user to name or re-name
the Vessel, to install and display its or such subcharterer's or user's stack
insignia and to fly its or such subcharterer's or user's house flag, all without
expense to the Shipowner, and the Bareboat Charterer shall remove, or cause to
be removed, such flag and insignia, and, at its own expense, if requested by the
Shipowner, shall remove, or cause to be removed, any distinctive colors, prior
to redelivery.

         (e) Basic Hire shall continue unabated during any construction
undertaken to change the Vessel. The Shipowner, the United States, and
Occidental shall be named as additional assureds on any builder's risks or other
insurance policy entered into by or for the benefit of the Bareboat Charterer
incident to construction undertaken to change the Vessel.

                                    ARTICLE 7
                              LIENS AND ATTACHMENTS

     (a) If the Vessel is ever libeled or otherwise attached, levied upon or
taken into custody, or detained or sequestered, by virtue of any proceeding in
any court or tribunal, or by any governmental or other authority, in any country
or nation of the world, on account of any mortgage, pledge, lien, encumbrance or
claim on or with respect to the Vessel or its profits, the Bareboat Charterer
shall immediately give notice thereof to the Shipowner, the Secretary and
Occidental by electronic means, confirmed by letter, and, subject to the
obligations of the Bareboat Charterer under the next sentence of this Article
7(a), the Time Charterer in the Time

                                       13
<PAGE>   85
Charter has agreed, at its sole cost and expense promptly to take or cause to be
taken such action as may be necessary to cause the Vessel to be released, and
such liens or claims to be discharged, within a reasonable time not exceeding 30
days. If any such mortgage, pledge, lien, encumbrance or claim arises, or in the
event that the Vessel shall be libeled or otherwise attached, levied upon or
taken into custody, or detained or sequestered, by virtue of any proceeding in
any court or tribunal, or by any governmental or other authority, on account of
any liens or claims against the Bareboat Charterer, any person or entity related
to the Bareboat Charterer or any other Person operating the Vessel on behalf of
the Bareboat Charterer, which such liens or claims are unrelated to the Bareboat
Charterer's chartering of the Vessel or, if related, result from the Bareboat
Charterer's failure properly to apply funds paid by the Time Charterer as
Operating Costs, the Bareboat Charterer agrees that it shall promptly, at its
own cost and expense, remove or cause to be removed such mortgage, pledge, lien,
encumbrance or claim, and cause the Vessel to be released, and cause all liens
and claims on the Vessel in connection with such libel or other action to be
discharged (whether by furnishing a surety bond or otherwise), within a
reasonable time not exceeding 30 days.

         (b) After the execution of this Bareboat Charter, no additional
mortgage, lien, charge or other encumbrance shall be placed on the Vessel or its
profits by the Bareboat Charterer without the prior written consent of the
Shipowner, the Secretary and Occidental.

         (c) Neither the Shipowner, the Bareboat Charterer, any sub-bareboat
charterer, time charterer, the Master of the Vessel, nor any other person has or
shall have any right, power or authority, to create, incur or permit to be
placed or imposed upon the Vessel any mortgage, lien, charge or other
encumbrance whatsoever except:


                                       14
<PAGE>   86
         (1) the liens of the Mortgage and the Second Mortgage; and

         (2) this Bareboat Charter and any assignments and subcharters permitted
under this Bareboat Charter; and

         (3) liens for Crew's Wages, for salvage (including contract salvage)
and general average which are:

                  (i) not yet due and payable, or

                  (ii) either unclaimed or covered by insurance, or

                 (iii) being contested by appropriate proceedings diligently
conducted so long as such proceedings do not involve a significant risk of a
sale, forfeiture or loss of the Vessel; and

         (4) contract and tort liens arising out of or incident to current
operations of, or repairs to, the Vessel (except for liens for Crew's Wages,
salvage and general average) which are subordinate to the liens of the Mortgage
and the Second Mortgage or liens covered by insurance or includable in any
deductible applicable thereto and which are:

                  (i)  based on claims not yet due and payable, or

                  (ii) being contested by appropriate proceedings diligently
conducted so long as such proceedings do not involve a significant risk of a
sale, forfeiture or loss of the Vessel.

         (d) The Bareboat Charterer agrees to warrant and defend the title to,
and the possession of, the Vessel against the claims of all persons arising
during the Charter Period. The Bareboat Charterer agrees to cause a true copy of
this Bareboat Charter, and a certified copy of the Mortgage and the Second
Mortgage, as furnished by the Shipowner, to be placed with the Vessel's papers
on board the Vessel and to exhibit, or cause to be exhibited, the same,

                                       15
<PAGE>   87
on demand, to any person having business with the Vessel which may give rise to
a maritime lien upon the Vessel or to the sale, conveyance, mortgage or charter
thereof, and, on demand, to any representative of the Shipowner.

      (e) The Bareboat Charterer shall cause to be placed and prominently
displayed in the Master's cabin or office and the chart room of the tug a framed
printed notice, of such size that the printed matter covers a space not less
than six inches in width and nine inches in length, and on the barge, a notice
not less than six inches in width and nine inches in length, affixed by means of
a durable plate, in both cases reading as follows:

                  "NOTICE OF PREFERRED MORTGAGES AND CHARTER

                  This Vessel is owned by Frances Owner Corporation, a Delaware
                  corporation and (i) is covered by a First Preferred Fleet
                  Mortgage dated as of Sept. 16, 1981, in favor of the United
                  States of America, under authority of Chapter 313, Title 46 of
                  the United States Code, as amended and supplemented, (ii) is
                  covered by a Second Preferred Fleet Mortgage dated ____, 1999,
                  in favor of Occidental Petroleum Corporation, under authority
                  of Chapter 313, Title 46 of the United States Code, and (iii)
                  is under bareboat charter (the "Bareboat Charter") dated ____,
                  1999, to Frances ODS Corporation (the "Bareboat Charterer").
                  Under the terms of said Mortgages and said Bareboat Charter,
                  neither the Shipowner, Bareboat Charterer, the Master of this
                  Vessel, nor any other person has any right, power or authority
                  to create, incur or impose, or permit to be placed, or
                  imposed, upon this Vessel any lien other than statutory liens
                  of the Mortgages or incident to current operations of this
                  Vessel and certain liens in favor of the United States of
                  America."

                                    ARTICLE 8
                                    INSURANCE

      (a) The Bareboat Charterer shall provide and maintain, or cause to be
provided and maintained, at its own expense, insurance on or with respect to the
Vessel and the operation thereof during the Charter Period as follows:

                                       16
<PAGE>   88
         (1) Marine navigating risk hull and machinery insurance or port risk
hull and machinery insurance (when permitted under this Article 8 (a)) and
marine war navigating risk hull and machinery insurance, together with increased
value and total loss only insurance, in each case to the extent permitted by
such policies. During the Original Term, such insurance (including such
increased value and total loss only insurance) shall be in amounts aggregating
at all times not less than the greater of 105 percent of the then Stipulated
Loss Value or the full commercial value (as determined by the Secretary pursuant
to the Security Agreement, until the Security Agreement shall have been
discharged) of the Vessel, but in no event less than 110 percent of the
aggregate unpaid principal amount of Obligations then Outstanding, including
obligations under the Second Mortgage. During any Renewal Term, such insurance
shall be in amounts aggregating at all times not less than the full commercial
value of the Vessel. While being operated, the Vessel shall always be covered by
marine navigating risk hull and machinery insurance and marine war navigating
risk hull and machinery insurance. When and while the Vessel is idle or laid up,
in lieu of the aforesaid marine navigating risk hull and machinery insurance and
increased value and other forms of total loss insurance, the Bareboat Charterer
may take out port risk hull and machinery insurance; provided, however, that at
all times the Vessel shall be covered by marine war navigating risk hull and
machinery insurance. Any of the foregoing insurance may provide for a deductible
amount approved by the Secretary, Occidental, and the Shipowner, but no consent
or approval shall be required for a deductible amount of up to an aggregate of
$500,000 with respect to any accident, occurrence or event other than an actual
or constructive total loss of the Vessel in any one year. Any such deductible
amount provided for in insurance required to be provided and maintained during
the

                                       17
<PAGE>   89

Renewal Term shall be agreed in advance of such Renewal Term by the Bareboat
Charterer and the Shipowner.


         All policies of insurance required under this Article 8(a)(1) shall,
unless the Secretary, Occidental, and the Shipowner shall otherwise consent in
writing, provide that in the event of an actual or constructive total loss of
either of the hulls of the Vessel, the full aggregate amount for which both
hulls are insured under any such policies shall be payable (i) until the
Security Agreement shall have been discharged, to the Secretary, except as
provided in Article 8(c)(2) hereof, and (ii) thereafter, to the Shipowner.

         (2) Marine and war risk protection and indemnity insurance and, at the
Bareboat Charterer's option, excess protection and indemnity insurance and
marine multi-liability insurance. During the Charter Period, the foregoing
insurance shall be against such risks and in such form as are, and the amount of
such insurance shall be not less than such amounts as are, in the opinion of the
insurance broker expressed in its most recent report delivered in accordance
with, but subject to, the provisions of Article 8(g) hereof, necessary or
advisable for the protection of the interests of the Shipowner; provided,
however, that during the Original Term such insurance to the extent obtainable
shall be in amounts aggregating not less than the greater of (i) 105 percent of
the then Stipulated Loss Value of the Vessel, (ii) the full commercial value
(as determined by the Secretary) of the Vessel, (iii) 110 percent of the
aggregate principal amount of the obligations then Outstanding, including the
obligations under the Second Mortgage, or (iv) such amount, which is then
reasonably obtainable by prudent shipowners and managing agents, as may be
approved from time to time by the Secretary, and provided further, that during
any Renewal Term such insurance to the extent obtainable shall be

                                       18
<PAGE>   90
in amounts aggregating not less than the full commercial value of the Vessel (as
determined by the Bareboat Charterer and not disapproved by the Shipowner in the
reasonable exercise of its discretion within 30 days after its receipt of a
notice of such determination, or in the absence of agreement, as determined by
the Appraisal Procedure). The Shipowner shall have the right to require that
such insurance provide for deductibles in amounts approved by the Secretary, but
that no consent or approval shall be required if such deductibles aggregate not
more than $250,000 with respect to any accident, occurrence or event and
$250,000 with respect to each cargo or property carried. (3) Insurance against
liability under law or international convention arising out of pollution,
spillage or leakage. Subject to the provisions of the next sentence, during the
Charter Period, the foregoing insurance shall be against such risks and in such
forms as are, and the amount of such insurance shall be not less than such
amounts as are, in the opinion of the insurance broker expressed in its most
recent report delivered in accordance with, but subject to, the provisions of
Article 8(g) hereof, necessary or advisable for the protection of the interests
of the Shipowner. During the Charter Period, such insurance to the extent
obtainable shall be in an amount equaling at all times not less than
$700,000,000 with respect to any occurrence.


         (4) Such insurance to the extent obtainable on or with respect to the
Vessel and the operation thereof as the Shipowner is required to provide and
maintain pursuant to the terms of the Security Agreement and the Second
Mortgage.

         (b) (1) All insurance required to be taken out and maintained pursuant
to the terms of this Bareboat Charter shall include the United States (as
Mortgagee under the Mortgage), Occidental (as Mortgagee under the Second
Mortgage), the Shipowner, the


                                       19
<PAGE>   91
Bareboat Charterer, the Time Charterer, and any sub-charterer and operator of
the Vessel which is an Affiliate of the Bareboat Charterer as additional
assureds as their interests may appear, and the policies or certificates of
insurance shall provide that there shall be no recourse against the Shipowner,
the Bareboat Charterer, the United States or Occidental for the payment of
premiums, commissions, club calls, assessments or advances.

         (2) All insurance carried pursuant to Article 8(a) hereof shall contain
provisions or endorsements (A) waiving the insurer's right to subrogation
against the United States (as Mortgagee under the Mortgage), Occidental (as
Mortgagee under the Second Mortgage), the Shipowner, the Bareboat Charterer, the
Time Charterer, and any sub-charterer and operator of the Vessel which is an
Affiliate of the Bareboat Charterer and, to the extent obtainable, such of its
corporate Affiliates as the Bareboat Charterer shall designate, unless any such
Person shall request that a waiver of subrogation in favor of it not be
obtained, in which event it need not be, (B) stating that such insurance is
primary insurance without any right of contribution with respect to any
insurance carried by or on behalf of the Shipowner , other than as provided
pursuant to this Bareboat Charter, on the same interest insured and (C) stating
that inasmuch as such insurance covers more than one insured person, all terms,
conditions and exclusions shall be treated as if a separate policy of insurance
were issued to each insured, and the inclusion in the policies of more than one
assured shall not operate to increase the liability of the insurers.

         (3) Except with respect to the Hull War Risks and Strikes Clauses to
which 14 days' notice or Automatic Termination provisions apply and except with
respect to the Protection and Indemnity insurance to which a 14 day notice
provision applies, the policies in

                                       20
<PAGE>   92
respect of insurance carried pursuant to Article 8(a) hereof shall provide that
at least 10 days (and to the extent reasonably available, 30 days') prior notice
by United States certified mail, return receipt requested, shall be given to the
Shipowner, the Bareboat Charterer, the Secretary and Occidental by the
underwriters of any cancellation for the nonpayment of premiums, commissions,
club calls, assessments or advances. Each policy in respect of such insurance
shall further provide, to the extent reasonably available from the underwriter
of such policy, that at least 30 days' prior notice by United States certified
mail, return receipt requested, shall be given to the Shipowner, the Bareboat
Charterer, the Secretary and Occidental by the underwriter of any termination,
cancellation, lapse or material modification of the terms of such policy. If the
Bareboat Charterer receives, but the Shipowner does not receive, any notice
referred to in the preceding sentence, the Bareboat Charterer shall promptly
deliver a copy of such notice to the Shipowner, the Secretary and Occidental.


         (c) All policies of insurance required to be taken out and maintained
pursuant to the terms of this Bareboat Charter or other evidence thereof shall
provide that losses thereunder shall be payable (i) until the Security Agreement
shall have been discharged, to the Secretary for application pursuant to the
Security Agreement and thereafter to Occidental pursuant to the Second Mortgage,
and (ii) thereafter, to the Shipowner; provided, however, that such policies of
insurance or other evidence thereof shall provide that:

         (1) in the case of insurance carried pursuant to Article 8(a)(2) hereof
or Section 2.07(e) of Exhibit 1 to the Security Agreement or the provisions of
the Second Mortgage:

                                       21
<PAGE>   93
         (i) if neither the Shipowner nor the Bareboat Charterer has incurred
the loss, damage or expense in question, any loss under such insurance may be
paid directly to the Person by whom any liability covered by such policies or
certificates has been incurred (whether or not a Default under the security
Agreement then exists), and

         (ii) if the Shipowner or the Bareboat Charterer shall have incurred the
loss, damage or expense in, question, and shall have presented to the
underwriters satisfactory evidence that the liability insured against has been
discharged or is being discharged simultaneously with such payment, any such
loss under such insurance shall be paid to the Shipowner or the Bareboat
Charterer, as the case may be, in reimbursement, if there is no existing Default
under the Security Agreement or the Second Mortgage of which the underwriter has
written notice from the Shipowner, the Bareboat Charterer or the Secretary, or,
if there is such an existing Default, to the Secretary to be held and applied
pursuant to the Security Agreement; and thereafter to Occidental pursuant to the
Second Mortgage; and

         (2) in the case of insurance carried pursuant to Article 8(a)(1) hereof
or Section 2.07(b) of Exhibit 1 to the Security Agreement or the Second
Mortgage, so long as the accident, occurrence or event does not result in an
Event of Loss, payment of all losses up to $250,000 (or such higher figure as
the Secretary may from time to time approve) by all insurance underwriters with
respect to any one accident, occurrence or event may be made (i) directly for
the repair or other charges involved, or (ii) directly to the Bareboat Charterer
as reimbursement if the Bareboat Charterer shall have first fully repaired the
damage and paid the cost thereof and the other charges involved, and the
underwriters shall have received evidence of such repair and payment or that
such payment will be made simultaneously with the payment

                                       22
<PAGE>   94
by the underwriters; provided, however, that the underwriters shall not have
received written notice from the Secretary, Occidental, the Bareboat Charterer
or the Shipowner as to the occurrence of a Default under the Security Agreement
or the Second Mortgage or, if so, have been notified by the Secretary in writing
that such Default under the Security Agreement or by Occidental in writing that
such Default under the Second Mortgage has been cured or waived.

         (d) In the event that a claim is made against the Vessel for loss,
damage or expense which is covered by insurance, and it is necessary for the
Bareboat Charterer to obtain a bond or to supply other security to prevent
arrest of the Vessel or to release the Vessel from arrest on account of said
claim, the Shipowner shall on request of the Bareboat Charterer, assign to any
person executing a surety or guarantee bond or other agreement to save or
release the Vessel from such arrest, all right, title and interest of the
Shipowner in and to said insurance covering said loss, damage or expense as
collateral security to indemnify against liability under said bond or other
agreement; provided, however, that (i) the Secretary shall have advised the
Shipowner that the United States has so assigned its right, title and interest
in and to such insurance proceeds and (ii) no Event of Bareboat Default shall
have occurred and be continuing.

         (e) The Bareboat Charterer shall have the duty and responsibility to
make, or cause to be made, at its own expense, all proofs of loss and take or
cause to be taken any and all other steps necessary to effect prompt collections
from underwriters for any loss under any insurance on or with respect to the
Vessel or the operation thereof pursuant to Article 8(a) hereof. The Shipowner
shall cooperate in making all proofs of loss and take all other reasonable steps
necessary to effect collection from underwriters.

                                       23
<PAGE>   95
         (f) The insurance provided and maintained on or with respect to the
Vessel or the operation thereof in accordance with this Bareboat Charter shall
be on such forms of policies or other evidence thereof as are required by
Section 2.07 of Exhibit 1 to the Security Agreement until the Security Agreement
shall have been satisfied and discharged and thereafter as required by the
Second Mortgage, and thereafter as are recommended by the insurance brokers
referred to in Article 8(g) hereof as being customary at the time for vessels of
similar size, type, trade and cargo.


         (g) (1) The Bareboat Charterer shall furnish, or cause to be furnished,
to the Shipowner, the Secretary (so long as the Security Agreement shall not
have been satisfied and discharged), and Occidental (so long as the Second
Mortgage shall not have been satisfied and discharged) on the Delivery Date and
on each annual anniversary thereafter, a detailed report, signed by marine
insurance brokers designated by the Bareboat Charterer satisfactory to the
Shipowner and the Secretary (so long as the Security Agreement shall not have
been satisfied and discharged) and Occidental (so long as the Second Mortgage
shall not have been satisfied and discharged), describing the insurance carried
and maintained on or with respect to the Vessel and the operation thereof and
stating, in effect, that such insurance complies in all respects with the
applicable requirements of this Bareboat Charter, the Security Agreement and the
Second Mortgage.

         (2) Such report shall state that in the opinion of such insurance
broker, the liability insurance referred to in Articles 8(a)(2) and 8(a)(3)
hereof then carried on the Vessel is against such respective risks and in such
respective forms as are, and the respective amounts of such insurance are not
less than such amounts as are, necessary or advisable for the protection

                                       24
<PAGE>   96
of the interest of the Shipowner. Such report shall further state that, in the
opinion of such insurance broker, all insurance carried pursuant to Article 8(a)
hereof is underwritten by satisfactory insurance companies, underwriters
associations or underwriting funds.

         (3) In connection with any insurance obtained by the Bareboat Charterer
under this Article 8, the Bareboat Charterer will cause such insurance broker to
agree (i) to advise the Shipowner, the Secretary and Occidental promptly of any
default in the payment of any premium, commission, club call, assessment or
advance required (whether for new insurance or for insurance replacing, renewing
or extending existing insurance) and of any other act, omission or event of
which such insurance broker has knowledge and which in its sole judgement (A)
might invalidate or render unenforceable, or cause the cancellation or lapse or
prevent the renewal or extension of, in whole or in part, any insurance carried
pursuant to Article 8(a) hereof, (B) or might result in any material
modification of the terms of any such insurance or (C) has or might result in
any such insurance not being in compliance with the applicable requirements of
this Bareboat Charter, the Security Agreement and the Second Mortgage, and (ii)
to furnish the Shipowner, the Secretary and Occidental from time to time, upon
request, detailed information with respect to any of the insurance carried on or
with respect to the Vessel or the operation thereof.

         (4) At any time during the Charter Period, the Bareboat Charterer's
insurance broker which is then acting pursuant to Article 8(g)(1) hereof may
(but shall not be obligated hereto to do so) furnish to the Secretary,
Occidental, and the Shipowner a report, in addition to the report required
pursuant to Article 8(g)(1) hereof, to the effect that, in the opinion of such
insurance broker, the amount of any liability insurance referred to in Articles


                                       25
<PAGE>   97
8(a)(2) or 8(a)(3) hereof then carried on the Vessel is either higher or lower
than an amount (the "New Amount"), specified in such additional report, which is
necessary or advisable for the protection of the interests of the Shipowner. If
any such additional report is received and the New Amount specified therein for
any such liability insurance is higher than that then carried on the Vessel, the
Bareboat Charterer shall obtain, as promptly as practicable, an additional
amount of such liability insurance so that the amount thereof is at least equal
to such New Amount. If any such additional report is received and the New Amount
specified therein for any such liability insurance is lower than that then
carried on the Vessel, the Bareboat Charterer may reduce the amount of such
liability insurance, so long as the reduced amount thereof is at least equal to
such New Amount and, if such additional report relates to any liability
insurance referred to in Articles 8(a)(2) or 8(a)(3) hereof, such reduced amount
thereof is not less than the minimum amount of such insurance required to be
carried by such Articles 8(a)(2) or 8(a)(3) hereof.

         (h) The Bareboat Charterer shall deliver, or cause to be delivered, to
the Secretary (so long as the Security Agreement shall not have been satisfied
and discharged) and to Occidental (so long as the Second Mortgage shall not have
been satisfied and discharged) and to the Shipowner, evidence satisfactory to
each of them that the insurance required to be provided and maintained pursuant
to this Bareboat Charter has been issued and in full force and effect.

         (i) Nothing in this Article 8 shall prohibit the Bareboat Charterer, or
if the Bareboat Charterer does not in the first instance, the Shipowner, from
placing, at the expense of the Bareboat Charterer, insurance on or with respect
to the Vessel or the operation thereof in an


                                       26
<PAGE>   98
amount exceeding the full commercial value of the Vessel, or 110 percent of the
aggregate principal amount of the Obligations then Outstanding or 105 percent of
the then Stipulated Loss Value, as provided in Article 8(a)(1) hereof, unless
such insurance would conflict with or otherwise limit the insurance to be
provided or maintained in accordance with Article 8(a) hereof. The Bareboat
Charterer agrees, upon receipt of a Request of, and payment of the premium
therefor by the Shipowner, to apply for and carry, or cause to be applied for
and carried, any insurance permitted to be carried by the Shipowner pursuant to
the preceding sentence, to the extent such insurance is available, with the
Shipowner named as the sole loss payee. The Bareboat Charterer agrees to furnish
the Shipowner and the Secretary, as the case may be, until the Security
Agreement shall have been discharged, promptly with copies of all policies
relating to such insurance.

         (j) The Bareboat Charterer will cause all insurance required to be
provided and maintained by this Bareboat Charter with marine insurance
companies, underwriters associations or underwriting funds approved by the
Shipowner and, until the Security Agreement shall have been discharged, the
Secretary, which approval of the Shipowner shall not be unreasonably withheld or
delayed.

         (k) The Bareboat Charterer shall not declare or agree upon a
compromised, constructive or agreed total loss of the Vessel without the prior
written consent of the Shipowner, and, until the Security Agreement shall have
been discharged, the Secretary and thereafter Occidental while the Second
Mortgage is in effect.

                                       27
<PAGE>   99
                                    ARTICLE 9
                        TERM OF BAREBOAT CHARTER, OPTION
                             TO RENEW AND BASIC HIRE

         (a) Unless sooner terminated in accordance with its terms, this
Bareboat Charter shall be in effect from the Effective Date for the balance of
the Original Term then remaining and shall be extended for the same period as
the Time Charter is extended pursuant to the provisions of Section 3.2 of the
Time Charter.

         (b) The Bareboat Charterer shall, on each Charter Hire Payment Date,
pay in immediately available funds to the Shipowner as hire for the use and
services of the Vessel during the continuance of this Bareboat Charter Basic
Hire an amount equal to the amount of principal and interest then due on the
Obligations. The Bareboat Charterer shall also pay as Supplemental Hire when the
same shall become due: directly to the Indenture Trustee during the period any
Obligations are outstanding, the Indenture Trustee Fees; directly to the
Secretary during the period any Obligations are outstanding, the Guarantee Fees
and directly to the Depository during the period any Obligations are
outstanding, the Depository Fees. Payments made by a Guarantor pursuant to its
Guarantee shall, to the extent of such payments, be deemed payments made by
Bareboat Charterer to the Shipowner pursuant to this Article 9(b). Payment of
Indenture Trustee Fees, Guarantee Fees and Depository Fees need not be paid in
immediately available funds.

         (c) In the event any amount of Basic Hire payable pursuant to the first
sentence of this Article 9 is not paid when due as provided in this Article 9,
the Bareboat Charterer promises to pay promptly, upon demand, in addition to
such amount of Basic Hire, interest (i) to, or on the order of the Shipowner in
an amount equal to the amount of the penalty interest


                                       28
<PAGE>   100
due for the nonpayment of principal of, and interest specified in the
Obligations as a result of non-payment when due of such principal of, premium,
if any, and interest on such Obligations, and (ii) to the Shipowner at the
Interest Rate as applied to the amount of such unpaid Basic Hire (other than any
unpaid Basic Hire payable in respect of principal of, premium, if any, and
interest on the Obligations), for the period from the due date of such Basic
Hire until the date of payment thereof. Payments of such interest made by a
Guarantor pursuant to its Guarantee shall, to the extent of such payments, be
deemed payments made by Bareboat Charterer pursuant to this Article 9(c).

         (d)      In the event any amount of Stipulated Loss Value or
Supplemental Hire (including any amount payable under Article 15(c) hereof) is
not paid when due pursuant to this Bareboat Charter, the Bareboat Charterer
promises to pay, in addition to such amount of Stipulated Loss Value or
Supplemental Hire, interest promptly upon demand (i) to, or on the order of, the
Shipowner, in an amount equal to the amount of the penalty interest due for the
nonpayment of the principal of, premium, if any, and interest specified in the
Obligations as a result of non-payment when due of such principal of, premium,
if any, and interest on the Obligations, and (ii) to the Shipowner at the
Interest Rate as applied to the amount of such unpaid Stipulated Loss Value or
Supplemental Hire (other than any unpaid portions of such amounts payable in
respect of principal of, premium, if any, and interest on the Obligations) for
the period from the due date of such unpaid Stipulated Loss Value or
Supplemental Hire until the date of payment thereof.

         (e)      It is understood and agreed that all provisions of this
Bareboat Charter are under all circumstances to be construed and applied so that
the Shipowner will at all times be paid

                                       29
<PAGE>   101
when due, whether or not the Shipowner has performed under this Bareboat
Charter, any and all amounts payable to it during the Charter Period pursuant to
any of the provisions of this Bareboat Charter and without setoff or adjustment
for any claim whatsoever of the Bareboat Charterer. In addition, the Bareboat
Charterer hereby agrees that, in the event that the Shipowner fails to perform
any covenant or obligation under this Bareboat Charter, the Bareboat Charterer
shall nevertheless make all payments required to be made by it hereunder, when
due, and otherwise perform all of its obligations hereunder, provided, however,
to the extent that a Guarantor, pursuant to its Guarantee makes any payment
required to be made by the Bareboat Charterer hereunder, or performs any
obligation required to be performed by the Bareboat Charterer hereunder, such
payment or performance shall be deemed, solely as between the Shipowner and the
Bareboat Charterer, to be performance or payment by the Bareboat Charterer
hereunder to the extent of the amounts so paid by such Guarantor or Occidental.
Nothing in this Article 9(e) shall be, or shall be deemed to be, a waiver by the
Bareboat Charterer of any rights against the Shipowner under any specific
indemnity in this Bareboat Charter.

         (f)      This Bareboat Charter may not be cancelled or terminated,
except in accordance with the express provisions hereof, for any reason
whatsoever, and the Bareboat Charterer shall have no right to be relieved or
discharged from any obligation or liability under this Bareboat Charter, except
as otherwise expressly provided herein, for any reason whatsoever. The Bareboat
Charterer hereby waives, to the extent permitted by applicable law, any and all
rights which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, cancel, quit or surrender this
Bareboat Charter except as otherwise

                                       30
<PAGE>   102
expressly provided herein. The Bareboat Charterer acknowledges and agrees that
its obligation to pay Basic Hire, Stipulated Loss Value, Supplemental Hire, any
amounts otherwise payable under this Article 9 and any other amount to be paid
by the Bareboat Charterer hereunder shall be absolute and unconditional, under
any and all circumstances, shall not be subject to any counterclaim, setoff,
deduction, abatement or defense based upon any claim the Bareboat Charterer may
have against the Shipowner, the Shipbuilder, the Indenture Trustee or any other
person whatsoever, and shall remain in full force and effect without regard to,
and shall not be released, discharged or in any way affected by any circumstance
or condition (whether or not the Bareboat Charterer shall have any knowledge or
notice thereof), including, but not limited to: (a) any amendment or
modification of or supplement to this Bareboat Charter, any agreements relating
to any part thereof or any other instrument or agreement applicable to the
Vessel or any part thereof or any assignment or transfer of any part thereof, or
any furnishing or acceptance of additional security, or any release of any
security, or any failure or inability to perfect any security, (b) any failure
on the part of the Shipowner, the Indenture Trustee, or any other person to
perform or comply with any term of this Bareboat Charter or any other such
instrument or agreement; (c) any waiver, consent, change, extension, indulgence
or other action or inaction under or in respect of this Bareboat Charter, or any
other such instrument or agreement or any exercise or nonexercise of any right,
remedy, power or privilege under or in respect of any such instrument or
agreement; (d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding with respect to the
Shipowner, the Indenture Trustee, the Bareboat Charterer, or any Affiliate of
any thereof, or their respective properties or creditors, or any action taken by
any court, trustee, receiver or

                                       31
<PAGE>   103
liquidating agent in any such proceeding, including, without limitation, any
termination or rejection of this Bareboat Charter, or any assignment thereof by
any court, trustee, receiver or liquidating agent of the Bareboat Charterer or
the Shipowner or of any of their respective properties in any such proceeding,
(e) any limitation on the liability or obligations of the Bareboat Charterer
under this Bareboat Charter or any termination, cancellation, frustration,
invalidity, irregularity or unenforceability, in whole or in part, of this
Bareboat Charter or any term thereof or any lack of power or authority of the
Shipowner or the Bareboat Charterer to enter into this Bareboat Charter; (f) any
assignment or other transfer of this Bareboat Charter by the Bareboat Charterer
or any lien, charge or encumbrance, from whatever source arising, on or
affecting the Bareboat Charterer's estate in, or any subchartering of, all or
any part of the Vessel (whether or not pursuant to the express provisions of
this Bareboat Charter); (g) any damage to, or loss, destruction, requisition,
seizure, forfeiture or marshal's or other sale of the Vessel or any exercise of
rights with respect to the Vessel under the Mortgage or the Second Mortgage; (h)
any libel, attachment, levy, detention, sequestration or taking into custody of
the Vessel, or any interruption or prevention of or restriction on or
interference with the use or possession of the Vessel; (i) any title defect or
encumbrance or any dispossession from the Vessel by title paramount or
otherwise; (j) any act, omission, misrepresentation or breach on the part of the
Shipowner or the Bareboat Charterer under this Bareboat Charter, or any other
agreement at any time existing between the Shipowner and the Bareboat Charterer
or under any statute, law or governmental regulation; (k) any other circumstance
whatsoever which might otherwise constitute a legal or equitable discharge or
defense of a bareboat charterer and irrespective of any other circumstance which
might otherwise limit the recourse against the Bareboat

                                       32
<PAGE>   104
Charterer, (l) any defect in the seaworthiness, condition, design, operation or
fitness for use of the Vessel or the ineligibility of the Vessel for any
particular trade; (m) any ineligibility of the Vessel for documentation under
the laws of the United States; or (n) any other occurrence or condition
whatsoever, foreseen or unforeseen, whether similar or dissimilar to the
foregoing, now existing or hereafter occurring. Even though the Bareboat
Charterer shall be deprived of or limited in the use of the Vessel in any
respect or for any length of time, whether or not by reason of some act,
omission or breach on the part of the Shipowner, the Bareboat Charterer or any
other party, whether or not resulting from accident and whether or not without
fault on the part of the Bareboat Charterer, the Bareboat Charterer will
continue to make all payments required of the Bareboat Charterer by the terms of
this Bareboat Charter, whether for Basic Hire, Stipulated Loss Value,
Supplemental Hire or otherwise, without interruption or abatement, unless and
until this Bareboat Charter shall have terminated with respect to the Vessel in
accordance with the express provisions hereof. If for any reason whatsoever this
Bareboat Charter shall be terminated in whole or in part by operation of law or
otherwise, except as specifically provided herein, the Bareboat Charterer
nonetheless agrees to pay an amount equal to each payment of Basic Hire,
Stipulated Loss Value, or other amounts at the time such payment would have
become due and payable in accordance with the terms hereof had this Bareboat
Charter not been terminated in whole or in part.

                                   ARTICLE 10
                      EVENT OF LOSS AND RIGHT TO TERMINATE

         (a)      In case an Event of Loss occurs during the Original Term, the
Bareboat Charterer shall give prompt written notice to the Shipowner (with a
copy to the Indenture

                                       33
<PAGE>   105
Trustee and the Secretary) of such Event of Loss and the Bareboat Charterer
shall thereafter give written notice to the Shipowner (with a copy to the
Indenture Trustee and the Secretary) of the Loss Termination Date (the "Loss
Termination Date"), which date shall be a Business Day, specified in such
notice, not less than 40 days after the date notice of the Event of Loss is
given, but not more than 180 days after the date on which such Event of Loss
shall be deemed to have occurred, provided, however, that if a constructive or
an agreed or compromised total loss of the Vessel is declared or agreed by the
underwriters under the insurance more than 105 days after the date of the
casualty giving rise to such total loss, then the "Loss Termination Date" shall
be 75 days (or the next succeeding Business Day) after the date on which such
total loss is declared or agreed by the underwriters. Not later than 10:00 a.m.
San Francisco time on such Loss Termination Date, the Bareboat Charterer shall
pay to, or on the order of, the Shipowner, the sum of (i) the Stipulated Loss
Value applicable to the Loss Termination Date, (ii) the final Indenture Trustee
Fees, Guarantee Fees and Depository Fees, (iii) an amount equal to all expenses
(including legal and investigatory fees) incurred by, and not otherwise
reimbursed to, the Shipowner in connection with the occurrence of the Event of
Loss, as set forth in an Officer's Certificate of the Shipowner received by the
Bareboat Charterer at least three Business Days prior to the Loss Termination
Date, (iv) all amounts of Basic Hire and Supplemental Hire which have become due
and payable under this Bareboat Charter but which have not been paid prior to
the Loss Termination Date, and (v) any amounts which have become due and payable
under the Participation Agreement but which have not been paid prior to the Loss
Termination Date.

                                       34
<PAGE>   106
         (b)      In case there occurs an Event of Loss after the Original Term
and prior to the end of the Charter Period, and the Bareboat Charterer shall
have given prompt written notice to the Shipowner of its election to terminate
this Bareboat Charter, then this Bareboat Charter shall terminate on the Loss
Termination Date specified in such written notice. Not later than 10:00 a.m. San
Francisco time on such Loss Termination Date, the Bareboat Charterer will pay to
the Shipowner the sum of (i) all amounts of Basic Hire and Supplemental Hire
which have become due and payable under this Bareboat Charter, but have not been
paid prior to the Loss Termination Date, and (ii) the Shipowner expenses as
described in clause (iii) of Article 10(a) hereof.

         (c)      Against the payment obligations of Bareboat Charterer under
Article 10(a) hereof, there shall be credited all Event of Loss Proceeds
received prior to the Loss Termination Date by the Indenture Trustee, the
Shipowner, or the Secretary, as the case may be. So long as no Event of Bareboat
Default shall have occurred and be continuing, all Event of Loss Proceeds up to
the amount of payments required to be made by the Bareboat Charterer under
Article 10(a) hereof, received at any time by the Shipowner (and which are not
required to be paid over to the Indenture Trustee during the Original Term)
shall be paid over to the Bareboat Charterer upon payment in full of all amounts
required to be paid by the Bareboat Charterer under Article 10(a) hereof,
provided, however, that during any Renewal Term the Shipowner shall be entitled
to retain an amount equal to the full commercial value of the Vessel as
determined pursuant to Article 8(a) hereof. Until and including the Loss
Termination Date, the Bareboat Charterer shall continue to make all payments of
Basic Hire and Supplemental Hire when due irrespective of the occurrence of the
Event of Loss. This Bareboat Charter shall terminate upon the making

                                       35
<PAGE>   107
by, or on behalf of, the Bareboat Charterer of the payments to the Shipowner
required by this Article 10 and all other amounts due and payable under this
Bareboat Charter, but which have not been paid prior to the Loss Termination
Date. Payments of any amounts due pursuant to this Article 10 made by the
Guarantor pursuant to the Bareboat Charter Guarantee shall, to the extent of
such payments, be deemed payments made by the Bareboat Charter pursuant to this
Article 10.

         (d)      Upon termination of this Bareboat Charterer pursuant to this
Article 10: (i) the Shipowner shall obtain a release of the Vessel from the
liens of the Mortgage and Second Mortgage and of the Secretary under the
Security Agreement; (ii) with the prior written consent, if necessary, of any
governmental authority having jurisdiction, the Vessel or its remains, shall be
transferred by the Shipowner to the Bareboat Charterer or its designee, such
transfer to be without recourse to or warranty by the Shipowner except that the
Shipowner shall warrant that it is transferring whatever title it received to
the Vessel free and clear of any liens, charges or encumbrances created by it;
(iii) the Bareboat Charterer or its designee shall be subrogated to all rights
and claims which the Shipowner shall have with respect to the Vessel or its
remains or which shall arise in connection with the Event of Loss, and the
Bareboat Charterer shall assume all liabilities, if any, with respect to the
Vessel and make payment in satisfaction thereof directly to the persons entitled
thereto; and (iv) the Bareboat Charterer shall have the power to abandon the
Vessel (with the prior written approval of the Secretary, until the Security
Agreement shall have been discharged). All costs and expenses of the Shipowner
in connection with the taking of any action under this Article 10(d) shall be
for the account of, and payable by, the Bareboat Charterer.

                                       36
<PAGE>   108
                                   ARTICLE 11

                                   [RESERVED]




                                   ARTICLE 12
                               REQUISITION OF USE

         (a)      In the event that during the Charter Period the Vessel is
requisitioned for use by any governmental authority of the United States or any
person acting under color of such governmental authority, on any basis not
involving, or not equivalent to, acquisition of title thereto or forfeiture
thereof, the Bareboat Charterer shall promptly notify or cause to be notified
the Bareboat Charterer by electronic means, confirmed by letter. Unless and
until this Bareboat Charter is terminated pursuant to its terms, this Bareboat
Charter shall nevertheless continue in effect, and the Bareboat Charterer will
continue to remain liable for all other obligations under this Bareboat Charter,
other than those obligations the performance of which physically cannot be
performed by reason of such requisition of use. The time the Vessel is under
such requisition will count as part of the Charter Period.

         (b)      (1) In the event that such requisition of use continues for a
period of more than 90 days, and the Bareboat Charterer shall have given a
Requisition Termination Notice specifying the Requisition Termination Date, then
so long as the conditions of Article 12 of the Bareboat Charter have been
satisfied, this Bareboat Charter shall terminate; provided, however, that the
requisition of use shall be continuing on the Requisition Termination Date.

                                       37
<PAGE>   109
                  (2)      During the period from the date of the Requisition
Termination Notice until the Requisition Termination Date specified in such
notice, the Bareboat Charterer may, if requested by the Shipowner, as agent for
the Shipowner, solicit bids for the purchase of the Vessel for cash on the
Requisition Termination Date. The Bareboat Charterer shall certify to the
Shipowner in writing the amount and terms of any bid received by it and the name
and address of the person submitting such bid. If no bid is received under
Article 12 hereof during the period ending on the Requisition Termination Date
specified in the Requisition Termination Notice or if the sale of the Vessel to
one of the Persons submitting such a bid during such period cannot be
consummated, the Requisition Termination Notice shall be deemed rescinded, this
Bareboat Charter shall continue in full force and effect and the Bareboat
Charterer may thereafter at any time give one or more further Requisition
Termination Notices.

                  (c)      On the Requisition Termination Date, if there are one
or more bidders certified to the Shipowner pursuant to Article 12(b)(2) hereof
which are qualified pursuant to law to purchase the Vessel, the Shipowner shall
elect, in accordance with Article 11 hereof, either (1) to sell the Vessel and
the rights to any future Requisition of Use Proceeds attributable to the Vessel
to one of such bidders (selected by it in its sole discretion) for cash in the
full amount of its bid or (2) to retain ownership of the Vessel. Any sale shall
be subject to the prior receipt of all necessary governmental approvals and of
the full amount of the purchase price in immediately available funds on the
Requisition Termination Date, and shall be without recourse to or warranty by
the Shipowner except that the Shipowner shall warrant title to and freedom from
liens created by it and persons claiming through it. Except to the extent
excused by the requisition described in Article 12(a) hereof, the Bareboat
Charterer shall redeliver the

                                       38
<PAGE>   110
Vessel in accordance with Article 13 hereof. The Shipowner shall be entitled to
the proceeds of any sale pursuant to this Article 12(c).

         (d)      (1)      If the Requisition Termination Date occurs during the
Original Term, on the Requisition Termination Date, the Bareboat Charterer shall
pay to the Depository for deposit into the Bareboat Charter Payment Fund:

                  (x)      if the Shipowner has elected to retain ownership of
         the Vessel, an amount equal to the excess, if any, of Termination
         Value as of the Requisition Termination Date over the highest bid
         certified by the Bareboat Charterer to the Shipowner pursuant to
         Article 12(b)(2) hereof, the maker of which bid is financially
         competent and qualified pursuant to law to purchase the Vessel; or

                  (y)      if the Shipowner shall have elected to sell the
         Vessel, an amount equal to the excess, if any, of Termination Value as
         of the Requisition Termination Date over the net proceeds of the sale
         of the Vessel pursuant to Article 12(c) hereof (or the amount of the
         highest bid of a bidder qualified pursuant to law to purchase the
         Vessel if the Shipowner shall have elected to sell the Vessel at a
         lower price, net of any expenses of the Shipowner with respect to such
         sale).

         (2)      If the Requisition Termination Date occurs during any Renewal
Term, on the Requisition Termination Date, the Bareboat Charterer shall pay to
the Shipowner an amount, equal to the aggregate amount of Basic Hire determined
pursuant to Article 9(b)(2) hereof, calculated on a daily basis, payable from
the last Charter Hire Payment Date through the Requisition Termination Date.

                                       39
<PAGE>   111
                  (e)      The Shipowner shall be under no duty to solicit bids
with respect to the Vessel, to inquire into the efforts of Bareboat Charterer to
obtain bids or otherwise to take any action in connection with any such sale,
other than as expressly provided herein. All costs and expenses of the Shipowner
in connection with any sale of the Vessel made pursuant to this Article 12 shall
be for the account of, and payable by, the Bareboat Charterer.

                  (f)      If an Event of Bareboat Default or a Default under
the Security Agreement shall have occurred and until such Default shall have
been cured or waived, the Secretary (or if the Security Agreement shall have
been discharged, the Shipowner) shall be entitled to receive and retain all
Requisition of Use Proceeds; otherwise the Bareboat Charterer shall be entitled
to receive and retain all such payments. In the event that this Bareboat Charter
is terminated pursuant to this Article 12, the Shipowner, if the Shipowner
retains ownership of the Vessel, or the purchaser of the Vessel, as the case may
be, shall be entitled to receive and retain all Requisition of Use Proceeds
attributable to the period after the Requisition Termination Date.

                  (g)      (1)      In the event that during the Charter Period,
the Vessel is requisitioned for use by any governmental authority (other than by
the United States) or any Person or Persons, whether or not acting under color
of such governmental authority, the Bareboat Charterer shall promptly notify or
cause to be notified the Shipowner, the Secretary and Occidental by electronic
means, confirmed by letter. In the case of such requisition, unless such
requisition shall be withdrawn, reversed or released within 90 days, the
Bareboat Charterer, immediately after the 90-day period, shall give a
Requisition Termination Notice

                                       40
<PAGE>   112
specifying the Loss Termination Date (as provided in Article 10(a) of this
Bareboat Charter) and thereafter the provisions of Article 10 hereof for an
Event of Loss shall apply.

                           (2)      In the event that during the Charter Period
there shall occur the capture, condemnation, purchase, seizure or forfeiture of,
or any taking of title to, the Vessel by any governmental authority (other than
by the United States) or any Person or Persons, whether or not acting under
color of such governmental authority, the Bareboat Charterer shall promptly
notify or caused to be notified the Shipowner, the Secretary and Occidental by
electronic means, confirmed by letter. In the case of such capture,
condemnation, confiscation, purchase, seizure or forfeiture of, or any taking of
title to, the Vessel, unless such capture, condemnation, confiscation, purchase,
seizure or forfeiture of, or any taking of title to, the Vessel shall be
withdrawn, reversed or released within 90 days, such capture, condemnation,
confiscation, purchase, seizure or forfeiture of, or any taking of title to, the
Vessel shall be deemed to be an Event of Loss and the provisions of Article 10
hereof shall apply.

         (h)      Until and including the Requisition Termination Date, the
Bareboat Charterer shall continue to make payments of Basic Hire and
Supplemental Hire when due irrespective of the requisition of use of the Vessel.
In addition, on the Requisition Termination Date, the Bareboat Charterer shall
pay to the Shipowner an amount equal to the premium, if any, due in respect of
the redemption of the Obligations as a result of the termination of this
Bareboat Charter pursuant to this Article 12. Notwithstanding any provision to
the contrary in this Article 12, this Bareboat Charter shall not terminate
unless all amounts due under this Bareboat Charter shall have been paid, the
Security Agreement shall have been satisfied and discharged, and, unless the
Shipowner shall have elected to retain ownership of the Vessel, the Vessel shall

                                       41
<PAGE>   113
have been sold as provided in Article 12(c) hereof. Payments of amounts due
under this Article 12 made by the Guarantor pursuant to the Bareboat Charter
Guarantee shall, to the extent of such payments, be deemed payments made by the
Bareboat Charterer pursuant to this Article 12.

                                   ARTICLE 13
                                   REDELIVERY

         (a)      On the last day of the Charter Period, unless (i) an Event of
Loss has occurred, or (ii) this Bareboat Charter has been terminated pursuant to
Article 12(b) hereof, or (iii) use of the Vessel has been requisitioned an
described in Article 12(a) hereof and such requisition is continuing, the
Bareboat Charterer shall, except as provided in Article 13(b) hereof, at the
Bareboat Charterer's cost and expense, redeliver the Vessel or cause the Vessel
to be redelivered to the Shipowner at any safe port in the continental United
States on the coast on or nearest to which the Vessel is trading at the end of
the Charter Period designated by the Shipowner by written notice to the Bareboat
Charterer at least 45 days prior to the end of the Charter Period. The Bareboat
Charterer agrees that at the time of such redelivery the Vessel (i) shall be
free and clear of all liens, charges and encumbrances (except any liens, charges
or encumbrances created by the Shipowner); (ii) shall be entitled to and shall
have the classification and rating required by Article 4(a) hereof; (iii) shall
have, with respect to remaining in class, no recommendations of an ABS surveyor
affecting class outstanding on the date of redelivery; and (iv) shall have no
requirements of any United States governmental agency or department having
jurisdiction unfulfilled and with all required certificates in effect, and if
redelivery shall be at the end of the Original Term, the Vessel shall have been
credited with at least its fifth special survey by ABS.

                                       42
<PAGE>   114
         (b)      Not earlier than 90 days prior to such redelivery, at the
Bareboat Charterer's expense, a joint survey shall be made by the Bareboat
Charterer and, the Shipowner(with drydocking only if required by ABS) to
determine the condition and fitness of the Vessel under the terms of this
Bareboat Charter including, but not limited to, Article 4(b) hereof, during
which survey the Vessel's cargo tanks shall be gas-freed. The Bareboat
Charterer, unless otherwise agreed by the Shipowner, at its own expense, will
fully correct and repair any condition disclosed by such survey to the extent
necessary to cause the Vessel to comply with all of the terms of Article 13(a)
hereof. The Charter Period shall be extended for any period necessary to make
such repairs and notwithstanding the provisions of Article 13(a) hereof relating
to the port of redelivery, redelivery shall take place at the port where such
repairs are made; provided, however, that the Original Term shall not be
extended for more than 180 days to effect repairs and redelivery.

         (c)      The Bareboat Charterer will pay additional hire hereunder for
any period for which the Charter Period may be extended pursuant to the terms of
Article 13(a) or 13(b) hereof or which may be necessary to complete any voyage
in progress, which hire shall be in addition to any other payments due
hereunder, and shall be payable on the last day of the Charter Period, as
extended, at a rate per day equal to 1/180th of the amount of Basic Hire payable
hereunder on the last Charter Hire Payment Date; provided, however, that no
additional hire shall be paid by the Bareboat Charterer for any period during
which repair work, ordered solely by the Shipowner and not required by this
Article 13, is being performed. Upon redelivery of the Vessel hereunder, the
Bareboat Charterer, if requested in writing by the

                                       43
<PAGE>   115
Bareboat Charterer, will provide docking or safe anchorage facilities for the
Vessel for a period not exceeding 30 days after redelivery, at the Shipowner's
expense.

         (d)      Any property of the Bareboat Charterer remaining aboard the
Vessel upon redelivery may be retained or disposed of by the Shipowner as its
own property once a reasonable opportunity has been given the Bareboat Charterer
to remove such property.

                                   ARTICLE 14
                                   ASSIGNMENTS

         (a)      The Shipowner shall not have the right to assign, or to permit
any assignment of, or to create a security interest in, or to permit the
creation of a security interest in, this Bareboat Charter or any moneys due and
to become due under this Bareboat Charter, except pursuant to the Security
Agreement. Any assignment or security interest created in violation of this
Article 14(a) shall be void.

         (b)      Except for the assignment to a successor bareboat charterer
under Article 14(e) hereof, the Bareboat Charterer shall not have the right to
assign, or permit any assignment of, or to create a security interest in, or to
permit the creation of a security interest in, this Bareboat Charter or any
moneys due and to become due under this Bareboat Charter, except pursuant to the
Security Agreement, without the prior written consents of the Shipowner, the
Secretary and, during the Statutory Economic Life of the Vessel, the Board. Any
assignment or security interest created in violation of this Article 14(b) shall
be void.

         (c)      So long as this Bareboat Charter shall remain in effect, the
Bareboat Charterer shall not:

                                       44
<PAGE>   116
                  (i)      merge or consolidate with any other corporation or
business entity of any kind other than with any Affiliate of the Bareboat
Charterer, or

                  (ii)     sell, assign pledge or otherwise dispose of any right
or interest arising out of this Bareboat Charter except in connection with the
assignment provided for in Article 14(e) hereof.

         (d)      The Bareboat Charterer shall not have the right to subcharter
or otherwise employ the Vessel other than pursuant to the Time Charter.

         (e)      (1)      The Shipowner shall have the right, subject to the
prior consent of the Secretary, to assign this Bareboat Charter to any person
who is a Citizen of the United States and who is a United States Person within
the meaning of Section 7701 of the Code in the event that the Shipowner shall
fail to remain, or an event shall occur which shall cause the Shipowner no
longer to remain, a Citizen of the United States.

                  (2)      The Bareboat Charterer shall have the right, without
the consent of the Shipowner, but subject to the terms of the Security Agreement
and the Second Mortgage so long as each is in effect, to assign this Bareboat
Charter to any Affiliate of the Bareboat Charterer which is a United States
person within the meaning of Section 7701 of the Code (with the consent of the
Secretary). Any such assignment shall be subject to the Bareboat Charterer's
continuing responsibility for full performance of its obligations under this
Bareboat Charter.

         (f)      This Bareboat Charter is subject and subordinate to the rights
of the Secretary under the Mortgage and the Security Agreement and the rights of
Occidental under the Second Mortgage.

                                       45
<PAGE>   117
                                   ARTICLE 15
                           EVENTS OF BAREBOAT DEFAULT


         (a)      Each of the following events shall constitute an Event of
Bareboat Default:

                  (1)      The Bareboat Charterer shall fail to pay any Basic
Hire, or Stipulated Loss Value under this Bareboat Charter within 5 days after
the date when due or the Bareboat Charterer shall fail to pay any Supplemental
Hire under this Bareboat Charter and fail to remedy the failure to pay such
Supplemental Hire within 10 days after receipt of notice thereof from the
Shipowner; or

                  (2)      The Bareboat Charterer or the Guarantor shall consent
to the appointment of a receiver, trustee or liquidator of itself or of
substantially all of its property or the Bareboat Charterer or the Guarantor
shall admit in writing its inability to pay its debts generally as they come due
or shall make a general assignment for the benefit of creditors; or

                  (3)      The Bareboat Charterer or the Guarantor shall file a
voluntary petition in bankruptcy or for a reorganization or for an arrangement
in a proceeding under any of the federal bankruptcy laws or other federal or
state insolvency laws as now or hereafter in effect or an answer admitting the
material allegations of a petition filed against the Bareboat Charterer or the
Guarantor in any such proceeding; or

                  (4)      An order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of the Bareboat Charterer or the Guarantor, a receiver, trustee or
liquidator of the Bareboat Charterer or the Guarantor or of substantially all of
its property, and any such order, judgment or decree of appointment shall

                                       46
<PAGE>   118
remain in force undismissed, unstayed or unvacated for a period of 90 days after
the date of entry thereof; or

                  (5)      A petition against the Bareboat Charterer or the
Guarantor in a proceeding under the federal bankruptcy laws or other federal or
state insolvency laws as now or hereafter in effect shall be filed and shall not
be withdrawn or dismissed within 90 days thereafter or if, under the provisions
of any law providing for reorganization or winding-up of corporations which may
apply to the Bareboat Charterer or the Guarantor, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the Bareboat
Charterer or the Guarantor or of substantially all of the property of either and
such jurisdiction, custody or control shall remain in force unrelinquished,
unstayed or unterminated for a period of 90 days; or

                  (6)      The failure of the Bareboat Charterer to perform or
comply in any material respect with any of the provisions of Articles 3(a), 7(a)
or 17(b) hereof or to maintain, or cause to be maintained, insurance in the
amounts and forms as and when required under Article 8 hereof; or

                  (7)      The Bareboat Charterer shall fail to remain, or an
event shall occur which will cause the Bareboat Charterer to no longer remain, a
Citizen of the United States, and the Bareboat Charterer shall fail for more
than 30 days after it obtains knowledge of such failure or event, to cause all
necessary governmental approvals, under Sections 9, 37 (if applicable) and 41 of
the Shipping Act, or otherwise, to be obtained; provided, however, that no Event
of Bareboat Default under this Article 15(a)(7) shall be deemed to have occurred
if the Bareboat Charterer shall have made the assignment of this Bareboat
Charter to a Citizen of the United

                                       47
<PAGE>   119
States provided for in Article 14(e)(1) hereof within 30 days after it obtains
knowledge of such failure or event; or

                  (8)      (i)      Either the MTC Guarantee or the SNTG
Guarantee shall cease to be in full force and effect, or either Guarantor shall
be in default under any of the provisions therein, or (ii) the Contingent
Guarantee shall cease to be in full force and effect (unless the Contingent
Guarantee shall so cease by operation of the provisions of Section 2(c) thereof)
or Occidental shall be in default under any provision therein, and, in each
case, such default shall fail to be remedied within 30 days after written notice
from the Shipowner or the Secretary to such Guarantor or Occidental of the
existence of such default; or

                  (9)      Any Default under the Security Agreement shall have
occurred and be continuing as a result of the Bareboat Charterer's failure to
perform or comply with its obligations under this Bareboat Charter; or

                  (10)     Either the Bareboat Charterer or the Time Charterer
shall fail for more than 30 days after written notice from the Secretary to the
Bareboat Charterer or the Time Charterer to perform or comply with any of the
provisions of the Title XI Reserve Fund and Financial Agreement insofar as such
provisions pertain to the Vessel unless such failure shall have been waived by
the Secretary; or

                  (11)     The Bareboat Charterer shall default in the
performance of any other obligation under this Bareboat Charter and shall fail
to remedy the default within 30 days after receipt of notice thereof from the
Shipowner or the Secretary, specifying the acts or omissions of the Bareboat
Charterer which constitute such default.

                                       48
<PAGE>   120
         (b)      Upon the occurrence of an Event of Bareboat Default, so long
as such Event of Bareboat Default shall be continuing, the Shipowner shall
promptly notify the Secretary of such occurrence and at any time thereafter, so
long as the same shall be continuing, the Shipowner (or the Secretary pursuant
to the Security Agreement) may, at its option, declare this Bareboat Charter to
be in default by notice delivered to the Bareboat Charterer and the Guarantor
and, at any time thereafter, so long as the Bareboat Charterer or the Guarantor,
as the case may be, shall not have remedied all outstanding Events of Bareboat
Default, the Shipowner by notice to the Bareboat Charterer and the Guarantor may
terminate this Bareboat Charter, upon which termination the Shipowner may do,
and the Bareboat Charterer shall comply with, one or more of the following, as
the Shipowner shall elect, to the extent permitted by, and subject to compliance
with, any mandatory requirements of applicable law and the provisions of the
Security Agreement if then in effect:

                  (1)      Upon written demand of the Shipowner, the Bareboat
Charterer shall without expense to the Shipowner, promptly redeliver the Vessel,
or cause the Vessel to be redelivered, to the Shipowner with all reasonable
dispatch to any safe port in the United States selected by the Shipowner (which
port shall be on the coast to which the Vessel is closest at the time of such
demand) in the same manner and in the same condition as if the Vessel were being
redelivered on the Last day of the Charter Period in accordance with the
provisions of Article 13 hereof, and, except as otherwise provided in this
Article 15, all obligations of the Bareboat Charterer under Article 13 hereof
shall apply to such redelivery. The Shipowner or its agent, without further
demand, may, but shall be under no obligation to, withdraw the Vessel from the
service of the Bareboat Charterer wherever found, whether upon the high seas or
at any port,

                                       49
<PAGE>   121
harbor or other place and irrespective of whether the Bareboat Charterer or any
other person may be in possession of the Vessel all without prior demand and
without legal process, and for that purpose the Shipowner or its agent may enter
upon any dock, pier or other premises where the Vessel may be and may take
possession thereof, without the Shipowner or its agent incurring any liability
by reason of such retaking, whether for the restoration of damage to property
caused by such withdrawal or otherwise.

                  (2)      If the Event of Bareboat Default resulting in the
termination of this Bareboat Charter shall have occurred during the Original
Term, the Bareboat Charterer will pay to, or on the order of, the Shipowner,
upon request by the Shipowner upon at least 10 days prior written notice, on the
payment date specified in such notice, as liquidated damages for loss of a
bargain and not as a penalty, all unpaid Basic Hire and Supplemental Hire
payable in accordance with the terms hereof on or prior to the Default
Termination Date plus an amount (together with interest on such amount at the
Interest Rate for the period, if any, from but not including, the Charter Hire
Payment Date immediately preceding the payment date specified in such notice to
and including the Default Termination Date) equal to:

                           (i)      the Stipulated Loss Value, computed as of
         the Charter Hire Payment Date occurring on or immediately preceding the
         Default Termination Date, less

                           (ii)     whichever of the following amounts the
         Shipowner, in its sole discretion, shall specify in such notice: (A)
         the fair market sales value (determined as hereinafter provided in this
         Article 15(b) (2)) of the Vessel as of the Charter Hire Payment Date
         immediately preceding the Default Termination

                                       50
<PAGE>   122
         Date or (B) the fair market demise charter value (determined as
         hereinafter provided in this Article 15(b)(2)) of the Vessel for the
         period from such Charter Hire Payment Date to the day which would have
         been the last day of the Charter Period but for the termination of this
         Bareboat Charter pursuant to this Article 15(b), after discounting such
         fair market demise charter value to its value on the Charter Hire
         Payment Date occurring on or immediately preceding the Default
         Termination Date at the Discount Rate.

         For the purpose of this Article 15(b)(2), the "fair market sales value"
or "fair market demise charter value" shall be determined by the Appraisal
Procedure; provided, however, that (x) if the Vessel shall have been sold prior
to the Default Termination Date by (i) the Shipowner pursuant to paragraph 4 of
this Article 15(b), or (ii) the Secretary pursuant to Section 6.04(b) of Exhibit
1 to the Security Agreement, the "fair market sales value" shall be the net
proceeds of such sale after deducting all costs and expenses incurred by the
Shipowner or the Secretary, as the case may be, in connection therewith, (y) the
"fair market sales value" or the "fair market demise charter value" shall be
zero if the Vessel is not redelivered or if the Shipowner has expended
reasonable efforts, under the circumstances to take possession of the Vessel but
has been unable to take possession; and (z) there shall be added to "fair market
sales value" and to "fair market demise charter value," as the case may be, the
net proceeds received by the Shipowner (after deducting all costs and expenses
of the Shipowner with respect thereto) from any charter of the Vessel to others
in accordance with Article 15(b)(3) hereto, to the extent such proceeds are
received by the Shipowner prior to the Default Termination Date. Nothing

                                       51
<PAGE>   123
contained in the preceding sentence shall require the Shipowner to sell or
charter the Vessel at any time.

                  (3)      If the Event of Bareboat Default resulting in the
termination of this Bareboat Charter shall have occurred during a Renewal Term,
the Bareboat Charterer shall pay to, or on the order of, the Shipowner, upon
request by the Shipowner upon at least 10 days prior written notice, on the date
specified in such notice as the Default Termination Date, as liquidated damages
for loss of a. bargain and not as a penalty, all unpaid Basic Hire and
Supplemental Hire payable in accordance with the terms hereof on or prior to the
Default Termination Date plus an amount, equal to the aggregate amount of Basic
Hire determined pursuant to Article 9(b) hereof, discounted at the Discount Rate
to its value on the Default Termination Date, which would have been paid during
the remainder of the Renewal Term in which the Default Termination Date occurs.

                  (4)      The Shipowner or its agent with or without notice to
the Bareboat Charterer, may sell the Vessel at public or private sale, with or
without advertisement or publication, as the Shipowner may determine, or
otherwise may dispose of, hold, use, operate, charter to others (whether for a
period greater or less than the balance of what would have been the Charter
Period in the absence of the termination of this Bareboat Charter pursuant to
this Article 15(b)) or keep the Vessel idle, all on such terms and conditions
and at such place or places as the Shipowner may determine and all free and
clear of any rights of the Bareboat Charterer and any claim of the Bareboat
Charterer in admiralty, in equity, at law or by statute, whether for loss or
damage or otherwise, and without any duty to account to the Bareboat Charterer
except to the extent provided for in Article 15(b)(2) hereof.

                                       52
<PAGE>   124
         (c)      In addition to the foregoing, the Bareboat Charterer shall pay
to, or on the order of, the Shipowner, all Supplemental Hire hereunder payable
before, during or after the exercise of any remedies exercised by the Shipowner,
and all legal and investigatory fees and any other costs and expenses whatsoever
incurred by the Shipowner by reason of the occurrence of any Event of Bareboat
Default or by reason of the exercise by the Shipowner of any remedy hereunder,
including, without limitation, any costs and expenses incurred by the Shipowner
in connection with the redelivery of the Vessel in accordance with this Article
15 and of placing the Vessel in the condition and seaworthiness required by the
terms of Article 13 hereof.

         (d)      No remedy referred to in Article 15(b) hereof is intended to
be exclusive, but each shall be cumulative and is in addition to, and may be
exercised concurrently with, any other remedy which is referred to in Article
15(b) hereof or which may otherwise be available to the Shipowner at law, in
equity or in admiralty, provided, however, that liquidated damages having been
agreed to by the parties hereto in Articles 15(b)(2) and (3) hereof, the
Shipowner shall not be entitled to recover from the Bareboat Charterer as
damages upon the occurrence of one or more Events of Bareboat Default an amount
in excess of such liquidated damages plus any Supplemental Hire and expenses
referred to above. There shall be deducted from the aggregate amount so
recoverable by the Shipowner the net balance, if any, remaining of any moneys
held by the Shipowner which would have been required by the terms of this
Bareboat Charter to have been paid to the Bareboat Charterer but for the
occurrence of an Event of Bareboat Default. The rights of the Shipowner and the
obligations of the Bareboat Charterer under this Article 15(d) shall be
effective and enforceable regardless of the pendency of any proceeding which has
or might have the effect of preventing the Shipowner or the Bareboat

                                       53
<PAGE>   125
Charterer from complying with the terms of this Bareboat Charter. No express or
implied waiver by the Shipowner of any Event of Bareboat Default shall in any
way be, or be construed to be, a waiver of any further or subsequent Event of
Bareboat Default. The Bareboat Charterer hereby agrees that to the extent that
the Shipowner shall sell charter or otherwise use the Vessel pursuant to Article
15 (b)(4) hereof in good faith, the Shipowner shall have no liability to the
Bareboat Charterer for any such sale, charter or other use except as
specifically provided in Article 15(b)(2) hereof.

         (e)      The Bareboat Charterer hereby waives, to the extent permitted
by applicable law, any and all rights which it may now have or which at any time
hereafter may be conferred upon it, by statute or otherwise, which may require
the Shipowner to sell charter or otherwise use the Vessel in mitigation of the
Shipowner's damages, or which may otherwise limit or modify any of the rights or
remedies of the Shipowner provided for in this Article 15.

         (f)      If the Bareboat Charterer shall fail to perform or observe any
of the other terms of this Bareboat Charter which do not give rise to an Event
of Bareboat Default, the Shipowner may (but in its discretion shall not be
obligated to) give written notice (which notice may be given by electronic means
and shall be effective upon receipt thereof) to the Bareboat Charterer of its
intention to exercise its rights under this Article 15. Unless the Bareboat
Charterer shall have then commenced to use due diligence, to the reasonable
satisfaction of the Shipowner, to cause such failure to be cured, the Shipowner
may, in its discretion, do all acts and make all expenditures necessary to
remedy such failure, including, without limitation, the taking out of insurance
on the Vessel and entry upon the Vessel to make repairs. The Bareboat Charterer
agrees to reimburse the Shipowner promptly on demand for all costs and expenses
incurred in

                                       54
<PAGE>   126
connection with the exercise of its rights under this Article 15(f), together
with interest thereon at the Interest Rate from the date of such expenditures to
the date of payment by the Bareboat Charterer. The Bareboat Charterer agrees to
permit the agents and servants of the Shipowner reasonable access to the Vessel
as shall be necessary under this Article 15(f).

                                   ARTICLE 16
                      REPLACEMENT OF THE BAREBOAT CHARTERER

         If at any time during the Charter Period, the Time Charterer shall have
given the notice of replacement of the Bareboat Charterer referred to in Section
14.2 of the Time Charter to cause the Bareboat Charterer to be replaced because
of the occurrence of an Event of Bareboat Charterer Default under the Time
Charter, and if the Shipowner shall approve in writing of such replacement, the
Bareboat Charterer shall be replaced as Bareboat Charterer hereunder.

                                   ARTICLE 17
                                  MISCELLANEOUS

         (a)      The Shipowner and the Bareboat Charterer severally agree to
perform, or cause to be performed, such action, and to execute, deliver or
furnish or to cause to be executed, delivered or furnished, all such further
assurances, certificates and other documents, necessary or proper to carry out
this Bareboat Charter.

         (b)      The terms of this Bareboat Charter and Schedule X attached
hereto shall not be altered, modified, amended, supplemented or terminated in
any manner whatsoever except by written instrument signed by the parties hereto
and with the written consent of the Secretary and Occidental.

                                       55
<PAGE>   127
         (c)      The invalidity of any provision of this Bareboat Charter shall
not affect the remainder hereof, which shall in such event be construed as if
such invalid provision had not been inserted.

         (d)      The table of contents and headings of this Bareboat Charter
are for purposes of reference only, and shall in no way limit or otherwise
affect any of the terms or provisions hereof.

         (e)      Subject to the provisions of Article 14 hereof, the terms of
this Bareboat Charter shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors and assigns.

         (f)      ALL QUESTIONS ARISING UNDER THIS BAREBOAT CHARTER SHALL IN ALL
RESPECTS BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE GENERAL
MARITIME LAWS OF THE UNITED STATES AND TO THE EXTENT FEDERAL LAW DOES NOT APPLY,
THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK. ANY CLAIM OR DISPUTE ARISING UNDER
THIS BAREBOAT CHARTER SHALL, PROVIDED THAT THE COURT HAS SUBJECT MATTER
JURISDICTION, BE DECIDED IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, TO THE JURISDICTION OF WHICH THE SHIPOWNER AND THE
BAREBOAT CHARTERER HEREBY SUBMIT THEMSELVES FOR THE PURPOSES OF ANY SUCH
PROCEEDING. IN THE EVENT THAT THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK LACKS SUBJECT MATTER JURISDICTION OVER ANY

                                       56
<PAGE>   128
CLAIM OR DISPUTE ARISING UNDER THIS BAREBOAT CHARTER, THE SHIPOWNER AND THE
BAREBOAT CHARTERER HEREBY SUBMIT THEMSELVES TO THE JURISDICTION OF THE SUPREME
COURT FOR THE COUNTY OF NEW YORK FOR THE PURPOSES OF ANY SUCH PROCEEDING AND
WAIVE ANY CLAIM OF FORUM NON CONVENIENS RELATING TO SUCH CHOICE OF COURT.

         (g)      (1)      The Bareboat Charterer and the Shipowner mutually
acknowledge that, during the Statutory Economic Life of the Vessel, the Vessel
and its operation are, or may be, subject to certain requirements contained in
the Title V Contract and in the ODS Contract. Unless waived (and the Bareboat
Charterer shall not request any waiver without the prior written consent of the
Shipowner) the Bareboat Charterer and the Shipowner agree to comply with any
such requirements notwithstanding anything to the contrary in this Bareboat
Charter.

                  (2)      The Bareboat Charterer and Shipowner severally agree
not to make, or permit to be made, any alteration in the National Defense
Features of the Vessel in a manner which adversely affects the value of the
National Defense Features without the prior written consent of the Board.

                  (3)      Nothing in this Article 16(g) shall affect the
absolute and unconditional obligation of the Bareboat Charterer to pay Basic
Hire, Supplemental Hire and amounts in respect of Stipulated Loss Value pursuant
to the terms of this Bareboat Charter.

         (h)      This Bareboat Charter is not a personal contract. The Bareboat
Charterer and the Shipowner shall have the benefit of all limitations of, and
exemptions from, liability accorded to the owner or chartered owner of vessels
by any statute or rule of law for the time being in force.

                                       57
<PAGE>   129
         (i)      This Bareboat Charter may be executed in several counterparts,
each of which shall be an original, but all of which together shall constitute
one agreement.

         (j)      No person other than the Bareboat Charterer and the Shipowner,
and their successors and assigns as permitted hereunder, shall enforce or
attempt to enforce the obligations of the Bareboat Charterer or the Shipowner
hereunder without the prior written consent of the Bareboat Charterer and the
Shipowner.

         (k)      All interest payments to be computed under this Bareboat
Charter shall be computed on the basis of a 360-day year of twelve 30-day
months.

         (1)      The provisions of this Bareboat Charter which require or
permit action by the Secretary and Occidental, the consent, approval or
authorization of the Secretary and Occidental or the furnishing of any document,
paper or information to the Secretary and Occidental shall not be effective, and
such provisions shall be read, unless otherwise required by law, as though there
were no such requirements or permissions, after: (i) termination of the
Guarantees, except a termination pursuant to clause (b) of Section 6.04 of
Exhibit 1 to the Security Agreement and the discharge of the Second Mortgage; or
(ii) payment in full of the principal of and interest on each Secretary's Note.

                                   ARTICLE 18
                                     NOTICES

         All notices and other communications hereunder shall be effective when
received except that all notices and other communications sent by prepaid United
States certified mail, return receipt requested, shall become effective on the
third Business Day after such mailing

                                       58
<PAGE>   130
and shall be addressed as follows or, to each party, at such other address as
shall be designated by such party in a written notice to the other persons named
below:

                To the Shipowner:

                           Frances Owner Corporation
                           c/o Marine Transport Corporation
                           1200 Harbor Boulevard
                           Weehawken, NJ 07087-0901

                To the Bareboat Charterer:

                           Frances ODS Corporation
                           c/o Marine Transport Corporation
                           1200 Harbor Boulevard
                           Weehawken, NJ 07087-0901

                  To the Secretary:

                           c/o Maritime Administrator
                           Maritime Administration
                           Department of Transportation
                           400 7th Street, SW
                           Washington, D.C. 20590

                  To Occidental:

                           10889 Wilshire Boulevard
                           Los Angeles, CA 90024
                           Attention:  Vice President & Treasurer

                                       59
<PAGE>   131
                IN WITNESS WHEREOF, the parties have caused this Bareboat
Charter to be signed as of the day and year first above written.

                                              FRANCES OWNER CORPORATION,
                                                                       Shipowner


                                              By: ______________________________
                                                 Name:  ________________________
                                                 Title: ________________________
<PAGE>   132
                                              FRANCES ODS CORPORATION,
                                                              Bareboat Charterer



                                              By: ______________________________
                                                 Name:  ________________________
                                                 Title: ________________________



THE ABOVE CHARTER AND CERTAIN HIRE DERIVED THEREFROM ARE SUBJECT TO A SECURITY
INTEREST IN FAVOR OF THE UNITED STATES OF AMERICA, REPRESENTED BY THE SECRETARY
OF TRANSPORTATION, ACTING BY AND THROUGH THE MARITIME ADMINISTRATOR (THE
"SECRETARY") IN ACCORDANCE WITH THE PROVISIONS OF A SECURITY AGREEMENT BETWEEN
THE ABOVE NAMED SHIPOWNER AND THE SECRETARY AS SECURED PARTY.
<PAGE>   133
                                                                         4.03(b)

                                BAREBOAT CHARTER


                                     BETWEEN


                            JULIUS OWNER CORPORATION,
                                             OWNER

                                       AND


                             JULIUS ODS CORPORATION,
                                            BAREBOAT CHARTERER



                               SEPTEMBER 29, 1999







                                ITB JULIUS HAMMER
                       (TO BE RENAMED SMT CHEMICAL TRADER)
<PAGE>   134
                                TABLE OF CONTENTS

                                BAREBOAT CHARTER

<TABLE>
<S>                                                                                                          <C>
         ARTICLE 1 - DEFINITIONS ..........................................................................     1


         ARTICLE 2 - DELIVERY AND ACCEPTANCE OF THE VESSEL ................................................     2


         ARTICLE 3 - USE AND OPERATION OF THE VESSEL; COMPLIANCE WITH LAWS ................................     3


         ARTICLE 4 - MAINTENANCE, CLASSIFICATION AND REPAIRS, INSPECTION ..................................     6


         ARTICLE 5 - USE OF STORES AND EQUIPMENT ..........................................................     9


         ARTICLE 6 - BAREBOAT CHARTERER'S CHANGES; INSTALLATION OF EQUIPMENT AND REMOVAL OF PARTS .........    11


         ARTICLE 7 - LIENS AND ATTACHMENTS ................................................................    13


         ARTICLE 8 - INSURANCE ............................................................................    16


         ARTICLE 9 - TERM OF BAREBOAT CHARTER, OPTION TO RENEW AND BASIC HIRE .............................    27


         ARTICLE 10 - EVENT OF LOSS AND RIGHT TO TERMINATE ................................................    32


         ARTICLE 11 - [RESERVED] ..........................................................................    35


         ARTICLE 12 - REQUISITION OF USE ..................................................................    36


         ARTICLE 13 - REDELIVERY ..........................................................................    40


         ARTICLE 14 - ASSIGNMENTS .........................................................................    42


         ARTICLE 15 - EVENTS OF BAREBOAT DEFAULT ..........................................................    44


         ARTICLE 16 - REPLACEMENT OF THE BAREBOAT CHARTERER ...............................................    53


         ARTICLE 17 - MISCELLANEOUS .......................................................................    53


         ARTICLE 18 - NOTICES .............................................................................    56
</TABLE>

<PAGE>   135

                                BAREBOAT CHARTER

                                ITB JULIUS HAMMER
                       (TO BE RENAMED SMT CHEMICAL TRADER)


         THIS BAREBOAT CHARTER is made on __________, 1999, by and between
Julius Owner Corporation, a Delaware corporation (the "Shipowner"), and Julius
ODS Corporation, a Delaware corporation (the "Bareboat Charterer").

                                   WITNESSETH

         WHEREAS, the Shipowner desires to demise charter the Vessel to the
Bareboat Charterer and the Bareboat Charterer desires to demise charter the
Vessel from the Shipowner, in each case on the terms and conditions hereinafter
set forth; and

         WHEREAS, the Shipowner, on the date hereof, is changing the name of the
Vessel to SMT CHEMICAL TRADER (tug) and SMT TWO (barge);

         NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Shipowner agrees to let and
demise charter and the Bareboat Charterer agrees to hire and demise charter the
Vessel on the terms and conditions hereinafter set forth.

                                    ARTICLE 1
                                   DEFINITIONS

         The capitalized terms used herein which are defined in, or defined by
reference to, Schedule X attached hereto, as said Schedule X may be amended from
time to time as herein provided, have the meanings specified in said Schedule X.

<PAGE>   136

                                    ARTICLE 2
                      DELIVERY AND ACCEPTANCE OF THE VESSEL

         (a)      Notwithstanding any other provision in this Bareboat Charter,
the Shipowner shall be deemed to have tendered, and the Bareboat Charterer shall
be deemed to have unconditionally accepted, delivery of the Vessel under this
Bareboat Charter "as is, where is" in whatever condition it may be, AND IT IS
AGREED THAT SHIPOWNER DOES NOT MAKE NOR SHALL BE DEEMED TO HAVE MADE ANY
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE TITLE, DESIGN,
CONDITION, VALUE, MERCHANTABILITY, OPERATION OR SEAWORTHINESS OF THE VESSEL OR,
AS TO THE QUALITY OF THE MATERIAL, EQUIPMENT OR WORKMANSHIP IN, OR AS TO THE
CONSUMABLE STORES ON BOARD, THE VESSEL, OR AS TO THE FITNESS OF THE VESSEL FOR
ANY PARTICULAR USE OR AS TO THE ELIGIBILITY OF THE VESSEL FOR ANY PARTICULAR
TRADE, OR ANY OTHER WARRANTY OR REPRESENTATION WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE VESSEL. The Bareboat Charterer's acceptance of the Vessel
under this Bareboat Charter, as provided in this Article 2(a), shall confirm and
be conclusive evidence, as between the Shipowner and the Bareboat Charterer,
that the Vessel is in all respects satisfactory to the Bareboat Charterer and in
compliance with all requirements of this Bareboat Charter, and the Bareboat
Charterer will not assert any claim of any nature whatsoever against the
Shipowner based on any of the foregoing matters in this Article 2(a). Nothing in
this Article 2(a) shall be construed as a waiver of any right that either the
Bareboat Charterer or the Shipowner may have against any person other than the
Shipowner or the Bareboat Charterer.

                                       2

<PAGE>   137

         (b)      The Shipowner hereby agrees to provide to the Bareboat
Charterer a full set of general and detailed Plans and Specifications correct to
the Vessel as built, which shall be returned to the Shipowner upon termination
of this Bareboat Charter or replacement of the Bareboat Charterer as bareboat
charterer of the Vessel.

                                    ARTICLE 3
                        USE AND OPERATION OF THE VESSEL;
                              COMPLIANCE WITH LAWS

         (a)      Subject to the terms and conditions of this Bareboat Charter,
the Bareboat Charterer shall have the full use of the Vessel and may employ the
Vessel in any part of the world and in such lawful trades and carrying such
lawful cargoes as the Time Charterer may direct and as otherwise required to
perform the Time Charter, subject to the limits of the American Institute of
Trade Warranties (the "Institute Warranties"). However, upon reasonable advance
notice to the Shipowner, the Bareboat Charterer may breach those Institute
Warranties, provided that the Bareboat Charterer shall pay any additional
premiums assessed by the Vessel's insurers for breach of the Institute's
Warranties, provided further that the Vessel shall not be operated in any area
in which the insurance required by Article 8 of this Bareboat Charter would not
be in full force and effect.

         (b)      Subject to the terms and conditions of this Bareboat Charter,
the Bareboat Charterer shall have exclusive possession and control of the
Vessel, and shall man, victual, equip, supply, furnish, outfit, maintain and
repair, navigate and operate the Vessel at its own expense or by its own
procurement throughout the Charter Period. The Master, officers and crew of the
Vessel shall be engaged and employed as directed by the Bareboat Charterer and
shall remain the Bareboat Charterer's servants, navigating and working the
Vessel on behalf of

                                       3

<PAGE>   138

and at the risk of the Bareboat Charterer. The Shipowner shall not have any
interest in any salvage moneys earned by the Vessel or received by the Bareboat
Charterer during the Charter Period. The Bareboat Charterer assumes and shall
satisfy all costs and liabilities incurred in connection with all salvage
services rendered by the Vessel. The Shipowner shall not be required to pay any
port charges, pilotages, or any other costs, charges and expenses whatsoever
incident to the use, operation and maintenance of the Vessel during the Charter
Period.


         (c)      The Bareboat Charterer shall, at the Bareboat Charterer's
expense, throughout the Charter Period maintain, or cause to be maintained, the
documentation of the Vessel under the laws and flag of the United States in the
name of the Shipowner, and the Shipowner shall upon the request of the Bareboat
Charterer execute such documents and furnish such information, or cause to be
executed or furnished by the Shipowner or the Secretary, as the Bareboat
Charterer may reasonably require to enable the -Bareboat Charterer to maintain,
or cause to be maintained, such documentation.

         (d)      The Vessel shall, and the Bareboat Charterer covenants that
it will, at the Bareboat Charterer's cost and expense, at all times comply with
the requirements of all applicable laws, treaties and conventions, and all
applicable rules, regulations and orders issued thereunder, including
particularly, but without limitation by this enumeration, the International
Convention for Safety of Life at Sea, 1960, as amended, and all applicable laws,
rules, regulations and orders administered by the United States Maritime
Administration, Coast Guard, Federal Maritime Commission, Customs Service,
Environmental Protection Agency, ABS and any other United States agency, or
their respective successors, having jurisdiction in connection with the use,
operation and maintenance of the Vessel and the Bareboat Charterer

                                       4

<PAGE>   139

covenants that it will have on board, when required thereby, valid certificates
showing compliance therewith. The Bareboat Charterer will not suffer or permit
anything to be done which might injuriously affect the documentation of the
Vessel under the laws and regulations of the United States or the validity or
the preferred status of the Mortgage or the Second Mortgage on the Vessel under
the Ship Mortgage Act, and the Bareboat Charterer will not abandon the Vessel in
a foreign port (unless advisable in connection with an Event of Loss), engage in
any unlawful trade under, or violate, any applicable law, treaty, convention,
rule, regulation or order or carry any cargo that may expose the Vessel to
penalty, forfeiture or seizure or expose the Shipowner to penalty.

         (e)      The cargo principally to be carried shall be superphosphoric
acid. However, the Bareboat Charterer shall have the option of shipping
petroleum products or any other lawful cargo in bulk for which the Vessel and
its tanks are suitable, as well as any lawful merchandise in containers in the
Vessel's forehold, between decks or other suitable space available, subject to
the Master's approval as to kind, character, amount and stowage.

         (f)      The Shipowner and the Bareboat Charterer, each respectively,
hereby represents that it is, and covenants that it shall remain during the
Charter Period, a Citizen of the United States. In the event that the Shipowner
or the Bareboat Charterer shall fail to remain, or an event shall occur which
will cause either to no longer remain, a Citizen of the United States, then it
shall notify the other party hereto as soon as it obtains knowledge of such
fact.

         (g)      The Bareboat Charterer agrees that it shall, to the extent the
Shipowner reasonably requests, assist the Shipowner in enforcing and asserting
all rights of warranty, guarantee, indemnity, royalty, liability, patent
liability and claims of patent infringement and any other rights which it may
have with respect to the Vessel or its equipment. The Bareboat

                                       5

<PAGE>   140

Charterer further agrees that it shall, to the extent it has knowledge, notify
the Shipowner of any information in connection with such rights or claims.

                                    ARTICLE 4
                           MAINTENANCE; CLASSIFICATION
                             AND REPAIRS; INSPECTION

         (a)      The Bareboat Charterer shall be charged with full
responsibility for maintenance and repair of the Vessel throughout the Charter
Period and shall at all times, at its own risk, expense and procurement, without
expense to the Shipowner, maintain and preserve, or cause to be maintained and
preserved, the Vessel in good condition, working order and repair, ordinary wear
and tear excepted, so that the Vessel shall be, insofar as due diligence can
make it so, tight, staunch, strong and well and sufficiently tackled, appareled,
furnished, equipped and supplied and in every respect seaworthy and in a good
operating condition. Furthermore, the Bareboat Charterer shall maintain, or
cause to be maintained, the Vessel so as to entitle it to the highest
classification and rating of ABS for vessels of the same age and type,
submitting the Vessel to all required surveys of ABS (giving the Shipowner prior
written notice thereof, 45 days in advance if practicable, but otherwise as long
in advance as may be practicable under the circumstances), and annually, during
the Charter Period, shall furnish to the Shipowner copies of all certificates
issued by ABS, within 20 days from receipt, evidencing the maintenance of such
classification and rating. The Bareboat Charterer shall also furnish to the
Shipowner copies of all other survey and inspection reports within 20 days of
the Bareboat Charterer's receipt thereof. The cost of all repairs or changes
necessary to cause the Vessel to comply with the requirements of ABS, including
changes or additions to such requirements, shall be for the Bareboat Charterer's
account.

                                       6
<PAGE>   141
         (b) The Vessel shall be repaired and overhauled, or caused to be
repaired and overhauled, by the Bareboat Charterer, and for the Bareboat
Charterer's account, whenever reasonably necessary, but at least as often as may
be required by applicable regulations of both the United States Coast Guard and
by ABS. The Bareboat Charterer shall, at its expense, promptly and duly comply
with all requirements of ABS in order to maintain class as provided in this
Article, including those resulting from each special survey of the Vessel. The
Vessel shall be drydocked, cleaned and the bottom painted, whenever necessary to
keep the Vessel in the condition required by the first sentence of Article 4(a)
hereof by the Bareboat Charterer, but at least as often as may be required by
applicable regulations of both the United States Coast Guard and by ABS and at
such intervals thereafter as the Shipowner shall from time to time determine.
The Bareboat Charterer shall give the Shipowner written notice of the time and
place of each such proposed drydocking 45 days in advance if practicable, but
otherwise as long in advance as may be practicable under the circumstances, in
order that the Shipowner may, if it so desires, have authorized representatives
present at such drydocking and otherwise inspect the Vessel at its own expense.

         (c) Subject to any applicable laws and regulations, the Shipowner, the
Time Charterer, the Secretary, Occidental, or their authorized representatives,
shall have the right at reasonable times, on reasonable notice and at their own
expense, without causing undue delay to the Vessel's operation, to inspect the
Vessel in order to ascertain its condition and to ascertain that the Vessel is
being properly repaired and maintained in accordance with this Article 4, but
inspection in drydock shall be made only when the Vessel shall be in drydock
under the provisions of Article 4(b) hereof. The Bareboat Charterer shall make,
or cause to be made, all repairs, without expense to the Shipowner, as such
inspection may show to be


                                       7
<PAGE>   142
required in order to meet the requirements of this Article 4. The Bareboat
Charterer shall (i) permit the Shipowner, the Secretary, Occidental, or the Time
Charterer, or their authorized representatives, to inspect the Vessel's logs and
papers whenever requested, on reasonable notice, and to a reasonable extent,
without causing undue delay to the Vessel's operation, and (ii) furnish the
Shipowner, the Secretary, Occidental, and the Time Charterer with full
information regarding any casualties or other accidents or damage to the Vessel.

         (d) Within 45 days after the end of each calendar year, the Bareboat
Charterer shall deliver an Officer's Certificate to the Shipowner stating for
the portion of the Calendar Year ended during which Bareboat Charterer had
possession of the Vessel pursuant to the provisions of this Bareboat Charter:

                  (i) whether the Vessel has been maintained and repaired in
accordance with this Bareboat Charter;

                  (ii) the specifics of any material changes and any repairs
involving an amount in excess of $250,000 which have been made to the Vessel;
and

                  (iii) whether any drydocking occurred and the actions taken
during such drydocking.

         (e) Neither the Shipowner nor the Time Charterer shall have any
obligation hereunder to make any inspection or examination or shall incur any
liability or obligation by reason of not making any inspection or examination
under this Article 4.


                                       8
<PAGE>   143
                                    ARTICLE 5
                           USE OF STORES AND EQUIPMENT

         (a) A complete inventory of the Vessel's entire equipment, outfit,
appliances and of all consumable stores on board the Vessel shall be made by the
Bareboat Charterer in conjunction with the Shipowner or its designee on or
before the commencement of this Bareboat Charter and again upon termination of
this Bareboat Charter or replacement of the Bareboat Charterer as bareboat
charterer of the Vessel. The Shipowner and the Bareboat Charterer acknowledge
that such fuel, diesel oil, fresh water, lubricating oil, greases and consumable
stores as may be on board the Vessel at the time of delivery thereof to the
Bareboat Charterer will be the property of the Time Charterer, but may be
utilized by the Bareboat Charterer in performing its obligations under the
provisions of this Bareboat Charter. On redelivery or retaking of the Vessel any
such fuel, diesel oil, fresh water, lubricating oil, greases and consumable
stores that may be on board the Vessel shall become the property of the
Shipowner.

         (b) The Bareboat Charterer shall have the use, without additional
payment to the Shipowner, of all outfit, equipment (including cabin, crew and
galley equipment), furniture, furnishings, appliances, spare and replacement
parts and non-consumable stores as shall have been on board the Vessel at the
time of delivery thereof to the Bareboat Charterer, as evidenced by the
inventory of such items supplied by the Shipowner on the Delivery Date. The same
or their substantial equivalent shall be returned to the Shipowner upon
redelivery of the Vessel pursuant to Article 13 hereof in the same good order
and condition as received, ordinary wear and tear excepted. Any such items
damaged or so worn in service as to be unfit for use or for use as a spare part
for replacement purposes, or lost or destroyed, shall be replaced or made


                                       9
<PAGE>   144
good by the Bareboat Charterer in kind at or before redelivery or, at the
Shipowner's option, the Bareboat Charterer may pay the Shipowner for such items
which are not required for the operation of the Vessel at the current market
prices therefor (including transportation and installation costs) at the port
and time of redelivery.

         (c) The Bareboat Charterer shall provide, or cause to be provided, at
its own expense, such additional outfit, furniture, furnishings, appliances,
spare and replacement parts, tools and stores, not required by Articles 3(d) or
4(a) hereof, as may be required for the operation of the Vessel under the Time
Charter. Such additional property so provided shall not become part of the
Vessel but shall remain the property of the Bareboat Charterer, and the Bareboat
Charterer may, but need not, remove the same, without expense to the Shipowner,
at or before such redelivery, provided that if such property is removed the
Vessel shall be restored prior to redelivery to the condition it would have been
in if such property had never been installed, ordinary wear and tear excepted.
Any item of such property which is on board the Vessel and not so removed at the
time of such redelivery shall become the property of the Shipowner.

         (d) All outfit, equipment, furniture, furnishings, appliances, spare
and replacement parts, tools and stores as shall be installed or placed on board
the Vessel in order to comply with Articles 3(d) or 4(a) hereof shall,
immediately upon such installation or replacement on board and without necessity
of further act, become part of the Vessel and the property of the Shipowner.


                                       10
<PAGE>   145
                                    ARTICLE 6
                   BAREBOAT CHARTERER'S CHANGES; INSTALLATION
                        OF EQUIPMENT AND REMOVAL OF PARTS

         (a) The Bareboat Charterer shall make, or cause to be made, at its sole
cost and expense, any structural change or alteration in the Vessel and install
any additional equipment on the Vessel, which is required by Articles 3(d) or
4(a) hereof. In addition to any changes in the Vessel required to comply with
the provisions of Articles 3(d) or 4(a) hereof, the Bareboat Charterer may,
subject to the approval of the Secretary to the extent required by the Security
Agreement or of Occidental to the extent required by the Second Mortgage, at its
sole cost and expense, make any additional structural changes and alterations in
the Vessel, but with the prior written consent of the Shipowner; provided,
however, that such changes and alterations do not (i) diminish the
seaworthiness, utility or market value of the Vessel, (ii) adversely affect the
ABS classification and rating required to be maintained hereunder, (iii)
conflict with or result in a violation of any other provisions of this Bareboat
Charter or (iv) require the Vessel to be re-documented. All such changes and
alterations shall be expeditiously completed in good and workmanlike manner, and
all equipment and material installed in connection therewith shall, without
necessity of further act, become part of the Vessel and the property of the
Shipowner.

         (b) Subject to the provisions of Articles 3(d) and 4(a) hereof and with
the written permission of the Time Charterer, the Bareboat Charterer may install
or cause to be installed any pumps, gear or equipment it may require in addition
to that on board the Vessel at the time of delivery thereof, provided that such
installations are accomplished without expense to the Shipowner. Pumps, gear and
equipment so installed shall without necessity of further act, become part of
the Vessel and the property of the Shipowner; provided, however, that any time
prior to redelivery of the Vessel pursuant to Article 13 hereof, and so long as
no event of


                                       11
<PAGE>   146
Bareboat Default shall have occurred and be continuing, any such pumps, gear or
equipment not required to be installed in order to meet the requirements of
Article 3(d) or of Article 4(a) hereof and not installed as replacement for
property on board the Vessel at the time of delivery thereof, may be removed by
the Bareboat Charterer, at its own expense, provided that the Vessel is restored
prior to such redelivery to the condition it would have been in if such pumps,
gear or other equipment had never been installed, ordinary wear and tear
excepted; otherwise such pumps, gear and equipment remaining on board at such
redelivery shall, without necessity of further act, remain the property of the
Shipowner.

         (c) Subject to provisions of Articles 3(d) and 4(a) hereof, the
Bareboat Charterer may, in the ordinary course of maintenance, repair or
overhaul of the Vessel, remove or cause to be removed any item of property
constituting a part of the Vessel, provided such item of property, other than
pumps, gear or equipment installed pursuant to Article 6(b) hereof, is replaced
as promptly as possible by an item of property which is free and clear of all
security interests, liens, encumbrances and rights of others, is in a good
operating condition, renders the Vessel as seaworthy and has a value and utility
at least equal to the item of property being replaced. Any item of property
removed from the Vessel as provided in the preceding sentence shall be disposed
of in a good faith manner with any proceeds resulting therefrom being credited
against Operating Costs. Any such replacement item of property shall, without
necessity of further act, become part of the Vessel and the property of the
Shipowner.

         (d) The Bareboat Charterer shall have the right to paint the Vessel in
its own colors or those of any subcharterer or other user of the Vessel, to name
or re-name the Vessel or permit any such subcharterer or user to name or re-name
the Vessel, to install and display its or such subcharterer's or user's stack
insignia and to fly its or such subcharterer's or user's house


                                       12
<PAGE>   147
flag, all without expense to the Shipowner, and the Bareboat Charterer shall
remove, or cause to be removed, such flag and insignia, and, at its own expense,
if requested by the Shipowner, shall remove, or cause to be removed, any
distinctive colors, prior to redelivery.

         (e) Basic Hire shall continue unabated during any construction
undertaken to change the Vessel. The Shipowner, the United States, and
Occidental shall be named as additional assureds on any builder's risks or other
insurance policy entered into by or for the benefit of the Bareboat Charterer
incident to construction undertaken to change the Vessel.

                                    ARTICLE 7
                              LIENS AND ATTACHMENTS

         (a) If the Vessel is ever libeled or otherwise attached, levied upon or
taken into custody, or detained or sequestered, by virtue of any proceeding in
any court or tribunal, or by any governmental or other authority, in any country
or nation of the world, on account of any mortgage, pledge, lien, encumbrance or
claim on or with respect to the Vessel or its profits, the Bareboat Charterer
shall immediately give notice thereof to the Shipowner, the Secretary and
Occidental by electronic means, confirmed by letter, and, subject to the
obligations of the Bareboat Charterer under the next sentence of this Article
7(a), the Time Charterer in the Time Charter has agreed, at its sole cost and
expense promptly to take or cause to be taken such action as may be necessary to
cause the Vessel to be released, and such liens or claims to be discharged,
within a reasonable time not exceeding 30 days. If any such mortgage, pledge,
lien, encumbrance or claim arises, or in the event that the Vessel shall be
libeled or otherwise attached, levied upon or taken into custody, or detained or
sequestered, by virtue of any proceeding in any court or tribunal, or by any
governmental or other authority, on account of


                                       13
<PAGE>   148
any liens or claims against the Bareboat Charterer, any person or entity related
to the Bareboat Charterer or any other Person operating the Vessel on behalf of
the Bareboat Charterer, which such liens or claims are unrelated to the Bareboat
Charterer's chartering of the Vessel or, if related, result from the Bareboat
Charterer's failure properly to apply funds paid by the Time Charterer as
Operating Costs, the Bareboat Charterer agrees that it shall promptly, at its
own cost and expense, remove or cause to be removed such mortgage, pledge, lien,
encumbrance or claim, and cause the Vessel to be released, and cause all liens
and claims on the Vessel in connection with such libel or other action to be
discharged (whether by furnishing a surety bond or otherwise), within a
reasonable time not exceeding 30 days.

         (b) After the execution of this Bareboat Charter, no additional
mortgage, lien, charge or other encumbrance shall be placed on the Vessel or its
profits by the Bareboat Charterer without the prior written consent of the
Shipowner, the Secretary and Occidental.

         (c) Neither the Shipowner, the Bareboat Charterer, any sub-bareboat
charterer, time charterer, the Master of the Vessel, nor any other person has or
shall have any right, power or authority, to create, incur or permit to be
placed or imposed upon the Vessel any mortgage, lien, charge or other
encumbrance whatsoever except:

         (1) the liens of the Mortgage and the Second Mortgage; and

         (2) this Bareboat Charter and any assignments and subcharters permitted
under this Bareboat Charter; and

         (3) liens for Crew's Wages, for salvage (including contract salvage)
and general average which are:

                  (i) not yet due and payable, or

                  (ii) either unclaimed or covered by insurance, or



                                       14
<PAGE>   149
                  (iii) being contested by appropriate proceedings diligently
conducted so long as such proceedings do not involve a significant risk of a
sale, forfeiture or loss of the Vessel; and

         (4) contract and tort liens arising out of or incident to current
operations of, or repairs to, the Vessel (except for liens for Crew's Wages,
salvage and general average) which are subordinate to the liens of the Mortgage
and the Second Mortgage or liens covered by insurance or includable in any
deductible applicable thereto and which are:

                  (i) based on claims not yet due and payable, or

                  (ii) being contested by appropriate proceedings diligently
conducted so long as such proceedings do not involve a significant risk of a
sale, forfeiture or loss of the Vessel.

         (d) The Bareboat Charterer agrees to warrant and defend the title to,
and the possession of, the Vessel against the claims of all persons arising
during the Charter Period. The Bareboat Charterer agrees to cause a true copy of
this Bareboat Charter, and a certified copy of the Mortgage and the Second
Mortgage, as furnished by the Shipowner, to be placed with the Vessel's papers
on board the Vessel and to exhibit, or cause to be exhibited, the same, on
demand, to any person having business with the Vessel which may give rise to a
maritime lien upon the Vessel or to the sale, conveyance, mortgage or charter
thereof, and, on demand, to any representative of the Shipowner.

         (e) The Bareboat Charterer shall cause to be placed and prominently
displayed in the Master's cabin or office and the chart room of the tug a framed
printed notice, of such size that the printed matter covers a space not less
than six inches in width and nine inches in length, and on the barge, a notice
not less than six inches in width and nine inches in length, affixed by means of
a durable plate, in both cases reading as follows:



                                       15
<PAGE>   150
                   "NOTICE OF PREFERRED MORTGAGES AND CHARTER

                  This Vessel is owned by Julius Owner Corporation, a Delaware
                  corporation and (i) is covered by a First Preferred Fleet
                  Mortgage dated as of March 18, 1981, in favor of the United
                  States of America, under authority of Chapter 313, Title 46 of
                  the United States Code, as amended and supplemented, (ii) is
                  covered by a Second Preferred Fleet Mortgage dated ____, 1999,
                  in favor of Occidental Petroleum Corporation, under authority
                  of Chapter 313, Title 46 of the United States Code, and (iii)
                  is under bareboat charter (the "Bareboat Charter") dated ____,
                  1999, to Julius ODS Corporation (the "Bareboat Charterer").
                  Under the terms of said Mortgages and said Bareboat Charter,
                  neither the Shipowner, Bareboat Charterer, the Master of this
                  Vessel, nor any other person has any right, power or authority
                  to create, incur or impose, or permit to be placed, or
                  imposed, upon this Vessel any lien other than statutory liens
                  of the Mortgages or incident to current operations of this
                  Vessel and certain liens in favor of the United States of
                  America."


                                    ARTICLE 8
                                    INSURANCE

         (a) The Bareboat Charterer shall provide and maintain, or cause to be
provided and maintained, at its own expense, insurance on or with respect to the
Vessel and the operation thereof during the Charter Period as follows:

                  (1) Marine navigating risk hull and machinery insurance or
port risk hull and machinery insurance (when permitted under this Article 8 (a))
and marine war navigating risk hull and machinery insurance, together with
increased value and total loss only insurance, in each case to the extent
permitted by such policies. During the Original Term, such insurance (including
such increased value and total loss only insurance) shall be in amounts
aggregating at all times not less than the greater of 105 percent of the then
Stipulated Loss Value or the full commercial value (as determined by the
Secretary pursuant to the Security Agreement, until the Security Agreement shall
have been discharged) of the Vessel, but in no event less than 110


                                       16
<PAGE>   151
percent of the aggregate unpaid principal amount of Obligations then
Outstanding, including obligations under the Second Mortgage. During any Renewal
Term, such insurance shall be in amounts aggregating at all times not less than
the full commercial value of the Vessel. While being operated, the Vessel shall
always be covered by marine navigating risk hull and machinery insurance and
marine war navigating risk hull and machinery insurance. When and while the
Vessel is idle or laid up, in lieu of the aforesaid marine navigating risk hull
and machinery insurance and increased value and other forms of total loss
insurance, the Bareboat Charterer may take out port risk hull and machinery
insurance; provided, however, that at all times the Vessel shall be covered by
marine war navigating risk hull and machinery insurance. Any of the foregoing
insurance may provide for a deductible amount approved by the Secretary,
Occidental, and the Shipowner, but no consent or approval shall be required for
a deductible amount of up to an aggregate of $500,000 with respect to any
accident, occurrence or event other than an actual or constructive total loss of
the Vessel in any one year. Any such deductible amount provided for in insurance
required to be provided and maintained during the Renewal Term shall be agreed
in advance of such Renewal Term by the Bareboat Charterer and the Shipowner.

                  All policies of insurance required under this Article 8(a)(1)
shall, unless the Secretary, Occidental, and the Shipowner shall otherwise
consent in writing, provide that in the event of an actual or constructive total
loss of either of the hulls of the Vessel, the full aggregate amount for which
both hulls are insured under any such policies shall be payable (i) until the
Security Agreement shall have been discharged, to the Secretary, except as
provided in Article 8(c)(2) hereof, and (ii) thereafter, to the Shipowner.


                                       17
<PAGE>   152
                  (2) Marine and war risk protection and indemnity insurance
and, at the Bareboat Charterer's option, excess protection and indemnity
insurance and marine multi-liability insurance. During the Charter Period, the
foregoing insurance shall be against such risks and in such form as are, and the
amount of such insurance shall be not less than such amounts as are, in the
opinion of the insurance broker expressed in its most recent report delivered in
accordance with, but subject to, the provisions of Article 8(g) hereof,
necessary or advisable for the protection of the interests of the Shipowner;
provided, however, that during the Original Term such insurance to the extent
obtainable shall be in amounts aggregating not less than the greater of (i) 105
percent of the then Stipulated Loss Value of the Vessel, (ii) the full
commercial value (as determined by the Secretary) of the Vessel, (iii) 110
percent of the aggregate principal amount of the obligations then Outstanding,
including the obligations under the Second Mortgage, or (iv) such amount, which
is then reasonably obtainable by prudent shipowners and managing agents, as may
be approved from time to time by the Secretary; and provided further, that
during any Renewal Term such insurance to the extent obtainable shall be in
amounts aggregating not less than the full commercial value of the Vessel (as
determined by the Bareboat Charterer and not disapproved by the Shipowner in the
reasonable exercise of its discretion within 30 days after its receipt of a
notice of such determination, or in the absence of agreement, as determined by
the Appraisal Procedure). The Shipowner shall have the right to require that
such insurance provide for deductibles in amounts approved by the Secretary, but
that no consent or approval shall be required if such deductibles aggregate not
more than $250,000 with respect to any accident, occurrence or event and
$250,000 with respect to each cargo or property carried. (3) Insurance against
liability under law or international convention arising out of pollution,
spillage or leakage. Subject to the provisions of the next sentence,


                                       18
<PAGE>   153
during the Charter Period, the foregoing insurance shall be against such risks
and in such forms as are, and the amount of such insurance shall be not less
than such amounts as are, in the opinion of the insurance broker expressed in
its most recent report delivered in accordance with, but subject to, the
provisions of Article 8(g) hereof, necessary or advisable for the protection of
the interests of the Shipowner. During the Charter Period, such insurance to the
extent obtainable shall be in an amount equaling at all times not less than
$700,000,000 with respect to any occurrence.

                  (4) Such insurance to the extent obtainable on or with respect
to the Vessel and the operation thereof as the Shipowner is required to provide
and maintain pursuant to the terms of the Security Agreement and the Second
Mortgage.

                  (b) (1) All insurance required to be taken out and maintained
pursuant to the terms of this Bareboat Charter shall include the United States
(as Mortgagee under the Mortgage), Occidental (as Mortgagee under the Second
Mortgage), the Shipowner, the Bareboat Charterer, the Time Charterer, and any
sub-charterer and operator of the Vessel which is an Affiliate of the Bareboat
Charterer as additional assureds as their interests may appear, and the policies
or certificates of insurance shall provide that there shall be no recourse
against the Shipowner, the Bareboat Charterer, the United States or Occidental
for the payment of premiums, commissions, club calls, assessments or advances.

                  (2) All insurance carried pursuant to Article 8(a) hereof
shall contain provisions or endorsements (A) waiving the insurer's right to
subrogation against the United States (as Mortgagee under the Mortgage),
Occidental (as Mortgagee under the Second Mortgage), the Shipowner, the Bareboat
Charterer, the Time Charterer, and any sub-charterer and operator of the Vessel
which is an Affiliate of the Bareboat Charterer and, to the extent

                                       19
<PAGE>   154
obtainable, such of its corporate Affiliates as the Bareboat Charterer shall
designate, unless any such Person shall request that a waiver of subrogation in
favor of it not be obtained, in which event it need not be, (B) stating that
such insurance is primary insurance without any right of contribution with
respect to any insurance carried by or on behalf of the Shipowner , other than
as provided pursuant to this Bareboat Charter, on the same interest insured and
(C) stating that inasmuch as such insurance covers more than one insured person,
all terms, conditions and exclusions shall be treated as if a separate policy of
insurance were issued to each insured, and the inclusion in the policies of more
than one assured shall not operate to increase the liability of the insurers.

                  (3) Except with respect to the Hull War Risks and Strikes
Clauses to which 14 days' notice or Automatic Termination provisions apply and
except with respect to the Protection and Indemnity insurance to which a 14 day
notice provision applies, the policies in respect of insurance carried pursuant
to Article 8(a) hereof shall provide that at least 10 days (and to the extent
reasonably available, 30 days') prior notice by United States certified mail,
return receipt requested, shall be given to the Shipowner, the Bareboat
Charterer, the Secretary and Occidental by the underwriters of any cancellation
for the nonpayment of premiums, commissions, club calls, assessments or
advances. Each policy in respect of such insurance shall further provide, to the
extent reasonably available from the underwriter of such policy, that at least
30 days' prior notice by United States certified mail, return receipt requested,
shall be given to the Shipowner, the Bareboat Charterer, the Secretary and
Occidental by the underwriter of any termination, cancellation, lapse or
material modification of the terms of such policy. If the Bareboat Charterer
receives, but the Shipowner does not receive, any notice

                                       20
<PAGE>   155
referred to in the preceding sentence, the Bareboat Charterer shall promptly
deliver a copy of such notice to the Shipowner, the Secretary and Occidental.

         (c) All policies of insurance required to be taken out and maintained
pursuant to the terms of this Bareboat Charter or other evidence thereof shall
provide that losses thereunder shall be payable (i) until the Security Agreement
shall have been discharged, to the Secretary for application pursuant to the
Security Agreement and thereafter to Occidental pursuant to the Second Mortgage,
and (ii) thereafter, to the Shipowner; provided, however, that such policies of
insurance or other evidence thereof shall provide that:

                  (1) in the case of insurance carried pursuant to Article
8(a)(2) hereof or Section 2.07(e) of Exhibit 1 to the Security Agreement or the
provisions of the Second Mortgage:

                           (i) if neither the Shipowner nor the Bareboat
Charterer has incurred the loss, damage or expense in question, any loss under
such insurance may be paid directly to the Person by whom any liability covered
by such policies or certificates has been incurred (whether or not a Default
under the security Agreement then exists), and

                           (ii) if the Shipowner or the Bareboat Charterer shall
have incurred the loss, damage or expense in, question, and shall have presented
to the underwriters satisfactory evidence that the liability insured against has
been discharged or is being discharged simultaneously with such payment, any
such loss under such insurance shall be paid to the Shipowner or the Bareboat
Charterer, as the case may be, in reimbursement, if there is no existing Default
under the Security Agreement or the Second Mortgage of which the underwriter has
written notice from the Shipowner, the Bareboat Charterer or the Secretary, or,

                                       21
<PAGE>   156
if there is such an existing Default, to the Secretary to be held and applied
pursuant to the Security Agreement; and thereafter to Occidental pursuant to the
Second Mortgage; and

                  (2) in the case of insurance carried pursuant to Article
8(a)(1) hereof or Section 2.07(b) of Exhibit 1 to the Security Agreement or the
Second Mortgage, so long as the accident, occurrence or event does not result in
an Event of Loss, payment of all losses up to $250,000 (or such higher figure as
the Secretary may from time to time approve) by all insurance underwriters with
respect to any one accident, occurrence or event may be made (i) directly for
the repair or other charges involved, or (ii) directly to the Bareboat Charterer
as reimbursement if the Bareboat Charterer shall have first fully repaired the
damage and paid the cost thereof and the other charges involved, and the
underwriters shall have received evidence of such repair and payment or that
such payment will be made simultaneously with the payment by the underwriters;
provided, however, that the underwriters shall not have received written notice
from the Secretary, Occidental, the Bareboat Charterer or the Shipowner as to
the occurrence of a Default under the Security Agreement or the Second Mortgage
or, if so, have been notified by the Secretary in writing that such Default
under the Security Agreement or by Occidental in writing that such Default under
the Second Mortgage has been cured or waived.

         (d) In the event that a claim is made against the Vessel for loss,
damage or expense which is covered by insurance, and it is necessary for the
Bareboat Charterer to obtain a bond or to supply other security to prevent
arrest of the Vessel or to release the Vessel from arrest on account of said
claim, the Shipowner shall on request of the Bareboat Charterer, assign to any
person executing a surety or guarantee bond or other agreement to save or
release the Vessel from such arrest, all right, title and interest of the
Shipowner in and to said insurance covering said loss, damage or expense as
collateral security to indemnify against liability under said


                                       22
<PAGE>   157
bond or other agreement; provided, however, that (i) the Secretary shall have
advised the Shipowner that the United States has so assigned its right, title
and interest in and to such insurance proceeds and (ii) no Event of Bareboat
Default shall have occurred and be continuing.

         (e) The Bareboat Charterer shall have the duty and responsibility to
make, or cause to be made, at its own expense, all proofs of loss and take or
cause to be taken any and all other steps necessary to effect prompt collections
from underwriters for any loss under any insurance on or with respect to the
Vessel or the operation thereof pursuant to Article 8(a) hereof. The Shipowner
shall cooperate in making all proofs of loss and take all other reasonable steps
necessary to effect collection from underwriters.

         (f) The insurance provided and maintained on or with respect to the
Vessel or the operation thereof in accordance with this Bareboat Charter shall
be on such forms of policies or other evidence thereof as are required by
Section 2.07 of Exhibit 1 to the Security Agreement until the Security Agreement
shall have been satisfied and discharged and thereafter as required by the
Second Mortgage, and thereafter as are recommended by the insurance brokers
referred to in Article 8(g) hereof as being customary at the time for vessels of
similar size, type, trade and cargo.

         (g) (1) The Bareboat Charterer shall furnish, or cause to be furnished,
to the Shipowner, the Secretary (so long as the Security Agreement shall not
have been satisfied and discharged), and Occidental (so long as the Second
Mortgage shall not have been satisfied

                                       23
<PAGE>   158
and discharged) on the Delivery Date and on each annual anniversary thereafter,
a detailed report, signed by marine insurance brokers designated by the Bareboat
Charterer satisfactory to the Shipowner and the Secretary (so long as the
Security Agreement shall not have been satisfied and discharged) and Occidental
(so long as the Second Mortgage shall not have been satisfied and discharged),
describing the insurance carried and maintained on or with respect to the Vessel
and the operation thereof and stating, in effect, that such insurance complies
in all respects with the applicable requirements of this Bareboat Charter, the
Security Agreement and the Second Mortgage.

                  (2) Such report shall state that in the opinion of such
insurance broker, the liability insurance referred to in Articles 8(a)(2) and
8(a)(3) hereof then carried on the Vessel is against such respective risks and
in such respective forms as are, and the respective amounts of such insurance
are not less than such amounts as are, necessary or advisable for the protection
of the interest of the Shipowner. Such report shall further state that, in the
opinion of such insurance broker, all insurance carried pursuant to Article 8(a)
hereof is underwritten by satisfactory insurance companies, underwriters
associations or underwriting funds.

                  (3) In connection with any insurance obtained by the Bareboat
Charterer under this Article 8, the Bareboat Charterer will cause such insurance
broker to agree (i) to advise the Shipowner, the Secretary and Occidental
promptly of any default in the payment of any premium, commission, club call,
assessment or advance required (whether for new insurance or for insurance
replacing, renewing or extending existing insurance) and of any other act,
omission or event of which such insurance broker has knowledge and which in its
sole judgement (A) might invalidate or render unenforceable, or cause the
cancellation or lapse or prevent the renewal or extension of, in whole or in
part, any insurance carried pursuant to Article 8(a) hereof, (B) or might result
in any material modification of the terms of any such insurance or (C) has or
might result in any such insurance not being in compliance with the applicable
requirements of this Bareboat Charter, the Security Agreement and the Second


                                       24
<PAGE>   159
Mortgage, and (ii) to furnish the Shipowner, the Secretary and Occidental from
time to time, upon request, detailed information with respect to any of the
insurance carried on or with respect to the Vessel or the operation thereof.

                  (4) At any time during the Charter Period, the Bareboat
Charterer's insurance broker which is then acting pursuant to Article 8(g)(1)
hereof may (but shall not be obligated hereto to do so) furnish to the
Secretary, Occidental, and the Shipowner a report, in addition to the report
required pursuant to Article 8(g)(1) hereof, to the effect that, in the opinion
of such insurance broker, the amount of any liability insurance referred to in
Articles 8(a)(2) or 8(a)(3) hereof then carried on the Vessel is either higher
or lower than an amount (the "New Amount"), specified in such additional report,
which is necessary or advisable for the protection of the interests of the
Shipowner. If any such additional report is received and the New Amount
specified therein for any such liability insurance is higher than that then
carried on the Vessel, the Bareboat Charterer shall obtain, as promptly as
practicable, an additional amount of such liability insurance so that the amount
thereof is at least equal to such New Amount. If any such additional report is
received and the New Amount specified therein for any such liability insurance
is lower than that then carried on the Vessel, the Bareboat Charterer may reduce
the amount of such liability insurance, so long as the reduced amount thereof is
at least equal to such New Amount and, if such additional report relates to any
liability insurance referred to in Articles 8(a)(2) or 8(a)(3) hereof, such
reduced amount thereof is not less than the minimum amount of such insurance
required to be carried by such Articles 8(a)(2) or 8(a)(3) hereof.

         (h) The Bareboat Charterer shall deliver, or cause to be delivered, to
the Secretary (so long as the Security Agreement shall not have been satisfied
and discharged) and to


                                       25
<PAGE>   160
Occidental (so long as the Second Mortgage shall not have been satisfied and
discharged) and to the Shipowner, evidence satisfactory to each of them that the
insurance required to be provided and maintained pursuant to this Bareboat
Charter has been issued and in full force and effect.

         (i) Nothing in this Article 8 shall prohibit the Bareboat Charterer, or
if the Bareboat Charterer does not in the first instance, the Shipowner, from
placing, at the expense of the Bareboat Charterer, insurance on or with respect
to the Vessel or the operation thereof in an amount exceeding the full
commercial value of the Vessel, or 110 percent of the aggregate principal amount
of the Obligations then Outstanding or 105 percent of the then Stipulated Loss
Value, as provided in Article 8(a)(1) hereof, unless such insurance would
conflict with or otherwise limit the insurance to be provided or maintained in
accordance with Article 8(a) hereof. The Bareboat Charterer agrees, upon receipt
of a Request of, and payment of the premium therefor by the Shipowner, to apply
for and carry, or cause to be applied for and carried, any insurance permitted
to be carried by the Shipowner pursuant to the preceding sentence, to the extent
such insurance is available, with the Shipowner named as the sole loss payee.
The Bareboat Charterer agrees to furnish the Shipowner and the Secretary, as the
case may be, until the Security Agreement shall have been discharged, promptly
with copies of all policies relating to such insurance.

         (j) The Bareboat Charterer will cause all insurance required to be
provided and maintained by this Bareboat Charter with marine insurance
companies, underwriters associations or underwriting funds approved by the
Shipowner and, until the Security Agreement shall have been discharged, the
Secretary, which approval of the Shipowner shall not be unreasonably withheld or
delayed.



                                       26
<PAGE>   161
         (k) The Bareboat Charterer shall not declare or agree upon a
compromised, constructive or agreed total loss of the Vessel without the prior
written consent of the Shipowner, and, until the Security Agreement shall have
been discharged, the Secretary and thereafter Occidental while the Second
Mortgage is in effect.

                                    ARTICLE 9
                        TERM OF BAREBOAT CHARTER, OPTION
                             TO RENEW AND BASIC HIRE

         (a) Unless sooner terminated in accordance with its terms, this
Bareboat Charter shall be in effect from the Effective Date for the balance of
the Original Term then remaining and shall be extended for the same period as
the Time Charter is extended pursuant to the provisions of Section 3.2 of the
Time Charter.

         (b) The Bareboat Charterer shall, on each Charter Hire Payment Date,
pay in immediately available funds to the Shipowner as hire for the use and
services of the Vessel during the continuance of this Bareboat Charter Basic
Hire an amount equal to the amount of principal and interest then due on the
Obligations. The Bareboat Charterer shall also pay as Supplemental Hire when the
same shall become due: directly to the Indenture Trustee during the period any
Obligations are outstanding, the Indenture Trustee Fees; directly to the
Secretary during the period any Obligations are outstanding, the Guarantee Fees
and directly to the Depository during the period any Obligations are
outstanding, the Depository Fees. Payments made by a Guarantor pursuant to its
Guarantee shall, to the extent of such payments, be deemed payments made by
Bareboat Charterer to the Shipowner pursuant to this Article 9(b). Payment of
Indenture Trustee Fees, Guarantee Fees and Depository Fees need not be paid in
immediately available funds.



                                       27
<PAGE>   162
         (c) In the event any amount of Basic Hire payable pursuant to the first
sentence of this Article 9 is not paid when due as provided in this Article 9,
the Bareboat Charterer promises to pay promptly, upon demand, in addition to
such amount of Basic Hire, interest (i) to, or on the order of the Shipowner in
an amount equal to the amount of the penalty interest due for the nonpayment of
principal of, and interest specified in the Obligations as a result of
non-payment when due of such principal of, premium, if any, and interest on such
Obligations, and (ii) to the Shipowner at the Interest Rate as applied to the
amount of such unpaid Basic Hire (other than any unpaid Basic Hire payable in
respect of principal of, premium, if any, and interest on the Obligations), for
the period from the due date of such Basic Hire until the date of payment
thereof. Payments of such interest made by a Guarantor pursuant to its Guarantee
shall, to the extent of such payments, be deemed payments made by Bareboat
Charterer pursuant to this Article 9(c).

         (d) In the event any amount of Stipulated Loss Value or Supplemental
Hire (including any amount payable under Article 15(c) hereof) is not paid when
due pursuant to this Bareboat Charter, the Bareboat Charterer promises to pay,
in addition to such amount of Stipulated Loss Value or Supplemental Hire,
interest promptly upon demand (i) to, or on the order of, the Shipowner, in an
amount equal to the amount of the penalty interest due for the nonpayment of the
principal of, premium, if any, and interest specified in the Obligations as a
result of non-payment when due of such principal of, premium, if any, and
interest on the Obligations, and (ii) to the Shipowner at the Interest Rate as
applied to the amount of such unpaid Stipulated Loss Value or Supplemental Hire
(other than any unpaid portions of such amounts payable in respect of principal
of, premium, if any, and interest on the Obligations) for

                                       28
<PAGE>   163
the period from the due date of such unpaid Stipulated Loss Value or
Supplemental Hire until the date of payment thereof.

         (e) It is understood and agreed that all provisions of this Bareboat
Charter are under all circumstances to be construed and applied so that the
Shipowner will at all times be paid when due, whether or not the Shipowner has
performed under this Bareboat Charter, any and all amounts payable to it during
the Charter Period pursuant to any of the provisions of this Bareboat Charter
and without setoff or adjustment for any claim whatsoever of the Bareboat
Charterer. In addition, the Bareboat Charterer hereby agrees that, in the event
that the Shipowner fails to perform any covenant or obligation under this
Bareboat Charter, the Bareboat Charterer shall nevertheless make all payments
required to be made by it hereunder, when due, and otherwise perform all of its
obligations hereunder, provided, however, to the extent that a Guarantor,
pursuant to its Guarantee makes any payment required to be made by the Bareboat
Charterer hereunder, or performs any obligation required to be performed by the
Bareboat Charterer hereunder, such payment or performance shall be deemed,
solely as between the Shipowner and the Bareboat Charterer, to be performance or
payment by the Bareboat Charterer hereunder to the extent of the amounts so paid
by such Guarantor or Occidental. Nothing in this Article 9(e) shall be, or shall
be deemed to be, a waiver by the Bareboat Charterer of any rights against the
Shipowner under any specific indemnity in this Bareboat Charter.

         (f) This Bareboat Charter may not be cancelled or terminated, except in
accordance with the express provisions hereof, for any reason whatsoever, and
the Bareboat Charterer shall have no right to be relieved or discharged from any
obligation or liability under this Bareboat Charter, except as otherwise
expressly provided herein, for any reason whatsoever. The


                                       29
<PAGE>   164
Bareboat Charterer hereby waives, to the extent permitted by applicable law, any
and all rights which it may now have or which at any time hereafter may be
conferred upon it, by statute or otherwise, to terminate, cancel, quit or
surrender this Bareboat Charter except as otherwise expressly provided herein.
The Bareboat Charterer acknowledges and agrees that its obligation to pay Basic
Hire, Stipulated Loss Value, Supplemental Hire, any amounts otherwise payable
under this Article 9 and any other amount to be paid by the Bareboat Charterer
hereunder shall be absolute and unconditional, under any and all circumstances,
shall not be subject to any counterclaim, setoff, deduction, abatement or
defense based upon any claim the Bareboat Charterer may have against the
Shipowner, the Shipbuilder, the Indenture Trustee or any other person
whatsoever, and shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected by any circumstance or
condition (whether or not the Bareboat Charterer shall have any knowledge or
notice thereof), including, but not limited to: (a) any amendment or
modification of or supplement to this Bareboat Charter, any agreements relating
to any part thereof or any other instrument or agreement applicable to the
Vessel or any part thereof or any assignment or transfer of any part thereof, or
any furnishing or acceptance of additional security, or any release of any
security, or any failure or inability to perfect any security, (b) any failure
on the part of the Shipowner, the Indenture Trustee, or any other person to
perform or comply with any term of this Bareboat Charter or any other such
instrument or agreement; (c) any waiver, consent, change, extension, indulgence
or other action or inaction under or in respect of this Bareboat Charter, or any
other such instrument or agreement or any exercise or nonexercise of any right,
remedy, power or privilege under or in respect of any such instrument or
agreement; (d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding with respect to the

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<PAGE>   165
Shipowner, the Indenture Trustee, the Bareboat Charterer, or any Affiliate of
any thereof, or their respective properties or creditors, or any action taken by
any court, trustee, receiver or liquidating agent in any such proceeding,
including, without limitation, any termination or rejection of this Bareboat
Charter, or any assignment thereof by any court, trustee, receiver or
liquidating agent of the Bareboat Charterer or the Shipowner or of any of their
respective properties in any such proceeding, (e) any limitation on the
liability or obligations of the Bareboat Charterer under this Bareboat Charter
or any termination, cancellation, frustration, invalidity, irregularity or
unenforceability, in whole or in part, of this Bareboat Charter or any term
thereof or any lack of power or authority of the Shipowner or the Bareboat
Charterer to enter into this Bareboat Charter; (f) any assignment or other
transfer of this Bareboat Charter by the Bareboat Charterer or any lien, charge
or encumbrance, from whatever source arising, on or affecting the Bareboat
Charterer's estate in, or any subchartering of, all or any part of the Vessel
(whether or not pursuant to the express provisions of this Bareboat Charter);
(g) any damage to, or loss, destruction, requisition, seizure, forfeiture or
marshal's or other sale of the Vessel or any exercise of rights with respect to
the Vessel under the Mortgage or the Second Mortgage; (h) any libel, attachment,
levy, detention, sequestration or taking into custody of the Vessel, or any
interruption or prevention of or restriction on or interference with the use or
possession of the Vessel; (i) any title defect or encumbrance or any
dispossession from the Vessel by title paramount or otherwise; (j) any act,
omission, misrepresentation or breach on the part of the Shipowner or the
Bareboat Charterer under this Bareboat Charter, or any other agreement at any
time existing between the Shipowner and the Bareboat Charterer or under any
statute, law or governmental regulation; (k) any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
bareboat charterer and irrespective of

                                       31
<PAGE>   166
any other circumstance which might otherwise limit the recourse against the
Bareboat Charterer, (l) any defect in the seaworthiness, condition, design,
operation or fitness for use of the Vessel or the ineligibility of the Vessel
for any particular trade; (m) any ineligibility of the Vessel for documentation
under the laws of the United States; or (n) any other occurrence or condition
whatsoever, foreseen or unforeseen, whether similar or dissimilar to the
foregoing, now existing or hereafter occurring. Even though the Bareboat
Charterer shall be deprived of or limited in the use of the Vessel in any
respect or for any length of time, whether or not by reason of some act,
omission or breach on the part of the Shipowner, the Bareboat Charterer or any
other party, whether or not resulting from accident and whether or not without
fault on the part of the Bareboat Charterer, the Bareboat Charterer will
continue to make all payments required of the Bareboat Charterer by the terms of
this Bareboat Charter, whether for Basic Hire, Stipulated Loss Value,
Supplemental Hire or otherwise, without interruption or abatement, unless and
until this Bareboat Charter shall have terminated with respect to the Vessel in
accordance with the express provisions hereof. If for any reason whatsoever this
Bareboat Charter shall be terminated in whole or in part by operation of law or
otherwise, except as specifically provided herein, the Bareboat Charterer
nonetheless agrees to pay an amount equal to each payment of Basic Hire,
Stipulated Loss Value, or other amounts at the time such payment would have
become due and payable in accordance with the terms hereof had this Bareboat
Charter not been terminated in whole or in part.

                                   ARTICLE 10
                      EVENT OF LOSS AND RIGHT TO TERMINATE

         (a) In case an Event of Loss occurs during the Original Term, the
Bareboat Charterer shall give prompt written notice to the Shipowner (with a
copy to the Indenture

                                       32
<PAGE>   167
Trustee and the Secretary) of such Event of Loss and the Bareboat Charterer
shall thereafter give written notice to the Shipowner (with a copy to the
Indenture Trustee and the Secretary) of the Loss Termination Date (the "Loss
Termination Date"), which date shall be a Business Day, specified in such
notice, not less than 40 days after the date notice of the Event of Loss is
given, but not more than 180 days after the date on which such Event of Loss
shall be deemed to have occurred, provided, however, that if a constructive or
an agreed or compromised total loss of the Vessel is declared or agreed by the
underwriters under the insurance more than 105 days after the date of the
casualty giving rise to such total loss, then the "Loss Termination Date" shall
be 75 days (or the next succeeding Business Day) after the date on which such
total loss is declared or agreed by the underwriters. Not later than 10:00 a.m.
San Francisco time on such Loss Termination Date, the Bareboat Charterer shall
pay to, or on the order of, the Shipowner, the sum of (i) the Stipulated Loss
Value applicable to the Loss Termination Date, (ii) the final Indenture Trustee
Fees, Guarantee Fees and Depository Fees, (iii) an amount equal to all expenses
(including legal and investigatory fees) incurred by, and not otherwise
reimbursed to, the Shipowner in connection with the occurrence of the Event of
Loss, as set forth in an Officer's Certificate of the Shipowner received by the
Bareboat Charterer at least three Business Days prior to the Loss Termination
Date, (iv) all amounts of Basic Hire and Supplemental Hire which have become due
and payable under this Bareboat Charter but which have not been paid prior to
the Loss Termination Date, and (v) any amounts which have become due and payable
under the Participation Agreement but which have not been paid prior to the Loss
Termination Date.

         (b) In case there occurs an Event of Loss after the Original Term and
prior to the end of the Charter Period, and the Bareboat Charterer shall have
given prompt written notice to

                                       33
<PAGE>   168
the Shipowner of its election to terminate this Bareboat Charter, then this
Bareboat Charter shall terminate on the Loss Termination Date specified in such
written notice. Not later than 10:00 a.m. San Francisco time on such Loss
Termination Date, the Bareboat Charterer will pay to the Shipowner the sum of
(i) all amounts of Basic Hire and Supplemental Hire which have become due and
payable under this Bareboat Charter, but have not been paid prior to the Loss
Termination Date, and (ii) the Shipowner expenses as described in clause (iii)
of Article 10(a) hereof.

         (c) Against the payment obligations of Bareboat Charterer under Article
10(a) hereof, there shall be credited all Event of Loss Proceeds received prior
to the Loss Termination Date by the Indenture Trustee, the Shipowner, or the
Secretary, as the case may be. So long as no Event of Bareboat Default shall
have occurred and be continuing, all Event of Loss Proceeds up to the amount of
payments required to be made by the Bareboat Charterer under Article 10(a)
hereof, received at any time by the Shipowner (and which are not required to be
paid over to the Indenture Trustee during the Original Term) shall be paid over
to the Bareboat Charterer upon payment in full of all amounts required to be
paid by the Bareboat Charterer under Article 10(a) hereof, provided, however,
that during any Renewal Term the Shipowner shall be entitled to retain an amount
equal to the full commercial value of the Vessel as determined pursuant to
Article 8(a) hereof. Until and including the Loss Termination Date, the Bareboat
Charterer shall continue to make all payments of Basic Hire and Supplemental
Hire when due irrespective of the occurrence of the Event of Loss. This Bareboat
Charter shall terminate upon the making by, or on behalf of, the Bareboat
Charterer of the payments to the Shipowner required by this Article 10 and all
other amounts due and payable under this Bareboat Charter, but which have not
been paid prior to the Loss Termination Date. Payments of any amounts due
pursuant to


                                       34
<PAGE>   169
this Article 10 made by the Guarantor pursuant to the Bareboat Charter Guarantee
shall, to the extent of such payments, be deemed payments made by the Bareboat
Charter pursuant to this Article 10.

        (d) Upon termination of this Bareboat Charterer pursuant to this Article
10: (i) the Shipowner shall obtain a release of the Vessel from the liens of the
Mortgage and Second Mortgage and of the Secretary under the Security Agreement;
(ii) with the prior written consent, if necessary, of any governmental authority
having jurisdiction, the Vessel or its remains, shall be transferred by the
Shipowner to the Bareboat Charterer or its designee, such transfer to be without
recourse to or warranty by the Shipowner except that the Shipowner shall warrant
that it is transferring whatever title it received to the Vessel free and clear
of any liens, charges or encumbrances created by it; (iii) the Bareboat
Charterer or its designee shall be subrogated to all rights and claims which the
Shipowner shall have with respect to the Vessel or its remains or which shall
arise in connection with the Event of Loss, and the Bareboat Charterer shall
assume all liabilities, if any, with respect to the Vessel and make payment in
satisfaction thereof directly to the persons entitled thereto; and (iv) the
Bareboat Charterer shall have the power to abandon the Vessel (with the prior
written approval of the Secretary, until the Security Agreement shall have been
discharged). All costs and expenses of the Shipowner in connection with the
taking of any action under this Article 10(d) shall be for the account of, and
payable by, the Bareboat Charterer.

                                   ARTICLE 11

                                   [RESERVED]


                                       35
<PAGE>   170
                                   ARTICLE 12
                               REQUISITION OF USE

         (a) In the event that during the Charter Period the Vessel is
requisitioned for use by any governmental authority of the United States or any
person acting under color of such governmental authority, on any basis not
involving, or not equivalent to, acquisition of title thereto or forfeiture
thereof, the Bareboat Charterer shall promptly notify or cause to be notified
the Bareboat Charterer by electronic means, confirmed by letter. Unless and
until this Bareboat Charter is terminated pursuant to its terms, this Bareboat
Charter shall nevertheless continue in effect, and the Bareboat Charterer will
continue to remain liable for all other obligations under this Bareboat Charter,
other than those obligations the performance of which physically cannot be
performed by reason of such requisition of use. The time the Vessel is under
such requisition will count as part of the Charter Period.

         (b) (1) In the event that such requisition of use continues for a
period of more than 90 days, and the Bareboat Charterer shall have given a
Requisition Termination Notice specifying the Requisition Termination Date, then
so long as the conditions of Article 12 of the Bareboat Charter have been
satisfied, this Bareboat Charter shall terminate; provided, however, that the
requisition of use shall be continuing on the Requisition Termination Date.

             (2) During the period from the date of the Requisition Termination
Notice until the Requisition Termination Date specified in such notice, the
Bareboat Charterer may, if requested by the Shipowner, as agent for the
Shipowner, solicit bids for the purchase of the Vessel for cash on the
Requisition Termination Date. The Bareboat Charterer shall certify to

                                       36
<PAGE>   171
the Shipowner in writing the amount and terms of any bid received by it and the
name and address of the person submitting such bid. If no bid is received under
Article 12 hereof during the period ending on the Requisition Termination Date
specified in the Requisition Termination Notice or if the sale of the Vessel to
one of the Persons submitting such a bid during such period cannot be
consummated, the Requisition Termination Notice shall be deemed rescinded, this
Bareboat Charter shall continue in full force and effect and the Bareboat
Charterer may thereafter at any time give one or more further Requisition
Termination Notices.

         (c) On the Requisition Termination Date, if there are one or more
bidders certified to the Shipowner pursuant to Article 12(b)(2) hereof which are
qualified pursuant to law to purchase the Vessel, the Shipowner shall elect, in
accordance with Article 11 hereof, either (1) to sell the Vessel and the rights
to any future Requisition of Use Proceeds attributable to the Vessel to one of
such bidders (selected by it in its sole discretion) for cash in the full amount
of its bid or (2) to retain ownership of the Vessel. Any sale shall be subject
to the prior receipt of all necessary governmental approvals and of the full
amount of the purchase price in immediately available funds on the Requisition
Termination Date, and shall be without recourse to or warranty by the Shipowner
except that the Shipowner shall warrant title to and freedom from liens created
by it and persons claiming through it. Except to the extent excused by the
requisition described in Article 12(a) hereof, the Bareboat Charterer shall
redeliver the Vessel in accordance with Article 13 hereof. The Shipowner shall
be entitled to the proceeds of any sale pursuant to this Article 12(c).

         (d) (1) If the Requisition Termination Date occurs during the Original
Term, on the Requisition Termination Date, the Bareboat Charterer shall pay to
the Depository for deposit into the Bareboat Charter Payment Fund:


                                       37
<PAGE>   172
                  (x) if the Shipowner has elected to retain ownership of the
        Vessel, an amount equal to the excess, if any, of Termination Value as
        of the Requisition Termination Date over the highest bid certified by
        the Bareboat Charterer to the Shipowner pursuant to Article 12(b)(2)
        hereof, the maker of which bid is financially competent and qualified
        pursuant to law to purchase the Vessel; or

                  (y) if the Shipowner shall have elected to sell the Vessel, an
        amount equal to the excess, if any, of Termination Value as of the
        Requisition Termination Date over the net proceeds of the sale of the
        Vessel pursuant to Article 12(c) hereof (or the amount of the highest
        bid of a bidder qualified pursuant to law to purchase the Vessel if the
        Shipowner shall have elected to sell the Vessel at a lower price, net of
        any expenses of the Shipowner with respect to such sale).

         (2) If the Requisition Termination Date occurs during any Renewal Term,
on the Requisition Termination Date, the Bareboat Charterer shall pay to the
Shipowner an amount, equal to the aggregate amount of Basic Hire determined
pursuant to Article 9(b)(2) hereof, calculated on a daily basis, payable from
the last Charter Hire Payment Date through the Requisition Termination Date.

                  (e) The Shipowner shall be under no duty to solicit bids with
respect to the Vessel, to inquire into the efforts of Bareboat Charterer to
obtain bids or otherwise to take any action in connection with any such sale,
other than as expressly provided herein. All costs and expenses of the Shipowner
in connection with any sale of the Vessel made pursuant to this Article 12 shall
be for the account of, and payable by, the Bareboat Charterer.

                  (f) If an Event of Bareboat Default or a Default under the
Security Agreement shall have occurred and until such Default shall have been
cured or waived, the

                                       38
<PAGE>   173
Secretary (or if the Security Agreement shall have been discharged, the
Shipowner) shall be entitled to receive and retain all Requisition of Use
Proceeds; otherwise the Bareboat Charterer shall be entitled to receive and
retain all such payments. In the event that this Bareboat Charter is terminated
pursuant to this Article 12, the Shipowner, if the Shipowner retains ownership
of the Vessel, or the purchaser of the Vessel, as the case may be, shall be
entitled to receive and retain all Requisition of Use Proceeds attributable to
the period after the Requisition Termination Date.

                  (g) (1) In the event that during the Charter Period, the
Vessel is requisitioned for use by any governmental authority (other than by the
United States) or any Person or Persons, whether or not acting under color of
such governmental authority, the Bareboat Charterer shall promptly notify or
cause to be notified the Shipowner, the Secretary and Occidental by electronic
means, confirmed by letter. In the case of such requisition, unless such
requisition shall be withdrawn, reversed or released within 90 days, the
Bareboat Charterer, immediately after the 90-day period, shall give a
Requisition Termination Notice specifying the Loss Termination Date (as provided
in Article 10(a) of this Bareboat Charter) and thereafter the provisions of
Article 10 hereof for an Event of Loss shall apply.

                       (2) In the event that during the Charter Period there
shall occur the capture, condemnation, purchase, seizure or forfeiture of, or
any taking of title to, the Vessel by any governmental authority (other than by
the United States) or any Person or Persons, whether or not acting under color
of such governmental authority, the Bareboat Charterer shall promptly notify or
caused to be notified the Shipowner, the Secretary and Occidental by electronic
means, confirmed by letter. In the case of such capture, condemnation,
confiscation, purchase, seizure or forfeiture of, or any taking of title to, the
Vessel, unless such capture, condemnation,


                                       39
<PAGE>   174
confiscation, purchase, seizure or forfeiture of, or any taking of title to, the
Vessel shall be withdrawn, reversed or released within 90 days, such capture,
condemnation, confiscation, purchase, seizure or forfeiture of, or any taking of
title to, the Vessel shall be deemed to be an Event of Loss and the provisions
of Article 10 hereof shall apply.

         (h) Until and including the Requisition Termination Date, the Bareboat
Charterer shall continue to make payments of Basic Hire and Supplemental Hire
when due irrespective of the requisition of use of the Vessel. In addition, on
the Requisition Termination Date, the Bareboat Charterer shall pay to the
Shipowner an amount equal to the premium, if any, due in respect of the
redemption of the Obligations as a result of the termination of this Bareboat
Charter pursuant to this Article 12. Notwithstanding any provision to the
contrary in this Article 12, this Bareboat Charter shall not terminate unless
all amounts due under this Bareboat Charter shall have been paid, the Security
Agreement shall have been satisfied and discharged, and, unless the Shipowner
shall have elected to retain ownership of the Vessel, the Vessel shall have been
sold as provided in Article 12(c) hereof. Payments of amounts due under this
Article 12 made by the Guarantor pursuant to the Bareboat Charter Guarantee
shall, to the extent of such payments, be deemed payments made by the Bareboat
Charterer pursuant to this Article 12.

                                   ARTICLE 13
                                   REDELIVERY

         (a) On the last day of the Charter Period, unless (i) an Event of Loss
has occurred, or (ii) this Bareboat Charter has been terminated pursuant to
Article 12(b) hereof, or (iii) use of the Vessel has been requisitioned an
described in Article 12(a) hereof and such requisition is continuing, the
Bareboat Charterer shall, except as provided in Article 13(b) hereof, at the


                                       40
<PAGE>   175
Bareboat Charterer's cost and expense, redeliver the Vessel or cause the Vessel
to be redelivered to the Shipowner at any safe port in the continental United
States on the coast on or nearest to which the Vessel is trading at the end of
the Charter Period designated by the Shipowner by written notice to the Bareboat
Charterer at least 45 days prior to the end of the Charter Period. The Bareboat
Charterer agrees that at the time of such redelivery the Vessel (i) shall be
free and clear of all liens, charges and encumbrances (except any liens, charges
or encumbrances created by the Shipowner); (ii) shall be entitled to and shall
have the classification and rating required by Article 4(a) hereof; (iii) shall
have, with respect to remaining in class, no recommendations of an ABS surveyor
affecting class outstanding on the date of redelivery; and (iv) shall have no
requirements of any United States governmental agency or department having
jurisdiction unfulfilled and with all required certificates in effect, and if
redelivery shall be at the end of the Original Term, the Vessel shall have been
credited with at least its fifth special survey by ABS.

         (b) Not earlier than 90 days prior to such redelivery, at the Bareboat
Charterer's expense, a joint survey shall be made by the Bareboat Charterer and,
the Shipowner(with drydocking only if required by ABS) to determine the
condition and fitness of the Vessel under the terms of this Bareboat Charter
including, but not limited to, Article 4(b) hereof, during which survey the
Vessel's cargo tanks shall be gas-freed. The Bareboat Charterer, unless
otherwise agreed by the Shipowner, at its own expense, will fully correct and
repair any condition disclosed by such survey to the extent necessary to cause
the Vessel to comply with all of the terms of Article 13(a) hereof. The Charter
Period shall be extended for any period necessary to make such repairs and
notwithstanding the provisions of Article 13(a) hereof relating to the port of
redelivery, redelivery shall take place at the port where such repairs are

                                       41
<PAGE>   176
made; provided, however, that the Original Term shall not be extended for more
than 180 days to effect repairs and redelivery.

         (c) The Bareboat Charterer will pay additional hire hereunder for any
period for which the Charter Period may be extended pursuant to the terms of
Article 13(a) or 13(b) hereof or which may be necessary to complete any voyage
in progress, which hire shall be in addition to any other payments due
hereunder, and shall be payable on the last day of the Charter Period, as
extended, at a rate per day equal to 1/180th of the amount of Basic Hire payable
hereunder on the last Charter Hire Payment Date; provided, however, that no
additional hire shall be paid by the Bareboat Charterer for any period during
which repair work, ordered solely by the Shipowner and not required by this
Article 13, is being performed. Upon redelivery of the Vessel hereunder, the
Bareboat Charterer, if requested in writing by the Bareboat Charterer, will
provide docking or safe anchorage facilities for the Vessel for a period not
exceeding 30 days after redelivery, at the Shipowner's expense.

         (d) Any property of the Bareboat Charterer remaining aboard the Vessel
upon redelivery may be retained or disposed of by the Shipowner as its own
property once a reasonable opportunity has been given the Bareboat Charterer to
remove such property.

                                   ARTICLE 14
                                   ASSIGNMENTS

         (a) The Shipowner shall not have the right to assign, or to permit any
assignment of, or to create a security interest in, or to permit the creation of
a security interest in, this Bareboat Charter or any moneys due and to become
due under this Bareboat Charter, except pursuant to


                                       42
<PAGE>   177
the Security Agreement. Any assignment or security interest created in violation
of this Article 14(a) shall be void.

         (b) Except for the assignment to a successor bareboat charterer under
Article 14(e) hereof, the Bareboat Charterer shall not have the right to assign,
or permit any assignment of, or to create a security interest in, or to permit
the creation of a security interest in, this Bareboat Charter or any moneys due
and to become due under this Bareboat Charter, except pursuant to the Security
Agreement, without the prior written consents of the Shipowner, the Secretary
and, during the Statutory Economic Life of the Vessel, the Board. Any assignment
or security interest created in violation of this Article 14(b) shall be void.

         (c) So long as this Bareboat Charter shall remain in effect, the
Bareboat Charterer shall not:

                  (i) merge or consolidate with any other corporation or
business entity of any kind other than with any Affiliate of the Bareboat
Charterer, or

                  (ii) sell, assign pledge or otherwise dispose of any right or
interest arising out of this Bareboat Charter except in connection with the
assignment provided for in Article 14(e) hereof.

         (d) The Bareboat Charterer shall not have the right to subcharter or
otherwise employ the Vessel other than pursuant to the Time Charter.

         (e) (1) The Shipowner shall have the right, subject to the prior
consent of the Secretary, to assign this Bareboat Charter to any person who is a
Citizen of the United States and who is a United States Person within the
meaning of Section 7701 of the Code in the event that the Shipowner shall fail
to remain, or an event shall occur which shall cause the Shipowner no longer to
remain, a Citizen of the United States.



                                       43
<PAGE>   178
                  (2) The Bareboat Charterer shall have the right, without the
consent of the Shipowner, but subject to the terms of the Security Agreement and
the Second Mortgage so long as each is in effect, to assign this Bareboat
Charter to any Affiliate of the Bareboat Charterer which is a United States
person within the meaning of Section 7701 of the Code (with the consent of the
Secretary). Any such assignment shall be subject to the Bareboat Charterer's
continuing responsibility for full performance of its obligations under this
Bareboat Charter.

         (f) This Bareboat Charter is subject and subordinate to the rights of
the Secretary under the Mortgage and the Security Agreement and the rights of
Occidental under the Second Mortgage.

                                   ARTICLE 15
                           EVENTS OF BAREBOAT DEFAULT


         (a) Each of the following events shall constitute an Event of Bareboat
Default:

                  (1) The Bareboat Charterer shall fail to pay any Basic Hire,
or Stipulated Loss Value under this Bareboat Charter within 5 days after the
date when due or the Bareboat Charterer shall fail to pay any Supplemental Hire
under this Bareboat Charter and fail to remedy the failure to pay such
Supplemental Hire within 10 days after receipt of notice thereof from the
Shipowner; or

                  (2) The Bareboat Charterer or the Guarantor shall consent to
the appointment of a receiver, trustee or liquidator of itself or of
substantially all of its property or the Bareboat Charterer or the Guarantor
shall admit in writing its inability to pay its debts generally as they come due
or shall make a general assignment for the benefit of creditors; or


                                       44
<PAGE>   179
                  (3) The Bareboat Charterer or the Guarantor shall file a
voluntary petition in bankruptcy or for a reorganization or for an arrangement
in a proceeding under any of the federal bankruptcy laws or other federal or
state insolvency laws as now or hereafter in effect or an answer admitting the
material allegations of a petition filed against the Bareboat Charterer or the
Guarantor in any such proceeding; or

                  (4) An order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of the Bareboat Charterer or the Guarantor, a receiver, trustee or
liquidator of the Bareboat Charterer or the Guarantor or of substantially all of
its property, and any such order, judgment or decree of appointment shall remain
in force undismissed, unstayed or unvacated for a period of 90 days after the
date of entry thereof; or

                  (5) A petition against the Bareboat Charterer or the Guarantor
in a proceeding under the federal bankruptcy laws or other federal or state
insolvency laws as now or hereafter in effect shall be filed and shall not be
withdrawn or dismissed within 90 days thereafter or if, under the provisions of
any law providing for reorganization or winding-up of corporations which may
apply to the Bareboat Charterer or the Guarantor, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the Bareboat
Charterer or the Guarantor or of substantially all of the property of either and
such jurisdiction, custody or control shall remain in force unrelinquished,
unstayed or unterminated for a period of 90 days; or

                  (6) The failure of the Bareboat Charterer to perform or comply
in any material respect with any of the provisions of Articles 3(a), 7(a) or
17(b) hereof or to maintain,


                                       45
<PAGE>   180
or cause to be maintained, insurance in the amounts and forms as and when
required under Article 8 hereof; or

                  (7) The Bareboat Charterer shall fail to remain, or an event
shall occur which will cause the Bareboat Charterer to no longer remain, a
Citizen of the United States, and the Bareboat Charterer shall fail for more
than 30 days after it obtains knowledge of such failure or event, to cause all
necessary governmental approvals, under Sections 9, 37 (if applicable) and 41 of
the Shipping Act, or otherwise, to be obtained; provided, however, that no Event
of Bareboat Default under this Article 15(a)(7) shall be deemed to have occurred
if the Bareboat Charterer shall have made the assignment of this Bareboat
Charter to a Citizen of the United States provided for in Article 14(e)(1)
hereof within 30 days after it obtains knowledge of such failure or event; or

                  (8) (i) Either the MTC Guarantee or the SNTG Guarantee shall
cease to be in full force and effect, or either Guarantor shall be in default
under any of the provisions therein, or (ii) the Contingent Guarantee shall
cease to be in full force and effect (unless the Contingent Guarantee shall so
cease by operation of the provisions of Section 2(c) thereof) or Occidental
shall be in default under any provision therein, and, in each case, such default
shall fail to be remedied within 30 days after written notice from the Shipowner
or the Secretary to such Guarantor or Occidental of the existence of such
default; or

                  (9) Any Default under the Security Agreement shall have
occurred and be continuing as a result of the Bareboat Charterer's failure to
perform or comply with its obligations under this Bareboat Charter; or

                  (10) Either the Bareboat Charterer or the Time Charterer shall
fail for more than 30 days after written notice from the Secretary to the
Bareboat Charterer or the Time

                                       46
<PAGE>   181
Charterer to perform or comply with any of the provisions of the Title XI
Reserve Fund and Financial Agreement insofar as such provisions pertain to the
Vessel unless such failure shall have been waived by the Secretary; or

                  (11) The Bareboat Charterer shall default in the performance
of any other obligation under this Bareboat Charter and shall fail to remedy the
default within 30 days after receipt of notice thereof from the Shipowner or the
Secretary, specifying the acts or omissions of the Bareboat Charterer which
constitute such default.

         (b) Upon the occurrence of an Event of Bareboat Default, so long as
such Event of Bareboat Default shall be continuing, the Shipowner shall promptly
notify the Secretary of such occurrence and at any time thereafter, so long as
the same shall be continuing, the Shipowner (or the Secretary pursuant to the
Security Agreement) may, at its option, declare this Bareboat Charter to be in
default by notice delivered to the Bareboat Charterer and the Guarantor and, at
any time thereafter, so long as the Bareboat Charterer or the Guarantor, as the
case may be, shall not have remedied all outstanding Events of Bareboat Default,
the Shipowner by notice to the Bareboat Charterer and the Guarantor may
terminate this Bareboat Charter, upon which termination the Shipowner may do,
and the Bareboat Charterer shall comply with, one or more of the following, as
the Shipowner shall elect, to the extent permitted by, and subject to compliance
with, any mandatory requirements of applicable law and the provisions of the
Security Agreement if then in effect:

                  (1) Upon written demand of the Shipowner, the Bareboat
Charterer shall without expense to the Shipowner, promptly redeliver the Vessel,
or cause the Vessel to be redelivered, to the Shipowner with all reasonable
dispatch to any safe port in the United States selected by the Shipowner (which
port shall be on the coast to which the Vessel is closest at the

                                       47
<PAGE>   182
time of such demand) in the same manner and in the same condition as if the
Vessel were being redelivered on the Last day of the Charter Period in
accordance with the provisions of Article 13 hereof, and, except as otherwise
provided in this Article 15, all obligations of the Bareboat Charterer under
Article 13 hereof shall apply to such redelivery. The Shipowner or its agent,
without further demand, may, but shall be under no obligation to, withdraw the
Vessel from the service of the Bareboat Charterer wherever found, whether upon
the high seas or at any port, harbor or other place and irrespective of whether
the Bareboat Charterer or any other person may be in possession of the Vessel
all without prior demand and without legal process, and for that purpose the
Shipowner or its agent may enter upon any dock, pier or other premises where the
Vessel may be and may take possession thereof, without the Shipowner or its
agent incurring any liability by reason of such retaking, whether for the
restoration of damage to property caused by such withdrawal or otherwise.

                  (2) If the Event of Bareboat Default resulting in the
termination of this Bareboat Charter shall have occurred during the Original
Term, the Bareboat Charterer will pay to, or on the order of, the Shipowner,
upon request by the Shipowner upon at least 10 days prior written notice, on the
payment date specified in such notice, as liquidated damages for loss of a
bargain and not as a penalty, all unpaid Basic Hire and Supplemental Hire
payable in accordance with the terms hereof on or prior to the Default
Termination Date plus an amount (together with interest on such amount at the
Interest Rate for the period, if any, from but not including, the Charter Hire
Payment Date immediately preceding the payment date specified in such notice to
and including the Default Termination Date) equal to:



                                       48
<PAGE>   183
                       (i) the Stipulated Loss Value, computed as of the Charter
                  Hire Payment Date occurring on or immediately preceding the
                  Default Termination Date, less

                       (ii) whichever of the following amounts the Shipowner, in
                  its sole discretion, shall specify in such notice: (A) the
                  fair market sales value (determined as hereinafter provided in
                  this Article 15(b)(2)) of the Vessel as of the Charter Hire
                  Payment Date immediately preceding the Default Termination
                  Date or (B) the fair market demise charter value (determined
                  as hereinafter provided in this Article 15(b)(2)) of the
                  Vessel for the period from such Charter Hire Payment Date to
                  the day which would have been the last day of the Charter
                  Period but for the termination of this Bareboat Charter
                  pursuant to this Article 15(b), after discounting such fair
                  market demise charter value to its value on the Charter Hire
                  Payment Date occurring on or immediately preceding the Default
                  Termination Date at the Discount Rate.

                  For the purpose of this Article 15(b)(2), the "fair market
sales value" or "fair market demise charter value" shall be determined by the
Appraisal Procedure; provided, however, that (x) if the Vessel shall have been
sold prior to the Default Termination Date by (i) the Shipowner pursuant to
paragraph 4 of this Article 15(b), or (ii) the Secretary pursuant to Section
6.04(b) of Exhibit 1 to the Security Agreement, the "fair market sales value"
shall be the net proceeds of such sale after deducting all costs and expenses
incurred by the Shipowner or the Secretary, as the case may be, in connection
therewith, (y) the "fair market sales value" or the "fair market demise charter
value" shall be zero if the Vessel is not redelivered or if the Shipowner has
expended reasonable efforts, under the circumstances to take possession of the


                                       49
<PAGE>   184
Vessel but has been unable to take possession; and (z) there shall be added to
"fair market sales value" and to "fair market demise charter value," as the case
may be, the net proceeds received by the Shipowner (after deducting all costs
and expenses of the Shipowner with respect thereto) from any charter of the
Vessel to others in accordance with Article 15(b)(3) hereto, to the extent such
proceeds are received by the Shipowner prior to the Default Termination Date.
Nothing contained in the preceding sentence shall require the Shipowner to sell
or charter the Vessel at any time.

                  (3) If the Event of Bareboat Default resulting in the
termination of this Bareboat Charter shall have occurred during a Renewal Term,
the Bareboat Charterer shall pay to, or on the order of, the Shipowner, upon
request by the Shipowner upon at least 10 days prior written notice, on the date
specified in such notice as the Default Termination Date, as liquidated damages
for loss of a. bargain and not as a penalty, all unpaid Basic Hire and
Supplemental Hire payable in accordance with the terms hereof on or prior to the
Default Termination Date plus an amount, equal to the aggregate amount of Basic
Hire determined pursuant to Article 9(b) hereof, discounted at the Discount Rate
to its value on the Default Termination Date, which would have been paid during
the remainder of the Renewal Term in which the Default Termination Date occurs.

                  (4) The Shipowner or its agent with or without notice to the
Bareboat Charterer, may sell the Vessel at public or private sale, with or
without advertisement or publication, as the Shipowner may determine, or
otherwise may dispose of, hold, use, operate, charter to others (whether for a
period greater or less than the balance of what would have been the Charter
Period in the absence of the termination of this Bareboat Charter pursuant to
this Article 15(b)) or keep the Vessel idle, all on such terms and conditions
and at such place or


                                       50
<PAGE>   185
places as the Shipowner may determine and all free and clear of any rights of
the Bareboat Charterer and any claim of the Bareboat Charterer in admiralty, in
equity, at law or by statute, whether for loss or damage or otherwise, and
without any duty to account to the Bareboat Charterer except to the extent
provided for in Article 15(b)(2) hereof.

         (c) In addition to the foregoing, the Bareboat Charterer shall pay to,
or on the order of, the Shipowner, all Supplemental Hire hereunder payable
before, during or after the exercise of any remedies exercised by the Shipowner,
and all legal and investigatory fees and any other costs and expenses whatsoever
incurred by the Shipowner by reason of the occurrence of any Event of Bareboat
Default or by reason of the exercise by the Shipowner of any remedy hereunder,
including, without limitation, any costs and expenses incurred by the Shipowner
in connection with the redelivery of the Vessel in accordance with this Article
15 and of placing the Vessel in the condition and seaworthiness required by the
terms of Article 13 hereof.

         (d) No remedy referred to in Article 15(b) hereof is intended to be
exclusive, but each shall be cumulative and is in addition to, and may be
exercised concurrently with, any other remedy which is referred to in Article
15(b) hereof or which may otherwise be available to the Shipowner at law, in
equity or in admiralty, provided, however, that liquidated damages having been
agreed to by the parties hereto in Articles 15(b)(2) and (3) hereof, the
Shipowner shall not be entitled to recover from the Bareboat Charterer as
damages upon the occurrence of one or more Events of Bareboat Default an amount
in excess of such liquidated damages plus any Supplemental Hire and expenses
referred to above. There shall be deducted from the aggregate amount so
recoverable by the Shipowner the net balance, if any, remaining of any moneys
held by the Shipowner which would have been required by the terms of this
Bareboat Charter to have been paid to the Bareboat Charterer but for the
occurrence of an Event of

                                       51
<PAGE>   186
Bareboat Default. The rights of the Shipowner and the obligations of the
Bareboat Charterer under this Article 15(d) shall be effective and enforceable
regardless of the pendency of any proceeding which has or might have the effect
of preventing the Shipowner or the Bareboat Charterer from complying with the
terms of this Bareboat Charter. No express or implied waiver by the Shipowner of
any Event of Bareboat Default shall in any way be, or be construed to be, a
waiver of any further or subsequent Event of Bareboat Default. The Bareboat
Charterer hereby agrees that to the extent that the Shipowner shall sell charter
or otherwise use the Vessel pursuant to Article 15(b)(4) hereof in good faith,
the Shipowner shall have no liability to the Bareboat Charterer for any such
sale, charter or other use except as specifically provided in Article 15(b)(2)
hereof.

         (e) The Bareboat Charterer hereby waives, to the extent permitted by
applicable law, any and all rights which it may now have or which at any time
hereafter may be conferred upon it, by statute or otherwise, which may require
the Shipowner to sell charter or otherwise use the Vessel in mitigation of the
Shipowner's damages, or which may otherwise limit or modify any of the rights or
remedies of the Shipowner provided for in this Article 15.

         (f) If the Bareboat Charterer shall fail to perform or observe any of
the other terms of this Bareboat Charter which do not give rise to an Event of
Bareboat Default, the Shipowner may (but in its discretion shall not be
obligated to) give written notice (which notice may be given by electronic means
and shall be effective upon receipt thereof) to the Bareboat Charterer of its
intention to exercise its rights under this Article 15. Unless the Bareboat
Charterer shall have then commenced to use due diligence, to the reasonable
satisfaction of the Shipowner, to cause such failure to be cured, the Shipowner
may, in its discretion, do all acts and make all expenditures necessary to
remedy such failure, including, without limitation, the taking out of

                                       52
<PAGE>   187
insurance on the Vessel and entry upon the Vessel to make repairs. The Bareboat
Charterer agrees to reimburse the Shipowner promptly on demand for all costs and
expenses incurred in connection with the exercise of its rights under this
Article 15(f), together with interest thereon at the Interest Rate from the date
of such expenditures to the date of payment by the Bareboat Charterer. The
Bareboat Charterer agrees to permit the agents and servants of the Shipowner
reasonable access to the Vessel as shall be necessary under this Article 15(f).

                                   ARTICLE 16
                      REPLACEMENT OF THE BAREBOAT CHARTERER

         If at any time during the Charter Period, the Time Charterer shall have
given the notice of replacement of the Bareboat Charterer referred to in Section
14.2 of the Time Charter to cause the Bareboat Charterer to be replaced because
of the occurrence of an Event of Bareboat Charterer Default under the Time
Charter, and if the Shipowner shall approve in writing of such replacement, the
Bareboat Charterer shall be replaced as Bareboat Charterer hereunder.

                                   ARTICLE 17
                                  MISCELLANEOUS

         (a) The Shipowner and the Bareboat Charterer severally agree to
perform, or cause to be performed, such action, and to execute, deliver or
furnish or to cause to be executed, delivered or furnished, all such further
assurances, certificates and other documents, necessary or proper to carry out
this Bareboat Charter.

         (b) The terms of this Bareboat Charter and Schedule X attached hereto
shall not be altered, modified, amended, supplemented or terminated in any
manner whatsoever except by

                                       53
<PAGE>   188
written instrument signed by the parties hereto and with the written consent of
the Secretary and Occidental.

         (c) The invalidity of any provision of this Bareboat Charter shall not
affect the remainder hereof, which shall in such event be construed as if such
invalid provision had not been inserted.

         (d) The table of contents and headings of this Bareboat Charter are for
purposes of reference only, and shall in no way limit or otherwise affect any of
the terms or provisions hereof.

         (e) Subject to the provisions of Article 14 hereof, the terms of this
Bareboat Charter shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns.

         (f) ALL QUESTIONS ARISING UNDER THIS BAREBOAT CHARTER SHALL IN ALL
RESPECTS BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE GENERAL
MARITIME LAWS OF THE UNITED STATES AND TO THE EXTENT FEDERAL LAW DOES NOT APPLY,
THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK. ANY CLAIM OR DISPUTE ARISING UNDER
THIS BAREBOAT CHARTER SHALL, PROVIDED THAT THE COURT HAS SUBJECT MATTER
JURISDICTION, BE DECIDED IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN

                                       54
<PAGE>   189
DISTRICT OF NEW YORK, TO THE JURISDICTION OF WHICH THE SHIPOWNER AND THE
BAREBOAT CHARTERER HEREBY SUBMIT THEMSELVES FOR THE PURPOSES OF ANY SUCH
PROCEEDING. IN THE EVENT THAT THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK LACKS SUBJECT MATTER JURISDICTION OVER ANY CLAIM OR DISPUTE
ARISING UNDER THIS BAREBOAT CHARTER, THE SHIPOWNER AND THE BAREBOAT CHARTERER
HEREBY SUBMIT THEMSELVES TO THE JURISDICTION OF THE SUPREME COURT FOR THE COUNTY
OF NEW YORK FOR THE PURPOSES OF ANY SUCH PROCEEDING AND WAIVE ANY CLAIM OF FORUM
NON CONVENIENS RELATING TO SUCH CHOICE OF COURT.

         (g) (1) The Bareboat Charterer and the Shipowner mutually acknowledge
that, during the Statutory Economic Life of the Vessel, the Vessel and its
operation are, or may be, subject to certain requirements contained in the Title
V Contract and in the ODS Contract. Unless waived (and the Bareboat Charterer
shall not request any waiver without the prior written consent of the Shipowner)
the Bareboat Charterer and the Shipowner agree to comply with any such
requirements notwithstanding anything to the contrary in this Bareboat Charter.

                  (2) The Bareboat Charterer and Shipowner severally agree not
to make, or permit to be made, any alteration in the National Defense Features
of the Vessel in a manner which adversely affects the value of the National
Defense Features without the prior written consent of the Board.

                  (3) Nothing in this Article 16(g) shall affect the absolute
and unconditional obligation of the Bareboat Charterer to pay Basic Hire,
Supplemental Hire and amounts in respect of Stipulated Loss Value pursuant to
the terms of this Bareboat Charter.

         (h) This Bareboat Charter is not a personal contract. The Bareboat
Charterer and the Shipowner shall have the benefit of all limitations of, and
exemptions from, liability accorded to the owner or chartered owner of vessels
by any statute or rule of law for the time being in force.



                                       55
<PAGE>   190
         (i) This Bareboat Charter may be executed in several counterparts, each
of which shall be an original, but all of which together shall constitute one
agreement.

         (j) No person other than the Bareboat Charterer and the Shipowner, and
their successors and assigns as permitted hereunder, shall enforce or attempt to
enforce the obligations of the Bareboat Charterer or the Shipowner hereunder
without the prior written consent of the Bareboat Charterer and the Shipowner.

         (k) All interest payments to be computed under this Bareboat Charter
shall be computed on the basis of a 360-day year of twelve 30-day months.

         (1) The provisions of this Bareboat Charter which require or permit
action by the Secretary and Occidental, the consent, approval or authorization
of the Secretary and Occidental or the furnishing of any document, paper or
information to the Secretary and Occidental shall not be effective, and such
provisions shall be read, unless otherwise required by law, as though there were
no such requirements or permissions, after: (i) termination of the Guarantees,
except a termination pursuant to clause (b) of Section 6.04 of Exhibit 1 to the
Security Agreement and the discharge of the Second Mortgage; or (ii) payment in
full of the principal of and interest on each Secretary's Note.

                                   ARTICLE 18
                                     NOTICES

                All notices and other communications hereunder shall be
effective when received except that all notices and other communications sent by
prepaid United States certified mail, return receipt requested, shall become
effective on the third Business Day after such mailing



                                       56
<PAGE>   191
and shall be addressed as follows or, to each party, at such other address as
shall be designated by such party in a written notice to the other persons named
below:

                  To the Shipowner:

                           Julius Owner Corporation
                           c/o Marine Transport Corporation
                           1200 Harbor Boulevard
                           Weehawken, NJ 07087-0901

                  To the Bareboat Charterer:

                           Julius ODS Corporation
                           c/o Marine Transport Corporation
                           1200 Harbor Boulevard
                           Weehawken, NJ 07087-0901

                  To the Secretary:

                           c/o Maritime Administrator
                           Maritime Administration
                           Department of Transportation
                           400 7th Street, SW
                           Washington, D.C. 20590

                  To Occidental:

                           10889 Wilshire Boulevard
                           Los Angeles, CA 90024
                           Attention:  Vice President & Treasurer


                                       57
<PAGE>   192
                IN WITNESS WHEREOF, the parties have caused this Bareboat
Charter to be signed as of the day and year first above written.

                                          JULIUS OWNER CORPORATION,
                                                             Shipowner


                                          By: _________________________
                                              Name:  _____________________
                                              Title: _____________________
<PAGE>   193
                                          JULIUS ODS CORPORATION,
                                                             Bareboat Charterer



                                          By: _________________________
                                              Name:  _______________________
                                              Title: _______________________



THE ABOVE CHARTER AND CERTAIN HIRE DERIVED THEREFROM ARE SUBJECT TO A SECURITY
INTEREST IN FAVOR OF THE UNITED STATES OF AMERICA, REPRESENTED BY THE SECRETARY
OF TRANSPORTATION, ACTING BY AND THROUGH THE MARITIME ADMINISTRATOR (THE
"SECRETARY") IN ACCORDANCE WITH THE PROVISIONS OF A SECURITY AGREEMENT BETWEEN
THE ABOVE NAMED SHIPOWNER AND THE SECRETARY AS SECURED PARTY.
<PAGE>   194
                                                                      4.05(a)(1)

                                    GUARANTEE


                            DATED SEPTEMBER 29, 1999


                                       BY


                          MARINE TRANSPORT CORPORATION,
                                                    GUARANTOR


                                       AND


                          THE UNITED STATES OF AMERICA




                               ITB FRANCES HAMMER
                      (TO BE RENAMED SMT CHEMICAL EXPLORER)
<PAGE>   195
                                    GUARANTEE

                               ITB FRANCES HAMMER
                      (TO BE RENAMED SMT CHEMICAL EXPLORER)


         This GUARANTEE (this "Guaranty Agreement"), is made on _____ _______,
1999, by MARINE TRANSPORT CORPORATION, a Delaware corporation (the "Guarantor")
to the United States of America, represented by the Department of
Transportation, acting by and through the Maritime Administrator (the
"Secretary").

                                   WITNESSETH:

         A. WHEREAS, on the date hereof (x) Frances Owner Corporation, a
Delaware corporation (the "Assuming Shipowner"), is assuming certain obligations
of STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in
its individual capacity but solely as owner trustee under the Trust Agreement
dated as of November 13, 1980, as amended, for the benefit of the owner
participant named therein (the "Assigning Shipowner"), as shipowner under the
Security Agreement, Contract No. MA-9892 (as supplemented and amended to date,
the "Security Agreement"), between the Assigning Shipowner and the Secretary and
(y) the Assigning Shipowner is being released from its obligations thereunder;

         B. WHEREAS, concurrently with the release of the Assigning Shipowner
from its obligations under the Security Agreement, (x) Suwannee River Phosphate
Lines, Inc., a California corporation (the "Original Bareboat Charterer"), as
bareboat charterer under a Bareboat Charter dated as of September 16, 1981 (as
supplemented and amended to date, the "Original Bareboat Charter"), between the
Original Bareboat Charterer and the Assigning Shipowner, is being released from
its obligations under the Original Bareboat Charter, (y) Occidental Petroleum
Corporation, a Delaware corporation (as successor to Occidental Petroleum
Corporation, a California corporation, herein "Occidental"), as guarantor under
a Bareboat Charter Guarantee dated as of September 16, 1981, relating to the
Original Bareboat Charter (the "Old Bareboat Charter Guarantee") is being
released from its obligations under such guarantee, and (z) the Secretary has
requested, as a condition to the Secretary's consent to releasing Occidental
from its obligations under the Old Bareboat Charter Guarantee, that (i) the
Guarantor enter into this Guaranty Agreement of 75% of the obligations of the
Assuming Shipowner under the Secretary's Note, (ii) Stolt-Nielsen Transportation
Group Ltd., a Liberian corporation ("SNTG"), enter into a similar guarantee
concurrently herewith of 25% of the obligations of the Assuming Shipowner under
the Secretary's Note (the "SNTG Guarantee"), the liability of the Guarantor and
SNTG under such guarantees being several but not joint, and (iii) Occidental
enter into a Contingent Guarantee of certain of the obligations of the Bareboat
Charterer under the Bareboat Charter; and



<PAGE>   196
         C. WHEREAS, the Assuming Shipowner is an Affiliate of the Guarantor.

         NOW, THEREFORE, in consideration of the Secretary's consent to the
assumption by the Assuming Shipowner of the Security Agreement and the
Secretary's Note, and the benefits and advantages to be derived therefrom by the
Guarantor, the Guarantor hereby agrees with the Secretary for its benefit as
follows:

         1.  Guarantee.

                   (a) The Guarantor hereby absolutely, irrevocably, and
unconditionally guarantees the due and punctual payment of the principal and
interest on the Secretary's Note. The Guarantor shall be required to make said
payments under this Guaranty Agreement upon receipt of a written notice from the
Secretary which states that the Assuming Shipowner has not promptly, completely
or effectively made said payments. The failure of the Guarantor to receive such
a written notice or the failure of the Secretary to send said notice shall not
relieve the Guarantor of its obligations under this Guaranty Agreement. This
Guaranty Agreement shall be enforceable and exercisable by the Secretary from
the first day of any failure by the Assuming Shipowner to make payment or
mandatory prepayment of the principal of and the interest on the Secretary's
Note when the same shall be due. The Guarantor shall immediately pay to the
Secretary or its designee in immediately available funds such payments
guaranteed herein.

                  (b) The Guarantor hereby consents and agrees that its
obligations under this Guaranty Agreement will not be discharged by any act or
omission to act of any kind by the Secretary or any other person or any other
circumstances whatsoever (including, but not limited to, any extension,
rearrangement, or renewal with respect to any indebtedness or other obligation
of the Assuming Shipowner with or without notice to the Guarantor, any waiver of
any right of the Secretary under the terms of the Secretary's Note, the Security
Agreement, the Mortgage, or this Guaranty Agreement, any release of security,
any transfer or assignment of rights or obligations accruing to the Secretary
under the Secretary's Note, the Security Agreement, the Mortgage, or this
Guaranty Agreement, any corporate reorganization, dissolution, merger,
acquisition of or by or other alteration of the corporate existence or structure
of the Assuming Shipowner or the Guarantor, discharge of the Assuming Shipowner
in bankruptcy, the invalidity, illegality, or unenforceability of the
Secretary's Note, the Security Agreement, the Mortgage, or this Guaranty
Agreement or the absence of any action to enforce the obligations of the
Assuming Shipowner) which might constitute a legal or equitable discharge of the
Guarantor; it being the intention of the Guarantor that this Guaranty Agreement
be absolute, continuing, and unconditional and the guarantee hereunder shall
only be discharged by the payment in full of all sums so guaranteed hereunder.

                  (c) The Guarantor hereby irrevocably and unconditionally
waives: (1) notice of any of the matters referred to in this Guaranty Agreement
and any action by the Secretary in reliance thereon; (2) all notices which may
be required by statute, rule of law, or otherwise to preserve any rights against
the Guarantor hereunder, including without limitation, any demand, protest,
proof of notice of non-payment of all sums payable under the Secretary's Note or
any notice of any failure on the part of the Assuming Shipowner to perform or
comply with any covenant, term, or obligations of any agreement to which it is a
party; (3) any requirement for the



                                       2

<PAGE>   197
enforcement, assertion, or exercise of any right, remedy, power, or privilege
under or with respect to the Mortgage, the Security Agreement, or the
Secretary's Note; (4) any requirement of diligence; (5) any requirement that the
Assuming Shipowner be joined as a party to any proceedings for the enforcement
of any provision of this Guaranty Agreement, or that the Secretary proceed
against any other guarantor executing this Guaranty Agreement or any other
guaranty agreement; (6) any and all defenses to payment hereunder, except the
defense of payment already made, and agrees to confess without contesting
liability hereunder for any judgment validly entered hereon; (7) presentment,
demand, protest, notice of protest and dishonor, notice of intent to accelerate,
and notice of acceptance; or (8) the right to require the Secretary to pursue
any remedy whatsoever in the Secretary's power.

                  (d) The Guarantor hereby agrees that this Guaranty Agreement
shall continue to be effective or shall be reinstated, as the case may be, if at
any time payment of any sum hereby guaranteed is rescinded or must be otherwise
restored or returned by the Secretary, upon the insolvency, bankruptcy, or
reorganization of the Assuming Shipowner, or otherwise, all as though such
payment had not been made. The Guarantor further agrees that if the maturity of
any obligations guaranteed herein be accelerated by bankruptcy or otherwise,
such maturity shall also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to the Guarantor.

                  (e) Any amount payable hereunder shall not be subject to any
reduction by reason of any counterclaim, set-off, deduction, abatement or
otherwise.

                  (f) The Guarantor shall pay all reasonable costs and expenses
(including, without limitation, attorneys' fees and expenses) incurred in
connection with the enforcement of the obligations of the Guarantor under this
Guaranty Agreement.

                  (g) The Secretary's Note may be amended, modified, or endorsed
without the consent of the Guarantor.

                  (h) The Secretary may enforce the Guarantor's obligations
hereunder without in any way first pursuing or exhausting any other rights or
remedies which the Secretary may have against the Assuming Shipowner or any
other person, firm, or corporation or against any security the Secretary may
hold.

                  (i) The obligations of the Guarantor hereunder shall equal
seventy-five percent (75%) of the obligations of the Assuming Shipowner under
the Secretary's Note. The obligations of the Guarantor hereunder are several but
not joint with the obligations of SNTG under the SNTG Guarantee.

         2. Secretary's Rights. The Guarantor authorizes the Secretary, without
notice or demand and without affecting the Guarantor's liability hereunder, to
take and hold security for the payment of this Guaranty Agreement and/or any of
the obligations guaranteed herein and exchange, enforce, waive, and release any
such security; and to apply such security and direct the order or manner of sale
thereof as the Secretary in his discretion may determine; and to obtain a
guarantee of any of the obligations guaranteed herein from any one or more
persons, corporations, or entities

                                       3
<PAGE>   198
whomsoever and at any time or times to enforce, waive, rearrange, modify, limit
or release such other persons, corporations, or entities from their obligations
under such guarantees.

         3. Primary Liability. It is expressly agreed that the liability of the
Guarantor for the payment of the obligations guaranteed herein shall be primary
and not secondary.


         4. Representations and Warranties. The Guarantor represents and
warrants as follows:

                  (a) It is a corporation duly organized, validly existing, and
in good standing under the laws of the state of Delaware and has full power and
authority (corporate, legal and other) to execute, deliver, and carry out the
terms of this Guaranty Agreement;

                  (b) This Guaranty Agreement has been duly authorized,
executed, and delivered by the Guarantor and constitutes the legal, valid, and
binding obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms;

                  (c) The execution, delivery, and performance by the Guarantor
of this Guaranty Agreement does not require the approval or consent of its
shareholders or of any governmental authority and does not contravene the
Guarantor's Articles of Incorporation, or any mortgage, indenture, or other
agreement binding upon it, or any law, regulation, order, judgment, or decree
applicable to the Guarantor;

                  (d) The Guarantor's guarantee pursuant to this Guaranty
Agreement may be expected to benefit, directly or indirectly, the Guarantor; and

                  (e) The Guarantor has fully adequate financial resources,
funds, and assets to satisfy its obligations under this Guaranty Agreement and
the Guarantor will in the future retain sufficient financial resources, funds,
and assets to satisfy fully its obligations under this Guaranty Agreement.

         5. Continuing Guarantee. This Guaranty Agreement is a continuing
guarantee of payment and collectability and shall:

                  (a) Remain in full force and effect so long as any obligation
of the Assuming Shipowner to the Secretary referred to herein exists;

                  (b) Be binding upon the Guarantor, its successors and assigns;

                  (c) Be executed and issued for the sole and exclusive benefit
of the United States, and no other party shall be permitted to claim any
benefit, direct or indirect, therefrom. This Guaranty Agreement is
nonassignable, any assignment thereof shall be null and void and have no legal
effect whatsoever; and

                  (d) Inure to the benefit of, and be enforceable by the
Secretary, his successors and assigns.


                                       4
<PAGE>   199
         6. Default. A default under the terms of this Guaranty Agreement shall
be deemed to occur if the Guarantor fails to make any payment guaranteed
hereunder.

         7. Notices. All communications may be made or delivered in person or by
certified or registered mail, postage prepaid, addressed to the Guarantor or the
Secretary as provided below or to such other address as the Guarantor or the
Secretary may hereafter specify in a written notice to the other and all notices
or other communications shall be in writing so addressed and shall be effective
upon receipt by the addressee thereof:

         Guarantor:                MARINE TRANSPORT CORPORATION
                                   1200 Harbor Boulevard, C-901
                                   Weehawken, NJ  07087
                                   Attention:  General Counsel

         Secretary:                 SECRETARY OF TRANSPORTATION
                                    c/o Maritime Administration
                                    Department of Transportation
                                    Washington, DC  20590
                                    Attn:   Chief, Division of Ship
                                            Financing Contracts

         8. Amendments and Supplements. No agreement shall be effective to
change or modify, supplement, amend, or discharge in whole or in part this
Guaranty Agreement unless such agreement is in writing, signed by the Guarantor
and the Secretary.

         9. Governing Law. This Guaranty Agreement and the rights and
obligations of the parties thereto shall in all respects be governed by, and
construed and enforced in accordance with the federal law of the United States
of America or in the absence of applicable federal law by the laws of the State
of New York, including Section 5-1401 of the General Obligations Law of the
State of New York.

         10. Counterparts. This Guaranty Agreement may be executed in one or
more counterparts. All such counterparts shall be deemed to be originals and
shall together constitute but one and the same instrument.

         11. Severability. If any term of this Guaranty Agreement or any
application thereof shall be invalid or unenforceable, the remainder of this
Guaranty Agreement and any other application of such term shall not be affected
thereby.

                                       5
<PAGE>   200
         IN WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement to
be executed and delivered as of the day and year first above written.

                                                   MARINE TRANSPORT CORPORATION



Attest:                                            By: ---------------------
                                                   Name:---------------------
 ---------------------                             Title:---------------------



<PAGE>   201

ACKNOWLEDGED BY:



                                           UNITED STATES OF AMERICA,
                                           SECRETARY OF TRANSPORTATION

                                           MARITIME ADMINISTRATOR



                                            By: ------------------------------
                                                Its Secretary

(SEAL)



ATTEST:


By: ---------------------------
     Its Assistant Secretary

<PAGE>   202
                                                                      4.05(b)(1)

                                    GUARANTEE


                            DATED SEPTEMBER 29, 1999


                                       BY


                          MARINE TRANSPORT CORPORATION,
                                                       GUARANTOR


                                       AND


                          THE UNITED STATES OF AMERICA








                                ITB JULIUS HAMMER
                       (TO BE RENAMED SMT CHEMICAL TRADER)








<PAGE>   203

                                    GUARANTEE

                                ITB JULIUS HAMMER
                       (to be renamed SMT CHEMICAL TRADER)


         This GUARANTEE (this "Guaranty Agreement"), is made on ----- -------,
1999, by MARINE TRANSPORT CORPORATION, a Delaware corporation (the "Guarantor")
to the United States of America, represented by the Department of
Transportation, acting by and through the Maritime Administrator (the
"Secretary").

                                   WITNESSETH:

         A. WHEREAS, on the date hereof (x) Julius Owner Corporation, a Delaware
corporation (the "Assuming Shipowner"), is assuming certain obligations of STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its
individual capacity but solely as owner trustee under the Trust Agreement dated
as of November 13, 1980, as amended, for the benefit of the owner participant
named therein (the "Assigning Shipowner"), as shipowner under the Security
Agreement, Contract No. MA-9880 (as supplemented and amended to date, the
"Security Agreement"), between the Assigning Shipowner and the Secretary and (y)
the Assigning Shipowner is being released from its obligations thereunder;

         B. WHEREAS, concurrently with the release of the Assigning Shipowner
from its obligations under the Security Agreement, (x) Suwannee River Lines,
Inc., a California corporation (the "Original Bareboat Charterer"), as bareboat
charterer under a Bareboat Charter dated as of March 18, 1981 (as supplemented
and amended to date, the "Original Bareboat Charter"), between the Original
Bareboat Charterer and the Assigning Shipowner, is being released from its
obligations under the Original Bareboat Charter, (y) Occidental Petroleum
Corporation, a Delaware corporation (as successor to Occidental Petroleum
Corporation, a California corporation, herein "Occidental"), as guarantor under
a Bareboat Charter Guarantee dated as of March 18, 1981, relating to the
Original Bareboat Charter (the "Old Bareboat Charter Guarantee") is being
released from its obligations under such guarantee, and (z) the Secretary has
requested, as a condition to the Secretary's consent to releasing Occidental
from its obligations under the Old Bareboat Charter Guarantee, that (i) the
Guarantor enter into this Guaranty Agreement of 75% of the obligations of the
Assuming Shipowner under the Secretary's Note, (ii) Stolt-Nielsen Transportation
Group Ltd., a Liberian corporation ("SNTG"), enter into a similar guarantee
concurrently herewith of 25% of the obligations of the Assuming Shipowner under
the Secretary's Note (the "SNTG Guarantee"), the liability of the Guarantor and
SNTG under such guarantees being several but not joint, and (iii) Occidental
enter into a Contingent Guarantee of certain of the obligations of the Bareboat
Charterer under the Bareboat Charter; and

         C. WHEREAS, the Assuming Shipowner is an Affiliate of the Guarantor.

         NOW, THEREFORE, in consideration of the Secretary's consent to the
assumption by the Assuming Shipowner of the Security Agreement and the
Secretary's Note, and the benefits

<PAGE>   204
and advantages to be derived therefrom by the Guarantor, the Guarantor hereby
agrees with the Secretary for its benefit as follows:

         1.  Guarantee.

                   (a) The Guarantor hereby absolutely, irrevocably, and
unconditionally guarantees the due and punctual payment of the principal and
interest on the Secretary's Note. The Guarantor shall be required to make said
payments under this Guaranty Agreement upon receipt of a written notice from the
Secretary which states that the Assuming Shipowner has not promptly, completely
or effectively made said payments. The failure of the Guarantor to receive such
a written notice or the failure of the Secretary to send said notice shall not
relieve the Guarantor of its obligations under this Guaranty Agreement. This
Guaranty Agreement shall be enforceable and exercisable by the Secretary from
the first day of any failure by the Assuming Shipowner to make payment or
mandatory prepayment of the principal of and the interest on the Secretary's
Note when the same shall be due. The Guarantor shall immediately pay to the
Secretary or its designee in immediately available funds such payments
guaranteed herein.

                  (b) The Guarantor hereby consents and agrees that its
obligations under this Guaranty Agreement will not be discharged by any act or
omission to act of any kind by the Secretary or any other person or any other
circumstances whatsoever (including, but not limited to, any extension,
rearrangement, or renewal with respect to any indebtedness or other obligation
of the Assuming Shipowner with or without notice to the Guarantor, any waiver of
any right of the Secretary under the terms of the Secretary's Note, the Security
Agreement, the Mortgage, or this Guaranty Agreement, any release of security,
any transfer or assignment of rights or obligations accruing to the Secretary
under the Secretary's Note, the Security Agreement, the Mortgage, or this
Guaranty Agreement, any corporate reorganization, dissolution, merger,
acquisition of or by or other alteration of the corporate existence or structure
of the Assuming Shipowner or the Guarantor, discharge of the Assuming Shipowner
in bankruptcy, the invalidity, illegality, or unenforceability of the
Secretary's Note, the Security Agreement, the Mortgage, or this Guaranty
Agreement or the absence of any action to enforce the obligations of the
Assuming Shipowner) which might constitute a legal or equitable discharge of the
Guarantor; it being the intention of the Guarantor that this Guaranty Agreement
be absolute, continuing, and unconditional and the guarantee hereunder shall
only be discharged by the payment in full of all sums so guaranteed hereunder.

                  (c) The Guarantor hereby irrevocably and unconditionally
waives: (1) notice of any of the matters referred to in this Guaranty Agreement
and any action by the Secretary in reliance thereon; (2) all notices which may
be required by statute, rule of law, or otherwise to preserve any rights against
the Guarantor hereunder, including without limitation, any demand, protest,
proof of notice of non-payment of all sums payable under the Secretary's Note or
any notice of any failure on the part of the Assuming Shipowner to perform or
comply with any covenant, term, or obligations of any agreement to which it is a
party; (3) any requirement for the enforcement, assertion, or exercise of any
right, remedy, power, or privilege under or with respect to the Mortgage, the
Security Agreement, or the Secretary's Note; (4) any requirement of diligence;
(5) any requirement that the Assuming Shipowner be joined as a party to any
proceedings for the enforcement of any provision of this Guaranty Agreement, or
that the Secretary proceed against any other guarantor executing this Guaranty
Agreement or any other guaranty agreement; (6) any and all

                                      2
<PAGE>   205

defenses to payment hereunder, except the defense of payment already made, and
agrees to confess without contesting liability hereunder for any judgment
validly entered hereon; (7) presentment, demand, protest, notice of protest and
dishonor, notice of intent to accelerate, and notice of acceptance; or (8) the
right to require the Secretary to pursue any remedy whatsoever in the
Secretary's power.

                  (d) The Guarantor hereby agrees that this Guaranty Agreement
shall continue to be effective or shall be reinstated, as the case may be, if at
any time payment of any sum hereby guaranteed is rescinded or must be otherwise
restored or returned by the Secretary, upon the insolvency, bankruptcy, or
reorganization of the Assuming Shipowner, or otherwise, all as though such
payment had not been made. The Guarantor further agrees that if the maturity of
any obligations guaranteed herein be accelerated by bankruptcy or otherwise,
such maturity shall also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to the Guarantor.

                  (e) Any amount payable hereunder shall not be subject to any
reduction by reason of any counterclaim, set-off, deduction, abatement or
otherwise.

                  (f) The Guarantor shall pay all reasonable costs and expenses
(including, without limitation, attorneys' fees and expenses) incurred in
connection with the enforcement of the obligations of the Guarantor under this
Guaranty Agreement.

                  (g) The Secretary's Note may be amended, modified, or endorsed
without the consent of the Guarantor.

                  (h) The Secretary may enforce the Guarantor's obligations
hereunder without in any way first pursuing or exhausting any other rights or
remedies which the Secretary may have against the Assuming Shipowner or any
other person, firm, or corporation or against any security the Secretary may
hold.

                  (i) The obligations of the Guarantor hereunder shall equal
seventy-five percent (75%) of the obligations of the Assuming Shipowner under
the Secretary's Note. The obligations of the Guarantor hereunder are several but
not joint with the obligations of SNTG under the SNTG Guarantee.

         2. Secretary's Rights. The Guarantor authorizes the Secretary, without
notice or demand and without affecting the Guarantor's liability hereunder, to
take and hold security for the payment of this Guaranty Agreement and/or any of
the obligations guaranteed herein and exchange, enforce, waive, and release any
such security; and to apply such security and direct the order or manner of sale
thereof as the Secretary in his discretion may determine; and to obtain a
guarantee of any of the obligations guaranteed herein from any one or more
persons, corporations, or entities whomsoever and at any time or times to
enforce, waive, rearrange, modify, limit or release such other persons,
corporations, or entities from their obligations under such guarantees.

         3. Primary Liability. It is expressly agreed that the liability of the
Guarantor for the payment of the obligations guaranteed herein shall be primary
and not secondary.

                                       3
<PAGE>   206
         4. Representations and Warranties. The Guarantor represents and
warrants as follows:

                  (a) It is a corporation duly organized, validly existing, and
in good standing under the laws of the state of Delaware and has full power and
authority (corporate, legal and other) to execute, deliver, and carry out the
terms of this Guaranty Agreement;

                  (b) This Guaranty Agreement has been duly authorized,
executed, and delivered by the Guarantor and constitutes the legal, valid, and
binding obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms;

                  (c) The execution, delivery, and performance by the Guarantor
of this Guaranty Agreement does not require the approval or consent of its
shareholders or of any governmental authority and does not contravene the
Guarantor's Articles of Incorporation, or any mortgage, indenture, or other
agreement binding upon it, or any law, regulation, order, judgment, or decree
applicable to the Guarantor;

                  (d) The Guarantor's guarantee pursuant to this Guaranty
Agreement may be expected to benefit, directly or indirectly, the Guarantor; and

                  (e) The Guarantor has fully adequate financial resources,
funds, and assets to satisfy its obligations under this Guaranty Agreement and
the Guarantor will in the future retain sufficient financial resources, funds,
and assets to satisfy fully its obligations under this Guaranty Agreement.

         5. Continuing Guarantee. This Guaranty Agreement is a continuing
guarantee of payment and collectability and shall:

                  (a) Remain in full force and effect so long as any obligation
of the Assuming Shipowner to the Secretary referred to herein exists;

                  (b) Be binding upon the Guarantor, its successors and assigns;

                  (c) Be executed and issued for the sole and exclusive benefit
of the United States, and no other party shall be permitted to claim any
benefit, direct or indirect, therefrom. This Guaranty Agreement is
nonassignable, any assignment thereof shall be null and void and have no legal
effect whatsoever; and

                  (d) Inure to the benefit of, and be enforceable by the
Secretary, his successors and assigns.

         6. Default. A default under the terms of this Guaranty Agreement shall
be deemed to occur if the Guarantor fails to make any payment guaranteed
hereunder.

                                       4
<PAGE>   207
         7. Notices. All communications may be made or delivered in person or by
certified or registered mail, postage prepaid, addressed to the Guarantor or the
Secretary as provided below or to such other address as the Guarantor or the
Secretary may hereafter specify in a written notice to the other and all notices
or other communications shall be in writing so addressed and shall be effective
upon receipt by the addressee thereof:

         Guarantor:                 MARINE TRANSPORT CORPORATION
                                    1200 Harbor Boulevard, C-901
                                    Weehawken, NJ  07087
                                    Attention:  General Counsel

         Secretary:                 SECRETARY OF TRANSPORTATION
                                    c/o Maritime Administration
                                    Department of Transportation
                                    Washington, DC  20590
                                    Attn:   Chief, Division of Ship
                                            Financing Contracts

         8. Amendments and Supplements. No agreement shall be effective to
change or modify, supplement, amend, or discharge in whole or in part this
Guaranty Agreement unless such agreement is in writing, signed by the Guarantor
and the Secretary.

         9. Governing Law. This Guaranty Agreement and the rights and
obligations of the parties thereto shall in all respects be governed by, and
construed and enforced in accordance with the federal law of the United States
of America or in the absence of applicable federal law by the laws of the State
of New York, including Section 5-1401 of the General Obligations Law of the
State of New York.

         10. Counterparts. This Guaranty Agreement may be executed in one or
more counterparts. All such counterparts shall be deemed to be originals and
shall together constitute but one and the same instrument.

         11. Severability. If any term of this Guaranty Agreement or any
application thereof shall be invalid or unenforceable, the remainder of this
Guaranty Agreement and any other application of such term shall not be affected
thereby.

                                       5
<PAGE>   208
         IN WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement to
be executed and delivered as of the day and year first above written.

                                             MARINE TRANSPORT CORPORATION



Attest:                                      By: ------------------------------
                                             Name: -----------------------------
-----------------------                      Title:-----------------------------
<PAGE>   209


ACKNOWLEDGED BY:



                                                UNITED STATES OF AMERICA,
                                                SECRETARY OF TRANSPORTATION

                                                MARITIME ADMINISTRATOR



                                                By:----------------------------
                                                         Its Secretary

(SEAL)



ATTEST:


By:--------------------------------
     Its Assistant Secretary

<PAGE>   210
                                    MTC-STOLT
                               GUARANTEE AGREEMENT



         This Guarantee Agreement (this "Guarantee Agreement"), dated this ____
day of September, 1999, by Marine Transport Corporation, a Delaware corporation
(the "Guarantor"), to Stolt-Nielsen, S.A., a Luxembourg corporation ("Stolt
SA"), and upon the conditions specified below, to Stolt-Nielsen Transportation
Group Ltd., a Liberian company ("Stolt Group").

                                   WITNESSETH:

         WHEREAS, as an inducement to Occidental Petroleum Corporation, a
Delaware corporation ("OPC") to enter into the Contingent Guarantee (as defined
in the Stolt-OPC Guarantee hereinafter referred to) of even date herewith
required by the United States of America, represented by the Secretary of
Transportation, acting by and through the Maritime Administrator (the
"Secretary"), to consummate the transactions (the "Transactions") referred to in
the Contingent Guarantee in which Transactions each of MTC, Stolt SA and Stolt
Group has an interest, Stolt SA and Stolt Group have agreed to enter into the
Stolt-OPC Guarantee Agreement of even date herewith (the "Stolt-OPC Guarantee")
in favor of OPC;

         WHEREAS, in accordance with the provisions of the Stolt-OPC Guarantee,
Stolt SA and Stolt Group are required to make payments to OPC when OPC is
required to make payments to the Secretary under the Contingent Guarantee; and

         WHEREAS, as an inducement to Stolt SA and Stolt Group to enter into the
Stolt-OPC Guarantee, MTC has agreed to enter into this Guarantee Agreement.

         NOW, THEREFORE, in consideration of the premises, and of other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:

         1. Definitions. Unless otherwise specifically defined herein, the
capitalized terms used herein which are defined in the Stolt-OPC Guarantee and
any reference therein to other instruments have the respective meanings given
such terms in the Stolt-OPC Guarantee or such other instruments.

         2. Beneficiary. It is the intent and agreement of the parties hereto
that this Guarantee Agreement shall be in favor of Stolt SA, but if and when
there is a substitution of "Guarantor" (as such term is defined in the Stolt-OPC
Agreement) pursuant to the provisions of the Stolt-OPC Agreement, then this
Guarantee Agreement shall be in favor of such substituted Guarantor.

         3. Guarantee.

            (a) The Guarantor hereby absolutely, irrevocably and unconditionally
guarantees to Stolt SA the prompt repayment of all amounts Stolt SA pays under
the Stolt-OPC Guarantee, to the extent those amounts paid by Stolt SA thereunder
are due to the failure of MTC to make

<PAGE>   211
payments to the Secretary required by the Transactions and are not due to the
failure by Stolt SA to make payments required by the Transactions. The Guarantor
shall be required to make said payments under this Guarantee Agreement within
five (5) days of the receipt of a written notice from Stolt SA which describes
the payments it has made under the Stolt-OPC Guarantee. The failure of the
Guarantor to receive such a written notice or the failure of Stolt SA to send
said notice shall not relieve the Guarantor of its obligations under this
Guarantee Agreement. The Guarantor shall immediately pay to Stolt SA in
immediately available funds such payments guaranteed herein.

         (b) The Guarantor hereby consents and agrees that its obligations under
this Guarantee Agreement will not be discharged by any act or omission to act of
any kind by Stolt SA or any other person or any other circumstances whatsoever
which might constitute a legal or equitable discharge of the Guarantor; it being
the intention of the Guarantor that this Guarantee Agreement be absolute,
continuing and unconditional and the guarantee hereunder shall only be
discharged by the payment in full of all sums so guaranteed hereunder.

         (c) The Guarantor hereby irrevocably and unconditionally waives: (i)
notice of any of the matters referred to in this Guarantee Agreement and any
action by Stolt SA in reliance thereon; (ii) all notices which may be required
by statute, rule of law or otherwise to preserve any rights against the
Guarantor hereunder, including, without limitations, any demand, protest, proof
of notice of non-payment of sums once Stolt SA has notified the Guarantor that
payment subject to this Guarantee Agreement was made under the Stolt-OPC
Guarantee; (iii) any requirement for the enforcement, assertion or exercise of
any right, remedy, power or privilege under or with respect to the Stolt-OPC
Guarantee; (iv) any requirement that any party be joined as a party to any
proceedings for the enforcement of any provision of this Guarantee Agreement or
that Stolt SA proceed against any other guarantor executing any other guarantee
agreement; (v) any and all defenses to payment hereunder, except the defense of
payment already made, and agrees to confess without contesting liability
hereunder for any judgment entered hereon; (vi) presentment, demand, protest,
notice of protest and dishonor, notice of intent to accelerate and notice of
acceptance; or (vii) the right to require Stolt SA to pursue any remedy in Stolt
SA's power whatsoever.

         (d) The Guarantor hereby agrees that this Guarantee Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time payment of any sum hereby guaranteed is rescinded or must be otherwise
restored or returned by Stolt SA, upon the insolvency, bankruptcy or
reorganization of any person, firm or corporation, or otherwise, all as though
such payment had not been made. The Guarantor further agrees that if the
maturity of any obligations guaranteed herein be accelerated by bankruptcy or
otherwise, such maturity shall also be deemed accelerated for the purpose of
this Guarantee Agreement without demand or notice to the Guarantor.

         (e) Any amount payable hereunder shall not be subject to any reduction
by reason of any counterclaim, set-off, deduction, abatement or otherwise.

         (f) The Guarantor shall pay all reasonable costs and expenses
(including, without limitation, attorneys' fees and expenses) incurred in
connection with the enforcement of the obligations of the Guarantor under this
Guarantee Agreement.

                                      -2-
<PAGE>   212
         (g) Stolt SA may enforce the Guarantor's obligations hereunder without
in any way first pursuing or exhausting any other rights or remedies which Stolt
SA may have against any other person, firm or corporation or against any
security Stolt SA may hold.

        4. Agreement to Contingent Guarantee. MTC has been provided a copy of
the Stolt-OPC Guarantee, have reviewed it and found it acceptable in all
respects. A copy of the Stolt-OPC Guarantee is attached to this Guarantee
Agreement. Stolt SA agrees that it will not agree to any amendment of the
Stolt-OPC Guarantee that adversely affects the rights of the Guarantor hereunder
without the prior written approval of the Guarantor.

        5. Representations and Warranties. The Guarantor represents and warrants
as follows:

           (a) It is a corporation duly authorized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has full
power and authority (corporate, legal and other) to execute, deliver and carry
out the terms of this Guarantee Agreement;

           (b) This Guarantee Agreement has been duly authorized, executed and
delivered by it and constitutes the legal, valid and binding obligation of it
enforceable against the Guarantor in accordance with its terms;

           (c) The execution, delivery and performance by it of this Guarantee
Agreement does not require the approval or consent of its shareholders or of any
governmental authority and does not contravene any of its corporate
organizational documents or any mortgage, indenture or other agreement binding
upon it, or any law, regulation, order, judgment or decree applicable to it;

           (d) Its guarantee pursuant to this Guarantee Agreement will be
expected to benefit it, directly or indirectly; and

           (e) It has fully adequate financial resources, funds, and assets to
satisfy its obligations under this Guarantee Agreement, and it will in the
future retain financial resources, funds, and assets to satisfy fully its
obligations under this Guarantee Agreement.

        6. Continuing Guarantee. This Guarantee Agreement is a continuing
guarantee of payment and collectibility and shall:

           (a) Remain in full force and effect so long as any obligation of
Stolt SA exists under the Stolt-OPC Guarantee;

           (b) Be binding upon the Guarantor, its successors and assigns;

           (c) Be executed and issued for the sole and exclusive benefit of
Stolt SA, and no other party shall be permitted to claim any benefit, direct or
indirect, therefrom. This Guarantee Agreement is nonassignable by the Guarantor
and any assignment thereof by it shall be null and void and have no legal effect
whatsoever; and

           (d) Inure to the benefit of, and be enforceable by Stolt SA, its
successors and assigns.

                                      -3-
<PAGE>   213
           7. Subrogation.

           (a) Upon any payment made by the Guarantor pursuant to this Guarantee
Agreement, the Guarantor, to the extent of such payment, shall be fully
subrogated to all rights of subrogation of Stolt SA, but only to the extent
afforded Stolt SA under the Stolt-OPC Guarantee.

           (b) Stolt SA, at the Guarantor's expense, shall promptly and duly
execute and deliver to the Guarantor such further documents and take such
further action as the Guarantor may from time to time reasonably request in
order more effectively to carry out the intent and purpose of these subrogation
rights to establish and protect the rights and remedies created or intended to
be created in this Section 7.

           8. Default. A default under the terms of this Guarantee Agreement
shall be deemed to occur if the Guarantor fails to make any payments guaranteed
hereunder within the time provided in Section 3.

           9. Notices. All communications may be made or delivered in person or
by certified or registered mail, postage prepaid, or telefax followed by mail,
addressed to Stolt SA or Stolt Group as provided below or to such other address
as any of them may hereafter specify in a written notice to the others and all
notices or other communications shall be in writing so addressed and shall be
effective upon receipt by the addressee thereof:

         Stolt SA or
         Stolt Group:               Stolt-Nielsen S.A. or Stolt- Nielsen
                                    Transportation Group, Ltd.
                                    8 Sound Shore Drive
                                    P.O. Box 2300
                                    Greenwich, CT 06836
                                    Attention:   Paul E. O'Brien, Esquire
                                                 Vice President and Assistant
                                                 General Counsel

                                    Telefax:(203) 625-3920

         The Guarantor:             Marine Transport Corporation
                                    1200 Harbor Boulevard, C-901
                                    Weehawken, NJ 07087
                                    Attention:General Counsel

                                    Telefax:  201-330-9646

           10. Amendments and Supplements. No agreement shall be effective to
change or modify, supplement, amend or discharge in whole or in part this
Guarantee Agreement unless such agreement is in writing, signed by the parties
hereto.

           11. Governing Law; Jurisdiction.

                                      -4-
<PAGE>   214
           (a) This Guarantee Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.

           (b) Each of the parties hereto hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of the Supreme Court of the State of New York sitting in New York
County (including its appellate division) and of any other appellate court in
the State of New York arising out of or relating to this Guarantee Agreement or
the transactions contemplated hereby. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any
objection that it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in any inconvenient forum. To the
extent that any party has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to itself or its property, such party hereby
irrevocably waives such immunity in respect of its obligations under this
Guarantee Agreement.

           (c) Each of the parties hereby irrevocably appoints CT Corporation
System (the "Process Agent"), with an office on the date hereof at 1633
Broadway, New York, New York 10019, as its agent to receive on behalf of it and
its property service of copies of the summons and complaint and any other
process which may be served in any suit, action or proceeding arising out of or
relating to this Guarantee Agreement to which it is a party. Such service may be
made by mailing or delivering a copy of such process to each such party in care
of the Process Agent at the Process Agent's above address, together with written
notice of such service given to each such party in the manner provided in
Section 9 hereof, and each such party hereby irrevocably authorizes and directs
the Process Agent to accept such service on its behalf. Each of the parties
agrees that a final judgment in any such suit, action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Section 11 shall affect the
right of any party to serve legal process in any other manner permitted by law
or affect the right of any party to bring any action or proceeding against any
other party or its property in the courts of any other jurisdictions.

          12. Counterparts. This Guarantee Agreement may be executed in one or
more counterparts. All such counterparts shall be deemed to be originals and
shall together constitute but one and the same instrument.



                                      -5-
<PAGE>   215
         IN WITNESS WHEREOF, this Guarantee Agreement has been executed on the
day and year first above written.




                                     MARINE TRANSPORT CORPORATION



                                     By:------------------------------------
                                        Name:
                                        Title:



                                      STOLT-NIELSEN S.A.



                                      By:------------------------------------
                                         Name:
                                         Title:



                                      STOLT-NIELSEN TRANSPORTATION GROUP LTD.



                                      By:------------------------------------
                                         Name:
                                         Title:





                                      -6-
<PAGE>   216

                                                                         4.08(a)

                                                                    Contract No.
                                                                         MA-9894

                   ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 1
                                       TO
                  TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT


                                       by


                           FRANCES OWNER CORPORATION,
                                                     ASSUMING COMPANY


                            FRANCES ODS CORPORATION,
                                                     BAREBOAT CHARTERER

                            STOLT MARINE TANKERS LLC,
                                                     TIME CHARTERER


                                       AND


                      SUWANNEE RIVER PHOSPHATE LINES, INC.,
                                                     ORIGINAL BAREBOAT CHARTERER


                                       AND


                          THE UNITED STATES OF AMERICA


                               SEPTEMBER 29, 1999



                               ITB FRANCES HAMMER
                      (TO BE RENAMED SMT CHEMICAL EXPLORER)




<PAGE>   217
                   ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 1
                                       TO
                  TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT

                               ITB FRANCES HAMMER
                      (to be renamed SMT CHEMICAL EXPLORER)


         THIS ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 1 (this "Amendment"), to
TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT (the "Agreement"), Contract No.
MA-9894, dated September 16, 1981, among FRANCES OWNER CORPORATION, a Delaware
corporation (the "Assuming Company"), FRANCES ODS CORPORATION, a Delaware
corporation (the "Bareboat Charterer"), STOLT MARINE TANKERS LLC, a Delaware
limited liability company (the "Time Charterer"), SUWANNEE RIVER PHOSPHATE
LINES, INC., a California corporation (the "Original Bareboat Charterer"), and
the UNITED STATES OF AMERICA (the "United States"), represented by the SECRETARY
OF TRANSPORTATION, acting by and through the MARITIME ADMINISTRATOR (the
"Secretary"), pursuant to the provisions of Title XI of the Merchant Marine Act,
1936, as amended, is made on September 29, 1999.

                                    RECITALS:

         A. On September 16, 1981, the Original Bareboat Charterer and the
Secretary entered into the Agreement, in connection with the issuance by the
Secretary of a Guarantee of certain Obligations issued by the Shipowner to
assist in financing the construction of the Vessel; and

         B. On the date hereof, State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as owner
trustee under the Trust Agreement dated as of November 13, 1980, as amended, for
the benefit of the owner participant named therein, as Shipowner, is
transferring the Vessel to the Assuming Company, which is assuming the
obligations of the Shipowner under the Security Agreement hereinafter referred
to, the Original Bareboat Charterer is being released from its obligations under
the Bareboat Charter dated as of September 16, 1981, between the Original
Bareboat Charterer and the Shipowner, and the Assuming Company is entering into
a new bareboat charter of the Vessel (the "Bareboat Charter") with the Bareboat
Charterer and the Bareboat Charterer is time-chartering the Vessel to the Time
Charterer.

         NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:


<PAGE>   218




                                  ARTICLE FIRST

                            ASSUMPTION OF OBLIGATIONS

       1. The Original Bareboat Charterer hereby transfers, assigns, sets
over, confirms and conveys to the Assuming Company, the Bareboat Charterer and
the Time Charterer, without limitation, all of its right, title, and interest
in, and all of its duties and obligations under the Agreement, and each of the
Assuming Company, the Bareboat Charterer and the Time Charterer hereby accepts
such transfer, assignment and conveyance, without limitation, subject to the
terms and conditions of the Agreement and accepts and assumes all of the right,
title, interest, duties and obligations of the Original Bareboat Charterer under
the Agreement arising as of or after the Effective Date with the same force and
effect as if each of the Assuming Company, the Bareboat Charterer and the Time
Charterer had been named as a party thereto, including without limitation, the
obligation to pay any amounts which would have been payable by the Original
Bareboat Charterer under the Agreement on or after the Effective Date but for
this Amendment. As of the Effective Date, the Original Bareboat Charterer shall
have no further obligations under the Agreement and the Secretary hereby
releases the Original Bareboat Charterer from its obligations thereunder.

         2. The transfer, assignment, conveyance, acceptance, assumption and
release provided in Section 1 above shall become effective on the Effective Date
and shall be of no force or effect prior thereto. Notwithstanding any provision
of this Amendment to the contrary: (i) the rights of the respective parties
under the Agreement which shall have unconditionally accrued at any time up to
and including the Effective Date shall survive the Effective Date, and (ii)
neither the assignment and assumption effected hereby nor any proceedings
arising from the Agreement shall (x) relieve any party thereto from the
observance or performance of any obligation required to be observed or performed
on or prior to the Effective Date, or from liability for any acts or omissions
of such party which were performed or required to be performed on or prior to
the Effective Date, or (y) serve as a defense against any claim for breach of or
failure to perform any such obligation.

         3. The Assuming Company, the Bareboat Charterer and the Time Charterer
each hereby expressly confirms and agrees to the Secretary's continuing security
interest in the Bareboat Charter Security Fund, which shall be known as the
Title XI Reserve Fund from and after the Effective Date.

         4. From and after the Effective Date all references in the Agreement to
the Company (as such term is defined in the Agreement) shall be deemed to be
references to the Assuming Company, the Bareboat Charterer and the Time
Charterer.

         5. The Agreement is hereby amended in all respects to conform to the
provisions in this Amendment, and all provisions thereof inconsistent with the
provisions herein shall be read and interpreted so as to conform to the
provisions hereof.


                                       2
<PAGE>   219
                                 ARTICLE SECOND

                         REPRESENTATIONS AND WARRANTIES

         1.       The Assuming Company hereby represents and warrants that:

                  (a) the Assuming Company was duly organized and is now validly
         existing and in good standing under the laws of the State of Delaware;

                  (b) the Assuming Company has duly authorized, executed and
         delivered this Amendment; and

                  (c) the execution, delivery and performance by the Assuming
         Company of this Amendment are not in contravention of any indenture or
         undertaking to which the Assuming Company is a party or by which it is
         bound.

         2. The Bareboat Charterer hereby represents and warrants that:

                  (a) the Bareboat Charterer was duly organized and is now
         validly existing and in good standing under the laws of the State of
         Delaware;

                  (b) the Bareboat Charterer has duly authorized, executed and
         delivered this Amendment; and

                  (c) the execution, delivery and performance by the Bareboat
         Charterer of this Amendment are not in contravention of any indenture
         or undertaking to which the Bareboat Charterer is a party or by which
         it is bound.

         3. The Time Charterer hereby represents and warrants that:

                  (a) the Time Charterer was duly organized and is now validly
         existing and in good standing under the laws of the State of Delaware;

                  (b) the Time Charterer has duly authorized, executed and
         delivered this Amendment; and

                  (c) the execution, delivery and performance by the Time
         Charterer of this Amendment are not in contravention of any indenture
         or undertaking to which the Time Charterer is a party or by which it is
         bound.

         4. The Original Bareboat Charterer hereby represents and warrants
           that:

                  (a) the Original Bareboat Charterer was duly organized and is
         now validly existing and in good standing under the laws of the State
         of California;


                                       3
<PAGE>   220
                  (b) the Original Bareboat Charterer has duly authorized,
         executed and delivered this Amendment; and

                  (c) the execution, delivery and performance by the Original
         Bareboat Charterer of this Amendment are not in contravention of any
         indenture or undertaking to which the Original Bareboat Charterer is a
         party or by which it is bound.



                                  ARTICLE THIRD

                ADDITIONS, DELETIONS AND AMENDMENTS TO EXHIBIT 1
                         (THE GENERAL PROVISIONS OF THE
                 TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT)

          Exhibit 1 to the Agreement, as amended by Article Third of the Special
Provisions of the Agreement, is hereby further amended as follows and as so
amended shall take effect immediately following the assignment by the Original
Bareboat Charterer, the assumption by the Assuming Company, the Bareboat
Charterer and the Time Charterer and the release of the Original Bareboat
Charterer:

         (1) Paragraph 4 of Article First of the Special Provisions is hereby
deleted in its entirety in its current form.

         (2) Paragraph 1 of Article Third of the Special Provisions is hereby
deleted in its entirety in its current form.

         (3) Paragraphs 4, 5, 6 and 8 of Article Third of the Special Provisions
are hereby deleted in their entirety in their respective current forms.

         (4) Paragraph 2(b)(2)(D) of the Exhibit 1 to the Title XI Reserve Fund
and Financial Agreement ("Exhibit 1") is hereby amended and restated as follows:

                  "(D) Irrespective of the Company's deposit requirements into
         the Title XI Reserve Fund, the Company shall not be required to make
         any deposits into the Title XI Reserve Fund if (i) the Obligations and
         the related Secretary's Note with respect to the Vessel shall have been
         satisfied and discharged and if the Company shall have paid or caused
         to be paid all other sums secured under the Security Agreement or the
         Mortgage, (ii) all of the Guarantees on the Outstanding Obligations
         shall have been terminated pursuant to the Security Agreement, or (iii)
         the amount (including any securities at current market value) in the
         Title XI Reserve Fund plus the Other Title XI Reserve Fund, together
         with the amount on deposit in the Capital Construction Fund of Marine
         Transport Corporation, a Delaware corporation (hereinafter, the "CCF"),
         is equal to, or in excess of 50% of the principal amount of the
         Outstanding Obligations plus the Other Outstanding Obligations".

                                       4
<PAGE>   221
         (5)      A new subsection 2(c) is hereby added to Exhibit 1 as follows:

                  "(c) No later than the time when any withdrawal is made from
         the CCF, the Company shall deposit, or cause to be deposited, into the
         Title XI Reserve Fund an amount equal to the amount of such withdrawal
         from the CCF, provided, however, that the deposits specified in this
         subsection shall not be required to be made if the amount (including
         any securities at current market value) in the Title XI Reserve Fund
         plus the Other Title XI Reserve Fund , together with the amount on
         deposit in the CCF is equal to, or in excess of 50% of the principal
         amount of the Outstanding Obligations plus the Other Outstanding
         Obligations."

         (6)      Section 3 of Exhibit 1 is hereby amended as follows:

                  (a) By adding before the period at the end of subsection 3(a)
         the following: "; provided, however, that no withdrawal may be made
         prior to January 1, 2001."; and

                  (b) By adding a new section (d) as follows:

                      "(d) The Secretary hereby approves withdrawals on or after
         January 1, 2001, for the purpose of dry-docking expenses only, upon
         sixty days prior written notice to the Secretary which, when aggregated
         for the SMT CHEMICAL EXPLORER and the SMT CHEMICAL TRADER, shall not
         exceed $500,000."

         (7) Clauses (i), (ii), and (iii) of subsection 13 (b) of Exhibit 1 in
their present form are hereby deleted and the following is substituted therefor:

                  "(i) each of the MTC Guarantee, the SNTG Guarantee, and the
         Contingent Guarantee are in full force and effect and (ii) MTC's market
         capitalization is at least $10 million, the Company shall not, without
         the prior written consent of the Secretary:"

         (8) Subsection 13(c)(1) of Exhibit 1 in its present form is hereby
deleted and the following is substituted therefor:

                  "(1) (i) pay any dividend or make any distribution of earnings
         so long as the Contingent Guarantee is required to remain in effect and
         (ii) after the Contingent Guarantee is no longer required to be in
         effect, make any distribution of earnings except as may be permitted by
         (A) or (B) below:

                      (A) From retained earnings in an amount specified in
         subsection (C) below, provided that, in the fiscal year in which the
         distribution of earnings is made there is no operating loss to the date
         of such payment of such distribution of earnings, and (i) there was no
         operating loss in the immediately preceding three fiscal years, or (ii)
         there was a one-year operating loss during the immediately preceding
         three fiscal years, but (a) such loss was not in the immediately
         preceding fiscal year, and (b) there was positive net income for the
         three year period;

                                       5
<PAGE>   222

                           (B) If distributions of earnings may not be made
         under (A) above, a distribution can be made in an amount equal to the
         total operating net income for the immediately preceding three fiscal
         year period, provided that, (i) there were no two successive years of
         operating losses, (ii) in the fiscal year in which such distribution is
         made, there is no operating loss to the date of such distribution, and
         (iii) the distribution or earnings made would not exceed an amount
         specified in Section 9(a)(1)(C) below;

                           (C) Distributions of earnings may be made from
         earnings of prior years in an aggregate amount equal to (i) 40 percent
         of the Company's total net income after tax for each of the prior
         years, less any distributions that were made in such years; or (ii) the
         aggregate of the Company's total net income after tax for such prior
         years, provided that, after making such distribution, the Company's
         Long Term Debt does not exceed its Net Worth. In computing net income
         for the purposes of this Section, extraordinary gains, such as gains
         from the sale of assets, shall be excluded."

         (9) Pursuant to subsection 13(a), each of the Company, the Bareboat
Charterer and the Time Charterer, with the consent of the Secretary, hereby
elects to be governed by sub-sections 13(b) and (c) of Exhibit 1 hereto, as
amended herein. From the date hereof, the covenants set forth in Section 12 of
Exhibit 1 hereto shall not apply to the Company, the Bareboat Charterer or the
Time Charterer.

         (10) The Secretary hereby approves the Management Agreement and the
Commercial Management Agreement and the provisions of Section 13(c)(2) shall not
apply thereto.

         (11) The Secretary hereby consents to the Second Mortgage, the Bareboat
Charter and the Time Charter and the provisions of Section 13(c)(3) shall not
apply thereto.

         (12) The provisions of Section 14(c) as amended in Article Third of the
Special Provisions shall apply to each Guarantor and the Time Charterer.

         (13) Section 15 of Exhibit 1 in its present form is hereby deleted in
its entirety. Immediately upon the execution and delivery of this Amendment, the
Company shall meet the requirements specified in Section 13(b) of Exhibit 1 as
amended hereby.

         (14) Attachment A to the Agreement is hereby amended by deleting the
addresses that appear thereon and inserting in their place the following:

         "A.  Name and address of Title XI Reserve Fund Depository:

              U.S. Bank Trust National Association
              One California Street, 4th Floor
              San Francisco, CA  94111

              Attn: Corporate Trust Administration
              Reference: Vessel SMT CHEMICAL EXPLORER


                                       6
<PAGE>   223
                           (formerly ITB FRANCES HAMMER)

         "B.      Name and address of the Assuming Company:

                  Frances Owner Corporation
                  c/o Marine Transport Corporation
                  1200 Harbor Boulevard, 9th Floor, C-901
                  Weehawken, NJ  07087-0901
                  Attn:  General Counsel

         "C.      Name and address of the Bareboat Charterer:

                  Frances ODS Corporation
                  c/o Marine Transport Corporation
                  1200 Harbor Boulevard, 9th Floor, C-901
                  Weehawken, NJ 07087-0901
                  Attn:  General Counsel

         "D.      Name and address of the Time Charterer:

                  Stolt Marine Tankers LLC
                  c/o Marine Transport Corporation
                  1200 Harbor Boulevard, 9th Floor, C-901
                  Weehawken, NJ 07087-0901
                  Attn:  General Counsel



                                 ARTICLE FOURTH

                                  MISCELLANEOUS

         1.       This instrument is executed as and shall constitute an
amendment to and be incorporated into and made a part of the Agreement. All of
the terms and provisions of the Agreement as amended hereby shall continue to be
and shall remain in full force and effect.

         2.       This Amendment may be executed in any number of counterparts.
All such counterparts shall be deemed to be originals and shall together
constitute but one and the same instrument.

         3.       Capitalized terms used herein which are defined in Schedule X
to the Security Agreement, Contract No. MA-9892, dated as of November 25, 1980,
as amended by Amendment No. 1 thereto dated October 18, 1991, and Assignment,
Assumption and Amendment No. 2 thereto dated the date hereof, between the
Shipowner and the United States of America, or by reference

                                       7
<PAGE>   224
therein to other instruments or agreements, shall have the meanings given to
such terms in said Schedule X or such other instruments or agreements.

         4. This Amendment and the rights and obligations of the parties hereto
shall in all respects be governed by, construed and enforced in accordance with
the federal laws of the United States of America, but if they are inapplicable,
then in accordance with the laws of the State of New York, including Section
5-1401 of the General Obligations Law of the State of New York.

         5. If any term of the Agreement, as amended by this Amendment, or any
application thereof shall be invalid or unenforceable, the remainder of the
Agreement, as amended, and any other application of such term shall not be
affected thereby.

                                       8
<PAGE>   225
         IN WITNESS WHEREOF, this Amendment has been executed by the Assuming
Company, the Bareboat Charterer, the Time Charterer and the Original Bareboat
Charterer and the Secretary as of the day and year first above written.


                                                FRANCES OWNER CORPORATION,
                                                            Assuming Company




                                                By: __________________________
                                                    Name:
                                                    Title:



Attest:



_____________________________
Assistant Secretary


<PAGE>   226



                                                  FRANCES ODS CORPORATION,
                                                          the Bareboat Charterer




                                                  By:
                                                      _________________________
                                                      Name:
                                                      Title:


Attest:


______________________________

Assistant Secretary



<PAGE>   227

                                           STOLT MARINE TANKERS LLC,
                                                         Time Charterer




                                           By:---------------------------------
                                           Name:
                                           Title:


Attest:




------------------------------
Assistant Secretary


<PAGE>   228




                                         SUWANNEE RIVER PHOSPHATE LINES, INC.,
                                                     Original Bareboat Charterer



                                         By: ___________________________________
                                             Name:
                                             Title:


Attest:


______________________________
Assistant Secretary


<PAGE>   229





                                            UNITED STATES OF AMERICA,
                                            SECRETARY OF TRANSPORTATION

                                            BY:  MARITIME ADMINISTRATOR




                                            By:-------------------------------
                                               Secretary
                                               Maritime Administration


Attest:




------------------------------
Assistant Secretary
Maritime Administration

<PAGE>   230
                                                                        4.08 (b)

                                                                    CONTRACT NO.
                                                                         MA-9882

                   ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 1
                                       TO
                  TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT


                                       BY


                            JULIUS OWNER CORPORATION,
                                             ASSUMING COMPANY


                             JULIUS ODS CORPORATION,
                                             BAREBOAT CHARTERER

                            STOLT MARINE TANKERS LLC,
                                             TIME CHARTERER


                                       AND


                           SUWANNEE RIVER LINES, INC.,
                                             ORIGINAL BAREBOAT CHARTERER


                                       AND


                          THE UNITED STATES OF AMERICA


                               SEPTEMBER 29, 1999


                                ITB JULIUS HAMMER
                       (TO BE RENAMED SMT CHEMICAL TRADER)
<PAGE>   231
                   ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 1
                                       TO
                  TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT

                                ITB JULIUS HAMMER
                       (TO BE RENAMED SMT CHEMICAL TRADER)


         THIS ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 1 (this "Amendment"), to
TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT (the "Agreement"), Contract No.
MA-9882, dated March 18, 1981, among JULIUS OWNER CORPORATION, a Delaware
corporation (the "Assuming Company"), JULIUS ODS CORPORATION, a Delaware
corporation (the "Bareboat Charterer"), STOLT MARINE TANKERS LLC, a Delaware
limited liability company (the "Time Charterer"), SUWANNEE RIVER LINES, INC., a
California corporation (the "Original Bareboat Charterer"), and the UNITED
STATES OF AMERICA (the "United States"), represented by the SECRETARY OF
TRANSPORTATION, acting by and through the MARITIME ADMINISTRATOR (the
"Secretary"), pursuant to the provisions of Title XI of the Merchant Marine Act,
1936, as amended, is made on September 29, 1999.

                                    RECITALS:

         A.       On March 18, 1981, the Original Bareboat Charterer and the
Secretary entered into the Agreement, in connection with the issuance by the
Secretary of a Guarantee of certain Obligations issued by the Shipowner to
assist in financing the construction of the Vessel; and

         B.       On the date hereof, State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as owner
trustee under the Trust Agreement dated as of November 13, 1980, as amended, for
the benefit of the owner participant named therein, as Shipowner, is
transferring the Vessel to the Assuming Company, which is assuming the
obligations of the Shipowner under the Security Agreement hereinafter referred
to, the Original Bareboat Charterer is being released from its obligations under
the Bareboat Charter dated as of September 16, 1981, between the Original
Bareboat Charterer and the Shipowner, and the Assuming Company is entering into
a new bareboat charter of the Vessel (the "Bareboat Charter") with the Bareboat
Charterer and the Bareboat Charterer is time-chartering the Vessel to the Time
Charterer.

         NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
<PAGE>   232
                                  ARTICLE FIRST

                            ASSUMPTION OF OBLIGATIONS

         1.       The Original Bareboat Charterer hereby transfers, assigns,
sets over, confirms and conveys to the Assuming Company, the Bareboat Charterer
and the Time Charterer, without limitation, all of its right, title, and
interest in, and all of its duties and obligations under the Agreement, and each
of the Assuming Company, the Bareboat Charterer and the Time Charterer hereby
accepts such transfer, assignment and conveyance, without limitation, subject to
the terms and conditions of the Agreement and accepts and assumes all of the
right, title, interest, duties and obligations of the Original Bareboat
Charterer under the Agreement arising as of or after the Effective Date with the
same force and effect as if each of the Assuming Company, the Bareboat Charterer
and the Time Charterer had been named as a party thereto, including without
limitation, the obligation to pay any amounts which would have been payable by
the Original Bareboat Charterer under the Agreement on or after the Effective
Date but for this Amendment. As of the Effective Date, the Original Bareboat
Charterer shall have no further obligations under the Agreement and the
Secretary hereby releases the Original Bareboat Charterer from its obligations
thereunder.

         2.       The transfer, assignment, conveyance, acceptance, assumption
and release provided in Section 1 above shall become effective on the Effective
Date and shall be of no force or effect prior thereto. Notwithstanding any
provision of this Amendment to the contrary: (i) the rights of the respective
parties under the Agreement which shall have unconditionally accrued at any time
up to and including the Effective Date shall survive the Effective Date, and
(ii) neither the assignment and assumption effected hereby nor any proceedings
arising from the Agreement shall (x) relieve any party thereto from the
observance or performance of any obligation required to be observed or performed
on or prior to the Effective Date, or from liability for any acts or omissions
of such party which were performed or required to be performed on or prior to
the Effective Date, or (y) serve as a defense against any claim for breach of or
failure to perform any such obligation.

         3.       The Assuming Company, the Bareboat Charterer and the Time
Charterer each hereby expressly confirms and agrees to the Secretary's
continuing security interest in the Bareboat Charter Security Fund, which shall
be known as the Title XI Reserve Fund from and after the Effective Date.

         4.       From and after the Effective Date all references in the
Agreement to the Company (as such term is defined in the Agreement) shall be
deemed to be references to the Assuming Company, the Bareboat Charterer and the
Time Charterer.

         5.       The Agreement is hereby amended in all respects to conform to
the provisions in this Amendment, and all provisions thereof inconsistent with
the provisions herein shall be read and interpreted so as to conform to the
provisions hereof.

                                       2
<PAGE>   233
                                 ARTICLE SECOND

                         REPRESENTATIONS AND WARRANTIES

1.       The Assuming Company hereby represents and warrants that:

         (a)      the Assuming Company was duly organized and is now validly
existing and in good standing under the laws of the State of Delaware;

         (b)      the Assuming Company has duly authorized, executed and
delivered this Amendment; and

         (c)      the execution, delivery and performance by the Assuming
Company of this Amendment are not in contravention of any indenture or
undertaking to which the Assuming Company is a party or by which it is bound.

2.       The Bareboat Charterer hereby represents and warrants that:

         (a)      the Bareboat Charterer was duly organized and is now validly
existing and in good standing under the laws of the State of Delaware;

         (b)      the Bareboat Charterer has duly authorized, executed and
delivered this Amendment; and

         (c)      the execution, delivery and performance by the Bareboat
Charterer of this Amendment are not in contravention of any indenture or
undertaking to which the Bareboat Charterer is a party or by which it is bound.

3.       The Time Charterer hereby represents and warrants that:

         (a)      the Time Charterer was duly organized and is now validly
existing and in good standing under the laws of the State of Delaware;

         (b)      the Time Charterer has duly authorized, executed and delivered
this Amendment; and

         (c)      the execution, delivery and performance by the Time Charterer
of this Amendment are not in contravention of any indenture or undertaking to
which the Time Charterer is a party or by which it is bound.

4.       The Original Bareboat Charterer hereby represents and warrants that:

         (a)      the Original Bareboat Charterer was duly organized and is now
validly existing and in good standing under the laws of the State of California;

                                       3
<PAGE>   234
         (b)      the Original Bareboat Charterer has duly authorized, executed
and delivered this Amendment; and

         (c)      the execution, delivery and performance by the Original
Bareboat Charterer of this Amendment are not in contravention of any indenture
or undertaking to which the Original Bareboat Charterer is a party or by which
it is bound.


                                  ARTICLE THIRD

                ADDITIONS, DELETIONS AND AMENDMENTS TO EXHIBIT 1
                         (THE GENERAL PROVISIONS OF THE
                 TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT)

         Exhibit 1 to the Agreement, as amended by Article Third of the Special
Provisions of the Agreement, is hereby further amended as follows and as so
amended shall take effect immediately following the assignment by the Original
Bareboat Charterer, the assumption by the Assuming Company, the Bareboat
Charterer and the Time Charterer and the release of the Original Bareboat
Charterer:

         (1)      Paragraph 4 of Article First of the Special Provisions is
hereby deleted in its entirety in its current form.

         (2)      Paragraph 1 of Article Third of the Special Provisions is
hereby deleted in its entirety in its current form.

         (3)      Paragraphs 4, 5, 6 and 8 of Article Third of the Special
Provisions are hereby deleted in their entirety in their respective current
forms.

         (4)      Paragraph 2(b)(2)(D) of the Exhibit 1 to the Title XI Reserve
Fund and Financial Agreement ("Exhibit 1") is hereby amended and restated as
follows:

                  "(D)     Irrespective of the Company's deposit requirements
         into the Title XI Reserve Fund, the Company shall not be required to
         make any deposits into the Title XI Reserve Fund if (i) the Obligations
         and the related Secretary's Note with respect to the Vessel shall have
         been satisfied and discharged and if the Company shall have paid or
         caused to be paid all other sums secured under the Security Agreement
         or the Mortgage, (ii) all of the Guarantees on the Outstanding
         Obligations shall have been terminated pursuant to the Security
         Agreement, or (iii) the amount (including any securities at current
         market value) in the Title XI Reserve Fund plus the Other Title XI
         Reserve Fund, together with the amount on deposit in the Capital
         Construction Fund of Marine Transport Corporation, a Delaware
         corporation (hereinafter, the "CCF"), is equal to, or in excess of 50%
         of the principal amount of the Outstanding Obligations plus the Other
         Outstanding Obligations".

                                       4
<PAGE>   235
         (5)      A new subsection 2(c) is hereby added to Exhibit 1 as follows:

                  "(c)     No later than the time when any withdrawal is made
         from the CCF, the Company shall deposit, or cause to be deposited, into
         the Title XI Reserve Fund an amount equal to the amount of such
         withdrawal from the CCF, provided, however, that the deposits specified
         in this subsection shall not be required to be made if the amount
         (including any securities at current market value) in the Title XI
         Reserve Fund plus the Other Title XI Reserve Fund, together with the
         amount on deposit in the CCF is equal to, or in excess of 50% of the
         principal amount of the Outstanding Obligations plus the Other
         Outstanding Obligations."

         (6)      Section 3 of Exhibit 1 is hereby amended as follows:

                  (a)      By adding before the period at the end of subsection
         3(a) the following: "; provided, however, that no withdrawal may be
         made prior to January 1, 2001."; and

                  (b)      By adding a new section (d) as follows:

                           "(d)     The Secretary hereby approves withdrawals on
         or after January 1, 2001, for the purpose of dry-docking expenses only,
         upon sixty days prior written notice to the Secretary which, when
         aggregated for the SMT CHEMICAL EXPLORER and the SMT CHEMICAL TRADER,
         shall not exceed $500,000."

         (7)      Clauses (i), (ii), and (iii) of subsection 13 (b) of Exhibit 1
in their present form are hereby deleted and the following is substituted
therefor:

                  "(i) each of the MTC Guarantee, the SNTG Guarantee, and the
         Contingent Guarantee are in full force and effect and (ii) MTC's market
         capitalization is at least $10 million, the Company shall not, without
         the prior written consent of the Secretary:"

         (8)      Subsection 13(c)(1) of Exhibit 1 in its present form is hereby
deleted and the following is substituted therefor:

                  "(1)     (i) pay any dividend or make any distribution of
         earnings so long as the Contingent Guarantee is required to remain in
         effect and (ii) after the Contingent Guarantee is no longer required to
         be in effect, make any distribution of earnings except as may be
         permitted by (A) or (B) below:

                           (A)      From retained earnings in an amount
         specified in subsection (C) below, provided that, in the fiscal year in
         which the distribution of earnings is made there is no operating loss
         to the date of such payment of such distribution of earnings, and (i)
         there was no operating loss in the immediately preceding three fiscal
         years, or (ii) there was a one-year operating loss during the
         immediately preceding three fiscal years, but (a) such loss was not in
         the immediately preceding fiscal year, and (b) there was positive net
         income for the three year period;

                                       5
<PAGE>   236
                           (B)      If distributions of earnings may not be made
         under (A) above, a distribution can be made in an amount equal to the
         total operating net income for the immediately preceding three fiscal
         year period, provided that, (i) there were no two successive years of
         operating losses, (ii) in the fiscal year in which such distribution is
         made, there is no operating loss to the date of such distribution, and
         (iii) the distribution or earnings made would not exceed an amount
         specified in Section 9(a)(1)(C) below;

                           (C)      Distributions of earnings may be made from
         earnings of prior years in an aggregate amount equal to (i) 40 percent
         of the Company's total net income after tax for each of the prior
         years, less any distributions that were made in such years; or (ii) the
         aggregate of the Company's total net income after tax for such prior
         years, provided that, after making such distribution, the Company's
         Long Term Debt does not exceed its Net Worth. In computing net income
         for the purposes of this Section, extraordinary gains, such as gains
         from the sale of assets, shall be excluded."

         (9)      Pursuant to subsection 13(a), each of the Company, the
Bareboat Charterer and the Time Charterer, with the consent of the Secretary,
hereby elects to be governed by sub-sections 13(b) and (c) of Exhibit 1 hereto,
as amended herein. From the date hereof, the covenants set forth in Section 12
of Exhibit 1 hereto shall not apply to the Company, the Bareboat Charterer or
the Time Charterer.

         (10)     The Secretary hereby approves the Management Agreement and the
Commercial Management Agreement and the provisions of Section 13(c)(2) shall not
apply thereto.

         (11)     The Secretary hereby consents to the Second Mortgage, the
Bareboat Charter and the Time Charter and the provisions of Section 13(c)(3)
shall not apply thereto.

         (12)     The provisions of Section 14(c) as amended in Article Third of
the Special Provisions shall apply to each Guarantor and the Time Charterer.

         (13)     Section 15 of Exhibit 1 in its present form is hereby deleted
in its entirety. Immediately upon the execution and delivery of this Amendment,
the Company shall meet the requirements specified in Section 13(b) of Exhibit 1
as amended hereby.

         (14)     Attachment A to the Agreement is hereby amended by deleting
the addresses that appear thereon and inserting in their place the following:

         "A.      Name and address of Title XI Reserve Fund Depository:

                  U.S. Bank Trust National Association
                  One California Street, 4th Floor
                  San Francisco, CA  94111

                  Attn:    Corporate Trust Administration
                  Reference:        Vessel SMT CHEMICAL TRADER
                                    (formerly JULIUS HAMMER)

                                       6
<PAGE>   237
         "B.      Name and address of the Assuming Company:

                  Julius Owner Corporation
                  c/o Marine Transport Corporation
                  1200 Harbor Boulevard, 9th Floor, C-901
                  Weehawken, NJ  07087-0901
                  Attn:  General Counsel

         "C.      Name and address of the Bareboat Charterer:

                  Julius ODS Corporation
                  c/o Marine Transport Corporation
                  1200 Harbor Boulevard, 9th Floor, C-901
                  Weehawken, NJ 07087-0901
                  Attn:  General Counsel

         "D.      Name and address of the Time Charterer:

                  Stolt Marine Tankers LLC
                  c/o Marine Transport Corporation
                  1200 Harbor Boulevard, 9th Floor, C-901
                  Weehawken, NJ 07087-0901
                  Attn:  General Counsel


                                 ARTICLE FOURTH

                                  MISCELLANEOUS

         1.       This instrument is executed as and shall constitute an
amendment to and be incorporated into and made a part of the Agreement. All of
the terms and provisions of the Agreement as amended hereby shall continue to be
and shall remain in full force and effect.

         2.       This Amendment may be executed in any number of counterparts.
All such counterparts shall be deemed to be originals and shall together
constitute but one and the same instrument.

         3.       Capitalized terms used herein which are defined in Schedule X
to the Security Agreement, Contract No. MA-9880, dated as of November 25, 1980,
as amended by Amendment No. 1 thereto dated October 18, 1991, and Assignment,
Assumption and Amendment No. 2 thereto dated the date hereof, between the
Shipowner and the United States of America, or by reference therein to other
instruments or agreements, shall have the meanings given to such terms in said
Schedule X or such other instruments or agreements.

         4.       This Amendment and the rights and obligations of the parties
hereto shall in all

                                       7
<PAGE>   238
respects be governed by, construed and enforced in accordance with the federal
laws of the United States of America, but if they are inapplicable, then in
accordance with the laws of the State of New York, including Section 5-1401 of
the General Obligations Law of the State of New York.

         5.       If any term of the Agreement, as amended by this Amendment, or
any application thereof shall be invalid or unenforceable, the remainder of the
Agreement, as amended, and any other application of such term shall not be
affected thereby.

                                       8
<PAGE>   239
         IN WITNESS WHEREOF, this Amendment has been executed by the Assuming
Company, the Bareboat Charterer, the Time Charterer and the Original Bareboat
Charterer and the Secretary as of the day and year first above written.


                                         JULIUS OWNER CORPORATION,
                                                                Assuming Company




                                         By: ___________________________________
                                             Name:
                                             Title:


Attest:




________________________________
Assistant Secretary
<PAGE>   240
                                         JULIUS ODS CORPORATION,
                                                          the Bareboat Charterer




                                         By:
                                              --------------------------------

                                               Name:
                                               Title:


Attest:




------------------------------
Assistant Secretary
<PAGE>   241
                                         STOLT MARINE TANKERS LLC,
                                                                  Time Charterer




                                         By:
                                             -----------------------------------
                                             Name:
                                             Title:


Attest:




------------------------------
Assistant Secretary
<PAGE>   242
                                         SUWANNEE RIVER LINES, INC.,
                                                     Original Bareboat Charterer



                                         By: -----------------------------------
                                             Name:
                                             Title:


Attest:



------------------------------
Assistant Secretary
<PAGE>   243
                                            UNITED STATES OF AMERICA,
                                            SECRETARY OF TRANSPORTATION

                                            BY:  MARITIME ADMINISTRATOR




                                            By:
                                               --------------------------
                                               Secretary
                                               Maritime Administration


Attest:




------------------------------
Assistant Secretary
Maritime Administration

<PAGE>   244
                                                                         5.03(a)


                                  TIME CHARTER


                                     BETWEEN


                             FRANCES ODS CORPORATION
                                              SUB-BAREBOAT CHARTERER


                                       AND


                            STOLT MARINE TANKERS LLC
                                              TIME CHARTERER



                     DATED AS OF ________________ ____, 1999








                                 FRANCES HAMMER
<PAGE>   245
                                Table of Contents

                                  TIME CHARTER

                                     BETWEEN

                             FRANCES ODS CORPORATION
                                              SUB-BAREBOAT CHARTERER
                                       AND

                            STOLT MARINE TANKERS LLC
                                              TIME CHARTERER

<TABLE>

<S>                                                                            <C>
SECTION 1.         Definitions ............................................      1
SECTION 2.         The Vessel .............................................      1
SECTION 3.         Period-Delivery-Redelivery .............................      3
   3.1    Primary Period ..................................................      3
   3.2    Extensions ......................................................      3
   3.3    Delivery ........................................................      4
   3.4    Redelivery ......................................................      4
SECTION 4.         Hire, Costs and Fees ...................................      5
   4.1    Hire ............................................................      5
   4.2    Operating Costs .................................................      6
   4.3    Payment .........................................................     13
SECTION 5.         The Vessel's Qualities .................................     15
   5.1    General .........................................................     15
   5.2    Fresh Water .....................................................     16
   5.3    Documentation ...................................................     17
   5.4    Identification ..................................................     17
SECTION 6.         Operational Provisions .................................     17
   6.1    Compliance; Trading Limits ......................................     17
   6.2    Use .............................................................     18
   6.3    Types of Cargo ..................................................     19
   6.4    Loading-Discharging .............................................     19
   6.5    General Obligations of Sub-Bareboat Charterer ...................     19
   6.6    Certain Obligations of Time Charterer ...........................     20
   6.7    Personnel Matters ...............................................     20
   6.8    Certain Duties of Master ........................................     22
   6.9    Additional Equipment ............................................     23
   6.10   Tugs and Pilots .................................................     24
   6.11   Claims ..........................................................     24
SECTION 7.         Bills of Lading ........................................     25
SECTION 8.         Pollution ..............................................     25
SECTION 9.         Insurance ..............................................     26
   9.1    Requirements ....................................................     26
   9.2    Option ..........................................................     26
   9.3    Losses ..........................................................     27
</TABLE>

                                       (i)
<PAGE>   246
<TABLE>
<S>                                                                            <C>
SECTION 10.       Drydocking, Lay-Up ......................................     27
   10.1   Drydocking ......................................................     27
   10.2      Lay-Up .......................................................     27
   10.3   Effect on Costs .................................................     28
SECTION 11.       Improvements ............................................     28
SECTION 12.       Liens and Attachments ...................................     29
   12.1   Discharge .......................................................     29
   12.2   Further Encumbrances ............................................     30
   12.3   Power to Impose .................................................     30
SECTION 13.      Exceptions ...............................................     32
SECTION 14.      Events and Consequences of Termination of Time Charter
                 or Replacement of Sub-Bareboat Charterer .................     33
   14.1   Events of Termination ...........................................     33
   14.2   Replacement of Sub-Bareboat Charterer ...........................     33
   14.3   Payments Upon Termination of Time Charter .......................     33
SECTION 15.       Events of Time Default and Remedies .....................     33
   15.1   Events of Time Default ..........................................     33
   15.2   Remedies Upon an Event of Time Default ..........................     35
SECTION 16.       Events of Sub-Bareboat Charterer Default and Remedies ...     35
   16.1   Events of Sub-Bareboat Charterer Default ........................     35
   16.2   Remedies Upon an Event of Sub-Bareboat Charterer Default ........     38
SECTION 17.       General .................................................     39
   17.1   Ice .............................................................     39
   17.2   Safe Berth ......................................................     39
   17.3   Limitations .....................................................     39
   17.4   Government Direction and Blockade ...............................     39
   17.5   No Frustration ..................................................     41
   17.6   Salvage Money ...................................................     41
   17.7   No Demise .......................................................     41
   17.8   Transfer and Subcharters ........................................     42
   17.9   Governing Law ...................................................     42
   17.10     Notice .......................................................     43
   17.11     Changes ......................................................     44
   17.12     Records ......................................................     44
   17.13     Operational Review ...........................................     44
   17.14     Procedures ...................................................     45
   17.15     Sub-Bareboat Charterer's Contracts ...........................     45
   17.16     Headings .....................................................     45
   17.17     Counterparts .................................................     45
   17.18     Separability .................................................     45
   17.19     U.S. Government Aids .........................................     46
   17.20     Subordination ................................................     47
   17.21     Escape or Discharge of Oil or Hazardous Substance ............     47
   17.22     Section References ...........................................     48
</TABLE>

                                      (ii)

<PAGE>   247


                                TABLE OF CONTENTS
<PAGE>   248
                                  TIME CHARTER

                                 FRANCES HAMMER

         This TIME CHARTER is made as of ______________________ ____, 1999, by
and between Frances ODS Corporation, ("Sub-Bareboat Charterer"), a Delaware
corporation, and Stolt Marine Tankers LLC, ("Time Charterer"), a Delaware
limited liability company.

                                   WITNESSETH:

         WHEREAS, Sub-Bareboat Charterer desires to time charter the Vessel to
Time Charterer and Time Charterer desires to time charter the Vessel from
Sub-Bareboat Charterer, in each case on the terms and conditions hereinafter set
forth;

         NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, Sub-Bareboat Charterer agrees to let and time
charter and Time Charterer agrees to hire and time charter the Vessel on the
terms and conditions hereinafter set forth.

         SECTION 1. DEFINITIONS.

         The capitalized terms used herein which are defined in, or by reference
in Schedule X hereto, as said Schedule X may be amended from time to time as
provided herein have the meanings specified in said Schedule X.

         SECTION 2. THE VESSEL.

         Sub-Bareboat Charterer hereby lets to Time Charterer, and Time
Charterer hereby hires from Sub-Bareboat Charterer, the use and services of the
Vessel, which shall have the particulars and capabilities specified below in
this Section, but as any thereof may be modified with Time Charterer's approval:

         (a)      American Bureau of Shipping Classification. Tug: +Al Towing
Service, +AMS, +ACC; Barge: +Ale "Chemical Barge" and "Oil Barge."
<PAGE>   249
         (b)      Carriage capacity. About 41,250 long tons total dead weight of
cargo, bunkers, stores and water, on a draft of 36 feet 0 inches in salt water;
and permanent bunkers, after deduction of 2 percent for expansion, of 2,633 long
tons of intermediate fuel oil and 661 long tons of light fuel oil.

         (c)      Speed. Capable of maintaining average speeds of 15.0 knots
loaded and 15.5 knots in ballast, by reference to the observed distance traveled
from seabuoy to seabuoy, and under weather conditions up to and including
Beaufort Scale Force No. 5 except for reductions in speed due to restricted
visibility or traffic conditions.

         (d)      Fuel. Fitted for burning light or intermediate diesel oil in
main motors, and light diesel oil under boilers. Capable of maintaining, on all
passages from seabuoy to seabuoy, under weather conditions up to and including
Beaufort Scale Force No. 5, an average daily fuel consumption of 57 tons of
intermediate fuel oil of the best commercial grade available with a maximum
viscosity of 180 centistokes at 50 degrees centigrade, excluding auxiliary
engines, cargo recirculating or heating and tank cleaning.

         (e)      Pumps. Equipped with center tank cargo pumps with
self-stripping features, capable of maintaining an aggregate discharge
throughput of 1600 metric tons per hour of bulk liquid cargoes having specific
gravities of 2.1 and viscosities of 2,000 SSU, with a maximum pressure at the
Vessel's manifold of 125 lbs. per square inch and 10 wing tank cargo pumps with
self-stripping features, each capable of maintaining an aggregate discharge
throughput of 750 gallons per minute, against a maximum pressure at the Vessel's
manifold of 125 lbs. per square inch of petroleum products at a specific gravity
of .86 and a maximum viscosity of 1,000 SSU.

                                       2
<PAGE>   250
         (f)      Nothing in this Section 2 shall be construed as a waiver of
any rights either Sub-Bareboat Charterer or Time Charterer may have under any
other agreement between Sub-Bareboat Charterer and Time Charterer nor any rights
of Time Charterer against Sub-Bareboat Charterer in connection with the
obligations of Sub-Bareboat Charterer under Section 12 hereof.

         SECTION 3. PERIOD-DELIVERY-REDELIVERY.

         3.1      PRIMARY PERIOD.

         This Time Charter shall be in effect from the Effective Date for the
balance of the Original Term.

         3.2      EXTENSIONS.

         So long as no Event of Time Default shall exist and be continuing, Time
Charterer shall have options to extend this Time Charter for one or more Renewal
Terms of two to five years each, exercisable by giving Sub-Bareboat Charterer
notice at least one hundred eighty days before the end of the Original Term or
60 days before the end of the then current Renewal Term (as the case may be),
which notice shall specify the period of such Renewal Term. In the event that
Time Charterer does not exercise such option to extend the Time Charter beyond
the Original Term, and an extension of more than 180 days beyond the
twenty-fifth anniversary of the Delivery Date is required for the completion of
a voyage in progress or for necessary repairs in accordance with the redelivery
requirements set forth in Article 13(b) of the Bareboat Charter, then this Time
Charter shall automatically be renewed for a Renewal Term equal to the period
commencing at midnight on the last day of the Original Term and ending at
midnight on the last day of the Charter Period. Upon the extension of this Time

                                       3
<PAGE>   251
Charter in accordance with this Section 3.2, the Sub-Bareboat Charter shall
automatically be renewed for the same period.

         3.3      DELIVERY.

         Time Charterer shall be deemed to have accepted the Vessel hereunder
simultaneously with the delivery to and acceptance of the Vessel by Sub-Bareboat
Charterer pursuant to the Sub-Bareboat Charter. Time Charterer's acceptance of
the Vessel under this Time Charter, as provided in this Section 3.3, shall
confirm and be conclusive evidence, as between Sub-Bareboat Charterer and Time
Charterer, that the Vessel is in all respects satisfactory to Time Charterer and
in compliance with all requirements of this Time Charter, and Time Charterer
will not assert any claim of any nature whatsoever against Sub-Bareboat
Charterer based on any of the foregoing matters in this Section 3.3. Nothing in
this Section 3.3 shall be construed as a waiver of any right that either Time
Charterer or Sub-Bareboat Charterer may have against any person other than
Sub-Bareboat Charterer or Time Charterer.

         3.4      REDELIVERY.

         (a)      On the last day of the Charter Period, unless (i) this Time
Charter has been terminated pursuant to Section 14.1, or (ii) use of the Vessel
has been requisitioned as described in Article 12 of the Sub-Bareboat Charter
and such requisition is continuing, Time Charterer shall, except as provided in
Article 13(b) of the Sub-Bareboat Charter (relating to an extension of the
Charter Period to make redelivery repairs), at Time Charterer's cost and
expense, redeliver the Vessel to Sub-Bareboat Charterer or the purchaser to whom
the Vessel was sold under Article 11 of the Bareboat Charter, at any safe port
in the continental United States on the coast on or nearest which the Vessel is
trading at the end of the Charter Period

                                       4
<PAGE>   252
designated by the Bareboat Charterer by written notice to Sub-Bareboat Charterer
and Time Charterer at least 45 days prior to the end of the Charter Period. Time
Charterer agrees that at the time of such redelivery the Vessel shall be free
and clear of all liens, charges and encumbrances created by it.

         (b)      Any property of Time Charterer remaining aboard the Vessel
upon redelivery may be retained or disposed of by Sub-Bareboat Charterer as its
own property.

         SECTION 4. HIRE, COSTS AND FEES.

         4.1      HIRE.

         The amount Time Charterer shall pay as hire for the use and services of
the Vessel during the continuance of this Time Charter shall comprise the
aggregate of the following:

         (a)      Basic Hire, Supplemental Hire, Termination Value and
Stipulated Loss Value (or amounts that are determined with Basic Hire,
Supplemental Hire, Termination Value or Stipulated Loss Value as the basis for
such determination) in the same amounts and at the same time and place as shall
be payable by Bareboat Charterer to Shipowner under the Bareboat Charter; and

         (b)      Operating Hire, which consists of amounts equal to the
following:

                  (1)      Operating Costs. All costs incurred by Sub-Bareboat
         Charterer in respect of obligations incident to the operation of the
         Vessel and in performance of Sub-Bareboat Charterer's obligations
         hereunder and under the Sub-Bareboat Charter, as detailed in Section
         4.2(f), below; and

                                       5
<PAGE>   253
                  (2)      Operating Fee. A daily Operating Fee to Sub-Bareboat
         Charterer in an amount as shall be determined by the parties, such
         amount to include the Management Fee included in the Management
         Agreement noted in Section 4.2 (e), below.

         If an item of Operating Cost is not appropriately budgeted pursuant to
Section 4.2, Sub-Bareboat Charterer is not required to incur such cost or make
any payments, except to the extent necessary to meet operating exigencies where
obtaining prior review by, or the prior approval of, Time Charterer is not
practicable.

         4.2      OPERATING COSTS.

         (a)      Estimates. At least 120 days before the beginning of each
Calendar Year, Sub-Bareboat Charterer shall submit to Time Charterer a written
estimate of the aggregate Operating Costs to be incurred during that forthcoming
Calendar Year. Such estimate shall include itemizations of the estimated
Operating Costs in reasonable detail; shall show how the estimated Operating
Costs were determined, including explanations of any thereof that are
extraordinary and shall be subject to Time Charterer's approval and
verification. Not later than 60 days before the beginning of each Calendar Year,
Sub-Bareboat Charterer and Time Charterer shall agree on an estimate of the
Operating Costs for such Calendar Year, which shall be the basis for payment of
Operating Hire for such Calendar Year, subject, however, to review, at the
request of Time Charterer at any time during the Calendar Year and adjustment to
allow for any previously unanticipated changes in Operating Costs to be
incurred.

                                       6
<PAGE>   254
         (b)      Economy. Sub-Bareboat Charterer shall use its best efforts at
all times to keep Operating Costs at a minimum consistent with the Vessel's full
and efficient performance in the service of Time Charterer.

         (c)      Audits of Operating Costs. Time Charterer may cause to be made
during regular business hours, after the end of each fiscal year of Sub-Bareboat
Charterer, an audit of Sub-Bareboat Charterer's accounts and records relating to
Operating Costs for the Calendar Year ending during that fiscal year by
certified public auditors selected and paid by Time Charterer. A copy of the
report of each such audit shall be delivered to Sub-Bareboat Charterer as soon
as it is completed, but not later than one hundred and twenty days after the end
of such fiscal year of Sub-Bareboat Charterer.

         (d)      General Audits. Without limiting the right contained in
Section 4.2(c) hereof, Time Charterer shall have the right to make general
audits of Sub-Bareboat Charterer's operation of the Vessel during regular
business hours, by authorized employees or representatives of Time Charterer or
its Affiliates, at any time but not more often than once every six months. Such
audits may cover all aspects of Sub-Bareboat Charterer's performance hereunder
and its operation of the Vessel, including the determination and control of
Operating Costs, voyage and port performance, cargo handling, maintenance of the
Vessel and its equipment, drydocking of the Vessel and spare gear and stores
inventories. Sub-Bareboat Charterer shall maintain and retain for at least four
Calendar Years (or until Time Charterer's audit thereof, if earlier, but always
for as long as may be required for purposes of the ODS Contract) complete and
accurate records relating to its performance and operation of the Vessel,
including, without limitation: (1) payroll records, cancelled payroll checks and
receipts for cash

                                       7
<PAGE>   255
payroll payments which are included in Operating Costs, (2) copies of original
invoices for all purchases and repairs, and copies of purchase orders, if any
(including subcontractors' and other third parties' services) and evidences of
payment thereof, (3) other documents evidencing the receipt and issuance of
equipment, gear and stores for use on the Vessel, (4) the Vessel's logs and
other records of its performance and operation, (5) true and correct copies of
contracts material to any operations hereunder, or as reasonably requested by
Time Charterer including, but not limited to, collective bargaining agreements,
agreements with shipping agents, repair and drydock contracts, and (6) copies of
any competitive bids for major repairs changes or modifications to the Vessel.

         (e)      If Sub-Bareboat Charterer enters into an agreement, other than
a labor agreement, with another person providing for operation of the Vessel,
Sub-Bareboat Charterer shall first have obtained Time Charterer's consent
thereto and shall cause such agreement to give Time Charterer the right to make
audits of such other person's operation of the Vessel under terms and conditions
equivalent to those contained in Sections 4.2(c) and (d) hereof and shall
contain such person's agreement to maintain complete and accurate books,
accounts and other records as specified in Section 17.12 hereof. Time Charterer
hereby consents to the Management Agreement between Sub-Bareboat Charterer and
Marine Transport Management, Inc., dated the date hereof.

         (f)      Operating Costs shall include:

                  (i)      Manning costs. All costs incurred and paid by
                           Sub-Bareboat Charterer pursuant to the terms of any
                           collective bargaining agreement applicable to the
                           crew.

                                       8
<PAGE>   256
                  (ii)     Insurance costs. All costs incurred and paid by
                           Sub-Bareboat Charterer, including, but not limited
                           to, all payments within deductibles or franchises,
                           all amounts paid for premiums, club costs, fees, dues
                           or calls, all amounts paid for obtaining (including
                           marine insurance brokerage fees and expenses),
                           maintaining and collecting proceeds (including legal
                           and investigatory fees and expenses) under insurance
                           to be carried by Sub-Bareboat Charterer pursuant to
                           Article 8 of the Sub-Bareboat Charter (except
                           insurance referred to in Article 8(i) of the
                           Sub-Bareboat Charter) and all expenses incurred in
                           connection with the collection of such insurance
                           proceeds in the event of an Event of Loss.

                  (iii)    Maintenance and repair costs. The cost of repairs,
                           excluding items paid for by insurance, and the cost
                           of maintenance or improvements required by
                           governmental authority, ABS or determined to be
                           necessary or advisable by Time Charterer,
                           Sub-Bareboat Charterer or Bareboat Charterer,
                           (subject to the reasonable approval of Time
                           Charterer, Sub-Bareboat Charterer or Bareboat
                           Charterer, as the case may be) including, but not
                           limited to, spare parts, replacement parts, renewals,
                           alterations, modifications, adjustments, innovations,
                           improvements and all related expenses whatsoever,
                           including but not limited to gas

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<PAGE>   257
                           freeing, tank cleaning, cleaning, painting,
                           drydocking, towage, pilotage; and other expenses, if
                           any, while repairing, maintaining, improving,
                           awaiting repairs or maintenance or improvements and
                           proceeding to or from the port or place where repairs
                           or maintenance or improvements are made and in
                           connection with a general average sacrifice or
                           expenditure; and all additional expenses during a
                           lay-up of the Vessel approved or requested by Time
                           Charterer, agency fees and expenses and supervision
                           costs and reasonable transportation costs incurred in
                           connection therewith.

                  (iv)     Stores Costs. The cost of all consumable and
                           expendable items, including but not limited to deck
                           and engine room stores, galley and cabin stores,
                           medical supplies purchased for use aboard the Vessel
                           and cost of purchasing, transporting, insuring and
                           loading such items.

                  (v)      Subsistence costs. The cost of all provisions and
                           food purchased for the use of the Vessel and cost of
                           purchasing, transporting, insuring and loading
                           thereof, as well as rubbish removal, and/or any
                           allowances paid to the crew in lieu of actual food
                           supplies. Sub-Bareboat Charterer's expenditures for
                           subsistence shall be consistent with expenditures
                           which are, or would reasonably be anticipated to be,
                           made by operators of recognized standing

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<PAGE>   258
                           engaged in the operation of United States flag
                           vessels of size, type, trade, cargo and crew most
                           similar to the Vessel.

                  (vi)     Lube Oil costs. The cost of all lubricating oils for
                           and additives used in conjunction with the main
                           engines and auxiliary diesels, reduction gear oil,
                           hydraulic oil used for the steering gears and the
                           hydraulic systems on both the tug and barge, and such
                           other greases and lubricants as may be required for
                           the operation of the Vessel and its equipment.

                  (vii)    Fuel costs. The cost of all fuels used in conjunction
                           with the main engines, auxiliary engines, galley fuel
                           and fuel provided for crew use on both the tug and
                           barge, except to the extent such fuel costs are paid
                           by Time Charterer pursuant to Section 6.6 hereof.

                  (viii)   Other costs. The cost of "MARISAT" satellite
                           communications with the Vessel, outside engineering
                           consultant fees, outside legal fees (subject to the
                           approval of Bareboat Charterer or Time Charterer, as
                           the case may be, which approval shall not be
                           unreasonably withheld), the cost of an annual audit
                           of Sub-Bareboat Charterer's financial records by an
                           independent certified public accounting firm, any
                           fees paid to any government or regulatory agency, not
                           otherwise included in Operating Costs, all costs in
                           connection with salvage activities and all other
                           costs and expenses incurred in direct connection with
                           the operation of the

                                       11
<PAGE>   259
                           Vessel (including any costs incurred in connection
                           with compliance with the provisions of Section 17.22
                           hereof and Exhibit I to this Time Charter) and in the
                           performance of Sub-Bareboat Charterer's obligations
                           under the Sub-Bareboat Charter.

         (g)      Any amounts received by Sub-Bareboat Charterer in reduction of
Operating Costs, whether pursuant to the ODS Contract or otherwise, shall reduce
operating costs hereunder in the full amount received by Sub-Bareboat Charterer.

         (h)      Notwithstanding the foregoing, Operating Costs shall NOT
include the following:

                  (1)      Any fines or penalties levied by any governmental
                  authority against Sub-Bareboat Charterer or any other Person
                  operating the Vessel on behalf of Sub-Bareboat Charterer as a
                  result of the negligence, gross negligence, or willful
                  misconduct of Sub-Bareboat Charterer or any other Person
                  operating the Vessel on behalf of Sub-Bareboat Charterer;

                  (2)      Any tax or withholding for taxes and any fines,
                  penalties or interest thereon which is levied on, or measured
                  by, the net income of Sub-Bareboat Charterer, or any taxes in
                  lieu thereof;

                  (3)      Any of the direct management costs or direct overhead
                  costs of the Sub-Bareboat Charterer and any other Person
                  operating the Vessel; direct management costs, direct overhead
                  costs, and any other administrative costs incurred in
                  connection with the operation of the Vessel which are included
                  in the Operating Fee; and

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<PAGE>   260
                  (4)      Any claims paid by Sub-Bareboat Charterer under the
                  second sentence of Article 7(a) of the Sub-Bareboat Charter or
                  the second sentence of Section 12.1 hereof.

         (i)      Sub-Bareboat Charterer and Time Charterer agree that in the
event Time Charterer pays for any item that is properly considered an Operating
Cost, Time Charterer shall be entitled to reimbursement for such item from
Sub-Bareboat Charterer. Sub-Bareboat Charterer further agrees that in no event
shall it be entitled to recover twice any element of Operating Costs from Time
Charterer.

         4.3      PAYMENT.

         (a)      Basic Hire, Supplemental Hire, Termination Value and
Stipulated Loss Value. Basic Hire, Supplemental Hire, Termination Value and
Stipulated Loss Value shall be paid by Time Charterer at the same place and not
later than the times and the dates on which such Basic Hire, Supplemental Hire,
Termination Value and Stipulated Loss Value are payable by Bareboat Charterer to
Shipowner or other appropriate Person under the Bareboat Charter. Payments of
Basic Hire, Supplemental Hire, Termination Value and Stipulated Loss Value shall
be paid by Time Charterer directly to Bareboat Charterer or any other person
Bareboat Charterer designates, in writing, to Sub-Bareboat Charterer and Time
Charterer.

         (b)      Operating Hire. Not later than the first day of each month
during each Calendar Year, Time Charterer shall pay Sub-Bareboat Charterer, as
preliminary Operating Hire for that month, an amount equal to one-twelfth of the
estimate of Operating Costs for that Calendar Year, as agreed pursuant to
Section 4.2(a) hereof (excluding any drydocking and insurance elements that Time
Charterer shall have agreed to pay upon invoice of Sub-Bareboat

                                       13
<PAGE>   261
Charterer) less any amounts actually received by Sub-Bareboat Charterer pursuant
to the ODS Contract, plus the Operating Fee for that month. Within ninety days
after the end of such Calendar Year: (1) the actual Operating Hire for such
Calendar Year (including modifications or adjustments to the Operating Fee as
agreed to by the parties to the Management Agreement) shall be initially
determined; (2) there shall be credited to the actual Operating Hire: (i) all of
Time Charterer's preliminary payments of Operating Hire during the Calendar
Year, if any, and amounts actually received by Sub-Bareboat Charterer pursuant
to the ODS Contract and (ii) any other credits to which Time Charterer is
entitled under this Time Charter; (3) if there is a deficiency of such aggregate
credits from the actual Operating Hire, such deficiency shall be promptly paid
by Time Charterer; or (4) if there is an excess of such aggregate credits over
the actual Operating Hire, such excess shall be promptly refunded (or credited,
at Time Charterer's option, to future Operating Hire) by Sub-Bareboat Charterer.
Promptly following the annual audit of Operating Costs pursuant to the terms of
Section 4.2(c) hereof, a final adjustment to the Operating Hire shall be
determined based on such audit, subject to further adjustment based on final
resolution of amounts payable under the ODS Contract.

         (c)      Disputed Amounts. In the event that after an audit has been
conducted for a Calendar Year pursuant to Sections 4.2(c) and (d) hereof,
Sub-Bareboat Charterer and Time Charterer disagree over the amount of actual
Operating Hire due Sub-Bareboat Charterer for such Calendar Year, then
Sub-Bareboat Charterer may deliver to Time Charterer an Officer's Certificate
setting forth in reasonable detail the reasons why Sub-Bareboat Charterer
believes it is entitled to the amount in dispute. Upon receipt of such Officer's
Certificate, Time Charterer shall promptly pay such disputed amount to
Sub-Bareboat Charterer, and may

                                       14
<PAGE>   262
thereafter proceed against Sub-Bareboat Charterer, under Section 17.9 hereof, to
obtain a refund of all or part of the disputed amount.

         (d)      Indemnity for Loss of Use of Vessel. Amounts payable by Time
Charterer under Sections 4.1(a) and 4.1(b) hereof shall be payable without
interruption; provided, however, should the Vessel be in collision with another
vessel or craft or stranded or strike an object or be damaged by fire, explosion
or other causes for which a third party is legally liable, [Sub-Bareboat
Charterer] shall indemnify and hold harmless Time Charterer: (a) by reimbursing
Time Charterer for amounts payable under Sections 4.1(a) and 4.1(b) hereof and
paid from the time the casualty occurred until the Vessel is returned to a fully
efficient state and able to resume its service, from a position not less
favorable to Time Charterer than its former position where the casualty
occurred; and (b) from any losses of profits under any subcharter of the Vessel
or agreement for employment of the Vessel during the period the Vessel is
detained due to such casualty, in each case only to the extent such third party
is held liable and has made payment to Sub-Bareboat Charterer for amounts
payable by Time Charterer under Sections 4.1(a) and 4.1(b) hereof, and the loss
of profits under any subcharter or agreement for employment of the Vessel (net
of any collection costs incurred therefor by Sub-Bareboat Charterer). Loss of
employment of the Vessel shall include steaming at reduced speed, deviations,
and temporary and permanent repair periods.

         SECTION 5. THE VESSEL'S QUALITIES.

         5.1      GENERAL.

         The Sub-Bareboat Charterer shall maintain the Vessel tight, staunch,
strong and sufficiently tackled, appareled, furnished, equipped and supplied and
in every respect

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<PAGE>   263
seaworthy and in good operating condition for the service contemplated by this
Time Charter, with holds, cargo tanks, pipelines, and valves clear, clean, and
tight, and with pumps, heat exchangers, and all other equipment in good working
order. Time Charterer's acceptance of the Vessel under Section 3.3 hereof shall
confirm and be conclusive evidence as between Sub-Bareboat Charterer and Time
Charterer that the Vessel is in all respects satisfactory to Time Charterer and
in compliance with all requirements of the preceding sentence and this Time
Charter. Nothing in this Section 5.1 shall be construed as a waiver of any right
that either Sub-Bareboat Charterer or Time Charterer may have against any person
concerning the Vessel other than Time Charterer or Sub-Bareboat Charterer,
respectively, or as a waiver of any rights either Sub-Bareboat Charterer or Time
Charterer may have under any other agreement between Sub-Bareboat Charterer and
Time Charterer. Such particulars and capabilities of the Vessel, after taking
into account the age and the condition of the Vessel at the commencement of this
Time Charter, shall be maintained by Sub-Bareboat Charterer throughout the
continuance of this Time Charter exercising due diligence and best marine
standards and Time Charterer shall always be entitled to the Vessel's full
capabilities.

         5.2      FRESH WATER.

         The Vessel when delivered to Time Charterer shall be equipped with a
salt water evaporator which is capable of making sufficient water to supply the
Vessel's domestic needs, and which Sub-Bareboat Charterer shall maintain in good
operating condition after taking into account the age of the Vessel.

                                       16
<PAGE>   264
         5.3      DOCUMENTATION.

                  Sub-Bareboat Charterer shall maintain the documentation of the
Vessel under the laws and flag of the United States in the name of the Shipowner
throughout the continuance of this Time Charter. Neither Sub-Bareboat Charterer
nor Time Charterer shall permit the Vessel to be documented or operated under
any foreign flag, or to permit anything which might prejudice the Vessel's
documentation as herein required.

         5.4      IDENTIFICATION.

         For the purposes of identification, Time Charterer shall have the
right, at its own expense, to have the Vessel painted in colors of its own
selection, to install and display its stack insignia, to fly its own "house
flag" and to utilize the colors, insignia or flag of any person directly or
indirectly controlling, or controlled by, or under direct or indirect common
control with Time Charterer and Time Charterer shall remove such insignia and
flag, at its expense, prior to redelivery.

         SECTION 6. OPERATIONAL PROVISIONS.

         6.1      COMPLIANCE; TRADING LIMITS.

         The Vessel shall, and Sub-Bareboat Charterer covenants that it will, at
Time Charterer's reasonable cost and expense, at all times comply with the
Sub-Bareboat Charter, all applicable laws, treaties and conventions, and all
applicable rules, regulations and orders issued thereunder, particularly, but
without limitation by this enumeration, the International Convention for Safety
of Life at Sea, 1960, as amended, and all applicable laws, rules, regulations
and orders administered by the United States Maritime Administration, Coast
Guard, Federal Maritime Commission, Customs Service, Environmental Protection
Agency,

                                       17
<PAGE>   265
ABS and any other United States agency, or their respective successors,
having jurisdiction over matters concerning the use, operation and maintenance
of the Vessel and regulations of the International Maritime Organization and
Sub-Bareboat Charterer covenants that it will have on board, when required
thereby, valid certificates showing compliance therewith. Subject to the
preceding sentence and subject to the American Institute of Trade Warranties,
Time Charterer shall have the full use of the Vessel and may employ the Vessel
as required to perform this Time Charter in any part of the world and in such
lawful trades as Time Charterer may direct. However, upon reasonable advance
notice to Sub-Bareboat Charterer, Time Charterer may breach those Institute
Warranties where said breach is allowable upon approval of the marine
underwriters for the Vessel, provided that Time Charterer shall pay any
additional premiums assessed by the Vessel's insurers for breach of the
Institute's Warranties, provided further that the Vessel shall not be operated
in any area in which the insurance required by Article 8 of the Sub-Bareboat
Charter would not be in full force and effect. Sub-Bareboat Charterer covenants
that it will comply with applicable regulations so as to enable the Vessel to
pass through the Suez and Panama Canals by day or night without delay so long as
the applicable fees have been paid in advance by Time Charterer.

         6.2      USE.

         The full use of the Vessel (but not more than it can reasonably stow
and safely carry) shall be at Time Charterer's disposal, reserving proper and
sufficient space for the Vessel's officers, crew, Master's cabin, tackle,
apparel, furniture, fuel, water, provisions and stores. Sub-Bareboat Charterer
shall provide proper and sufficient quarters on the Vessel for an

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<PAGE>   266
authorized representative of Time Charterer, upon reasonable advance notice from
Time Charterer that it wishes to have such an authorized representative on board
the Vessel.

         6.3      TYPES OF CARGO.

         Time Charterer shall have the option of shipping liquid bulk, petroleum
products or any other lawful cargo in bulk for which the Vessel and its tanks
are suitable, as well as any lawful merchandise, between decks or other suitable
space available, subject to the Master's approval as to kind, character, amount
and stowage, and to Time Charterer's payment of all charges for dunnage,
loading, stowing and discharging.

         6.4      LOADING-DISCHARGING.

         The Vessel shall be loaded, discharged or lightened as rapidly as
possible by night as well as by day, at any safe port, berth, dock, anchorage or
submarine line, or alongside lighters or lightening vessels, (including ship to
ship transfers at anchor or underway, but Time Charterer shall supply all
necessary fenders and equipment together with mooring master and tug assistance,
if available, subject only to the Master's approval of suitable weather
conditions for such ship to ship transfer and subject to obtaining all required
insurance endorsements prior to any such transfers) as Time Charterer may
direct, provided the Vessel can reach, occupy and leave the same, always safely
afloat. Each loading and discharging shall be accomplished expeditiously, and to
that end the Vessel's crew shall work overtime, not to exceed that permitted
under applicable U.S. law, if and whenever requested by Time Charterer.

         6.5      GENERAL OBLIGATIONS OF SUB-BAREBOAT CHARTERER.

         Sub-Bareboat Charterer shall provide and pay for all provisions, deck
and engine room stores, galley and cabin stores, all fresh water used by the
Vessel, wages and overtime of

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<PAGE>   267
the Master, officers and crew, all certificates and other requirements necessary
to enable the Vessel to be employed throughout the trading limits specified in
Section 6.1 hereof, consular fees pertaining to the Master, officers and crew,
and all other expenses connected with the operation, maintenance and navigation
of the Vessel as such expenses are defined in Section 4.2(f) hereof.

         6.6      CERTAIN OBLIGATIONS OF TIME CHARTERER.

         Time Charterer shall pay for all fuels required by the Vessel
(including galley fuel and fuel provided for crew use) and all fuels on board
when the Vessel is delivered to Time Charterer pursuant to Section 3.3 hereof
shall be the property of Time Charterer, but all fuels on board when the Vessel
is redelivered to Sub-Bareboat Charterer pursuant to Section 3.4 hereof shall be
the property of Sub-Bareboat Charterer. Time Charterer shall pay for all port
charges, light dues, dock dues, canal dues, consular fees (except those
pertaining to Master, officers and crew), pilotage and tugs necessary for
assisting the Vessel in, about and out of port for the purpose of carrying out
this Time Charter, Time Charterer's agencies and commissions incurred for Time
Charterer's account, crew expense incurred for connecting and disconnecting
cargo hoses and arms, and any transportation taxes. If Sub-Bareboat Charterer
and Time Charterer agree, Sub-Bareboat Charterer may pay such charges, dues,
fees and expenses and shall be reimbursed by Time Charterer therefor.

         6.7      PERSONNEL MATTERS.

         (a)      General. Appointment of the Vessel's personnel shall be wholly
at Sub-Bareboat Charterer's discretion, subject only to compliance with all
requirements of law, including those relating to their citizenship. However, if
Time Charterer ever gives notice to

                                       20
<PAGE>   268
Sub-Bareboat Charterer of dissatisfaction with the conduct of the Master, any
officer or crew member, Sub-Bareboat Charterer and Time Charterer shall promptly
jointly investigate the particulars of Time Charterer's complaint and if the
complaint proves to be well-founded, Sub-Bareboat Charterer, without delay,
shall promptly make changes in the appointments.

         (b)      Protection Against Strikes; Other Labor Agreement Provisions.
From each labor organization representing any of the Vessel's crew, Sub-Bareboat
Charterer shall obtain a "no strike" agreement prohibiting strikes, slowdowns,
boycotts, picketing and any other form of interference with the Vessel's service
at the direction or with the acquiescence of such labor organization.

         (c)      Manning. Sub-Bareboat Charterer shall man the Vessel and
attend to all matters involving the Vessel's personnel, including the following:

                  (i)      procuring and enlisting for the Vessel, as required
                           by applicable law, competent, reliable and
                           duly-licensed personnel and all replacements thereof
                           as necessary from time to time (collectively "Crew
                           Members");

                  (ii)     arranging for and procuring all transportation, board
                           and lodging for the Crew Members as and when
                           required;

                  (iii)    maintaining complete records of any labor agreements
                           which may be entered into between Sub-Bareboat
                           Charterer and Crew Members, in accordance with
                           collective bargaining agreements at any time in
                           effect between employee organizations and unions, and
                           reporting promptly to Time Charterer, as soon as
                           notice or

                                       21
<PAGE>   269
                           knowledge thereof is received by Sub-Bareboat
                           Charterer, any actual or proposed material changes in
                           any of such agreements or other regulations relating
                           to Crew Members;

                  (iv)     settlement of all wages with Crew Members during the
                           course and upon termination of their employment, and
                           handling and settling of all claims of Crew Members,
                           including those arising out of accidents, sickness or
                           death, loss of personal effects, or disputes under
                           articles or contracts of enlistment, pension plans,
                           insurance policies or fines, provided, however, that
                           Sub-Bareboat Charterer shall proceed diligently and
                           cooperate fully with Time Charterer in handling and
                           settling those claims which are covered by insurance
                           placed by Time Charterer or Bareboat Charterer or
                           which are self-insured by Time Charterer or Bareboat
                           Charterer;

                  (v)      maintaining all administrative and financial records
                           relative to Crew Members as required by law, labor
                           agreements or Time Charterer; and making such reports
                           thereof at such times and in such forms as Time
                           Charterer may reasonably request; and

                  (vi)     performing other services in connection with the
                           manning of the Vessel as Time Charterer may
                           reasonably request.

         6.8      CERTAIN DUTIES OF MASTER.

         The Master, though appointed and employed by Sub-Bareboat Charterer and
subject to Sub-Bareboat Charterer's direction and control, shall observe Time
Charterer's

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<PAGE>   270
orders in connection with Time Charterer's agencies, arrangements and employment
of the Vessel hereunder. The Master shall: (a) prosecute each voyage with utmost
dispatch (subject to any orders by Time Charterer for slow-steaming); (b) render
all reasonable assistance with the Vessel's crew and equipment; (c) keep a full
and correct log of each voyage in the English language, which shall always be
open to inspection by Time Charterer and its agents, and abstracts of which
shall be furnished to Time Charterer at the end of each voyage; and (d) make
regular weekly reports by telegraph or cable to Sub-Bareboat Charterer, and
Sub-Bareboat Charterer hereby agrees to furnish a copy of such weekly reports to
Time Charterer by electronic means, containing statistics on the Vessel's
performance (including mileage steamed loaded and in ballast, speed and fuel
consumption), accounting for time spent, and such other information as
Sub-Bareboat Charterer or Time Charterer may request.

         6.9      ADDITIONAL EQUIPMENT.

         Time Charterer shall be at liberty to fit any additional pumps or gear
for loading or discharging cargo, or other equipment which is readily removable
without causing material damage to the Vessel, that Time Charterer may require
beyond that which is on board at the beginning of this Time Charter, and to make
the necessary connections with cargo, steam or water pipes. If not required to
be installed in order to meet the requirements of Section 5.1 or 6.1 hereof and
not installed as replacement for property on board the Vessel at the time of
delivery thereof, pumps, gear and equipment so installed shall remain the
property of Time Charterer, and so long as no Event of Time Default shall have
occurred and be continuing, Time Charterer may instruct Sub-Bareboat Charterer
to remove, or Time Charterer may remove, any such pumps, gear or equipment, at
Time Charterer's expense at any time during or

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<PAGE>   271
at the expiration of this Time Charter, subject only to Time Charterer's leaving
the Vessel in the condition it would have been in if such pumps, gear or other
equipment, had not been installed, ordinary wear and tear excepted.

         6.10     TUGS AND PILOTS.

         Time Charterer is authorized by Sub-Bareboat Charterer to engage
pilotage and tug assistance on behalf of Sub-Bareboat Charterer on the usual
terms and conditions for such services then prevailing at the ports or places
where such services are engaged, including provisions then prevailing (if any)
making pilots, tug captains or tugs or pilots the borrowed servants of
Sub-Bareboat Charterer. However, Time Charterer shall have the option of using
its own tugs or pilots or tugs or pilots made available or employed by any of
its Affiliates or otherwise related companies, to render towage or pilotage
services to the Vessel. In this event, the terms and conditions of such services
as are rendered and applied by independent tugboat owners or pilots shall be
applicable; and Time Charterer or its Affiliates or otherwise related companies
and their pilots shall be entitled to all exemptions from and limitations of
liability, applicable to such independent tugboat owners or pilots and their
published tariff terms and conditions.

         6.11     CLAIMS.

         Unless otherwise requested by Time Charterer, Sub-Bareboat Charterer
shall handle and diligently prosecute all claims arising in connection with the
Vessel's operation, whether by or against the Vessel or Bareboat Charterer or
Shipowner, including the following:

         (a)      investigating, prosecuting or defending, employing counsel,
and effecting settlements of such claims, including those involving any of the
insurances with

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<PAGE>   272
respect to the Vessel, and those that do or might give rise to maritime liens or
other encumbrances on the Vessel;

         (b)      in cases of general or particular average, assisting in
preparing the average account, done by the general average adjuster, and, in all
ways reasonably possible, protecting the interests of the Vessel, Bareboat
Charterer and Shipowner; and

         (c)      in cases of particular average, settlement of claims in
conjunction with the Vessel's hull and machinery insurance, and making
disbursements accordingly.

         SECTION 7. BILLS OF LADING.

         Bills of lading shall be signed at any rate of freight Time Charterer
or its agents may direct, without prejudice to this Time Charter, the Master
attending daily, if required, at the offices of Time Charterer or its agents.
Time Charterer hereby agrees to indemnify Sub-Bareboat Charterer from all
consequences or liabilities that may arise from the Master, Time Charterer or
its agents signing bills of lading or other documents signed at the request of
Time Charterer or its agents, or any irregularity in papers supplied by Time
Charterer or its agents, or from complying with the orders of Time Charterer or
its agents.

         SECTION 8. POLLUTION.

         Sub-Bareboat Charterer shall comply, and shall use due diligence to
obtain the compliance of Bareboat Charterer and Shipowner with (a) all
applicable governmental laws, regulations, rules and orders (including any
international conventions to which the United States is a party) pertaining to
prevention or cleanup of pollution by escapes or discharges from the Vessel of
liquid cargoes in its custody, including maintenance of any required evidence of

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<PAGE>   273
financial responsibility, or Releases of Hazardous Substances and (b) the
Pollution Provisions set forth in Exhibit I to this Time Charter.

         SECTION 9. INSURANCE.

         9.1      REQUIREMENTS.

         Sub-Bareboat Charterer shall provide and maintain insurance on or with
respect to the Vessel and the operation thereof during the Charter Period as may
be required by Article 8 of the Sub-Bareboat Charter.

         9.2      OPTION.

         Time Charterer at its option and subject to any approvals under the ODS
Contract may procure and maintain on or with respect to the Vessel and the
operation thereof, such insurance as is required to be procured and maintained
by Sub-Bareboat Charterer pursuant to Section 9.1. Subject to provisions of the
Bareboat Charter and the Sub-Bareboat Charter, Time Charterer, in the first
instance and thereafter, Sub-Bareboat Charterer, may procure and maintain
insurance, at the expense of Time Charterer or Sub-Bareboat Charterer as the
case may be, on the Vessel in excess of such insurance as is required to be
procured and maintained by Sub-Bareboat Charterer unless such excess insurance
would conflict with or otherwise limit the insurance required to be procured and
maintained by Sub-Bareboat Charterer. Time Charterer agrees, upon the placing of
the insurance required by Section 9.1 hereof, promptly to furnish Shipowner and
Sub-Bareboat Charterer with copies of the policies, cover notes or other
evidence of such insurance.

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<PAGE>   274
         9.3      LOSSES.

         Sub-Bareboat Charterer and Time Charterer shall cooperate to make all
proofs of loss and take all other steps necessary to effect prompt collections
from the insurers for any loss under any insurances on or with respect to the
Vessel or the operation thereof. At Bareboat Charterer's written request (and
only at such request) Time Charterer shall join Shipowner, Bareboat Charterer
and Sub-Bareboat Charterer in a declaration of or agreement on a compromised,
constructive or agreed total loss of the Vessel or tendering abandonment of the
Vessel to the insurers.

         SECTION 10. DRYDOCKING, LAY-UP.

         10.1     DRYDOCKING.

         When required by applicable regulations of the United States Coast
Guard or by ABS, Sub-Bareboat Charterer shall drydock the Vessel, clean and
paint its bottom and make all overhaul and necessary repairs. At least 30 days,
if practicable, before each drydocking commences, Sub-Bareboat Charterer shall
submit to Time Charterer anticipated drydocking work lists and bids thereon for
its review and approval, and Time Charterer shall select the facility where the
drydocking shall be performed and may attend the drydocking to whatever extent
it deems necessary. After each drydocking, Sub-Bareboat Charterer shall submit
to and review with Time Charterer the detailed list and account of all
drydocking work done by the shipyard.

         10.2     LAY-UP.

                  Time Charterer shall have the option of laying up the Vessel
from time to time and for any periods of time during the continuance of this
Time Charter. If Time Charterer,

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having exercised this option, desires the Vessel to be returned to service,
Sub-Bareboat Charterer shall, upon receipt of notice thereof from Time
Charterer, immediately take steps to restore the Vessel to service as promptly
as possible.

         10.3     EFFECT ON COSTS.

         During each period of drydocking or lay-up, Sub-Bareboat Charterer
shall use its best efforts to effect maximum savings of Operating Costs during
each such period, but always in a manner consistent with its other obligations
under this Time Charter.

         SECTION 11. IMPROVEMENTS.

         Subject to the terms of Article 6 of the Sub-Bareboat Charter, in order
to maintain or enhance the utility of the Vessel for this Time Charter, at Time
Charterer's request from time to time, but wholly at Time Charterer's risk and
expense, Sub-Bareboat Charterer shall modernize or improve the Vessel by making
changes in any of its equipment which are not readily removable without causing
material damage to the Vessel; provided, however, that such changes do not (a)
diminish the seaworthiness, utility or market value of the Vessel, (b) adversely
affect its United States Coast Guard certification or its ABS classification and
rating required to be maintained by the Bareboat Charter, (c) conflict with or
result in a violation of any provision of the Bareboat Charter, or (d) require
the Vessel to be redocumented. Sub-Bareboat Charterer shall procure all permits
and licenses required for any such changes, and shall exercise due diligence so
that all such changes shall be expeditiously completed in good and workmanlike
manner and in compliance with all applicable legal and classification
requirements, and all equipment and material so installed shall, without
necessity of further act, become part of the Vessel and the property of
Shipowner. Payment by Time Charterer to Sub-

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<PAGE>   276
Bareboat Charterer for improvements made pursuant to this Section 11, including
the cost of necessary permits and licenses, shall be made as agreed upon by Time
Charterer and Sub-Bareboat Charterer, but always in a manner so as to permit the
progress of the work to continue and to minimize the need for payments in
advance by Time Charterer, and Sub-Bareboat Charterer shall be under no
obligation to make or to commence to make such improvements until a method of
payment has been agreed.

         SECTION 12. LIENS AND ATTACHMENTS.

         12.1     DISCHARGE.

         If the Vessel is ever libeled or otherwise attached, levied upon or
taken into custody, or detained or sequestered, by virtue of any proceeding in
any court or tribunal, or by any governmental or other authority, in any country
or nation of the world, on account of any mortgage, pledge, lien, encumbrance or
claim on or with respect to the Vessel or its profits, Sub-Bareboat Charterer
shall immediately give notice thereof to Bareboat Charterer and Time Charterer
by electronic means, confirmed by letter, and, subject to the next sentence of
this Section 12.1, Time Charterer shall, at its sole cost and expense, promptly
take or cause to be taken such action as may be necessary to cause the Vessel to
be released, and such liens or claims to be discharged, within a reasonable time
not exceeding 30 days. However, if any mortgage, pledge, lien, encumbrance or
claim arises, or in the event that the Vessel shall be libeled or otherwise
attached, levied upon or taken into custody, or detained or sequestered by
virtue of any proceeding in any court or tribunal or by any governmental or
other authority on account of any liens or claims against Sub-Bareboat
Charterer, any person or entity related to Sub-Bareboat Charterer or any other
Person operating the Vessel on behalf of the Sub-Bareboat

                                       29
<PAGE>   277
Charterer, which such liens or claims are unrelated to Sub-Bareboat Charterer's
chartering of the Vessel or, if related, result from the Sub-Bareboat
Charterer's failure properly to apply funds timely paid by the Time Charterer as
Operating Costs, Sub-Bareboat Charterer agrees that it shall promptly, at its
own cost and expense, remove or cause to be removed such mortgage, pledge, lien,
encumbrance or claim or cause the Vessel to be released and cause all liens and
claims on the Vessel in connection with such libel or other action to be
discharged (whether by furnishing a surety bond or otherwise), within a
reasonable time not exceeding 30 days. In the event that Sub-Bareboat Charterer
fails, at its own cost and expense, promptly to remove or cause to be removed
such mortgage, pledge, lien, encumbrance or claim, Time Charterer may remove
such mortgage, pledge, lien, encumbrance or claim or cause the Vessel to be
released and cause all liens and claims on the Vessel in connection with such
libel or other action to be discharged and Sub-Bareboat Charterer agrees that it
shall promptly reimburse Time Charterer for its costs and expenses incurred in
removing such mortgage, pledge, lien, encumbrance or claim within a reasonable
time not exceeding 30 days after Sub-Bareboat Charterer receives notice from
Time Charterer as to the amount of such costs and expenses.

         12.2     FURTHER ENCUMBRANCES.

         After the execution of this Time Charter, no mortgage, lien, charge or
other encumbrance shall be placed on the Vessel or its profits by Sub-Bareboat
Charterer without the prior written consent of the Secretary, Occidental, and
Time Charterer.

         12.3     POWER TO IMPOSE.

         Neither Sub-Bareboat Charterer, Time Charterer nor the Master of the
Vessel, nor any other person has or shall have any right, power or authority,
without the prior written

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<PAGE>   278
consent of Bareboat Charterer, the Secretary, and Occidental, to create, incur
or permit to be placed or imposed upon the Vessel any mortgage, lien, charge or
other encumbrance whatsoever except:

                  (1)      liens for taxes, for crew's and master's wages, for
salvage (including contract salvage) and general average which are:

                           (i)      not yet due and payable, or

                           (ii)     unclaimed, or

                           (iii)    being contested by appropriate proceedings
                                    diligently conducted so long as such
                                    proceedings do not involve a significant
                                    risk of a sale, forfeiture or loss of the
                                    Vessel; and

                  (2)      contract and tort liens arising out of or incident to
current operations of, or repairs to, the Vessel which are subordinate to the
liens of the Mortgage and the Second Mortgage and which are:

                           (i)      based on claims not yet due and payable, or

                           (ii)     being contested by appropriate proceedings
                                    diligently conducted so long as such
                                    proceedings do not involve a significant
                                    risk of a sale, forfeiture or loss of the
                                    Vessel; or

                  (3)      any rights of the United States arising by operation
of law or under the Title V Contract by virtue of the payment of
construction-differential subsidy by the United States pursuant to Title V of
the Act.

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         SECTION 13. EXCEPTIONS.

         The Vessel, its Master, Shipowner, any Owner Participant, Bareboat
Charterer, Sub-Bareboat Charterer and Time Charterer shall not, unless otherwise
expressly provided in this Time Charter, be responsible for any loss or damage
arising or resulting from: any act, neglect, default or barratry of the Master,
pilots, mariners or other servants of Sub-Bareboat Charterer in the navigation,
management or operation of the Vessel; fire, unless caused by the actual fault
or privity of Sub-Bareboat Charterer; collision or stranding; dangers and
accidents of the sea; explosion, bursting of boilers, breakage of shafts, or any
latent defect in hull, equipment or machinery. The Vessel, its Master,
Shipowner, any Owner Participant, Bareboat Charterer and Sub-Bareboat Charterer
shall not, unless otherwise expressly provided in this Time Charter, be
responsible for any loss or damage or delay or failure in performing hereunder
arising or resulting from: Act of God; act of war; seizure under legal process
provided bond is promptly furnished to release the Vessel or cargo; strike or
lockout or stoppage or restraint of labor from whatever cause, either partial or
general; or riot or civil commotion; and arrest or restraint of princes, rulers
or people. The Vessel shall have liberty to sail with or without pilots, to tow
or to be towed, to go to the assistance of vessels in distress and to deviate
for the purpose of saving life or property or of landing any ill or injured
person on board. This Section 13 is not to be construed as in any way affecting
the provisions for payment of hire as provided in Section 4 hereof.

                                       32
<PAGE>   280
         SECTION 14. EVENTS AND CONSEQUENCES OF TERMINATION OF TIME CHARTER OR
                     REPLACEMENT OF SUB-BAREBOAT CHARTERER.


         14.1     EVENTS OF TERMINATION.

         This Time Charter shall terminate simultaneously upon a termination of
the Sub- Bareboat Charter as set forth in Article 10, 11 and 12 thereof
(relating to an Event of Loss (including requisition of title to the Vessel),
Early Termination for obsolescence and Requisition of Use, respectively) or upon
the election of Time Charterer, with the consent of Bareboat Charterer, for
reasons of a Sub-Bareboat Charterer Default under Section 16 hereof.

         14.2     REPLACEMENT OF SUB-BAREBOAT CHARTERER.

         Notwithstanding anything to the contrary in this Time Charter, Time
Charterer, with the consent of Bareboat Charterer, shall have the right at any
time and from time to time, to elect to cause the Sub-Bareboat Charterer to be
replaced by a successor sub-bareboat charterer under this Time Charter. The
exercise of such election shall be by written notice from Time Charterer
approved by Bareboat Charterer, the Secretary, and Occidental to Sub-Bareboat
Charterer.

         14.3     PAYMENTS UPON TERMINATION OF TIME CHARTER.

         In the event that this Time Charter shall be terminated for any of the
reasons set forth in Sections 14.1 or 14.2 hereof, Time Charterer shall pay to
Sub-Bareboat Charterer all reasonable Operating Costs incurred by Sub-Bareboat
Charterer in the termination and cessation of its management and operation of
the Vessel.

         SECTION 15. EVENTS OF TIME DEFAULT AND REMEDIES.

         15.1     EVENTS OF TIME DEFAULT.

         Each of the following shall be an Event of Time Default:

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<PAGE>   281
         (a)      Time Charterer on an aliquot basis, shall fail to pay any
Operating Hire under this Time Charter and not remedy such failure within 10
days after receipt of notice thereof from Sub-Bareboat Charterer; or

         (b)      Time Charterer shall fail, for more than 30 days after receipt
of written notice specifying such failure and demanding that the same be cured,
to perform or comply with any of the provisions of this Time Charter; provided,
however, that if Time Charterer shall have undertaken to cure such failure and,
notwithstanding the reasonable diligence of Time Charterer in attempting to cure
such failure, such failure is not cured within said 30 day period but is curable
with future due diligence, there shall be no Event of Time Default under this
Section 15.1(b) as long as Time Charterer is proceeding with due diligence to
cure such failure; or

         (c)      Time Charterer shall consent to the appointment of a receiver,
trustee or liquidator of itself or of substantially all of its property, or Time
Charterer or the Guarantor shall admit in writing its inability to pay its debts
generally as they come due, or shall make a general assignment for the benefit
of creditors; or

         (d)      Time Charterer shall file a voluntary petition in bankruptcy
or for a reorganization or for an arrangement in a proceeding under any of the
federal bankruptcy laws or other federal or state insolvency laws as are now or
hereafter in effect or an answer admitting the material allegations of a
petition filed against Time Charterer in any such proceeding; or

         (e)      an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of Time Charterer, a receiver, trustee or liquidator of Time Charterer
or of substantially all of its property, and any such order,

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<PAGE>   282
judgment or decree of appointment shall remain in force undismissed, unstayed or
unvacated for a period of 90 days after the date of entry thereof, or

         (f)      a petition against Time Charterer in a proceeding under the
federal bankruptcy laws or other federal or state insolvency laws as now or
hereafter in effect shall be filed and shall not be withdrawn or dismissed
within 90 days thereafter, or if, under the provisions of any law providing for
reorganization or winding-up of corporations which may apply to Time Charterer,
any court of competent jurisdiction shall assume jurisdiction, custody or
control of Time Charterer or of substantially all of the property of Time
Charterer and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of 90 days.

         15.2     REMEDIES UPON AN EVENT OF TIME DEFAULT.

         In the event of an Event of Time Default, this Time Charter shall
terminate and Sub-Bareboat Charterer shall be entitled to full and immediate
payment of the amounts set forth in Section 14.3 hereof, plus any reasonable
costs of collection of such amounts.

         SECTION 16. EVENTS OF SUB-BAREBOAT CHARTERER DEFAULT AND REMEDIES.

         16.1     EVENTS OF SUB-BAREBOAT CHARTERER DEFAULT.

         Each of the following shall be an Event of Sub-Bareboat Charterer
         Default:

         (a)      Sub-Bareboat Charterer's default in performance of any
material obligation under the Sub-Bareboat Charter, this Time Charter, or the
ODS Contract, or the incorrectness, when made, in any material respect, of any
representation made by Sub-Bareboat Charterer in the Sub-Bareboat Charter, or in
this Time Charter or Sub-Bareboat Charterer's failure to remedy the default or
incorrectness by the earlier of: (x) any termination of the

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<PAGE>   283
Bareboat Charter resulting from such default or incorrectness; or (y) within 30
days after receipt of notice thereof from Bareboat Charterer or Time Charterer,
as the case may be, provided, however, that no such default or incorrectness
shall be deemed to be an Event of Sub-Bareboat Charterer Default if Sub-Bareboat
Charterer commences appropriate remedial action within 30 days after receipt of
such notice and prosecutes diligently the same to completion; or

         (b)      Sub-Bareboat Charterer shall consent to the appointment of a
receiver, trustee or liquidator of itself or of substantially all of its
property, or Sub-Bareboat Charterer shall admit in writing its inability to pay
its debts generally as they come due, or shall make a general assignment for the
benefit of creditors;

         (c)      Sub-Bareboat Charterer shall file a voluntary petition in
bankruptcy or for a reorganization or for an arrangement in a proceeding under
any of the federal bankruptcy laws or other federal or state insolvency laws as
are now or hereafter in effect or an answer admitting the material allegations
of a petition filed against Sub-Bareboat Charterer in any such proceeding; or

         (d)      an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of Sub-Bareboat Charterer, a receiver, trustee or liquidator of
Sub-Bareboat Charterer or of substantially all of its property, and any such
order, judgment or decree of appointment shall remain in force undismissed,
unstayed or unvacated for a period of 90 days after the date of entry thereof,
or

         (e)      a petition against Sub-Bareboat Charterer in a proceeding
under the federal bankruptcy laws or other federal or state insolvency laws as
are now or hereafter in effect shall be filed and shall not be withdrawn or
dismissed within 90 days thereafter, or if,

                                       36
<PAGE>   284
under the provisions of any law providing for reorganization or winding-up of
corporations which may apply to Sub-Bareboat Charterer, any court of competent
jurisdiction shall assume jurisdiction, custody or control of Sub-Bareboat
Charterer or of substantially all of the property of any of them and such
jurisdiction, custody or control shall remain in force unrelinquished, unstayed
or unterminated for a period of 90 days; or

         (f)      the sale or transfer by Sub-Bareboat Charterer of all or
substantially all of its assets or the transfer of ownership of Sub-Bareboat
Charterer to any other corporation or person, or the consolidation or merger of
Sub-Bareboat Charterer or the Manager into any other corporation or person,
except for sales, transfers, consolidations or mergers either directly or
indirectly with Affiliates, unless such sale, transfer, consolidation or merger
would, in the reasonable judgement of Time Charterer, adversely affect the
Sub-Bareboat Charterer's obligations under the Bareboat Charter, hereunder or
under the ODS Contract or the Manager's performance under the Management
Agreement; or

         (g)      any amendment of Sub-Bareboat Charterer's articles of
incorporation or by-laws, if any such amendment would have a material effect on
Sub-Bareboat Charterer's obligations under the Sub-Bareboat Charter, hereunder
or under the ODS Contract or the Manager's performance under the Management
Agreement; or

         (h)      (1)      Sub-Bareboat Charterer's receipt of notice from Time
Charterer alleging in detail that Sub-Bareboat Charterer's or the Manager's
management or operating performance (including general administration) is below
commercially acceptable standards, and (2) Sub-Bareboat Charterer's and the
Manager's failure to remedy such alleged substandard

                                       37


<PAGE>   285
performance, to Time Charterer's reasonable satisfaction, within 90 days after
receipt of Time Charterer's notice; or

         (i)      Sub-Bareboat Charterer's failure to remain, or the occurrence
of any event which will cause Sub-Bareboat Charterer to no longer remain a
Citizen of the United States or a United States person within the meaning of
Section 7701 of the Code; or

         (j)      the failure of Sub-Bareboat Charterer to maintain, or to cause
to be maintained, insurance in the amounts and forms as and when required to be
maintained by Sub-Bareboat Charterer under Article 8 of the Sub-Bareboat
Charter;

         (k)      an event of default by Sub-Bareboat Charterer shall have
occurred and be continuing under the ODS Contract.

         (l)      any Event of Sub-Bareboat Charterer Default under the other
time charter between an Affiliate of the Sub-Bareboat Charterer and the Time
Charterer with respect to the Other Vessel; or

         (m)      any material change in the financial condition or management
structure of Sub-Bareboat Charterer when such material change would, in the
reasonable judgement of Time Charterer, adversely affect the Sub-Bareboat
Charterer's obligations hereunder.

         16.2 REMEDIES UPON AN EVENT OF SUB-BAREBOAT CHARTERER DEFAULT.

         Upon the occurrence of an Event of Sub-Bareboat Charterer Default under
Section 16.1 hereof, Time Charterer may, at its option, cause such default to be
cured at its own cost, without prejudice, however, to any other rights or
remedies Time Charterer may have.

                                       38
<PAGE>   286
         SECTION 17. GENERAL.

         17.1     ICE.

         Time Charterer shall not send the Vessel to ice-bound waters without
Sub-Bareboat Charterer's consent, but such consent shall not be unreasonably
withheld.

         17.2     SAFE BERTH.

         The cargo or cargoes shall be laden or discharged by day and by night
in any dock or at any wharf or place or alongside lighters or ocean going
vessels that Time Charterer or its agents may direct where the Vessel can
proceed thereto, lie at, and depart therefrom, always safely afloat. Any
lighterage shall be at the risk and expense of Time Charterer.

         17.3     LIMITATIONS.

         Sub-Bareboat Charterer shall have the benefit of all limitations of,
and exemptions from, liability accorded to the owner or disponent or chartered
owner of vessels whether construed to be a private carrier, contract carrier or
common carrier, by any statute or rule of law for the time being in force.
Nothing in this Time Charter shall operate to limit or deprive Sub-Bareboat
Charterer of any statutory exemption from or limitation of liability on the
theory of personal contract or otherwise.

         17.4     GOVERNMENT DIRECTION AND BLOCKADE.

         (a)      The Vessel shall have liberty to comply with any directions or
recommendations as to departure, arrival, routes, ports of call, stoppages,
destinations, zones, waters, delivery or in any other ways whatsoever (including
any direction or recommendations not to go to the port of destination or to
delay proceeding thereto or to proceed to some other port) given by the
government of the United States or any other governmental or local authority

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<PAGE>   287
including any de facto government or local authority or by any belligerent or by
any State or organized body engaged in civil war, hostilities or warlike
operations or by any person or body acting or purporting to act as or with the
authority of any such government, authority, State or organized body or by any
committee or person having under the terms of the war risk insurance on the
Vessel the right to give any such directions or recommendations. If by reason of
or in compliance with any such direction or recommendation, anything is done or
is not done such shall not be deemed a deviation or a violation of this Time
Charter.

                  (b)      (1)      If any port of loading or of discharge to
which the Vessel may properly be ordered pursuant to the terms of this Time
Charter or the bills of lading be blockaded, or

                           (2)      If owing to any war, hostilities, warlike
operations, civil war, civil commotions, revolutions, or the operation of
international law (i) entry to any such port of loading or of discharge or the
loading or discharge of cargo at any such port shall be considered by the Master
or Sub-Bareboat Charterer in his or its discretion dangerous or prohibited or
(ii) it shall be considered by the Master or Sub-Bareboat Charterer in his or
its discretion dangerous or impossible for the Vessel to reach any such port of
loading or of discharge; Time Charterer shall have the right to order the cargo
or such part of it as may be affected to be loaded or discharged at any other
port of loading or of discharge within the range of loading or discharge ports
respectively established under the provisions of this Time Charter (provided
such other port is not blockaded or that entry thereto or loading or discharge
of cargo thereat is not in the Master's or Sub-Bareboat Charterer's discretion
dangerous or prohibited). In the event of the cargo being loaded or discharged
at any such other port within the respective range of loading

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<PAGE>   288
or discharge ports established under the provisions of this Time Charter, this
Time Charter shall be read in respect of freight and all other conditions
whatsoever as if the voyage performed were that originally designated. However,
if the Vessel discharges the cargo at a port outside the range of discharge
ports established under the provisions of this Time Charter, freight shall be
paid as for the voyage originally designated and all extra expenses involved in
reaching the actual port of discharge and/or discharging the cargo thereat shall
be paid by Time Charterer or cargo owners. In this latter event, Sub-Bareboat
Charterer shall have a lien on the cargo for all such extra expenses.

         17.5     NO FRUSTRATION.

         Notwithstanding anything in this Time Charter to the contrary, no
circumstances shall be deemed sufficient (a) to frustrate this Time Charter, or
(b), except as provided in Sections 14 and 16 hereof, to terminate this Time
Charter, or (c) except as specifically provided herein, to reduce the amount of
hire payable hereunder during the Charter Period.

         17.6     SALVAGE MONEY.

         All salvage money earned by the Vessel shall be paid to Time Charterer
after deducting Master's, Officer's and crew's share, legal expenses, repairs of
damage (if any), and any other extraordinary loss or expense sustained as a
result of the service, which shall always be a first charge on such money.

         17.7     NO DEMISE.

         This Time Charter does not, and nothing herein shall be construed to,
effect a demise of the Vessel to Time Charterer or vest Time Charterer with
possession of the Vessel or any power over the physical condition, ownership or
navigation thereof.

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<PAGE>   289
         17.8     TRANSFER AND SUBCHARTERS.

         (1)      By Sub-Bareboat Charterer. Except for the assignment to a
successor sub-bareboat charterer under Sections 14.2 and 16.2 hereof,
Sub-Bareboat Charterer shall never voluntarily transfer, or permit any transfer
of, or create a security interest in, or permit the creation of a security
interest in the Sub-Bareboat Charter, this Time Charter, or any of its rights or
obligations under either of them, without the prior written consent of Time
Charterer.

         (2)      By Time Charterer. Time Charterer has the right to transfer
this Time Charter to any Affiliate or to employ the Vessel under subcharter,
contract of affreightment or any other agreement or arrangement relating to the
use or employment of the Vessel, to any person, without Sub-Bareboat Charterer's
consent, but subject to prior receipt of all necessary governmental approvals,
and to Time Charterer's continuing responsibility for full performance of all of
its obligations under this Time Charter.

         (3)      Succession. Subject to the foregoing, this Time Charter shall
bind and benefit the successors and assigns of the parties hereto.

         17.9     GOVERNING LAW.

         ALL QUESTIONS ARISING UNDER THIS TIME CHARTER SHALL IN ALL RESPECTS BE
GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE GENERAL MARITIME LAWS
OF THE UNITED STATES OF AMERICA AND, TO THE EXTENT SUCH LAWS DO NOT APPLY, THE
LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK. ANY CLAIM OR DISPUTE ARISING UNDER
THIS TIME CHARTER SHALL, PROVIDED THAT THE COURT HAS

                                       42
<PAGE>   290
SUBJECT MATTER JURISDICTION OVER SUCH CLAIM OR DISPUTE, BE DECIDED IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, TO WHICH
JURISDICTION THE SUB-BAREBOAT CHARTERER AND TIME CHARTERER HEREBY SUBMIT FOR THE
PURPOSES OF ANY SUCH PROCEEDING. IN THE EVENT THAT THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK LACKS SUBJECT MATTER JURISDICTION
OVER ANY CLAIM OR DISPUTE ARISING UNDER THIS TIME CHARTER, SUB-BAREBOAT
CHARTERER AND TIME CHARTERER HEREBY SUBMIT THEMSELVES TO THE JURISDICTION OF THE
SUPREME COURT FOR THE COUNTY OF NEW YORK FOR THE PURPOSES OF ANY SUCH PROCEEDING
AND WAIVE ANY CLAIM OF FORUM NON CONVENIENS RELATING TO SUCH CHOICE OF COURT.

         17.10    NOTICE.

         All notices and other communications hereunder shall be effective when
received, except that all notices and other communications sent by prepaid
United States certified mail, return receipt requested, shall become effective
on the third Business Day after mailing, addressed (i) if to Sub-Bareboat
Charterer, 7 Penn Plaza, 370 7th Avenue, Suite 1128, New York, NY 10001,
Attention: President, or (ii) if to Time Charterer, c/o Stolt Marine Tankers
LLC, c/o Marine Transport Corporation, 1200 Harbor Boulevard, Weehawken, New
Jersey 07087, Attention: General Counsel, or (iii) if to Occidental, 10889
Wilshire Boulevard, Los Angeles, California 90021, Attention: Vice President &
Secretary, or (iv) to any of the foregoing, at such other address as any such
person may from time to time designate in writing to such other persons.

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         17.11    CHANGES.

         No agreement amending, supplementing or partially or wholly terminating
this Time Charter, or Schedule X hereto, or waiving or discharging any
provisions hereof, shall be effective unless such agreement is executed in
writing by the party against whom enforcement of such agreement is sought. No
consent of the Secretary shall be required for any agreement amending,
supplementing, or partially or wholly terminating this Time Charter or Schedule
X hereto so long as payment of the principal and interest on the Obligations and
the Guarantee Fee has been made as required.

         17.12    RECORDS.

         Sub-Bareboat Charterer and any other person operating the Vessel as
provided in Section 4.2(e), shall maintain complete and accurate books, accounts
and other records relating to Sub-Bareboat Charterer's performance of this Time
Charter, in accordance with generally accepted accounting practices and
principles and as satisfactory to the Board, and all such records may, upon
prior notice, be examined and audited by authorized representatives of Time
Charterer at any time during the usual business hours of Sub-Bareboat Charterer
and Manager. The books, accounts and other records required to be maintained by
this Section 17.12 shall be kept separate and apart from the books, accounts and
records relating to any other business of Sub-Bareboat Charterer and any other
person operating the Vessel pursuant to Section 4.2(e).

         17.13    OPERATIONAL REVIEW.

         Time Charterer may, upon prior notice, review with Sub-Bareboat
Charterer and Manager, at any time during Sub-Bareboat Charterer's usual
business hours, any aspects of the

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<PAGE>   292
Vessel's operation, including, without limitation, operating costs, operational
procedures and practices, the Vessel's voyage and port performance, and
maintenance and repair.

         17.14    PROCEDURES.

         Sub-Bareboat Charterer and Time Charterer shall jointly develop an
Operating Manual which shall include written operating procedures. Said
procedures shall describe those areas of administration and operation not
specifically detailed herein and which are related to Sub-Bareboat Charterer's
management of the Vessel and to the conduct of business between Sub-Bareboat
Charterer and Time Charterer.

         17.15    SUB-BAREBOAT CHARTERER'S CONTRACTS.

         Time Charterer and the Vessel shall have the advantages of any existing
or future contracts of Sub-Bareboat Charterer, its Affiliates or its Parent
Corporation for purchases of stores, supplies, equipment or other materials, or
of repairs or other services.

         17.16    HEADINGS.

         The table of contents preceding this Time Charter and the headings to
the various sections hereof have been inserted for convenient reference only and
shall not in any way limit or otherwise affect any of the terms or provisions
hereof.

         17.17    COUNTERPARTS.

         This Time Charter may be executed in several counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.

         17.18    SEPARABILITY.

         If any term or provision of this Time Charter or application thereof to
any person or circumstances shall to any extent be invalid or unenforceable, the
remainder of this Time

                                       45
<PAGE>   293
Charter, or the application of such term or provision to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected and each term and provision of this Time Charter shall be valid
and shall be enforceable to the extent permitted by law.

         17.19    U.S. GOVERNMENT AIDS.

         Sub-Bareboat Charterer and Time Charterer mutually acknowledge that the
Vessel and its operation are, or may be, subject to certain requirements of the
U.S. Government contained in the Title V Contract, the ODS Contract and the
documents relating to the financing of the Vessel under Title XI of the Act.
Unless waived by the U.S. Government (and Sub-Bareboat Charterer shall not
request any waiver without the prior written consent of Time Charterer),
Sub-Bareboat Charterer and Time Charterer agree to comply with any such
requirements notwithstanding anything to the contrary in this Time Charter. Time
Charterer acknowledges that since the Sub-Bareboat Charterer is receiving
subsidy under the ODS Contract, the Sub-Bareboat Charterer may be required by
statute to offer the Vessel for employment by the Military Sealift Command.
Sub-Bareboat Charterer agrees to coordinate each such offer with the Time
Charterer before the offer is made. Sub-Bareboat Charterer further agrees that
proceeds received as a consequence of any employment of the Vessel by the
Military Sealift Command shall be paid over to the Bareboat Charterer in
accordance with Article 12(f) of the Sub-Bareboat Charter and Time Charterer
agrees that payment of Operating Hire shall continue under the Time Charter
notwithstanding any such employment of the Vessel.

                                       46
<PAGE>   294
         17.20    SUBORDINATION.

         This Time Charter is subject and subordinate to the rights of the
Shipowner under the Bareboat Charter and the rights of the Secretary under the
Mortgage and the Security Agreement and the rights of Occidental under the
Second Mortgage.

         17.21    ESCAPE OR DISCHARGE OF OIL OR HAZARDOUS SUBSTANCE.

         When an escape or discharge of Oil occurs from the Vessel and causes or
threatens to cause Damages, or when there is a substantial threat of a discharge
of Oil or discharge of Oil (i.e., a grave and imminent danger of the escape or
discharge of Oil which, if it occurred, would create a serious danger of
Damages, whether or not an escape or discharge in fact subsequently occurs), or
when any action or occurrence causes or threatens to cause a Release, or a
Hazardous Substance, then the Time Charterer may, at its option, upon notice to
the Sub-Bareboat Charterer or Master, undertake such measures as are reasonably
necessary to prevent or minimize such Damages or Release, to remove the threat
of such Damages or Release, unless the Sub-Bareboat Charterer promptly
undertakes the same. The Time Charterer shall keep Sub-Bareboat Charterer
advised of the nature and result of any such measures taken by it and, if time
permits, the nature of the measures intended to be taken by it. Any of the
aforementioned measures taken by Time Charterer shall be deemed taken on the
Sub-Bareboat Charterer's authority and as the Sub-Bareboat Charterer's agent,
and shall be at the Sub-Bareboat Charterer's expense except to the extent that:

         (1)      any such Damages or Release or threat of such Damages or
Release was caused or contributed to by the Time Charterer, or

         (2)      Sub-Bareboat Charterer is exempt from liability under
applicable law; or

                                       47
<PAGE>   295
         (3)      expenses for such measures, when added to the reasonable Cost
         of Sub-Bareboat Charterer's own remedial measures, exceed maximum
         coverage under Sub-Bareboat Charterer's insurances.

         PROVIDED ALWAYS that if Sub-Bareboat Charterer in its absolute
discretion considers said measures should be discontinued, Sub-Bareboat
Charterer shall so notify Time Charterer and thereafter Time Charterer shall
have no right to continue said measures under the provisions of this Clause and
all further liability to Time Charterer under this Clause shall thereupon cease.

         The above provisions are not in derogation of such other rights as Time
Charterer or Sub-Bareboat Charterer may have under this Time Charter or
Sub-Bareboat Charterer may otherwise have or acquire by law or any International
Convention.

         17.22    SECTION REFERENCES.

         The terms "hereof", "hereunder", and "herein", as well as any
references to Section numbers in this Time Charter which do not expressly refer
to another agreement, refer to such sections of this Time Charter.

                                       48
<PAGE>   296
         IN WITNESS WHEREOF, the parties have caused this Time Charter to be
executed and delivered as of the day and year first above written.

                                     FRANCES ODS CORPORATION,
                                                         Sub-Bareboat Charterer,

_____________________                By: __________________________________
Attest:                                  Name: ____________________________
                                         Title:____________________________


                                     STOLT MARINE TANKERS LLC,
                                                         Time Charterer,

_____________________                By:___________________________________
Attest:                                 Name:  ____________________________
                                        Title: ____________________________
<PAGE>   297
                                                                       EXHIBIT I
                                                                              TO
                                                                    TIME CHARTER

                              POLLUTION PROVISIONS

         A.       Remedial Measures. Whenever there is an escape or discharge
from the Vessel of Oil, or a substantial threat of discharge of Oil, or any
action or occurrence that causes or threatens to cause a Release of a Hazardous
Substance, which does or threatens to cause or contribute to any violation of
the laws, regulations, rules or orders referred to in Section 8 of the Time
Charter or which causes Damages: Sub-Bareboat Charterer shall (a) give Time
Charterer immediate notice thereof by telegram, cable or telephone at Stolt
MarineTankers LLC, c/o Marine Transport Corporation, 1200 Harbor Boulevard,
Weehawken, New Jersey 07087, Attention: General Counsel or at such other
address, attention and telephone number as Time Charterer may have designated by
at least fifteen days' prior notice to Sub-Bareboat Charterer and (b) promptly
take such measures as are necessary to prevent, contain and clean up the escape
or discharge, and to remedy any Damages resulting therefrom. Time Charterer
shall have the right, at its option, to participate in such measures taken by
Sub-Bareboat Charterer and to take any such measures which it deems necessary or
expedient to those ends, all in behalf and for the account of Sub-Bareboat
Charterer. Time Charterer shall keep Sub-Bareboat Charterer and the Master
advised, as currently as practicable, of the nature and results of any such
measures taken, or intended to be taken, by Time Charterer. Sub-Bareboat
Charterer shall reimburse Time Charterer for all costs incurred by Time
Charterer on account of its participating in and taking any such measures,
except when and to the extent that the escape or discharge was caused or
contributed to by Time Charterer, or Sub-Bareboat Charterer is exempt from
liability for the escape or discharge under the applicable law, whether national
or international; provided: (1) that such reimbursement, when added to the
reasonable costs of Sub-Bareboat Charterer's own remedial measures, shall not
exceed the maximum coverage thereof afforded by Sub-Bareboat Charterer's
insurances; and (2) that, if Sub-Bareboat Charterer, in its absolute discretion,
believes that such measures should be discontinued, Sub-Bareboat Charterer may
so notify Time Charterer, and thereafter Time Charterer shall have no right to
continue such measures under this clause, and all additional liability to Time
Charterer under this clause shall thereupon cease. The provisions of this clause
are not in derogation of any other rights Sub-Bareboat Charterer or Time
Charterer may have under this Time Charter, or may otherwise have or acquire by
law or any international convention.

         B.       At Time Charterer's request, Sub-Bareboat Charterer shall
participate in Time Charterer's program covering oil pollution avoidance.
Sub-Bareboat Charterer shall comply with all oil pollution avoidance instruction
provided by Time Charterer to Sub-Bareboat Charterer in writing, together with
any amendments which may be issued in writing or by radio to cover special cases
or changes in international or national regulations or laws. If applicable, the
Master shall contain on board the Vessel all oily residues from consolidated
tank washings, dirty ballast, etc. such residues shall be contained in one
compartment, after the separation of
<PAGE>   298
all possible water has taken place by safe methods employing the use of
settlement and decanting or mechanic separation to approved and recognized
standards. The oil residue shall be pumped ashore at the loading or discharging
terminal, either as segregated oil, dirty ballast, commingled with cargo, or as
is possible for Time Charterer to arrange with each cargo. If Time Charterer
requires that demulsifiers be used for the separation of oil and water, the cost
of such demulsifiers shall be for Time Charterer's account. The Vessel shall
take all necessary precautions while loading and discharging cargo or bunkers,
as well as ballast, to ensure that no oil will escape overboard. Nothing in Time
Charterer's instructions shall be construed as permission to pollute the sea by
the discharge of oil or oily water, etc. Sub-Bareboat Charterer shall instruct
the Master that, upon arrival at the loading port, the Master shall furnish Time
Charterer with a report covering oil pollution avoidance, together with details
of the quantity of oil residue on board.

         C.       Sub-Bareboat Charterer or its Parent Corporation shall remain
a member of ITOPF for duration of this Time Charter.

<PAGE>   299
                                                                         5.03(b)







                                  TIME CHARTER



                                     BETWEEN



                             JULIUS ODS CORPORATION,

                                               BAREBOAT CHARTERER



                                       AND



                            STOLT MARINE TANKERS LLC,

                                               TIME CHARTERER





                         DATED AS OF SEPTEMBER 29, 1999











                        -------------------------------
                                ITB JULIUS HAMMER

                       (TO BE RENAMED SMT CHEMICAL TRADER)

                      -------------------------------------


<PAGE>   300





                                TABLE OF CONTENTS


<TABLE>
<CAPTION>

<S>                                                                                                                <C>
SECTION 1.  DEFINITIONS........................................................................................       1


SECTION 2.  THE VESSEL.........................................................................................       1


SECTION 3.  PERIOD-DELIVERY-REDELIVERY.........................................................................       3

   3.1    PRIMARY PERIOD.......................................................................................       3

   3.2    EXTENSIONS...........................................................................................       3

   3.3    DELIVERY.............................................................................................       4

   3.4    REDELIVERY...........................................................................................       4


SECTION 4.  HIRE, COSTS AND FEES...............................................................................       5


   4.1    HIRE.................................................................................................       5

   4.2    OPERATING COSTS......................................................................................       6

   4.3    PAYMENT..............................................................................................      13

SECTION 5.        THE VESSEL'S QUALITIES.......................................................................      16

   5.1    GENERAL..............................................................................................      16

   5.2    FRESH WATER..........................................................................................      17

   5.3    DOCUMENTATION........................................................................................      17

   5.4    IDENTIFICATION.......................................................................................      17


SECTION 6.        OPERATIONAL PROVISIONS.......................................................................      18

   6.1    COMPLIANCE; TRADING LIMITS...........................................................................      18

   6.2    USE..................................................................................................      19

   6.3    TYPES OF CARGO.......................................................................................      19

   6.4    LOADING-DISCHARGING..................................................................................      19

   6.5    GENERAL OBLIGATIONS OF BAREBOAT CHARTERER............................................................      20

   6.6    CERTAIN OBLIGATIONS OF TIME CHARTERER................................................................      20

   6.7    PERSONNEL MATTERS....................................................................................      21

   6.8    CERTAIN DUTIES OF MASTER.............................................................................      23

   6.9    ADDITIONAL EQUIPMENT.................................................................................      24

   6.10   TUGS AND PILOTS......................................................................................      24

   6.11   CLAIMS...............................................................................................      25


SECTION 7.        BILLS OF LADING..............................................................................      25


SECTION 8.        POLLUTION....................................................................................      26


SECTION 9.        INSURANCE....................................................................................      26


   9.1    REQUIREMENTS.........................................................................................      26

   9.2    OPTION...............................................................................................      26

   9.3    LOSSES...............................................................................................      27


SECTION 10.  DRYDOCKING, LAY-UP................................................................................      28

   10.1   DRYDOCKING...........................................................................................      28

   10.2     LAY-UP.............................................................................................      28
</TABLE>


                                       i
<PAGE>   301

<TABLE>
<CAPTION>

<S>                                                                                                                 <C>
   10.3   EFFECT ON COSTS......................................................................................      28


SECTION 11.  IMPROVEMENTS......................................................................................      29


SECTION 12.  LIENS AND ATTACHMENTS.............................................................................      30

   12.1   DISCHARGE............................................................................................      30

   12.2   FURTHER ENCUMBRANCES.................................................................................      31

   12.3   POWER TO IMPOSE......................................................................................      31


SECTION 13.  EXCEPTIONS........................................................................................      32

SECTION 14.      EVENTS AND CONSEQUENCES OF TERMINATION OF TIME CHARTER OR REPLACEMENT OF BAREBOAT CHARTERER...      33

   14.1   EVENTS OF TERMINATION................................................................................      33

   14.2   REPLACEMENT OF BAREBOAT CHARTERER....................................................................      34

   14.3   PAYMENTS UPON TERMINATION OF TIME CHARTER............................................................      34


SECTION 15.  EVENTS OF TIME DEFAULT AND REMEDIES...............................................................      34

   15.1   EVENTS OF TIME DEFAULT...............................................................................      34


SECTION 16.   EVENTS OF BAREBOAT CHARTERER DEFAULT AND REMEDIES................................................      36

   16.1   EVENTS OF BAREBOAT CHARTERER DEFAULT.................................................................      36

   16.2   REMEDIES UPON AN EVENT OF BAREBOAT CHARTERER DEFAULT.................................................      39


SECTION 17.       GENERAL......................................................................................      40

   17.1   ICE..................................................................................................      40

   17.2   SAFE BERTH...........................................................................................      40

   17.3   LIMITATIONS..........................................................................................      40

   17.4   GOVERNMENT DIRECTION AND BLOCKADE....................................................................      40

   17.5   NO FRUSTRATION.......................................................................................      42

   17.6   SALVAGE MONEY........................................................................................      42

   17.7   NO DEMISE............................................................................................      42

   17.9   GOVERNING LAW........................................................................................      43

   17.10   NOTICE..............................................................................................      44

   17.11   CHANGES.............................................................................................      45

   17.12   RECORDS.............................................................................................      45

   17.13   OPERATIONAL REVIEW..................................................................................      46

   17.14   PROCEDURES..........................................................................................      46

   17.15   BAREBOAT CHARTERER'S CONTRACTS......................................................................      46

   17.16   HEADINGS............................................................................................      46

   17.17   COUNTERPARTS........................................................................................      46

   17.18   SEPARABILITY........................................................................................      47

   17.19   U.S. GOVERNMENT AIDS................................................................................      47

   17.20   SUBORDINATION.......................................................................................      48

   17.21   ESCAPE OR DISCHARGE OF OIL OR HAZARDOUS SUBSTANCE...................................................      48

   17.22   SECTION REFERENCES..................................................................................      49
EXHIBIT I TO TIME CHARTER
</TABLE>



                                       ii
<PAGE>   302


                                  TIME CHARTER

                                ITB JULIUS HAMMER

                       (TO BE RENAMED SMT CHEMICAL TRADER)



                  This TIME CHARTER is made on ______________________ ____,
1999, by and between Julius ODS Corporation ("Bareboat Charterer"), a Delaware
corporation, and Stolt Marine Tankers LLC ("Time Charterer"), a Delaware limited
liability company.

                                   WITNESSETH:

                  WHEREAS, Bareboat Charterer desires to time charter the Vessel
to Time Charterer and Time Charterer desires to time charter the Vessel from
Bareboat Charterer, in each case on the terms and conditions hereinafter set
forth;

                  WHEREAS, the Shipowner, on the date hereof, is changing the
name of the Vessel to SMT CHEMICAL TRADER (tug) and SMT TWO (barge);

                  NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, Bareboat Charterer agrees to let and time charter
and Time Charterer agrees to hire and time charter the Vessel on the terms and
conditions hereinafter set forth.



                  SECTION 1. DEFINITIONS.

                  The capitalized terms used herein which are defined in, or by
reference in Schedule X hereto, as said Schedule X may be amended from time to
time as provided herein have the meanings specified in said Schedule X.



<PAGE>   303


                  SECTION 2. THE VESSEL.

                  Bareboat Charterer hereby lets to Time Charterer, and Time
Charterer hereby hires from Bareboat Charterer, the use and services of the
Vessel, which shall have the particulars and capabilities specified below in
this Section, but as any thereof may be modified with Time Charterer's approval:

                  (a)      American Bureau of Shipping Classification.  Tug: +Al
Towing Service, +AMS, +ACC; Barge: +Ale "Chemical Barge" and "Oil Barge."

                  (b)      Carriage capacity. About 41,250 long tons total dead
weight of cargo, bunkers, stores and water, on a draft of 36 feet 0 inches in
salt water; and permanent bunkers, after deduction of 2 percent for expansion,
of 2,633 long tons of intermediate fuel oil and 661 long tons of light fuel oil.

                  (c)      Speed. Capable of maintaining average speeds of 15.0
knots loaded and 15.5 knots in ballast, by reference to the observed distance
traveled from seabuoy to seabuoy, and under weather conditions up to and
including Beaufort Scale Force No. 5 except for reductions in speed due to
restricted visibility or traffic conditions.

                  (d)      Fuel. Fitted for burning light or intermediate diesel
oil in main motors, and light diesel oil under boilers. Capable of maintaining,
on all passages from seabuoy to seabuoy, under weather conditions up to and
including Beaufort Scale Force No. 5, an average daily fuel consumption of 57
tons of intermediate fuel oil of the best commercial grade available with a
maximum viscosity of 180 centistokes at 50 degrees centigrade, excluding
auxiliary engines, cargo recirculating or heating and tank cleaning.

                  (e)      Pumps. Equipped with center tank cargo pumps with
self-stripping features, capable of maintaining an aggregate discharge
throughput of 1600 metric tons per



                                       2
<PAGE>   304

hour of bulk liquid cargoes having specific gravities of 2.1 and viscosities of
2,000 SSU, with a maximum pressure at the Vessel's manifold of 125 lbs. per
square inch and 10 wing tank cargo pumps with self-stripping features, each
capable of maintaining an aggregate discharge throughput of 750 gallons per
minute, against a maximum pressure at the Vessel's manifold of 125 lbs. per
square inch of petroleum products at a specific gravity of .86 and a maximum
viscosity of 1,000 SSU.

                  (f)      Nothing in this Section 2 shall be construed as a
waiver of any rights either Bareboat Charterer or Time Charterer may have under
any other agreement between Bareboat Charterer and Time Charterer nor any rights
of Time Charterer against Bareboat Charterer in connection with the obligations
of Bareboat Charterer under Section 12 hereof.


                  SECTION 3.    PERIOD-DELIVERY-REDELIVERY.

                  3.1      PRIMARY PERIOD.

                  This Time Charter shall be in effect from the Effective Date
for the balance of the Original Term.

                  3.2      EXTENSIONS.

                  So long as no Event of Time Default shall exist and be
continuing, Time Charterer shall have options to extend this Time Charter for
one or more Renewal Terms of two to five years each, exercisable by giving
Bareboat Charterer notice at least one hundred eighty days before the end of the
Original Term or 60 days before the end of the then current Renewal Term (as the
case may be), which notice shall specify the period of such Renewal Term. In the
event that Time Charterer does not exercise such option to extend the Time
Charter beyond the Original Term, and an extension of more than 180 days beyond
the twenty-fifth anniversary of



                                       3
<PAGE>   305

the Delivery Date is required for the completion of a voyage in progress or for
necessary repairs in accordance with the redelivery requirements set forth in
Article 13(b) of the Bareboat Charter, then this Time Charter shall
automatically be renewed for a Renewal Term equal to the period commencing at
midnight on the last day of the Original Term and ending at midnight on the last
day of the Charter Period. Upon the extension of this Time Charter in accordance
with this Section 3.2, the Bareboat Charter shall automatically be renewed for
the same period.

                  3.3      DELIVERY.

                  Time Charterer shall be deemed to have accepted the Vessel
hereunder simultaneously with the delivery to and acceptance of the Vessel by
Bareboat Charterer pursuant to the Bareboat Charter. Time Charterer's acceptance
of the Vessel under this Time Charter, as provided in this Section 3.3, shall
confirm and be conclusive evidence, as between Bareboat Charterer and Time
Charterer, that the Vessel is in all respects satisfactory to Time Charterer and
in compliance with all requirements of this Time Charter, and Time Charterer
will not assert any claim of any nature whatsoever against Bareboat Charterer
based on any of the foregoing matters in this Section 3.3. Nothing in this
Section 3.3 shall be construed as a waiver of any right that either Time
Charterer or Bareboat Charterer may have against any person other than Bareboat
Charterer or Time Charterer.

                  3.4      REDELIVERY.

                  (a)      On the last day of the Charter Period, unless (i)
this Time Charter has been terminated pursuant to Section 14.1, or (ii) use of
the Vessel has been requisitioned as described in Article 12 of the Bareboat
Charter and such requisition is continuing, Time Charterer shall, except as
provided in Article 13(b) of the Bareboat Charter (relating to an extension of
the Charter Period to make redelivery repairs), at Time Charterer's cost and





                                       4
<PAGE>   306

expense, redeliver the Vessel to Bareboat Charterer, at any safe port in the
continental United States on the coast on or nearest to which the Vessel is
trading at the end of the Charter Period designated by the Shipowner by written
notice to Bareboat Charterer and Time Charterer at least 45 days prior to the
end of the Charter Period. Time Charterer agrees that at the time of such
redelivery the Vessel shall be free and clear of all liens, charges and
encumbrances created by it.

                  (b)      Any property of Time Charterer remaining aboard the
Vessel upon redelivery may be retained or disposed of by Bareboat Charterer as
its own property.


                  SECTION 4.    HIRE, COSTS AND FEES.

                  4.1      HIRE.

                  The amount Time Charterer shall pay as hire for the use and
services of the Vessel during the continuance of this Time Charter shall
comprise the aggregate of the following:

                  (a)      Basic Hire, Supplemental Hire, and Stipulated Loss
Value (or amounts that are determined with Basic Hire, Supplemental Hire, or
Stipulated Loss Value as the basis for such determination) in the same amounts
and at the same time and place as shall be payable by Bareboat Charterer to
Shipowner under the Bareboat Charter; plus

                  (b)      Operating Hire, which consists of amounts equal to
                           the following:

                           (1) Operating Costs. All costs incurred by Bareboat
                           Charterer incident to the operation of the Vessel and
                           in performance of Bareboat Charterer's obligations
                           hereunder and under the Bareboat Charter, as detailed
                           in Section 4.2(f) below; plus


                                       5
<PAGE>   307


                           (2) Operating Fee. A daily Operating Fee to Bareboat
                           Charterer in an amount equal to the Management Fee
                           included in the Management Agreement noted in Section
                           4.2 (e) below.

                  If an item of Operating Cost is not appropriately budgeted
pursuant to Section 4.2, Bareboat Charterer is not required to incur such cost
or make any payments, except to the extent necessary to meet operating
exigencies where obtaining prior review by, or the prior approval of, Time
Charterer is not practicable.

                  4.2      OPERATING COSTS.

                  (a)      Estimates. At least 120 days before the beginning of
each Calendar Year, Bareboat Charterer shall submit to Time Charterer a written
estimate of the aggregate Operating Costs to be incurred during that forthcoming
Calendar Year. Such estimate shall include itemizations of the estimated
Operating Costs in reasonable detail; shall show how the estimated Operating
Costs were determined, including explanations of any thereof that are
extraordinary and shall be subject to Time Charterer's approval and
verification. Not later than 60 days before the beginning of each Calendar Year,
Bareboat Charterer and Time Charterer shall agree on an estimate of the
Operating Costs for such Calendar Year, which shall be the basis for payment of
Operating Hire for such Calendar Year, subject, however, to review, at the
request of Time Charterer at any time during the Calendar Year and adjustment to
allow for any previously unanticipated changes in Operating Costs to be
incurred.

                  (b)      Economy. Bareboat Charterer shall use its best
efforts at all times to keep Operating Costs at a minimum consistent with the
Vessel's full and efficient performance in the service of Time Charterer.



                                       6
<PAGE>   308

                  (c)      Audits of Operating Costs. Time Charterer may cause
to be made during regular business hours, after the end of each fiscal year of
Bareboat Charterer, an audit of Bareboat Charterer's accounts and records
relating to Operating Costs for the Calendar Year ending during that fiscal year
by certified public auditors selected and paid by Time Charterer. A copy of the
report of each such audit shall be delivered to Bareboat Charterer as soon as it
is completed, but not later than one hundred and twenty days after the end of
such fiscal year of Bareboat Charterer.

                  (d)      General Audits. Without limiting the right contained
in Section 4.2(c) hereof, Time Charterer shall have the right to make general
audits of Bareboat Charterer's operation of the Vessel during regular business
hours, by authorized employees or representatives of Time Charterer or its
Affiliates, at any time but not more often than once every six months. Such
audits may cover all aspects of Bareboat Charterer's performance hereunder and
its operation of the Vessel, including the determination and control of
Operating Costs, voyage and port performance, cargo handling, maintenance of the
Vessel and its equipment, drydocking of the Vessel and spare gear and stores
inventories. Bareboat Charterer shall maintain and retain for at least four
Calendar Years (or until Time Charterer's audit thereof, if earlier, but always
for as long as may be required for purposes of the ODS Contract) complete and
accurate records relating to its performance and operation of the Vessel,
including, without limitation: (1) payroll records, cancelled payroll checks and
receipts for cash payroll payments which are included in Operating Costs, (2)
copies of original invoices for all purchases and repairs, and copies of
purchase orders, if any (including subcontractors' and other third parties'
services) and evidences of payment thereof, (3) other documents evidencing the
receipt and issuance of equipment, gear and stores for use on the Vessel, (4)
the Vessel's



                                       7
<PAGE>   309

logs and other records of its performance and operation, (5) true and correct
copies of contracts material to any operations hereunder, or as reasonably
requested by Time Charterer including, but not limited to, collective bargaining
agreements, agreements with shipping agents, repair and drydock contracts, and
(6) copies of any competitive bids for major repairs, changes or modifications
to the Vessel.

                  (e)      Other Agreements. If Bareboat Charterer enters into
an agreement, other than a labor agreement, with another person providing for
operation of the Vessel, Bareboat Charterer shall first have obtained Time
Charterer's consent thereto and shall cause such agreement to give Time
Charterer the right to make audits of such other person's operation of the
Vessel under terms and conditions equivalent to those contained in Sections
4.2(c) and (d) hereof and shall contain such person's agreement to maintain
complete and accurate books, accounts and other records as specified in Section
17.12 hereof. Time Charterer hereby consents to the Management Agreement between
Bareboat Charterer and Marine Transport Management, Inc. dated the date hereof.

                  (f)      Inclusions in Operating Costs.  Operating Costs shall
                           include:

                           (i)      Manning costs. All costs incurred and paid
                                    by Bareboat Charterer pursuant to the terms
                                    of any collective bargaining agreement
                                    applicable to the crew.

                           (ii)     Insurance costs. All costs incurred and paid
                                    by Bareboat Charterer, including, but not
                                    limited to, all payments within deductibles
                                    or franchises, all amounts paid for
                                    premiums, club costs, fees, dues or calls,
                                    all amounts paid for obtaining (including
                                    marine insurance brokerage fees and
                                    expenses),


                                       8
<PAGE>   310
                                    maintaining and collecting proceeds
                                    (including legal and investigatory fees and
                                    expenses) under insurance to be carried by
                                    Bareboat Charterer pursuant to Article 8 of
                                    the Bareboat Charter (except insurance
                                    referred to in Article 8(i) of the Bareboat
                                    Charter) and all expenses incurred in
                                    connection with the collection of such
                                    insurance proceeds in the event of an Event
                                    of Loss.

                           (iii)    Maintenance and repair costs. The cost of
                                    repairs, excluding items paid for by
                                    insurance, and the cost of maintenance or
                                    improvements required by any governmental
                                    authority, ABS or determined to be necessary
                                    or advisable by Time Charterer, Bareboat
                                    Charterer or Shipowner (subject to the
                                    reasonable approval of Time Charterer,
                                    Bareboat Charterer or Shipowner, as the case
                                    may be) including, but not limited to, spare
                                    parts, replacement parts, renewals,
                                    alterations, modifications, adjustments,
                                    innovations, improvements and all related
                                    expenses whatsoever, including but not
                                    limited to gas freeing, tank cleaning,
                                    cleaning, painting, drydocking, towage,
                                    pilotage; and other expenses, if any, while
                                    repairing, maintaining, improving, awaiting
                                    repairs or maintenance or improvements and
                                    proceeding to or from the port or place
                                    where repairs or maintenance or improvements
                                    are made and in connection with a general
                                    average sacrifice or expenditure; and all
                                    additional expenses during a lay-




                                       9
<PAGE>   311

                                    up of the Vessel approved or requested by
                                    Time Charterer, agency fees and expenses and
                                    supervision costs and reasonable
                                    transportation costs incurred in connection
                                    therewith.

                           (iv)     Stores Costs. The cost of all consumable and
                                    expendable items, including but not limited
                                    to deck and engine room stores, galley and
                                    cabin stores, medical supplies purchased for
                                    use aboard the Vessel and cost of
                                    purchasing, transporting, insuring and
                                    loading such items.

                           (v)      Subsistence costs. The cost of all
                                    provisions and food purchased for the use of
                                    the Vessel and cost of purchasing,
                                    transporting, insuring and loading thereof,
                                    as well as rubbish removal, and/or any
                                    allowances paid to the crew in lieu of
                                    actual food supplies. Bareboat Charterer's
                                    expenditures for subsistence shall be
                                    consistent with expenditures which are, or
                                    would reasonably be anticipated to be, made
                                    by operators of recognized standing engaged
                                    in the operation of United States flag
                                    vessels of size, type, trade, cargo and crew
                                    most similar to the Vessel.

                           (vi)     Lube Oil costs. The cost of all lubricating
                                    oils for and additives used in conjunction
                                    with the main engines and auxiliary diesels,
                                    reduction gear oil, hydraulic oil used for
                                    the steering gears and the hydraulic systems
                                    on both the tug and barge, and such other
                                    greases and lubricants as may be required
                                    for the operation of the Vessel and its
                                    equipment.




                                       10
<PAGE>   312

                           (vii)    Fuel costs. The cost of all fuels used in
                                    conjunction with the main engines, auxiliary
                                    engines, galley fuel and fuel provided for
                                    crew use on both the tug and barge, except
                                    to the extent such fuel costs are paid by
                                    Time Charterer pursuant to Section 6.6
                                    hereof.

                           (viii)   Other costs. The cost of "MARISAT" satellite
                                    communications for the Vessel, outside
                                    engineering consultant fees, outside legal
                                    fees (subject to the approval of Shipowner
                                    or Time Charterer, as the case may be, which
                                    approval shall not be unreasonably
                                    withheld), the cost of an annual audit of
                                    Bareboat Charterer's financial records by an
                                    independent certified public accounting
                                    firm, any fees paid to any government or
                                    regulatory agency, not otherwise included in
                                    Operating Costs, all costs in connection
                                    with salvage activities and all other costs
                                    and expenses incurred in direct connection
                                    with the operation of the Vessel (including
                                    any costs incurred in connection with
                                    compliance with the provisions of Section
                                    17.21 hereof and Exhibit I to this Time
                                    Charter) and in the performance of Bareboat
                                    Charterer's obligations under the Bareboat
                                    Charter.

                  (g)      Reduction of Operating Costs. Any amounts received by
Bareboat Charterer in reduction of Operating Costs, whether pursuant to the ODS
Contract or otherwise, shall reduce operating costs hereunder in the full amount
received by Bareboat Charterer.

                  (h)      Exclusions from Operating Costs.  Notwithstanding the
foregoing, Operating Costs shall NOT include the following:





                                       11
<PAGE>   313

                           (1) Any fines or penalties levied by any governmental
                           authority against Bareboat Charterer or any other
                           Person operating the Vessel on behalf of Bareboat
                           Charterer as a result of the negligence, gross
                           negligence, or willful misconduct of Bareboat
                           Charterer or any other Person operating the Vessel on
                           behalf of Bareboat Charterer;

                           (2) Any tax or withholding for taxes and any fines,
                           penalties or interest thereon which is levied on, or
                           measured by, the net income of Bareboat Charterer, or
                           any taxes in lieu thereof;

                           (3) Any of the direct management costs or direct
                           overhead costs of the Bareboat Charterer and any
                           other Person operating the Vessel;

                           (4) Direct management costs, direct overhead costs,
                           and any other administrative costs incurred in
                           connection with the operation of the Vessel which are
                           included in the Operating Fee; and

                           (5) Any claims paid by Bareboat Charterer under the
                           second sentence of Article 7(a) of the Bareboat
                           Charter or the second sentence of Section 12.1
                           hereof.

                  (i)      Reimbursement. Bareboat Charterer and Time Charterer
agree that in the event Time Charterer pays more than once for any item that is
properly considered an Operating Cost, Time Charterer shall be entitled to
reimbursement for such payment from Bareboat Charterer. Bareboat Charterer
further agrees that in no event shall it be entitled to recover more than once
any element of Operating Costs from Time Charterer.



                                       12
<PAGE>   314

                  4.3      PAYMENT.

                  (a)      Basic Hire, Supplemental Hire and Stipulated Loss
Value. Basic Hire, Supplemental Hire, and Stipulated Loss Value shall be paid by
Time Charterer at the same place and not later than the times and the dates on
which such Basic Hire, Supplemental Hire, and Stipulated Loss Value are payable
by Bareboat Charterer to Shipowner or other appropriate Person under the
Bareboat Charter. Payments of Basic Hire, Supplemental Hire, and Stipulated Loss
Value shall be paid by Time Charterer directly to Shipowner or any other person
Shipowner designates, in writing, to Bareboat Charterer and Time Charterer.

                  (b)      Operating Hire. Not later than the first day of each
month during each Calendar Year, Time Charterer shall pay Bareboat Charterer, as
preliminary Operating Hire for that month, an amount equal to one-twelfth of the
estimate of Operating Costs for that Calendar Year, as agreed pursuant to
Section 4.2(a) hereof (excluding any drydocking and insurance elements that Time
Charterer shall have agreed to pay upon invoice of Bareboat Charterer) less any
amounts actually received by Bareboat Charterer pursuant to the ODS Contract,
plus the Operating Fee for that month. Within ninety days after the end of such
Calendar Year: (1) the actual Operating Hire for such Calendar Year (including
modifications or adjustments to the Operating Fee as agreed by the parties to
the Management Agreement) shall be initially determined; (2) there shall be
credited to the actual Operating Hire: (i) all of Time Charterer's preliminary
payments of Operating Hire during the Calendar Year, if any, and amounts
actually received by Bareboat Charterer pursuant to the ODS Contract and (ii)
any other credits to which Time Charterer is entitled under this Time Charter;
(3) if there is a deficiency of such aggregate credits from the actual Operating
Hire,



                                       13
<PAGE>   315

such deficiency shall be promptly paid by Time Charterer; or (4) if there is an
excess of such aggregate credits over the actual Operating Hire, such excess
shall be promptly refunded (or credited, at Time Charterer's option, to future
Operating Hire) by Bareboat Charterer. Promptly following the annual audit of
Operating Costs pursuant to the terms of Section 4.2(c) hereof, a final
adjustment to the Operating Hire shall be determined based on such audit,
subject to further adjustment based on final resolution of amounts payable under
the ODS Contract.

                  (c)      Disputed Amounts. In the event that after an audit
has been conducted for a Calendar Year pursuant to Sections 4.2(c) and (d)
hereof, Bareboat Charterer and Time Charterer disagree over the amount of actual
Operating Hire due Bareboat Charterer for such Calendar Year, then Bareboat
Charterer may deliver to Time Charterer an Officer's Certificate setting forth
in reasonable detail the reasons why Bareboat Charterer believes it is entitled
to the amount in dispute. Upon receipt of such Officer's Certificate, Time
Charterer shall promptly pay such disputed amount to Bareboat Charterer, and may
thereafter proceed against Bareboat Charterer, under Section 17.9 hereof, to
obtain a refund of all or part of the disputed amount.

                  (d)      Indemnity for Loss of Use of Vessel. Amounts payable
by Time Charterer under Sections 4.1(a) and 4.1(b) hereof shall be payable
without interruption; provided, however, should the Vessel be in collision with
another vessel or craft or stranded or strike an object or be damaged by fire,
explosion or other causes for which a third party is legally liable, Bareboat
Charterer shall indemnify and hold harmless Time Charterer: (a) by reimbursing
Time Charterer for amounts payable under Sections 4.1(a) and 4.1(b) hereof and
paid from the time the casualty occurred until the Vessel is returned to a fully
efficient state and able to resume its service, from a position not less
favorable to Time Charterer than its former position where the casualty
occurred; and (b) from any losses of profits under any subcharter of




                                       14
<PAGE>   316

the Vessel or agreement for employment of the Vessel during the period the
Vessel is detained due to such casualty, in each case only to the extent such
third party is held liable and has made payment to Bareboat Charterer for
amounts payable by Time Charterer under Sections 4.1(a) and 4.1(b) hereof, and
the loss of profits under any subcharter or agreement for employment of the
Vessel (net of any collection costs incurred therefor by Bareboat Charterer).
Loss of employment of the Vessel shall include steaming at reduced speed,
deviations, and temporary and permanent repair periods.


                  SECTION 5.    THE VESSEL'S QUALITIES.

                  5.1      GENERAL.

                  Bareboat Charterer shall maintain the Vessel tight, staunch,
strong and sufficiently tackled, appareled, furnished, equipped and supplied and
in every respect seaworthy and in good operating condition for the service
contemplated by this Time Charter, with holds, cargo tanks, pipelines, and
valves clear, clean, and tight, and with pumps, heat exchangers, and all other
equipment in good working order. Time Charterer's acceptance of the Vessel under
Section 3.3 hereof shall confirm and be conclusive evidence as between Bareboat
Charterer and Time Charterer that the Vessel is in all respects satisfactory to
Time Charterer and in compliance with all requirements of the preceding sentence
and this Time Charter. Nothing in this Section 5.1 shall be construed as a
waiver of any right that either Bareboat Charterer or Time Charterer may have
against any person concerning the Vessel other than Time Charterer or Bareboat
Charterer, respectively, or as a waiver of any rights either Bareboat Charterer
or Time Charterer may have under any other agreement between Bareboat Charterer
and Time Charterer. Such particulars and capabilities of the Vessel, after
taking into account






                                       15
<PAGE>   317

the age and the condition of the Vessel at the commencement of this Time
Charter, shall be maintained by Bareboat Charterer throughout the continuance of
this Time Charter exercising due diligence and best marine standards and Time
Charterer shall always be entitled to the Vessel's full capabilities.

                  5.2      FRESH WATER.

                  The Vessel when delivered to Time Charterer shall be equipped
with a salt water evaporator which is capable of making sufficient water to
supply the Vessel's domestic needs, and which Bareboat Charterer shall maintain
in good operating condition after taking into account the age of the Vessel.

                  5.3      DOCUMENTATION.

                  Bareboat Charterer shall maintain the documentation of the
Vessel under the laws and flag of the United States in the name of the Shipowner
throughout the continuance of this Time Charter. Neither Bareboat Charterer nor
Time Charterer shall permit the Vessel to be documented or operated under any
foreign flag, or to permit anything which might prejudice the Vessel's
documentation as herein required.

                  5.4      IDENTIFICATION.

                  For the purposes of identification, Time Charterer shall have
the right, at its own expense, to have the Vessel painted in colors of its own
selection, to install and display its stack insignia, to fly its own "house
flag" and to utilize the colors, insignia or flag of any person directly or
indirectly controlling, or controlled by, or under direct or indirect common
control with Time Charterer and Time Charterer shall remove such insignia and
flag, at its expense, prior to redelivery.




                                       16
<PAGE>   318

                  SECTION 6.    OPERATIONAL PROVISIONS.

                  6.1      COMPLIANCE; TRADING LIMITS.

                  The Vessel shall, and Bareboat Charterer covenants that it
will, at Time Charterer's reasonable cost and expense, at all times comply with
the Bareboat Charter, all applicable laws, treaties and conventions, and all
applicable rules, regulations and orders issued thereunder, particularly, but
without limitation by this enumeration, the International Convention for Safety
of Life at Sea, 1960, as amended, and all applicable laws, rules, regulations
and orders administered by the United States Maritime Administration, Coast
Guard, Federal Maritime Commission, Customs Service, Environmental Protection
Agency, ABS and any other United States agency, or their respective successors,
having jurisdiction over matters concerning the use, operation and maintenance
of the Vessel and regulations of the International Maritime Organization and
Bareboat Charterer covenants that it will have on board, when required thereby,
valid certificates showing compliance therewith. Subject to the preceding
sentence and subject to the American Institute of Trade Warranties, Time
Charterer shall have the full use of the Vessel and may employ the Vessel as
required to perform this Time Charter in any part of the world and in such
lawful trades as Time Charterer may direct. However, upon reasonable advance
notice to Bareboat Charterer, Time Charterer may breach those Institute
Warranties where said breach is allowable upon approval of the marine
underwriters for the Vessel, provided that Time Charterer shall pay any
additional premiums assessed by the Vessel's insurers for breach of the
Institute's Warranties, provided further that the Vessel shall not be operated
in any area in which the insurance required by Article 8 of the Bareboat Charter
would not be in full force and effect. Bareboat Charterer covenants that it will
comply with applicable regulations so as to enable the Vessel to pass through
the Suez and



                                       17
<PAGE>   319

Panama Canals by day or night without delay so long as the applicable fees have
been paid in advance by Time Charterer.

                  6.2      USE.

                  The full use of the Vessel (but not more than it can
reasonably stow and safely carry) shall be at Time Charterer's disposal,
reserving proper and sufficient space for the Vessel's officers, crew, Master's
cabin, tackle, apparel, furniture, fuel, water, provisions and stores. Bareboat
Charterer shall provide proper and sufficient quarters on the Vessel for an
authorized representative of Time Charterer, upon reasonable advance notice from
Time Charterer that it wishes to have such an authorized representative on board
the Vessel.

                  6.3      TYPES OF CARGO.

                  Time Charterer shall have the option of shipping liquid bulk,
petroleum products or any other lawful cargo in bulk for which the Vessel and
its tanks are suitable, as well as any lawful merchandise, between decks or
other suitable space available, subject to the Master's approval as to kind,
character, amount and stowage, and to Time Charterer's payment of all charges
for dunnage, loading, stowing and discharging.

                  6.4      LOADING-DISCHARGING.

                  The Vessel shall be loaded, discharged or lightened as rapidly
as possible by night as well as by day, at any safe port, berth, dock, anchorage
or submarine line, or alongside lighters or lightening vessels (including ship
to ship transfers at anchor or underway, but Time Charterer shall supply all
necessary fenders and equipment together with mooring master and tug assistance,
if available, subject only to the Master's approval of suitable weather
conditions for such ship to ship transfer and subject to obtaining all required
insurance endorsements prior to any such transfers) as Time Charterer may
direct, provided the Vessel can reach, occupy and





                                       18
<PAGE>   320

leave the same, always safely afloat. Each loading and discharging shall be
accomplished expeditiously, and to that end the Vessel's crew shall work
overtime, not to exceed that permitted under applicable U.S. law, if and
whenever requested by Time Charterer.

                  6.5      GENERAL OBLIGATIONS OF BAREBOAT CHARTERER.

                  Bareboat Charterer shall provide and pay for all provisions,
deck and engine room stores, galley and cabin stores, all fresh water used by
the Vessel, wages and overtime of the Master, officers and crew, all
certificates and other requirements necessary to enable the Vessel to be
employed throughout the trading limits specified in Section 6.1 hereof, consular
fees pertaining to the Master, officers and crew, and all other expenses
connected with the operation, maintenance and navigation of the Vessel as such
expenses are defined in Section 4.2(f) hereof.

                  6.6      CERTAIN OBLIGATIONS OF TIME CHARTERER.

                  Time Charterer shall pay for all fuels required by the Vessel
(including galley fuel and fuel provided for crew use) and all fuels on board
when the Vessel is delivered to Time Charterer pursuant to Section 3.3 hereof
shall be the property of Time Charterer, but all fuels on board when the Vessel
is redelivered to Bareboat Charterer pursuant to Section 3.4 hereof shall be the
property of Bareboat Charterer. Time Charterer shall pay for all port charges,
light dues, dock dues, canal dues, consular fees (except those pertaining to
Master, officers and crew), pilotage and tugs necessary for assisting the Vessel
in, about and out of port for the purpose of carrying out this Time Charter,
Time Charterer's agencies and commissions incurred for Time Charterer's account,
crew expense incurred for connecting and disconnecting cargo hoses and arms, and
any transportation taxes. If Bareboat Charterer and Time Charterer agree,
Bareboat





                                       19
<PAGE>   321

Charterer may pay such charges, dues, fees and expenses and shall be reimbursed
by Time Charterer therefor.

                  6.7      PERSONNEL MATTERS.

                  (a)      General. Appointment of the Vessel's personnel shall
be wholly at Bareboat Charterer's discretion, subject only to compliance with
all requirements of law, including those relating to their citizenship. However,
if Time Charterer ever gives notice to Bareboat Charterer of dissatisfaction
with the conduct of the Master, any officer or crew member, Bareboat Charterer
and Time Charterer shall promptly jointly investigate the particulars of Time
Charterer's complaint and if the complaint proves to be well-founded, Bareboat
Charterer, without delay, shall promptly make changes in the appointments.

                  (b)      Protection Against Strikes; Other Labor Agreement
Provisions. From each labor organization representing any of the Vessel's crew,
Bareboat Charterer shall obtain a "no strike" agreement prohibiting strikes,
slowdowns, boycotts, picketing and any other form of interference with the
Vessel's service at the direction or with the acquiescence of such labor
organization.

                  (c)      Manning.  Bareboat Charterer shall man the Vessel and
attend to all matters involving the Vessel's personnel, including the following:

                           (i)      procuring and enlisting for the Vessel, as
                                    required by applicable law, competent,
                                    reliable and duly-licensed personnel and all
                                    replacements thereof as necessary from time
                                    to time (collectively "Crew Members");

                           (ii)     arranging for and procuring all
                                    transportation, board and lodging for the
                                    Crew Members as and when required;



                                       20
<PAGE>   322

                           (iii)    maintaining complete records of any labor
                                    agreements which may be entered into between
                                    Bareboat Charterer and Crew Members, in
                                    accordance with collective bargaining
                                    agreements at any time in effect between
                                    employee organizations and unions, and
                                    reporting promptly to Time Charterer, as
                                    soon as notice or knowledge thereof is
                                    received by Bareboat Charterer, any actual
                                    or proposed material changes in any of such
                                    agreements or other regulations relating to
                                    Crew Members;

                           (iv)     settlement of all wages with Crew Members
                                    during the course and upon termination of
                                    their employment, and handling and settling
                                    of all claims of Crew Members, including
                                    those arising out of accidents, sickness or
                                    death, loss of personal effects, or disputes
                                    under articles or contracts of enlistment,
                                    pension plans, insurance policies or fines,
                                    provided, however, that Bareboat Charterer
                                    shall proceed diligently and cooperate fully
                                    with Time Charterer in handling and settling
                                    those claims which are covered by insurance
                                    placed by Time Charterer or Shipowner or
                                    which are self-insured by Time Charterer or
                                    Shipowner;

                           (v)      maintaining all administrative and financial
                                    records relative to Crew Members as required
                                    by law, labor agreements or Time Charterer;
                                    and making such reports thereof at such
                                    times and in such forms as Time Charterer
                                    may reasonably request; and





                                       21
<PAGE>   323

                           (vi)     performing other services in connection with
                                    the manning of the Vessel as Time Charterer
                                    may reasonably request.

                  6.8      CERTAIN DUTIES OF MASTER.

                  The Master, though appointed and employed by Bareboat
Charterer and subject to Bareboat Charterer's direction and control, shall
observe Time Charterer's orders in connection with Time Charterer's agencies,
arrangements and employment of the Vessel hereunder. The Master shall: (a)
prosecute each voyage with utmost dispatch (subject to any orders by Time
Charterer for slow-steaming); (b) render all reasonable assistance with the
Vessel's crew and equipment; (c) keep a full and correct log of each voyage in
the English language, which shall always be open to inspection by Time Charterer
and its agents, and abstracts of which shall be furnished to Time Charterer at
the end of each voyage; and (d) make regular weekly reports by telegraph or
cable to Bareboat Charterer, and Bareboat Charterer hereby agrees to furnish a
copy of such weekly reports to Time Charterer by electronic means, containing
statistics on the Vessel's performance (including mileage steamed loaded and in
ballast, speed and fuel consumption), accounting for time spent, and such other
information as Bareboat Charterer or Time Charterer may request.

                  6.9      ADDITIONAL EQUIPMENT.

                  Time Charterer shall be at liberty to fit any additional pumps
or gear for loading or discharging cargo, or other equipment which is readily
removable without causing material damage to the Vessel, that Time Charterer may
require beyond that which is on board at the beginning of this Time Charter, and
to make the necessary connections with cargo, steam or water pipes. If not
required to be installed in order to meet the requirements of Section 5.1 or 6.1
hereof and not installed as replacement for property on board the Vessel at the
time of




                                       22
<PAGE>   324

delivery thereof, pumps, gear and equipment so installed shall remain the
property of Time Charterer, and so long as no Event of Time Default shall have
occurred and be continuing, Time Charterer may instruct Bareboat Charterer to
remove, or Time Charterer may remove, any such pumps, gear or equipment, at Time
Charterer's expense at any time during or at the expiration of this Time
Charter, subject only to Time Charterer's leaving the Vessel in the condition it
would have been in if such pumps, gear or other equipment, had not been
installed, ordinary wear and tear excepted.

                  6.10     TUGS AND PILOTS.

                  Time Charterer is authorized by Bareboat Charterer to engage
pilotage and tug assistance on behalf of Bareboat Charterer on the usual terms
and conditions for such services then prevailing at the ports or places where
such services are engaged, including provisions then prevailing (if any) making
pilots, tug captains or tugs or pilots the borrowed servants of Bareboat
Charterer. However, Time Charterer shall have the option of using its own tugs
or pilots or tugs or pilots made available or employed by any of its Affiliates
or otherwise related companies, to render towage or pilotage services to the
Vessel. In this event, the terms and conditions of such services as are rendered
and applied by independent tugboat owners or pilots shall be applicable; and
Time Charterer or its Affiliates or otherwise related companies and their pilots
shall be entitled to all exemptions from and limitations of liability,
applicable to such independent tugboat owners or pilots and their published
tariff terms and conditions.

                  6.11     CLAIMS.

                  Unless otherwise requested by Time Charterer, Bareboat
Charterer shall handle and diligently prosecute all claims arising in connection
with the Vessel's operation, whether by or against the Vessel or Shipowner,
including the following:




                                       23
<PAGE>   325

                 (a)       investigating, prosecuting or defending, employing
counsel, and effecting settlements of such claims, including those involving any
of the insurances with respect to the Vessel, and those that do or might give
rise to maritime liens or other encumbrances on the Vessel;

                  (b)      in cases of general or particular average, assisting
in preparing the average account, done by the general average adjuster, and, in
all ways reasonably possible, protecting the interests of the Vessel and
Shipowner; and

                  (c)      in cases of particular average, settlement of claims
in conjunction with the Vessel's hull and machinery insurance, and making
disbursements accordingly.

                  SECTION 7.    BILLS OF LADING.

                  Bills of lading shall be signed at any rate of freight Time
Charterer or its agents may direct, without prejudice to this Time Charter, the
Master attending daily, if required, at the offices of Time Charterer or its
agents. Time Charterer hereby agrees to indemnify Bareboat Charterer from all
consequences or liabilities that may arise from the Master, Time Charterer or
its agents signing bills of lading or other documents signed at the request of
Time Charterer or its agents, or any irregularity in papers supplied by Time
Charterer or its agents, or from complying with the orders of Time Charterer or
its agents.


                  SECTION 8.    POLLUTION.

                  Bareboat Charterer shall comply, and shall use due diligence
to obtain the compliance of Shipowner with (a) all applicable governmental laws,
regulations, rules and orders (including any international conventions to which
the United States is a party) pertaining to prevention or cleanup of pollution
by escapes or discharges from the Vessel of liquid cargoes




                                       24
<PAGE>   326

in its custody, including maintenance of any required evidence of financial
responsibility, or Releases of Hazardous Substances and (b) the Pollution
Provisions set forth in Exhibit I to this Time Charter.


                  SECTION 9.    INSURANCE.

                  9.1      REQUIREMENTS.

                  Bareboat Charterer shall provide and maintain insurance on or
with respect to the Vessel and the operation thereof during the Charter Period
as may be required by Article 8 of the Bareboat Charter.

                  9.2      OPTION.

                  Time Charterer at its option and subject to any approvals
under the ODS Contract may procure and maintain on or with respect to the Vessel
and the operation thereof, such insurance as is required to be procured and
maintained by Bareboat Charterer pursuant to Section 9.1. Subject to provisions
of the Bareboat Charter, Time Charterer, in the first instance and thereafter,
Bareboat Charterer, may procure and maintain insurance, at the expense of Time
Charterer or Bareboat Charterer as the case may be, on the Vessel in excess of
such insurance as is required to be procured and maintained by Bareboat
Charterer unless such excess insurance would conflict with or otherwise limit
the insurance required to be procured and maintained by Bareboat Charterer. Time
Charterer agrees, upon the placing of the insurance required by Section 9.1
hereof, promptly to furnish Shipowner and Bareboat Charterer with copies of the
policies, cover notes or other evidence of such insurance.




                                       25
<PAGE>   327

                  9.3      LOSSES.

                  Bareboat Charterer and Time Charterer shall cooperate to make
all proofs of loss and take all other steps necessary to effect prompt
collections from the insurers for any loss under any insurances on or with
respect to the Vessel or the operation thereof. At Bareboat Charterer's written
request (and only at such request) Time Charterer shall join Shipowner and
Bareboat Charterer in a declaration of or agreement on a compromised,
constructive or agreed total loss of the Vessel or tendering abandonment of the
Vessel to the insurers.


                  SECTION 10.   DRYDOCKING, LAY-UP.

                  10.1     DRYDOCKING.

                  When required by applicable regulations of the United States
Coast Guard or by ABS, Bareboat Charterer shall drydock the Vessel, clean and
paint its bottom and make all overhaul and necessary repairs. At least 30 days,
if practicable, before each drydocking commences, Bareboat Charterer shall
submit to Time Charterer anticipated drydocking work lists and bids thereon for
its review and approval, and Time Charterer shall select the facility where the
drydocking shall be performed and may attend the drydocking to whatever extent
it deems necessary. After each drydocking, Bareboat Charterer shall submit to
and review with Time Charterer the detailed list and account of all drydocking
work done by the shipyard.

                  10.2     LAY-UP.

                  Time Charterer shall have the option of laying up the Vessel
from time to time and for any periods of time during the continuance of this
Time Charter. If Time Charterer, having exercised this option, desires the
Vessel to be returned to service, Bareboat Charterer




                                       26
<PAGE>   328

shall, upon receipt of notice thereof from Time Charterer, immediately take
steps to restore the Vessel to service as promptly as possible.

                  10.3     EFFECT ON COSTS.

                  During each period of drydocking or lay-up, Bareboat Charterer
shall use its best efforts to effect maximum savings of Operating Costs during
each such period, but always in a manner consistent with its other obligations
under this Time Charter.


                  SECTION 11.   IMPROVEMENTS.

                  Subject to the terms of Article 6 of the Bareboat Charter, in
order to maintain or enhance the utility of the Vessel for this Time Charter, at
Time Charterer's request from time to time, but wholly at Time Charterer's risk
and expense, Bareboat Charterer shall modernize or improve the Vessel by making
changes in any of its equipment which are not readily removable without causing
material damage to the Vessel; provided, however, that such changes do not (a)
diminish the seaworthiness, utility or market value of the Vessel, (b) adversely
affect its United States Coast Guard certification or its ABS classification and
rating required to be maintained by the Bareboat Charter, (c) conflict with or
result in a violation of any provision of the Bareboat Charter, or (d) require
the Vessel to be redocumented. Bareboat Charterer shall procure all permits and
licenses required for any such changes, and shall exercise due diligence so that
all such changes shall be expeditiously completed in good and workmanlike manner
and in compliance with all applicable legal and classification requirements, and
all equipment and material so installed shall, without necessity of further act,
become part of the Vessel and the property of Shipowner. Payment by Time
Charterer to Bareboat Charterer for improvements made pursuant to this Section
11, including the cost of necessary permits and licenses, shall be




                                       27
<PAGE>   329

made as agreed upon by Time Charterer and Bareboat Charterer, but always in a
manner so as to permit the progress of the work to continue and to minimize the
need for payments in advance by Time Charterer, and Bareboat Charterer shall be
under no obligation to make or to commence to make such improvements until a
method of payment has been agreed.


                  SECTION 12.   LIENS AND ATTACHMENTS.

                  12.1     DISCHARGE.

                  If the Vessel is ever libeled or otherwise attached, levied
upon or taken into custody, or detained or sequestered, by virtue of any
proceeding in any court or tribunal, or by any governmental or other authority,
in any country or nation of the world, on account of any mortgage, pledge, lien,
encumbrance or claim on or with respect to the Vessel or its profits, Bareboat
Charterer shall immediately give notice thereof to Shipowner and Time Charterer
by electronic means, confirmed by letter, and, subject to the next sentence of
this Section 12.1, Time Charterer shall, at its sole cost and expense, promptly
take or cause to be taken such action as may be necessary to cause the Vessel to
be released, and such liens or claims to be discharged, within a reasonable time
not exceeding 30 days. However, if any mortgage, pledge, lien, encumbrance or
claim arises, or in the event that the Vessel shall be libeled or otherwise
attached, levied upon or taken into custody, or detained or sequestered by
virtue of any proceeding in any court or tribunal or by any governmental or
other authority on account of any liens or claims against Bareboat Charterer,
any person or entity related to Bareboat Charterer or any other Person operating
the Vessel on behalf of the Bareboat Charterer, which such liens or claims are
unrelated to Bareboat Charterer's chartering of the Vessel or, if related,
result from the Bareboat Charterer's failure properly to apply funds timely paid
by the Time Charterer as



                                       28
<PAGE>   330

Operating Costs, Bareboat Charterer agrees that it shall promptly, at its own
cost and expense, remove or cause to be removed such mortgage, pledge, lien,
encumbrance or claim or cause the Vessel to be released and cause all liens and
claims on the Vessel in connection with such libel or other action to be
discharged (whether by furnishing a surety bond or otherwise), within a
reasonable time not exceeding 30 days. In the event that Bareboat Charterer
fails, at its own cost and expense, promptly to remove or cause to be removed
such mortgage, pledge, lien, encumbrance or claim, Time Charterer may remove
such mortgage, pledge, lien, encumbrance or claim or cause the Vessel to be
released and cause all liens and claims on the Vessel in connection with such
libel or other action to be discharged and Bareboat Charterer agrees that it
shall promptly reimburse Time Charterer for its costs and expenses incurred in
removing such mortgage, pledge, lien, encumbrance or claim within a reasonable
time not exceeding 30 days after Bareboat Charterer receives notice from Time
Charterer as to the amount of such costs and expenses.

                  12.2     FURTHER ENCUMBRANCES.

                  After the execution of this Time Charter, no mortgage, lien,
charge or other encumbrance shall be placed on the Vessel or its profits by
Bareboat Charterer without the prior written consent of the Secretary,
Occidental, and Time Charterer.

                  12.3     POWER TO IMPOSE.

                  Neither Bareboat Charterer, Time Charterer nor the Master of
the Vessel, nor any other person has or shall have any right, power or
authority, without the prior written consent of Shipowner, the Secretary, and
Occidental, to create, incur or permit to be placed or imposed upon the Vessel
any mortgage, lien, charge or other encumbrance whatsoever except:


                                       29
<PAGE>   331


                  (1)      liens for taxes, for crew's and master's wages, for
salvage (including contract salvage) and general average which are:

                           (i)      not yet due and payable, or

                           (ii)     unclaimed, or

                           (iii)    being contested by appropriate proceedings
                                    diligently conducted so long as such
                                    proceedings do not involve a significant
                                    risk of a sale, forfeiture or loss of the
                                    Vessel; and

                  (2)      contract and tort liens arising out of or incident to
current operations of, or repairs to, the Vessel which are subordinate to the
liens of the Mortgage and the Second Mortgage and which are:

                           (i)      based on claims not yet due and payable, or

                           (ii)     being contested by appropriate proceedings
                                    diligently conducted so long as such
                                    proceedings do not involve a significant
                                    risk of a sale, forfeiture or loss of the
                                    Vessel; or

                  (3)      any rights of the United States arising by operation
of law or under the Title V Contract by virtue of the payment of
construction-differential subsidy by the United States pursuant to Title V of
the Act.


                  SECTION 13.       EXCEPTIONS.

                  The Vessel, its Master, Shipowner, Bareboat Charterer, and
Time Charterer shall not, unless otherwise expressly provided in this Time
Charter, be responsible for any loss or damage arising or resulting from: any
act, neglect, default or barratry of the Master, pilots, mariners or other
servants of Bareboat Charterer in the navigation, management or operation of

                                       30
<PAGE>   332

the Vessel; fire, unless caused by the actual fault or privity of Bareboat
Charterer; collision or stranding; dangers and accidents of the sea; explosion,
bursting of boilers, breakage of shafts, or any latent defect in hull, equipment
or machinery. The Vessel, its Master, Shipowner, and Bareboat Charterer shall
not, unless otherwise expressly provided in this Time Charter, be responsible
for any loss or damage or delay or failure in performing hereunder arising or
resulting from: Act of God; act of war; seizure under legal process provided
bond is promptly furnished to release the Vessel or cargo; strike or lockout or
stoppage or restraint of labor from whatever cause, either partial or general;
or riot or civil commotion; and arrest or restraint of princes, rulers or
people. The Vessel shall have liberty to sail with or without pilots, to tow or
to be towed, to go to the assistance of vessels in distress and to deviate for
the purpose of saving life or property or of landing any ill or injured person
on board. This Section 13 is not to be construed as in any way affecting the
provisions for payment of hire as provided in Section 4 hereof.


                  SECTION 14.   EVENTS AND CONSEQUENCES OF TERMINATION OF TIME
                                CHARTER OR REPLACEMENT OF BAREBOAT CHARTERER.


                  14.1     EVENTS OF TERMINATION.

                  This Time Charter shall terminate simultaneously upon a
termination of the Bareboat Charter as set forth in Article 10 and 12 thereof
(relating to an Event of Loss (including requisition of title to the Vessel),
and Requisition of Use) or upon the election of Time Charterer, with the consent
of Bareboat Charterer, for reasons of a Bareboat Charterer Default under Section
16 hereof.


                                       31
<PAGE>   333


                  14.2     REPLACEMENT OF BAREBOAT CHARTERER.

                  Notwithstanding anything to the contrary in this Time Charter,
Time Charterer, with the consent of Shipowner, shall have the right at any time
and from time to time, to elect to cause the Bareboat Charterer to be replaced
by a successor bareboat charterer under this Time Charter. The exercise of such
election shall be by written notice from Time Charterer approved by Shipowner,
the Secretary, and Occidental to Bareboat Charterer.

                  14.3     PAYMENTS UPON TERMINATION OF TIME CHARTER.

                  In the event that this Time Charter shall be terminated for
any of the reasons set forth in Sections 14.1 or 14.2 hereof, Time Charterer
shall pay to Bareboat Charterer all reasonable Operating Costs incurred by
Bareboat Charterer in the termination and cessation of its management and
operation of the Vessel.


                  SECTION 15.       EVENTS OF TIME DEFAULT AND REMEDIES.

                  15.1     EVENTS OF TIME DEFAULT.

                  Each of the following shall be an Event of Time Default:

                  (a)      Time Charterer on an aliquot basis, shall fail to pay
any Basic Hire, Supplemental Hire or Operating Hire under this Time Charter and
not remedy such failure within 10 days after receipt of notice thereof from
Bareboat Charterer; or

                  (b)      Time Charterer shall fail, for more than 30 days
after receipt of written notice specifying such failure and demanding that the
same be cured, to perform or comply with any of the provisions of this Time
Charter; provided, however, that if Time Charterer shall have undertaken to cure
such failure and, notwithstanding the reasonable diligence of Time Charterer in
attempting to cure such failure, such failure is not cured within said 30 day
period

                                       32
<PAGE>   334

but is curable with future due diligence, there shall be no Event of Time
Default under this Section 15.1(b) as long as Time Charterer is proceeding with
due diligence to cure such failure; or

                  (c)      Time Charterer shall consent to the appointment of a
receiver, trustee or liquidator of itself or of substantially all of its
property, or Time Charterer shall admit in writing its inability to pay its
debts generally as they come due, or shall make a general assignment for the
benefit of creditors; or

                  (d)      Time Charterer shall file a voluntary petition in
bankruptcy or for a reorganization or for an arrangement in a proceeding under
any of the federal bankruptcy laws or other federal or state insolvency laws as
are now or hereafter in effect or an answer admitting the material allegations
of a petition filed against Time Charterer in any such proceeding; or

                  (e)      an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of Time Charterer, a receiver, trustee or liquidator of Time Charterer
or of substantially all of its property, and any such order, judgment or decree
of appointment shall remain in force undismissed, unstayed or unvacated for a
period of 90 days after the date of entry thereof, or

                  (f)      a petition against Time Charterer in a proceeding
under the federal bankruptcy laws or other federal or state insolvency laws as
now or hereafter in effect shall be filed and shall not be withdrawn or
dismissed within 90 days thereafter, or if, under the provisions of any law
providing for reorganization or winding-up of corporations which may apply to
Time Charterer, any court of competent jurisdiction shall assume jurisdiction,
custody or control of Time Charterer or of substantially all of the property of
Time Charterer and such

                                       33
<PAGE>   335

jurisdiction, custody or control shall remain in force unrelinquished, unstayed
or unterminated for a period of 90 days.

                  15.2     REMEDIES UPON AN EVENT OF TIME DEFAULT.

                  In the event of an Event of Time Default, this Time Charter
shall terminate and Bareboat Charterer shall be entitled to full and immediate
payment of the amounts set forth in Section 14.3 hereof, plus any reasonable
costs of collection of such amounts.


                  SECTION 16. EVENTS OF BAREBOAT CHARTERER DEFAULT AND REMEDIES.


                  16.1     EVENTS OF BAREBOAT CHARTERER DEFAULT.

                  Each of the following shall be an Event of Bareboat Charterer
Default:

                  (a)      Bareboat Charterer's default in performance of any
material obligation under the Bareboat Charter, this Time Charter, or the ODS
Contract, or the incorrectness, when made, in any material respect, of any
representation made by Bareboat Charterer in the Bareboat Charter, or in this
Time Charter or Bareboat Charterer's failure to remedy the default or
incorrectness by the earlier of: (x) any termination of the Bareboat Charter
resulting from such default or incorrectness; or (y) within 30 days after
receipt of notice thereof from Shipowner or Time Charterer, as the case may be,
provided, however, that no such default or incorrectness shall be deemed to be
an Event of Bareboat Charterer Default if Bareboat Charterer commences
appropriate remedial action within 30 days after receipt of such notice and
prosecutes diligently the same to completion; or

                  (b)      Bareboat Charterer shall consent to the appointment
of a receiver, trustee or liquidator of itself or of substantially all of its
property, or Bareboat Charterer shall admit in

                                       34
<PAGE>   336

writing its inability to pay its debts generally as they come due, or shall make
a general assignment for the benefit of creditors;

                  (c)      Bareboat Charterer shall file a voluntary petition in
bankruptcy or for a reorganization or for an arrangement in a proceeding under
any of the federal bankruptcy laws or other federal or state insolvency laws as
are now or hereafter in effect or an answer admitting the material allegations
of a petition filed against Bareboat Charterer in any such proceeding; or

                  (d)      an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of Bareboat Charterer, a receiver, trustee or liquidator of Bareboat
Charterer or of substantially all of its property, and any such order, judgment
or decree of appointment shall remain in force undismissed, unstayed or
unvacated for a period of 90 days after the date of entry thereof, or

                  (e)      a petition against Bareboat Charterer in a proceeding
under the federal bankruptcy laws or other federal or state insolvency laws as
are now or hereafter in effect shall be filed and shall not be withdrawn or
dismissed within 90 days thereafter, or if, under the provisions of any law
providing for reorganization or winding-up of corporations which may apply to
Bareboat Charterer, any court of competent jurisdiction shall assume
jurisdiction, custody or control of Bareboat Charterer or of substantially all
of the property of any of them and such jurisdiction, custody or control shall
remain in force unrelinquished, unstayed or unterminated for a period of 90
days; or

                  (f)      the sale or transfer by Bareboat Charterer of all or
substantially all of its assets or the transfer of ownership of Bareboat
Charterer to any other corporation or person, or the consolidation or merger of
Bareboat Charterer or the Manager into any other corporation or person, except
for sales, transfers, consolidations or mergers either directly or indirectly
with

                                       35
<PAGE>   337

Affiliates, unless such sale, transfer, consolidation or merger would, in the
reasonable judgement of Time Charterer, adversely affect the Bareboat
Charterer's obligations under the Bareboat Charter, hereunder or under the ODS
Contract or the Manager's performance under the Management Agreement; or

                  (g)      any amendment of Bareboat Charterer's articles of
incorporation or by-laws, if any such amendment would have a material effect on
Bareboat Charterer's obligations under the Bareboat Charter, hereunder or under
the ODS Contract or the Manager's performance under the Management Agreement; or

                  (h)      (1) Bareboat Charterer's receipt of notice from Time
Charterer alleging in detail that Bareboat Charterer's or the Manager's
management or operating performance (including general administration) is below
commercially acceptable standards, and (2) Bareboat Charterer's and the
Manager's failure to remedy such alleged substandard performance, to Time
Charterer's reasonable satisfaction, within 90 days after receipt of Time
Charterer's notice; or

                  (i)      Bareboat Charterer's failure to remain, or the
occurrence of any event which will cause Bareboat Charterer to no longer remain
a Citizen of the United States or a United States person within the meaning of
Section 7701 of the Code; or

                  (j)      the failure of Bareboat Charterer to maintain, or to
cause to be maintained, insurance in the amounts and forms as and when required
to be maintained by Bareboat Charterer under Article 8 of the Bareboat Charter;

                  (k)      an event of default by Bareboat Charterer shall have
occurred and be continuing under the ODS Contract.


                                       36
<PAGE>   338


                  (l)      any Event of Bareboat Charterer Default under the
other time charter between an Affiliate of Bareboat Charterer and Time Charterer
with respect to the Other Vessel; or

                  (m)      any material change in the financial condition or
management structure of Bareboat Charterer when such material change would, in
the reasonable judgement of Time Charterer, adversely affect the Bareboat
Charterer's obligations hereunder.

                  16.2     REMEDIES UPON AN EVENT OF BAREBOAT CHARTERER DEFAULT.

                  Upon the occurrence of an Event of Bareboat Charterer Default
under Section 16.1 hereof, Time Charterer may, at its option, cause such default
to be cured at its own cost, without prejudice, however, to any other rights or
remedies Time Charterer may have.


                  SECTION 17.       GENERAL.

                  17.1     ICE.

                  Time Charterer shall not send the Vessel to ice-bound waters
without Bareboat Charterer's consent, but such consent shall not be unreasonably
withheld.

                  17.2     SAFE BERTH.

                  The cargo or cargoes shall be laden or discharged by day and
by night in any dock or at any wharf or place or alongside lighters or ocean
going vessels that Time Charterer or its agents may direct where the Vessel can
proceed thereto, lie at, and depart therefrom, always safely afloat. Any
lighterage shall be at the risk and expense of Time Charterer.

                  17.3     LIMITATIONS.

                  Bareboat Charterer shall have the benefit of all limitations
of, and exemptions from, liability accorded to the owner or disponent or
chartered owner of vessels whether

                                       37
<PAGE>   339

construed to be a private carrier, contract carrier or common carrier, by any
statute or rule of law for the time being in force. Nothing in this Time Charter
shall operate to limit or deprive Bareboat Charterer of any statutory exemption
from or limitation of liability on the theory of personal contract or otherwise.

                  17.4     GOVERNMENT DIRECTION AND BLOCKADE.

                  (a)      The Vessel shall have liberty to comply with any
directions or recommendations as to departure, arrival, routes, ports of call,
stoppages, destinations, zones, waters, delivery or in any other ways whatsoever
(including any direction or recommendations not to go to the port of destination
or to delay proceeding thereto or to proceed to some other port) given by the
government of the United States or any other governmental or local authority
including any de facto government or local authority or by any belligerent or by
any State or organized body engaged in civil war, hostilities or warlike
operations or by any person or body acting or purporting to act as or with the
authority of any such government, authority, State or organized body or by any
committee or person having under the terms of the war risk insurance on the
Vessel the right to give any such directions or recommendations. If by reason of
or in compliance with any such direction or recommendation, anything is done or
is not done such shall not be deemed a deviation or a violation of this Time
Charter.

                  (b)      (1) If any port of loading or of discharge to which
the Vessel may properly be ordered pursuant to the terms of this Time Charter or
the bills of lading be blockaded, or

                           (2)      If owing to any war, hostilities, warlike
operations, civil war, civil commotions, revolutions, or the operation of
international law (i) entry to any such port of loading or of discharge or the
loading or discharge of cargo at any such port shall be considered

                                       38
<PAGE>   340

by the Master or Bareboat Charterer in his or its discretion dangerous or
prohibited or (ii) it shall be considered by the Master or Bareboat Charterer in
his or its discretion dangerous or impossible for the Vessel to reach any such
port of loading or of discharge, Time Charterer shall have the right to order
the cargo or such part of it as may be affected to be loaded or discharged at
any other port of loading or of discharge within the range of loading or
discharge ports respectively established under the provisions of this Time
Charter (provided such other port is not blockaded or that entry thereto or
loading or discharge of cargo thereat is not in the Master's or Bareboat
Charterer's discretion dangerous or prohibited). In the event of the cargo being
loaded or discharged at any such other port within the respective range of
loading or discharge ports established under the provisions of this Time
Charter, this Time Charter shall be read in respect of freight and all other
conditions whatsoever as if the voyage performed were that originally
designated. However, if the Vessel discharges the cargo at a port outside the
range of discharge ports established under the provisions of this Time Charter,
freight shall be paid as for the voyage originally designated and all extra
expenses involved in reaching the actual port of discharge and/or discharging
the cargo thereat shall be paid by Time Charterer or cargo owners. In this
latter event, Bareboat Charterer shall have a lien on the cargo for all such
extra expenses.

                  17.5     NO FRUSTRATION.

                  Notwithstanding anything in this Time Charter to the contrary,
no circumstances shall be deemed sufficient (a) to frustrate this Time Charter,
or (b), except as provided in Sections 14 and 16 hereof, to terminate this Time
Charter, or (c) except as specifically provided herein, to reduce the amount of
hire payable hereunder during the Charter Period.


                                       39
<PAGE>   341


                  17.6     SALVAGE MONEY.

                  All salvage money earned by the Vessel shall be paid to Time
Charterer after deducting Master's, Officer's and crew's share, legal expenses,
repairs of damage (if any), and any other extraordinary loss or expense
sustained as a result of the service, which shall always be a first charge on
such money.

                  17.7     NO DEMISE.

                  This Time Charter does not, and nothing herein shall be
construed to, effect a demise of the Vessel to Time Charterer or vest Time
Charterer with possession of the Vessel or any power over the physical
condition, ownership or navigation thereof.

                  17.8     TRANSFER AND SUBCHARTERS.

                  (1)      By Bareboat Charterer. Except for the assignment to a
successor bareboat charterer under Sections 14.2 and 16.2 hereof, Bareboat
Charterer shall never voluntarily transfer, or permit any transfer of, or create
a security interest in, or permit the creation of a security interest in the
Bareboat Charter, this Time Charter, or any of its rights or obligations under
either of them, without the prior written consent of Time Charterer.

                  (2)      By Time Charterer. Time Charterer has the right to
transfer this Time Charter to any Affiliate or to employ the Vessel under
subcharter, contract of affreightment or any other agreement or arrangement
relating to the use or employment of the Vessel, to any person, without Bareboat
Charterer's consent, but subject to prior receipt of all necessary governmental
approvals, and to Time Charterer's continuing responsibility for full
performance of all of its obligations under this Time Charter.

                  (3)      Succession.  Subject to the foregoing, this Time
Charter shall bind and benefit the successors and assigns of the parties hereto.


                                       40
<PAGE>   342


                  17.9     GOVERNING LAW.

                  ALL QUESTIONS ARISING UNDER THIS TIME CHARTER SHALL IN ALL
RESPECTS BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE GENERAL
MARITIME LAWS OF THE UNITED STATES OF AMERICA AND, TO THE EXTENT SUCH LAWS DO
NOT APPLY, THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK. ANY CLAIM OR DISPUTE ARISING
UNDER THIS TIME CHARTER SHALL, PROVIDED THAT THE COURT HAS SUBJECT MATTER
JURISDICTION OVER SUCH CLAIM OR DISPUTE, BE DECIDED IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, TO WHICH JURISDICTION THE
BAREBOAT CHARTERER AND TIME CHARTERER HEREBY SUBMIT FOR THE PURPOSES OF ANY SUCH
PROCEEDING. IN THE EVENT THAT THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK LACKS SUBJECT MATTER JURISDICTION OVER ANY CLAIM OR DISPUTE
ARISING UNDER THIS TIME CHARTER, BAREBOAT CHARTERER AND TIME CHARTERER HEREBY
SUBMIT THEMSELVES TO THE JURISDICTION OF THE SUPREME COURT FOR THE COUNTY OF NEW
YORK FOR THE PURPOSES OF ANY SUCH PROCEEDING AND WAIVE ANY CLAIM OF FORUM NON
CONVENIENS RELATING TO SUCH CHOICE OF COURT.

                  17.10    NOTICE.

                  All notices and other communications hereunder shall be
effective when received, except that all notices and other communications sent
by prepaid United States certified mail, return receipt requested, shall become
effective on the third Business Day after

                                       41
<PAGE>   343

mailing, addressed (i) if to Bareboat Charterer, c/o Marine Transport
Corporation, 1200 Harbor Boulevard, Weehawken, New Jersey 07087, Attention:
General Counsel, or (ii) if to Time Charterer, Stolt Marine Tankers LLC, c/o
Marine Transport Corporation, 1200 Harbor Boulevard, Weehawken, New Jersey
07087, Attention: General Counsel, or (iii) if to Occidental, 10889 Wilshire
Boulevard, Los Angeles, California 90021, Attention: Vice President & Secretary,
or (iv) to any of the foregoing, at such other address as any such person may
from time to time designate in writing to such other persons.

                  17.11    CHANGES.

                  No agreement amending, supplementing or partially or wholly
terminating this Time Charter, or Schedule X hereto, or waiving or discharging
any provisions hereof, shall be effective unless such agreement is executed in
writing by the party against whom enforcement of such agreement is sought. No
consent of the Secretary shall be required for any agreement amending,
supplementing, or partially or wholly terminating this Time Charter or Schedule
X hereto so long as payment of the principal and interest on the Obligations and
the Guarantee Fee has been made as required.

                  17.12    RECORDS.

                  Bareboat Charterer and any other person operating the Vessel
as provided in Section 4.2(e), shall maintain complete and accurate books,
accounts and other records relating to Bareboat Charterer's performance of this
Time Charter, in accordance with generally accepted accounting practices and
principles and as satisfactory to the Board, and all such records may, upon
prior notice, be examined and audited by authorized representatives of Time
Charterer at any time during the usual business hours of Bareboat Charterer and
Manager. The books, accounts and other records required to be maintained by this
Section 17.12 shall be kept

                                       42
<PAGE>   344

separate and apart from the books, accounts and records relating to any other
business of Bareboat Charterer and any other person operating the Vessel
pursuant to Section 4.2(e).

                  17.13    OPERATIONAL REVIEW.

                  Time Charterer may, upon prior notice, review with Bareboat
Charterer and Manager, at any time during Bareboat Charterer's usual business
hours, any aspects of the Vessel's operation, including, without limitation,
operating costs, operational procedures and practices, the Vessel's voyage and
port performance, and maintenance and repair.

                  17.14    PROCEDURES.

                  Bareboat Charterer and Time Charterer shall jointly develop an
Operating Manual which shall include written operating procedures. Said
procedures shall describe those areas of administration and operation not
specifically detailed herein and which are related to Bareboat Charterer's
management of the Vessel and to the conduct of business between Bareboat
Charterer and Time Charterer.

                  17.15    BAREBOAT CHARTERER'S CONTRACTS.

                  Time Charterer and the Vessel shall have the advantages of any
existing or future contracts of Bareboat Charterer, its Affiliates or its Parent
Corporation for purchases of stores, supplies, equipment or other materials, or
of repairs or other services.

                  17.16    HEADINGS.

                  The table of contents preceding this Time Charter and the
headings to the various sections hereof have been inserted for convenient
reference only and shall not in any way limit or otherwise affect any of the
terms or provisions hereof.


                                       43
<PAGE>   345


                  17.17    COUNTERPARTS.

                  This Time Charter may be executed in several counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument.

                  17.18    SEPARABILITY.

                  If any term or provision of this Time Charter or application
thereof to any person or circumstances shall to any extent be invalid or
unenforceable, the remainder of this Time Charter, or the application of such
term or provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected and each term and provision of
this Time Charter shall be valid and shall be enforceable to the extent
permitted by law.

                  17.19    U.S. GOVERNMENT AIDS.

                  Bareboat Charterer and Time Charterer mutually acknowledge
that the Vessel and its operation are, or may be, subject to certain
requirements of the U.S. Government contained in the Title V Contract, the ODS
Contract and the documents relating to the financing of the Vessel under Title
XI of the Act. Unless waived by the U.S. Government (and Bareboat Charterer
shall not request any waiver without the prior written consent of Time
Charterer), Bareboat Charterer and Time Charterer agree to comply with any such
requirements notwithstanding anything to the contrary in this Time Charter. Time
Charterer acknowledges that since the Bareboat Charterer is receiving subsidy
under the ODS Contract, the Bareboat Charterer may be required by statute to
offer the Vessel for employment by the Military Sealift Command. Bareboat
Charterer agrees to coordinate each such offer with the Time Charterer before
the offer is made. Bareboat Charterer further agrees that proceeds received as a
consequence of any employment of the Vessel by the Military Sealift Command
shall be paid

                                       44
<PAGE>   346

over to the Shipowner in accordance with Article 12(f) of the Bareboat Charter
and Time Charterer agrees that payment of Operating Hire shall continue under
the Time Charter notwithstanding any such employment of the Vessel.

                  17.20    SUBORDINATION.

                  This Time Charter is subject and subordinate to the rights of
the Shipowner under the Bareboat Charter and the rights of the Secretary under
the Mortgage and the Security Agreement and the rights of Occidental under the
Second Mortgage.

                  17.21    ESCAPE OR DISCHARGE OF OIL OR HAZARDOUS SUBSTANCE.

                  When an escape or discharge of Oil occurs from the Vessel and
causes or threatens to cause Damages, or when there is a substantial threat of a
discharge of Oil or discharge of Oil (i.e., a grave and imminent danger of the
escape or discharge of Oil which, if it occurred, would create a serious danger
of Damages, whether or not an escape or discharge in fact subsequently occurs),
or when any action or occurrence causes or threatens to cause a Release, or a
Hazardous Substance, then Time Charterer may, at its option, upon notice to
Bareboat Charterer or Master, undertake such measures as are reasonably
necessary to prevent or minimize such Damages or Release, to remove the threat
of such Damages or Release, unless Bareboat Charterer promptly undertakes the
same. Time Charterer shall keep Bareboat Charterer advised of the nature and
result of any such measures taken by it and, if time permits, the nature of the
measures intended to be taken by it. Any of the aforementioned measures taken by
Time Charterer shall be deemed taken on Bareboat Charterer's authority and as
Bareboat Charterer's agent, and shall be at Bareboat Charterer's expense except
to the extent that:


                                       45
<PAGE>   347


                  (1)      any such Damages or Release or threat of such Damages
or Release was caused or contributed to by Time Charterer, or

                  (2)      Bareboat Charterer is exempt from liability under
applicable law; or

                  (3)      expenses for such measures, when added to the
reasonable Cost of Bareboat Charterer's own remedial measures, exceed maximum
coverage under Bareboat Charterer's insurances.

                  PROVIDED ALWAYS that if Bareboat Charterer in its absolute
discretion considers said measures should be discontinued, Bareboat Charterer
shall so notify Time Charterer and thereafter Time Charterer shall have no right
to continue said measures under the provisions of this Clause and all further
liability to Time Charterer under this Clause shall thereupon cease.

                  The above provisions are not in derogation of such other
rights as Time Charterer or Bareboat Charterer may have under this Time Charter
or Bareboat Charterer may otherwise have or acquire by law or any International
Convention.

                  17.22    SECTION REFERENCES.

                  The terms "hereof", "hereunder", and "herein", as well as any
references to Section numbers in this Time Charter which do not expressly refer
to another agreement, refer to such sections of this Time Charter.




                                       46
<PAGE>   348


                  IN WITNESS WHEREOF, the parties have caused this Time Charter
to be executed and delivered as of the day and year first above written.


                                    JULIUS ODS CORPORATION,

                                                     Bareboat Charterer


_____________________               By:     ____________________________

                                    Name:   ____________________________

                                    Title:  ____________________________





                                    STOLT MARINE TANKERS LLC,

                                                     Time Charterer


_____________________               By:     ____________________________

                                    Name:   ____________________________

                                    Title:  ____________________________





THE ABOVE CHARTER AND CERTAIN HIRE DERIVED THEREFROM ARE SUBJECT TO A SECURITY
INTEREST IN FAVOR OF THE UNITED STATES OF AMERICA, REPRESENTED BY THE SECRETARY
OF TRANSPORTATION, ACTING BY AND THROUGH THE MARITIME ADMINISTRATOR (THE
"SECRETARY") IN ACCORDANCE WITH THE PROVISIONS OF A SECURITY AGREEMENT BETWEEN
THE SHIPOWNER AND THE SECRETARY A SECURED PARTY.



<PAGE>   349






                                                                       EXHIBIT I

                                                                              TO

                                                                    TIME CHARTER


                              POLLUTION PROVISIONS

         A. Remedial Measures. Whenever there is an escape or discharge from the
Vessel of Oil, or a substantial threat of discharge of Oil, or any action or
occurrence that causes or threatens to cause a Release of a Hazardous Substance,
which does or threatens to cause or contribute to any violation of the laws,
regulations, rules or orders referred to in Section 8 of the Time Charter or
which causes Damages: Bareboat Charterer shall (a) give Time Charterer immediate
notice thereof by telegram, cable or telephone at Stolt MarineTankers LLC, c/o
Marine Transport Corporation, 1200 Harbor Boulevard, Weehawken, New Jersey
07087, Attention: General Counsel or at such other address, attention and
telephone number as Time Charterer may have designated by at least fifteen days'
prior notice to Bareboat Charterer and (b) promptly take such measures as are
necessary to prevent, contain and clean up the escape or discharge, and to
remedy any Damages resulting therefrom. Time Charterer shall have the right, at
its option, to participate in such measures taken by Bareboat Charterer and to
take any such measures which it deems necessary or expedient to those ends, all
in behalf and for the account of Bareboat Charterer. Time Charterer shall keep
Bareboat Charterer and the Master advised, as currently as practicable, of the
nature and results of any such measures taken, or intended to be taken, by Time
Charterer. Bareboat Charterer shall reimburse Time Charterer for all costs
incurred by Time Charterer on account of its participating in and taking any
such measures, except when and to the extent that the escape or discharge was
caused or contributed to by Time Charterer, or Bareboat Charterer is exempt from
liability for the escape or discharge under the applicable law, whether national
or international; provided: (1) that such reimbursement, when added to the
reasonable costs of Bareboat Charterer's own remedial measures, shall not exceed
the maximum coverage thereof afforded by Bareboat Charterer's insurances; and
(2) that, if Bareboat Charterer, in its absolute discretion, believes that such
measures should be discontinued, Bareboat Charterer may so notify Time
Charterer, and thereafter Time Charterer shall have no right to continue such
measures under this clause, and all additional liability to Time Charterer under
this clause shall thereupon cease. The provisions of this clause are not in
derogation of any other rights Bareboat Charterer or Time Charterer may have
under this Time Charter, or may otherwise have or acquire by law or any
international convention.


         B. At Time Charterer's request, Bareboat Charterer shall participate in
Time Charterer's program covering oil pollution avoidance. Bareboat Charterer
shall comply with all oil pollution avoidance instruction provided by Time
Charterer to Bareboat Charterer in writing, together with any amendments which
may be issued in writing or by radio to cover special cases or changes in
international or national regulations or laws. If applicable, the Master shall
contain on board the Vessel all oily residues from consolidated tank washings,

<PAGE>   350


dirty ballast, etc. such residues shall be contained in one compartment, after
the separation of all possible water has taken place by safe methods employing
the use of settlement and decanting or mechanic separation to approved and
recognized standards. The oil residue shall be pumped ashore at the loading or
discharging terminal, either as segregated oil, dirty ballast, commingled with
cargo, or as is possible for Time Charterer to arrange with each cargo. If Time
Charterer requires that demulsifiers be used for the separation of oil and
water, the cost of such demulsifiers shall be for Time Charterer's account. The
Vessel shall take all necessary precautions while loading and discharging cargo
or bunkers, as well as ballast, to ensure that no oil will escape overboard.
Nothing in Time Charterer's instructions shall be construed as permission to
pollute the sea by the discharge of oil or oily water, etc. Bareboat Charterer
shall instruct the Master that, upon arrival at the loading port, the Master
shall furnish Time Charterer with a report covering oil pollution avoidance,
together with details of the quantity of oil residue on board.


         C. Bareboat Charterer or its Parent Corporation shall remain a member
of ITOPF for duration of this Time Charter.