*      Application to be filed with the Securities and Exchange
       Commission, pursuant to Exchange Act Rule 24-b-2, for confidential
       treatment of certain portions of this exhibit.
                                                                        
                                                       EXECUTION VERSION
                                                                        
                                 AMENDMENT NO. 2
                                        
                             DATED SEPTEMBER 1, 1995
                                        
                                  By and Among
                                        
                         KREDITANSTALT FUR WIEDERAUFBAU
                                     (as Agent and Lender)
                                        
                             COMMERZBANK AG, HAMBURG
                                     (as Syndicate Agent)
                                        
                                        
                          COMMERZBANK AG (KIEL BRANCH)
                           DRESDNER BANK AG in HAMBURG
                            VEREINS- und WESTBANK AG
                             DEUTSCHE SCHIFFSBANK AG
                      NORDDEUTSCHE LANDESBANK-GIROZENTRALE
                   DEUTSCHE VERKEHRS-BANK AG (HAMBURG BRANCH)
                     BANQUE INTERNATIONALE A LUXEMBOURG S.A.
                                          (as the Syndicate)
                                        
                      THE CORPORATIONS LISTED IN SCHEDULE A
                                        
                                       and
                                        
                         AMERICAN PRESIDENT LINES, LTD.
                                        
                                       to
                                        
                                 LOAN AGREEMENT
                                        
                              DATED MARCH 14, 1994
                                        
                                  AS AMENDED BY
                                        
                        AMENDMENT NO. 1 TO LOAN AGREEMENT
                                        
                               DATED MAY 19, 1995
                                        
                                  Loan Facility
                     -in respect of the purchase financing-
                            six (6) container vessels
            three (3) contracted with Howaldtswerke-Deutsche Werft AG
                  three (3) contracted with Daewoo Shipbuilding
                             & Heavy Machinery, Ltd.
               THIS AMENDMENT NO. 2 TO LOAN AGREEMENT is made this 1st
day of September, 1995 by and among KREDITANSTALT FUR WIEDERAUFBAU, a
public law corporation incorporated in the Federal Republic of Germany,
whose address is Palmengartenstrasse 5-9, D-60325 Frankfurt am Main
("KfW"); COMMERZBANK AG, Hamburg, a banking corporation incorporated in
the Federal Republic of Germany whose address is Ness 7-9, D-20457
Hamburg (the "Syndicate Agent"); the banks listed in Schedule 1 which is
attached hereto (each a "Syndicate Member" and, collectively, the
"Syndicate"); each of the corporations listed in Schedule A hereto whose
address is 1111 Broadway, Oakland, California 94607; and AMERICAN
PRESIDENT LINES, LTD., a Delaware corporation, whose address is 1111
Broadway, Oakland, California 94607 ("APL").

                              W I T N E S S E T H:
                                        
               A.     Reference is made to that certain Loan Agreement
dated March 14, 1994, as amended by Amendment No. 1 thereto dated May
19, 1995 ("Amendment No. 1"), among the parties hereto (the "Old Loan
Agreement".  Capitalized terms used herein and not otherwise defined
have the meanings provided therefor in the Loan Agreement.

               B. On May 19, 1995, pursuant to the Old Loan Agreement,
APL CHINA was delivered by HDW to APL Newbuildings, Ltd., and, on the
same date, APL CHINA was transferred by APL Newbuildings, Ltd. to one of
the Transferees, namely M.V. President Kennedy, Ltd., as part of an
exchange for a C-10 conbulk vessel, PRESIDENT KENNEDY, owned by such
Transferee, prior to the draw down by M.V. President Kennedy, Ltd. of
the Subportion relating to APL CHINA.

               C. With respect to the five remaining Vessels, APL
desires to provide for the partial assignment of the appropriate
Shipbuilding Agreement (in each case to the extent such Shipbuilding
Agreement relates to the Vessel in question) to five wholly-owned
subsidiaries of the Guarantor (each an "Original Owner" and,
collectively, the "Original Owners"), as follows, such that each of the
Original Owners would acquire its Vessel directly from HDW or Daewoo, as
the case may be:

               (1)    APL JAPAN to be transferred to APL M.V. Japan,
                      Ltd., a Delaware corporation;
               
               (2)    APL KOREA to be transferred to APL M.V. Korea,
                      Ltd., a Delaware corporation;
               
               (3)    APL SINGAPORE to be transferred to APL M.V.
                      Singapore, Ltd., a Delaware corporation;
               
               (4)    APL THAILAND to be transferred to APL M.V.
                      Thailand, Ltd. a Delaware corporation; and
               
               (5)    APL PHILIPPINES to be transferred to APL M.V.
                      Philippines, a Delaware corporation.
       
               D.     The parties to the Old Loan Agreement wish to
amend the Loan Agreement to permit each of the Vessels (other than APL
CHINA) to be transferred by the Original Owner thereof to APL as part of
an exchange for a C-10 conbulk vessel owned by APL, whereupon APL would
execute and deliver the First Mortgage and (in the case of a Daewoo
Vessel) the Second Mortgage, and thereafter APL would transfer the
Vessel in question to the appropriate Transferee, which would assume
such Mortgage(s) in connection with the draw down of the Subportion
relating to such Vessel by such Transferee.

               E.     Notwithstanding the intended Vessel transfers
referred to in Recital D above, APL shall retain the right under the
Loan Agreement to take delivery itself of any of the remaining Vessels
from HDW or Daewoo, as the case may be, and to draw down the applicable
Subportion.

               F.     As more particularly described herein:

               (1)    each of the Transferees, upon its execution of a
                      Note hereunder: (a) if it acquires a Daewoo
                      Vessel, will be jointly and severally liable as a
                      co-Borrower, together with all of the other
                      Transferees that have or thereafter shall execute
                      a Note hereunder, for all Vessel Indebtedness
                      respecting any of all of the Daewoo Vessels and
                      the HDW Vessels, and (b) if it acquires an HDW
                      Vessel, will be jointly and severally liable as a
                      co-Borrower, together with all of the other
                      Transferees that have or thereafter shall execute
                      an HDW Note hereunder, for all Vessel Indebtedness
                      respecting any or all of the HDW Vessels; and
               
               (2)    each Transferee's obligation to repay Vessel
                      Indebtedness under the Note executed by it or as a
                      joint and several co-Borrower under the terms
                      hereof shall be a non-recourse obligation, and
                      shall be limited to such Transferee's interest in
                      the Vessel acquired by it and the other assets and
                      property covered by the Security Documents to
                      which such Transferee in a party.

               G.     Concurrently with the execution and delivery of
this Amendment, APL, the Transferees and the Lenders are entering into a
Second Amended and Restated Agreement to Acquire and Charter dated as of
the date hereof, respecting, among other things, the permitted exchange
and transfer of each of the Vessels as set forth above.

               H.     In light of the foregoing, KfW, the Syndicate
Agent, the Syndicate, APL and the Transferees wish to make certain
amendments to the Old Loan Agreement.

               NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:

               Section 1. The following defined term is amended as
follows:

               "Transferees" means the following six (6) corporations:

                      (1)         M.V. President Kennedy, Ltd., a
                              Delaware corporation;
                      (2)         M.V. President Adams, Ltd., a
                              Delaware corporation;
                      (3)         M.V. President Jackson, Ltd., a
                              Delaware corporation;
                      (4)         M.V. President Polk, Ltd., a Delaware
                              corporation;
                      (5)         M.V. President Truman, Ltd., a
                              Delaware Corporation; and
                      (6)         APL Shipholdings, Ltd., a Delaware
                              corporation.
                              
and "Transferee" means, in respect of any Vessel, the corporation named
above that acquires that Vessel pursuant to an Exchange Agreement (or
from APL following APL's acquisition of that Vessel pursuant to an
Exchange Agreement).

               This defined term shall supersede and replace the
definition of "Transferees" contained in Section 1 of the Old Loan
Agreement.

               Section 2. The following definitions in Section 1 of the
Old Loan Agreement are amended to read as follows:

               "Agreement to Acquire and Charter" means the Second
Amended and Restated Agreement to Acquire and Charter dated September 1,
1995, among APL, KfW, the Syndicate Agent, the Syndicate Members and the
Transferees respecting each Transferee's liability for the Vessel
Indebtedness for any of the Vessels delivered to such Transferee and
APL's obligation to charter any such Vessel from such Transferee,
together with all Exhibits thereto.

              "Borrower" shall have the following meanings:
       
              (i)    Prior to any transfer of the Vessels pursuant to
       the Agreement to Acquire and Charter, APL shall be the Borrower;
       and
       
              (ii)   From and after the acquisition of any Vessel by a
       Transferee which does not involve APL in the prior chain of
       title, in accordance with the Agreement to Acquire and Charter,
       such Transferee shall be the Borrower with respect to all payment
       and performance obligations relating to the Vessel Indebtedness
       of that Vessel (including but not limited to, Sections 2.02(d),
       3, 4, 5, 6, 10, 11, 12 and 15.09 of this Agreement), and
       references to the Borrower in any of such Sections shall be
       construed to mean such related Transferee as Borrower, except
       that (x) references to the "Borrower" in Section 11.03 shall mean
       the Borrowers jointly and severally and (y) references to the
       "Borrower" in Section 12.01 shall mean any of the Borrowers.  APL
       shall be the Borrower with respect to all other provisions of
       this Agreement (including but not limited to, Sections 8, 9 and
       13.03); and
       
              (iii) From and after the acquisition of any Vessel by a
       Transferee from APL following APL's acquisition of that Vessel
       pursuant to an Exchange Agreement, both APL and the related
       Transferee shall be deemed to be Borrowers (jointly and
       severally) with respect to all payment and performance
       obligations relating to the Vessel Indebtedness of that Vessel
       (including but not limited to, Sections 2.02(d), 3, 4, 5, 6, 10,
       1l, 12 and 15.09 of this Agreement), and references to the
       Borrower in any of such Sections shall be construed to mean APL
       and such related Transferee as Borrower, except that (x)
       references to the "Borrower" in Section 11.03 shall mean the
       Borrowers jointly and severally and (y) references to the
       "Borrower" in Section 12.01 shall mean any of the Borrowers.  APL
       shall be the only Borrower with respect to all other provisions
       of this Agreement (including but not limited to, Sections 8, 9
       and 13.03).
       
               "Delivery Date" means, in respect of each Vessel, the
date on which that Vessel is either delivered to and accepted by APL
pursuant to the relevant Shipbuilding Agreement or ownership of that
Vessel is acquired by a Transferee in accordance with the Agreement to
Acquire and Charter.

               "Vessel Indebtedness" means, in respect of each Vessel,
all sums owing, actually or contingently, by the related Borrower or
Borrowers, whether individually or jointly or severally, to the relevant
Lender(s) in respect of that Subportion which relates to that Vessel
under this Agreement (whether by way of repayment of principal, payment
of commitment commission, payment of interest or default interest,
payment upon any indemnity, reimbursement for costs or other).

               Section 3. The following new definitions are added to
Section 1 of the Old Loan Agreement as follows:

               "Assumption of First Mortgage" means the assumption of a
First Mortgage entered into by APL and a Transferee contemplated by
Section 2.03(b) of this Loan Agreement, pursuant to which a Transferee
assumes the payment and performance obligations under the related First
Mortgage.

               "Assumption of Second Mortgage" means the assumption of a
Second Mortgage entered into by APL and a Transferee contemplated by
Section 2.03(b) of this Loan Agreement, pursuant to which a Transferee
assumes the payment and performance obligations under the related Second
Mortgage.

               "Original Owner" has the meaning set forth in Recital C
hereto.

               Section 4. Section 7(k) of the Old Loan Agreement is
amended to read as follows:

                      (k) (x) if the Vessel is to be transferred to a
               Transferee pursuant to an Exchange Agreement (in the case
               of APL CHINA) or from APL following APL's acquisition of
               the Vessel pursuant to an Exchange Agreement, then
               evidence that such Vessel (other than APL CHINA) is duly
               registered in the name and ownership of, first, the
               Original Owner (if applicable), second, APL (if
               applicable), and then the Transferee under the law and
               flag of the Republic of The Marshall Islands, free of
               registered liens except the relevant Mortgage(s); and (y)
               if the Vessel is not to be transferred to the Transferee,
               then evidence that such Vessel is duly registered in the
               name and ownership of APL under the laws and flag of its
               registry, free of registered liens except the relevant
               Mortgage(s); provided that, notwithstanding anything to
               the contrary in this Loan Agreement or any other Loan
               Document, any Vessel may be initially documented upon its
               Delivery Date under the laws and flag of the United
               States, if written notice of the intention to so document
               such Vessel is given to the Agent or the Syndicate Agent,
               as the case may be, not less than sixty (60) days prior
               to such Delivery Date, and the parties hereto shall make
               such changes to the Loan Documents and take such action
               (including, but not limited to, the selection of an
               approved trustee to act as mortgagee for the relevant
               Lenders and appropriate modification of the Loan
               Documents) which are consistent with the Loan Documents
               and which such parties may reasonably deem necessary to
               effectuate this proviso clause; provided further that,
               notwithstanding anything to the contrary in this Loan
               Agreement or any other Loan Document, APL may, prior to
               the Delivery Date of such Vessel, assign the related HDW
               Shipbuilding Agreement or Daewoo Shipbuilding Agreement,
               as the case may be, to the extent the same relates to
               such Vessel, to the Transferee (or to an entity with
               which APL or the Transferee shall enter into an Exchange
               Agreement in respect of the Vessel) and provided finally
               that, notwithstanding anything to the contrary in this
               Loan Agreement or in any other Loan Document, APL may
               transfer any Vessel to an Original Owner as a
               "Transferee" and a "Borrower" pursuant to, and for all
               purposes of this Agreement and the parties shall make
               such changes to the Operative Documents which the parties
               and such Original Owner may reasonably deem necessary to
               effectuate this "provided finally" clause.
               
               Section 5. Section 2.03 of the Old Loan Agreement is
amended by designating existing Section 2.03 as "2.03(a)" and by adding
a new Section 2.03(b) as follows:

                      (b) Notwithstanding anything herein or in any
               other Loan Document to the contrary, APL agrees that, in
               the event a Vessel is acquired by APL (following a Vessel
               Exchange between APL and an Original Owner), APL shall be
               jointly and severally, primarily and directly liable as a
               co-Borrower together with all of the other Transferees
               similarly liable for payment in full of the Vessel
               Indebtedness respecting that Vessel, it being expressly
               understood, however, that APL shall not be liable
               hereunder for payment of the Vessel Indebtedness
               respecting any Vessel not so acquired by APL (including
               APL CHINA).  In order to evidence its joint and several
               liability, APL agrees that, on the related Delivery Date,
               it shall execute, deliver and record a First Mortgage
               and, if the Vessel is a Daewoo Vessel, a Second Mortgage
               substantially in the form attached to this Agreement.
               Upon transfer to, and registration of the Vessel in the
               name of, the Transferee, APL and the related Transferee
               shall execute, deliver and record an Assumption of First
               Mortgage and, if the Vessel is a Daewoo Vessel, an
               Assumption of Second Mortgage substantially in the form
               attached to this Agreement.  The liability of APL
               hereunder shall be independent of the duties, obligations
               and liabilities of each and all of the Transferees with
               which it is jointly and severally liable as provided
               herein. The Lenders (subject to the provisions hereof)
               may bring a separate action or actions on each, any or
               all of the Vessel Indebtedness against APL on each, any
               or all of the Vessel Indebtedness as to which it is
               jointly and severally liable as provided herein, whether
               action is brought against any other or all of the
               Transferees with which APL is jointly and severally
               liable, or whether any one or more of such Transferees is
               or is not joined therein.
               
               Section 6. Section 12.02 (d) of the Old Loan Agreement is
amended to read as follows:

                      (d) any of the Obligors is in breach in the
               performance or observance of any other terms or
               conditions of this Agreement or in any of the Loan
               Documents, the Charter Documents or the Security
               Documents (other than the Mortgage(s) to which any of
               them is a party (not being a default which falls within
               paragraphs (a), (b) or (c) of this Section) and if it is
               capable of being remedied such breach is not remedied
               within thirty (30) days after receipt by the Borrower of
               notice of such breach from the Agent or the Syndicate
               Agent, as the case may be; provided, however, that, in
               the case of a Vessel subject to a Charter substantially
               in the form of Exhibit A to the Agreement to Acquire and
               Charter, an Event of Default under Section 24(a)(i) of
               such Charter caused by the failure of the Charterer to
               pay Additional Charter Hire shall not be an Event of
               Default under this Agreement; or
               
               Section 7. Appendix A of the Loan Agreement (forms of
Notes) is amended to add, as Appendix A-3A, Appendix A-3B, Appendix A-4A
and Appendix A-4B, the forms of Notes required under Section 2.03(b), as
set forth in Exhibits A-1, A-2, A-3 and A-4 hereto, respectively.

               Section 8. Appendix B of the Loan Agreement (forms of
Mortgages) is amended to add, as Appendix B-3 and Appendix B-4, the
forms of the First Preferred Ship Mortgage and the Second Preferred Ship
Mortgage to be executed and delivered by APL as contemplated by Section
2.03(b) of this Agreement, as set forth in Exhibits B-1 and B-2 hereto,
respectively.  Appendix B of the Loan Agreement is further amended to
add, as Appendix B-5 and Appendix B-6, the forms of the Assumption of
First Preferred Ship Mortgage and the Assumption of Second Preferred
Ship Mortgage to be executed by the appropriate Transferee as
contemplated by Section 2.03(b) of this Agreement, as set forth in
Exhibits C-1 and C-2 hereto, respectively.

               Section 9. This Amendment No. 2 shall be governed by and
construed in accordance with laws of the State of New York (other than
the law of the State of New York governing choice of law).

               Section 10. Except as amended by this Amendment No. 2,
all other terms, conditions and covenants of the Loan Agreement are
hereby confirmed by the parties hereto and remain unchanged and in full
force and effect.  From and after the date hereof, all references to the
Loan Agreement (i) in the Loan Agreement (including references therein
to "this Agreement", "hereof" and "hereunder"), and (ii) in any of the
other Loan Documents, shall be deemed to be references to the Loan
Agreement as amended by this Amendment No. 2.

               Section 11. This Amendment No. 2 may be executed in
separate counterparts, each of which, when executed and delivered shall
be an original, but all such counterparts shall together constitute but
one and the same instrument.

       IN WITNESS WHEREOF, the parties have caused this
Amendment No, 2 to be duly executed by their respective officers
as the day and year first above written.

                                             KREDITANSTALT FUR
WIEDERAUFBAU


                                             By:    /s/
                                                    Name:
                                                    Title:

                                             COMMERZBANK AG, HAMBURG


                                             By:    /s/
                                                    Name:
                                                    Title:

                                             By:    /s/
                                                    Name:
                                                    Title:


                                             COMMERZBANK AG (KIEL BRANCH)


                                             By:    /s/
                                                    Name:
                                                    Title


                                             By:    /s/
                                                    Name:
                                                    Title:


                                             DRESDNER BANK AG in HAMBURG


                                             By:    /s/
                                                    Name:
                                                    Title:


                                             By:    /s/
                                                    Name:
                                                    Title:


              [Signature Page to Amendment No. 2 to Loan Agreement]
                                     BANQUE INTERNATIONALE A LUXEMBOURG
                                     S.A.


                                     By:     /s/
                                             Name:   Jean-Pierre Vernier
                                             Title:  Directeur-adjoint


                                     AMERICAN PRESIDENT LINES, LTD.


                                     By:     /s/
                                             Name:   Thomas R. Meier
                                             Title:  Assistant Treasurer


                                     M.V. PRESIDENT KENNEDY, LTD.
                                     M.V. PRESIDENT ADAMS, LTD.
                                     M.V. PRESIDENT JACKSON, LTD.
                                     M.V. PRESIDENT POLK, LTD.
                                     M.V. PRESIDENT TRUMAN, LTD.
                                     APL SHIPHOLDING, LTD.


                                     By:     /s/
                                             Name:   Thomas R. Meier
                                             Title:  Assistant Treasurer




















              [Signature Page to Amendment No. 2 to Loan Agreement]
                                                             EXHIBIT A-1
                                                      to Amendment No. 2
                                                       to Loan Agreement
                                                                        
                                                        [Schedules to be
                                                         added to Notes]
                                                                        
                                                           APPENDIX A-3A

                            FORM OF FIXED RATE NOTES
                                  [HDW Vessel]
                                        
                                        
                                      NOTE


No.________________   $______________


                         [                             ]
                                        
                            Issued in connection with
                            the purchase financing of
                           three (3) container vessels


INTEREST RATE  MATURITY DATE         ISSUE DATE




               [                   ] (together, the "Companies"), for
value received, hereby jointly and severally promise to pay to [
] or registered assigns the principal sum of
____________________________ DOLLARS (USD ___________) on the maturity
date specified above. This Note shall bear interest at the rate
specified above on the unpaid principal amount thereof from time to time
outstanding from the date thereof to but excluding the date due at the
Interest Rate for each Interest Period beginning on or after the Fixed
Rate Conversion Date (as defined in the Loan Agreement referred to
below) and shall be payable in arrears on each Interest Payment Date on
a basis of the actual number of days elapsed over a year of three
hundred sixty (360) days including the first day of the relevant
Interest Period or portion thereof but excluding such Interest Payment
Date.  Principal on this Note shall be payable on each Repayment Date in
the amounts set forth in Schedule 1 attached hereto subject to any HDW *
exercised by the Companies pursuant to Section 5.03 of the Loan
Agreement. Capitalized terms contained herein and not defined herein
shall have the meanings specified in a certain Loan Agreement dated
March 14, 1994, as amended by Amendment No. 1 dated May 19, 1995 as
further amended by Amendment No. 2 thereto dated September 1, 1995 (the
"Loan Agreement"), by and among American President Lines, Ltd. ("APL"),
the corporations listed in Schedule A to Amendment No. 2, Kreditanstalt
fur Wiederaufbau, Commerzbank AG, Hamburg, Commerzbank AG (Kiel Branch),
Dresdner Bank AG in Hamburg, Vereins-und Westbank AG, Deutsche
Schiffsbank AG, Norddeutsche Landesbank-Girozentrale, Deutsche Verkehrs-
Bank AG (Hamburg Branch) and Banque Internationale a Luxembourg S.A.

               The interest so payable, and punctually paid or duly
provided for, on any such Interest Payment Date will, as provided in
the Loan Agreement, be paid by the Companies to the Syndicate Agent for
payment to the Person in whose name this Note is registered at the
close of business on the date for payment of such interest. Any such
interest not so punctually paid or duly provided for shall be paid
together with default interest which shall accrue on the amount of such
overdue sum in the case of payments due as more fully provided in the
Loan Agreement.

               Under the Loan Agreement, the Companies are obligated to
pay interest on and the principal of this Note to the Syndicate Agent
in the manner as provided therein, in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts.

               This Note is subject to prepayment and acceleration as
more fully described in the Loan Agreement.

               This Note is one of a duly authorized issue of Notes
issued and to be issued under the Loan Agreement.

               Reference is made to the Loan Agreement and all
supplements and amendments thereto (a copy of which is on file with
each of the Companies at its principal corporate office) for a more
complete statement of the terms and provisions thereof, including a
statement of the properties thereby conveyed, pledged and assigned, the
nature and extent of the security, the respective rights thereunder of
the Companies and the Holders of the Notes, and the terms upon which
the Notes are, and are to be, executed and delivered, to all of which
terms and conditions in the Loan Agreement each Holder hereof agrees by
its acceptance of this Note.

               On a LIBO Rate Conversion Date, the Interest Rate on
this Note shall be converted to a LIBO Rate. Upon such conversion, the
Holders shall exchange this Note for a new LIBO Rate Note or Notes by
delivery of this Note to the principal office of the Registrar or at an
                                             KREDITANSTALT FUR WIEDERAUFBAU


                                             By:    /s/
                                                    Name:
                                                    Title:

                                             COMMERZBANK AG, HAMBURG


                                             By:    /s/
                                                    Name:
                                                    Title:

                                             By:    /s/
ment.

               As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is transferable, and upon
surrender of this Note for registration of transfer at the principal
office of the Registrar, or at the office or agency maintained for such
purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by, the
Holder or his attorney duly authorized in writing, one or more new
Notes of the same maturity and type and of authorized denominations and
for the same aggregate principal amount will be issued to the
designated transferee or transferees.

               As provided in the Loan Agreement and subject to certain
limitations therein set forth, Notes are exchangeable for a like
aggregate principal amount of Notes of the same maturity and type and
of authorized denominations, as requested by the Holder surrendering
the same, upon presentation thereof for such purpose at the principal
office of the Registrar, or at an office or agency maintained for such
purpose.

               Prior to due presentment for registration of exchange or
transfer of this Note, the Syndicate Agent, the Paying Agent and the
Registrar may deem and treat the Person in whose name this Note is
registered as the absolute owner hereof for the purpose of receiving
payment of the principal of and interest on this Note and for all other
purposes whatsoever whether or not this Note be overdue, and neither
the Syndicate Agent, the Paying Agent nor the Registrar shall be
affected by notice to the contrary.

               This Note shall not be entitled to any benefit under the
Loan Agreement or be valid or obligatory for any purpose unless this
Note has been executed on behalf of the Companies by the manual
signature of an authorized officer of each of the Companies.

               Notwithstanding anything herein or in any other Loan
Document to the contrary, the Companies (other than APL) agrees that,
upon its execution of this Note, it shall be jointly and severally,
directly and primarily liable as a co-Borrower, together with all of
the other Transferees that have or shall have executed a Note under the
Loan Agreement for payment in full of all Vessel Indebtedness
respecting any or all of the HDW Vessels and the HDW Vessels. APL
agrees that, upon its execution of this Note, it shall be jointly and
severally, directly and primarily liable, with the Transferees also
liable therefor, with respect to any HDW Note executed by APL as co-
Borrower under the Loan Agreement for payment in full of the Vessel
Indebtedness relating to the related HDW Vessel or Vessels. The
liability of the Companies shall be independent of the duties,
obligations and liabilities of each and all of the other joint and
several Transferees. Any Holder (subject to the provisions of the Loan
Agreement) may bring a separate action or actions on each, any or all
of such Vessel Indebtedness against each, any or all of such
Transferees liable therefor and APL (to the extent it is or becomes a
co-Borrower), whether action is brought against any other or all of
such Transferees and APL (as provided herein), or any one or more of
the Transferees or APL (as provided herein) is or is not joined
therein.

               Notwithstanding anything herein, in the HDW Notes or in
any other Loan Document to the contrary, except with respect to APL, by
acceptance of this Note the Holder agrees that it will look solely to
the Recourse Assets for all amounts coming due from the Transferees (or
any Transferee) under the Loan Agreement, under the HDW Notes or under
any of the other Loan Documents, and for the performance of all
covenants, agreements and obligations and for the breach of
representations and warranties or covenants of the Companies (other
than APL) (or any Transferee) under the Loan Agreement or under the HDW
Notes or any of the other Loan Documents, or under any certificate or
other documents executed and delivered by the Companies (other than
APL) as contemplated by the Loan Documents, and, therefore,
notwithstanding anything contained in any of the aforesaid documents,
no judgment or recourse (except a judgment against the Recourse Assets
or any of them) shall be sought or enforced for the payment or
performance of the Companies' (other than APL's) (or any Transferee's)
obligations under the Loan Agreement, the HDW Notes, any other Loan
Document or any such other certificate or document: (a) against the
Companies (other than APL) in their individual or personal capacities,
other than in connection with the enforcement of remedies against the
Recourse Assets or (b) against any assets or property of the Companies
(other than APL) other than the Recourse Assets; provided, however,
that nothing in this paragraph shall (x) limit or otherwise prejudice
in any way the rights of the Holders to proceed against the Guarantor
under the Guarantee or (y) constitute or be deemed to be a release of
the obligations secured by, or impair the enforceability of, the liens,
mortgage interests or other security interests created by the Security
Documents, or to restrict the remedies available to Holders to realize
upon the Security Documents or enforce the Guarantee.

               AS PROVIDED IN THE LOAN AGREEMENT, THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (OTHER THAN THE LAW OF THE STATE OF NEW YORK GOVERNING CHOICE
OF LAW).


               IN WITNESS WHEREOF, the Companies have caused this
instrument to be duly executed under its corporate seal.


                                                    [              ]



By:___________________
    [Title]



Attest:


By:_____________________
   [Title]

Issue Date:

                                   SCHEDULE 1

                      Maturity Dates, Principal Amounts and
                          Initial Interest Rates of Notes


                                       Principal
Maturity Date                            Amount                    Interest Rate


                                                            EXHIBIT A-2
                                                     to Amendment No. 2
                                                      to Loan Agreement


                                                          APPENDIX A-3B


                             FORM OF LIBO RATE NOTE
                                  [HDW Vessel]
                                        
                                      NOTE


No.____________________
$_________________

                          [                           ]

                            Issued in connection with
                             the purchase financing
                         of three (3) container vessels
                                        
                         Issue Date: _____________, ____
                                        
                                        
                                  MATURITY DATE
                                        
                                        
                                 _________, ____


               [                            ] (together, the
"Companies"), for value received, hereby jointly and severally promise
to pay to the order of [                       ] or registered assigns
the principal sum of _______________________________ DOLLARS (USD
___________) on the maturity date specified above. This Note shall bear
interest on the unpaid principal amount hereof from time to time
outstanding from the date hereof to but excluding the date due at the
Interest Rate for each Interest Period (as such term is defined in the
Loan Agreement referred to below) and shall be payable in arrears on
each Interest Payment Date on a basis of the actual number of days
elapsed over a year of three hundred sixty (360) days including the
first day of the relevant Interest Period or portion thereof but
excluding such Interest Payment Date), until the principal hereof is
paid. Principal on this Note shall be payable on each Repayment Date in
the amounts set forth in Schedule 1 attached hereto subject to any HDW
* exercised by the Companies pursuant to Section 5.03 of the Loan
Agreement. Capitalized terms contained herein and not defined herein,
shall have the meanings specified in a certain Loan Agreement dated
March 14, 1994, as amended by Amendment No. 1 thereto dated May 19,
1995 and further amended by Amendment No. 2 thereto dated September 1,
1995 (the "Loan Agreement"), by and among American President Lines,
Ltd. ("APL"), the corporations listed in Schedule A to Amendment No. 2,
Kreditanstalt fYr Wiederaufbau, Commerzbank AG, Hamburg, Commerzbank AG
(Kiel Branch), Dresdner Bank AG in Hamburg, Vereins-und Westbank AG,
Deutsche Schiffsbank AG, Norddeutsche Landesbank-Girozentrale, Deutsche
Verkehrs-Bank AG (Hamburg Branch) and Banque Internationale e
Luxembourg S.A.

               The interest so payable, and punctually paid or duly
provided for, on any such Interest Payment Date will, as provided in
the Loan Agreement, be paid by the Companies to the Syndicate Agent for
payment to the Person in whose name this Note is registered at the
close of business on the date for payment of such interest. Any such
interest not so punctually paid or duly provided for shall be paid
together with default interest which shall accrue on the amount of such
overdue sum in the case of payments due as more fully provided in the
Loan Agreement.

               Under the Loan Agreement, the Companies are obligated to
pay interest on and the principal of this Note to the Syndicate Agent
in the manner as provided therein, in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts.

               This Note is subject to prepayment and acceleration as
more fully described in the Loan Agreement.

               This Note is one of a duly authorized issue of Notes
issued and to be issued under the Loan Agreement.

               Reference is made to the Loan Agreement and all
supplements and amendments thereto (a copy of which is on file with
each of the Companies at its principal corporate office) for a more
complete statement of the terms and provisions thereof, including a
statement of the properties thereby conveyed, pledged and assigned, the
nature and extent of the security, the respective rights thereunder of
the Companies, and the Holders of the Notes, and the terms upon which
the Notes are, and are to be, executed and delivered, to all of which
terms and conditions in the Loan Agreement each Holder hereof agrees by
its acceptance of this Note.

               On a Fixed Rate Conversion Date, the Interest Rate on
this Note shall be converted to a Fixed Rate. Upon such conversion, the
Holders shall exchange this Note for a new Fixed Rate Note or Notes by
delivery of this Note to the principal office of the Registrar or at an
office or agency maintained for that purpose.

               If an Event of Default shall occur and be continuing,
the principal of this Note may be declared due and payable in the
manner and with the effect provided in the Loan Agreement and the
Syndicate Agent may exercise whatever rights and remedies provided for
therein.

               The right of the Holder of this Note to institute action
for any remedy under the Loan Agreement, including the enforcement of
payment of any amount due hereon, is subject to certain restrictions
specified in the Loan Agreement.

               As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is transferable, and upon
surrender of this Note for registration of transfer at the principal
office of the Registrar, or at the office or agency maintained for such
purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by, the
Holder or his attorney duly authorized in writing, one or more new
Notes of the same maturity and type and of authorized denominations and
for the same aggregate principal amount will be issued to the
designated transferee or transferees.

               As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is exchangeable for a like
aggregate principal amount of LIBO Rate Notes of the same maturity and
type and of authorized denominations, as requested by the Holder
surrendering the same, upon presentation thereof for such purpose at
the principal office of the Registrar, or at an office or agency
maintained for such purpose.

               Prior to due presentment for registration of exchange or
transfer of this Note, the Syndicate Agent, the Paying Agent and the
Registrar may deem and treat the Person in whose name this Note is
registered as the absolute owner hereof for the purpose of receiving
payment of the principal of and interest on this Note and for all other
purposes whatsoever whether or not this Note be overdue, and neither
the Syndicate Agent, the Paying Agent nor the Registrar shall be
affected by notice to the contrary.

               This Note shall not be entitled to any benefit under the
Loan Agreement or be valid or obligatory for any purpose unless this
Note has been executed pursuant to the provisions in the Loan
Agreement.

               Notwithstanding anything herein or in any other Loan
Document to the contrary, each of the Companies (other than APL) agrees
that, upon its execution of this Note, it shall be jointly and
severally, directly and primarily liable as a co-Borrower, together
with all of the other Transferees that have or shall have executed a
Note under the Loan Agreement for payment in full of all Vessel
Indebtedness respecting any or all of the HDW Vessels and the HDW
Vessels. APL agrees that, upon its execution of this Note, it shall be
jointly and severally, directly and primarily liable, with the
Transferees also liable therefor, with respect to any HDW Note executed
by APL as co-Borrower under the Loan Agreement for payment in full of
the Vessel Indebtedness relating to the related HDW Vessel or Vessels.
The liability of the Companies shall be independent of the duties,
obligations and liabilities of each and all of the other joint and
several Transferees. Any Holder (subject to the provisions of the Loan
Agreement) may bring a separate action or actions on each, any or all
of such Vessel Indebtedness against each, any or all of such
Transferees liable therefor and APL (to the extent it is or becomes a
co-Borrower), whether action is brought against any other or all of
such Transferees and APL (as provided herein), or any one or more of
the Transferees or APL (as provided herein) is or is not joined
therein.

               Notwithstanding anything herein, in the HDW Notes or in
any other Loan Document to the contrary, except with respect to APL, by
acceptance of this Note the Holder agrees that it will look solely to
the Recourse Assets for all amounts coming due from the Transferees (or
any Transferee) under the Loan Agreement, under the HDW Notes or under
any of the other Loan Documents, and for the performance of all
covenants, agreements and obligations and for the breach of
representations and warranties or covenants of the Companies (other than
APL) (or any Transferee) under the Loan Agreement or under the HDW Notes
or any of the other Loan Documents, or under any certificate or other
documents executed and delivered by the Companies (other than APL) as
contemplated by the Loan Documents, and, therefore, notwithstanding
anything contained in any of the aforesaid documents, no judgment or
recourse (except a judgment against the Recourse Assets or any of them)
shall be sought or enforced for the payment or performance of the
Companies' (other than APL's) (or any Transferee's) obligations under
the Loan Agreement, the HDW Notes, any other Loan Document or any such
other certificate or document: (a) against the Companies (other than
APL) in their individual or personal capacities, other than in
connection with the enforcement of remedies against the Recourse Assets
or (b) against any assets or property of the Companies (other than APL)
other than the Recourse Assets; provided, however, that nothing in this
paragraph shall (x) limit or otherwise prejudice in any way the rights
of the Holders to proceed against the Guarantor under the Guarantee or
(y) constitute or be deemed to be a release of the obligations secured
by, or impair the enforceability of, the liens, mortgage interests or
other security interests created by the Security Documents, or to
restrict the remedies available to Holders to realize upon the Security
Documents or enforce the Guarantee.

               AS PROVIDED IN THE LOAN AGREEMENT, THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (OTHER THAN THE LAW OF THE STATE OF NEW YORK GOVERNING CHOICE
OF LAW).


               IN WITNESS WHEREOF, the Companies have caused this
instrument to be duly executed under its corporate seal.

                                                    [                   ]


                                                    By:_________________
                                                       Title:



Attest:


By:___________________
   Title:

                                                             EXHIBIT A-3
                                                      to Amendment No. 2
                                                       to Loan Agreement
                                                                        
                                                        [Schedules to be
                                                         added to Notes]
                                                                        
                                                           APPENDIX A-4A


                            FORM OF FIXED RATE NOTES
                                 [Daewoo Vessel]


                                      NOTE


No.________________   $______________


                         [                             ]

                            Issued in connection with
                            the purchase financing of
                           three (3) container vessels


INTEREST RATE                          MATURITY DATE                  ISSUE DATE




               [                      ] (together, the "Companies"), for
value received, hereby jointly and severally promise to pay to [
] or registered assigns the principal sum of
____________________________ DOLLARS (USD ___________) on the maturity
date specified above. This Note shall bear interest at the rate
specified above on the unpaid principal amount thereof from time to time
outstanding from the date thereof to but excluding the date due at the
Interest Rate for each Interest Period beginning on or after the Fixed
Rate Conversion Date (as defined in the Loan Agreement referred to
below) and shall be payable in arrears on each Interest Payment Date on
a basis of the actual number of days elapsed over a year of three
hundred sixty (360) days including the first day of the relevant
Interest Period or portion thereof but excluding such Interest Payment
Date.  Principal on this Note shall be payable on each Repayment Date in
the amounts set forth in Schedule 1 attached hereto subject to any
Daewoo * exercised by the Companies pursuant to Section 5.03 of the Loan
Agreement. Capitalized terms contained herein and not defined herein
shall have the meanings specified in a certain Loan Agreement dated
March 14, 1994, as amended by Amendment No. 1 dated May 19, 1995 as
further amended by Amendment No. 2 thereto dated September 1, 1995 (the
"Loan Agreement"), by and among American President Lines, Ltd. ("APL"),
the corporations listed in Schedule A to Amendment No. 2, Kreditanstalt
fur Wiederaufbau, Commerzbank AG, Hamburg, Commerzbank AG (Kiel Branch),
Dresdner Bank AG in Hamburg, Vereins-und Westbank AG, Deutsche
Schiffsbank AG, Norddeutsche Landesbank-Girozentrale, Deutsche Verkehrs-
Bank AG (Hamburg Branch) and Banque Internationale a Luxembourg S.A.

               The interest so payable, and punctually paid or duly
provided for, on any such Interest Payment Date will, as provided in
the Loan Agreement, be paid by the Companies to the Syndicate Agent for
payment to the Person in whose name this Note is registered at the
close of business on the date for payment of such interest. Any such
interest not so punctually paid or duly provided for shall be paid
together with default interest which shall accrue on the amount of such
overdue sum in the case of payments due as more fully provided in the
Loan Agreement.

               Under the Loan Agreement, the Companies are obligated to
pay interest on and the principal of this Note to the Syndicate Agent
in the manner as provided therein, in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts.

               This Note is subject to prepayment and acceleration as
more fully described in the Loan Agreement.

               This Note is one of a duly authorized issue of Notes
issued and to be issued under the Loan Agreement.

               Reference is made to the Loan Agreement and all
supplements and amendments thereto (a copy of which is on file with
each of the Companies at its principal corporate office) for a more
complete statement of the terms and provisions thereof, including a
statement of the properties thereby conveyed, pledged and assigned, the
nature and extent of the security, the respective rights thereunder of
the Companies and the Holders of the Notes, and the terms upon which
the Notes are, and are to be, executed and delivered, to all of which
terms and conditions in the Loan Agreement each Holder hereof agrees by
its acceptance of this Note.

               On a LIBO Rate Conversion Date, the Interest Rate on
this Note shall be converted to a LIBO Rate. Upon such conversion, the
Holders shall exchange this Note for a new LIBO Rate Note or Notes by
delivery of this Note to the principal office of the Registrar or at an
office or agency maintained for that purpose.

               If an Event of Default shall occur and be continuing,
the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Loan Agreement and the
Syndicate Agent may exercise the rights and remedies provided for
therein.

               The right of the Holder of this Note to institute action
for any remedy under the Loan Agreement, including the enforcement of
payment of any amount due hereon, is subject to certain restrictions
specified in the Loan Agreement.

               As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is transferable, and upon
surrender of this Note for registration of transfer at the principal
office of the Registrar, or at the office or agency maintained for such
purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by, the
Holder or his attorney duly authorized in writing, one or more new
Notes of the same maturity and type and of authorized denominations and
for the same aggregate principal amount will be issued to the
designated transferee or transferees.

               As provided in the Loan Agreement and subject to certain
limitations therein set forth, Notes are exchangeable for a like
aggregate principal amount of Notes of the same maturity and type and
of authorized denominations, as requested by the Holder surrendering
the same, upon presentation thereof for such purpose at the principal
office of the Registrar, or at an office or agency maintained for such
purpose.

               Prior to due presentment for registration of exchange or
transfer of this Note, the Syndicate Agent, the Paying Agent and the
Registrar may deem and treat the Person in whose name this Note is
registered as the absolute owner hereof for the purpose of receiving
payment of the principal of and interest on this Note and for all other
purposes whatsoever whether or not this Note be overdue, and neither
the Syndicate Agent, the Paying Agent nor the Registrar shall be
affected by notice to the contrary.

               This Note shall not be entitled to any benefit under the
Loan Agreement or be valid or obligatory for any purpose unless this
Note has been executed on behalf of the Companies by the manual
signature of an authorized officer of each of the Companies.

               Notwithstanding anything herein or in any other Loan
Document to the contrary, the Companies (other than APL) agrees that,
upon its execution of this Note, it shall be jointly and severally,
directly and primarily liable as a co-Borrower, together with all of
the other Transferees that have or shall have executed a Note under the
Loan Agreement for payment in full of all Vessel Indebtedness
respecting any or all of the Daewoo Vessels and the HDW Vessels. APL
agrees that, upon its execution of this Note, it shall be jointly and
severally, directly and primarily liable, with the Transferees also
liable therefor, with respect to any Daewoo Note executed by APL as co-
Borrower under the Loan Agreement for payment in full of the Vessel
Indebtedness relating to the related Daewoo Vessel or Vessels. The
liability of the Companies shall be independent of the duties,
obligations and liabilities of each and all of the other joint and
several Transferees. Any Holder (subject to the provisions of the Loan
Agreement) may bring a separate action or actions on each, any or all
of such Vessel Indebtedness against each, any or all of such
Transferees liable therefor and APL (to the extent it is or becomes a
co-Borrower), whether action is brought against any other or all of
such Transferees and APL (as provided herein), or any one or more of
the Transferees or APL (as provided herein) is or is not joined
therein.

               Notwithstanding anything herein, in the Daewoo Notes or
in any other Loan Document to the contrary, except with respect to APL,
by acceptance of this Note the Holder agrees that it will look solely
to the Recourse Assets for all amounts coming due from the Transferees
(or any Transferee) under the Loan Agreement, under the Daewoo Notes or
under any of the other Loan Documents, and for the performance of all
covenants, agreements and obligations and for the breach of
representations and warranties or covenants of the Companies (other
than APL) (or any Transferee) under the Loan Agreement or under the
Daewoo Notes or any of the other Loan Documents, or under any
certificate or other documents executed and delivered by the Companies
(other than APL) as contemplated by the Loan Documents, and, therefore,
notwithstanding anything contained in any of the aforesaid documents,
no judgment or recourse (except a judgment against the Recourse Assets
or any of them) shall be sought or enforced for the payment or
performance of the Companies' (other than APL's) (or any Transferee's)
obligations under the Loan Agreement, the Daewoo Notes, any other Loan
Document or any such other certificate or document: (a) against the
Companies (other than APL) in their individual or personal capacities,
other than in connection with the enforcement of remedies against the
Recourse Assets or (b) against any assets or property of the Companies
(other than APL) other than the Recourse Assets; provided, however,
that nothing in this paragraph shall (x) limit or otherwise prejudice
in any way the rights of the Holders to proceed against the Guarantor
under the Guarantee or (y) constitute or be deemed to be a release of
the obligations secured by, or impair the enforceability of, the liens,
mortgage interests or other security interests created by the Security
Documents, or to restrict the remedies available to Holders to realize
upon the Security Documents or enforce the Guarantee.

               AS PROVIDED IN THE LOAN AGREEMENT, THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (OTHER THAN THE LAW OF THE STATE OF NEW YORK GOVERNING CHOICE
OF LAW).

               IN WITNESS WHEREOF, the Companies have caused this
instrument to be duly executed under its corporate seal.


                                                    [             ]



By:___________________
   [Title]



Attest:


By:_____________________
   [Title]
Issue Date:

                                   SCHEDULE 1
                                        
                      Maturity Dates, Principal Amounts and
                          Initial Interest Rates of Notes



                                      Principal
Maturity Date                            Amount
Interest Rate


                                                             EXHIBIT A-4
                                                      to Amendment No. 2
                                                       to Loan Agreement
                                                                        
                                                                        
                                                           APPENDIX A-4B


                             FORM OF LIBO RATE NOTE
                                 [Daewoo Vessel]

                                      NOTE


No.____________________
$_________________



                          [                           ]

                            Issued in connection with
                             the purchase financing
                         of three (3) container vessels
                                        
                         Issue Date: _____________, ____


                                  MATURITY DATE
                                        
                                        
                                 _________, ____


               [                            ] (together, the
"Companies"), for value received, hereby jointly and severally promise
to pay to the order of [ ] or registered assigns the principal sum of
_______________________________ DOLLARS (USD ___________) on the
maturity date specified above. This Note shall bear interest on the
unpaid principal amount hereof from time to time outstanding from the
date hereof to but excluding the date due at the Interest Rate for each
Interest Period (as such term is defined in the Loan Agreement referred
to below) and shall be payable in arrears on each Interest Payment Date
on a basis of the actual number of days elapsed over a year of three
hundred sixty (360) days including the first day of the relevant
Interest Period or portion thereof but excluding such Interest Payment
Date), until the principal hereof is paid. Principal on this Note shall
be payable on each Repayment Date in the amounts set forth in Schedule 1
attached hereto subject to any Daewoo * exercised by the Companies
pursuant to Section 5.03 of the Loan Agreement. Capitalized terms
contained herein and not defined herein, shall have the meanings
specified in a certain Loan Agreement dated March 14, 1994, as amended
by Amendment No. 1 thereto dated May 19, 1995 and further amended by
Amendment No. 2 thereto dated September 1, 1995 (the "Loan Agreement"),
by and among American President Lines, Ltd. ("APL"), the corporations
listed in Schedule A to Amendment No. 2, Kreditanstalt fur Wiederaufbau,
Commerzbank AG, Hamburg, Commerzbank AG (Kiel Branch), Dresdner Bank AG
in Hamburg, Vereins-und Westbank AG, Deutsche Schiffsbank AG,
Norddeutsche Landesbank-Girozentrale, Deutsche Verkehrs-Bank AG (Hamburg
Branch) and Banque Internationale a Luxembourg S.A.

               The interest so payable, and punctually paid or duly
provided for, on any such Interest Payment Date will, as provided in the
Loan Agreement, be paid by the Companies to the Syndicate Agent for
payment to the Person in whose name this Note is registered at the close
of business on the date for payment of such interest. Any such interest
not so punctually paid or duly provided for shall be paid together with
default interest which shall accrue on the amount of such overdue sum in
the case of payments due as more fully provided in the Loan Agreement.

               Under the Loan Agreement, the Companies are obligated to
pay interest on and the principal of this Note to the Syndicate Agent in
the manner as provided therein, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment
of public and private debts.

               This Note is subject to prepayment and acceleration as
more fully described in the Loan Agreement.

               This Note is one of a duly authorized issue of Notes
issued and to be issued under the Loan Agreement.

               Reference is made to the Loan Agreement and all
supplements and amendments thereto (a copy of which is on file with each
of the Companies at its principal corporate office) for a more complete
statement of the terms and provisions thereof, including a statement of
the properties thereby conveyed, pledged and assigned, the nature and
extent of the security, the respective rights thereunder of the
Companies, and the Holders of the Notes, and the terms upon which the
Notes are, and are to be, executed and delivered, to all of which terms
and conditions in the Loan Agreement each Holder hereof agrees by its
acceptance of this Note.

               On a Fixed Rate Conversion Date, the Interest Rate on
this Note shall be converted to a Fixed Rate. Upon such conversion, the
Holders shall exchange this Note for a new Fixed Rate Note or Notes by
delivery of this Note to the principal office of the Registrar or at an
office or agency maintained for that purpose.

               If an Event of Default shall occur and be continuing, the
principal of this Note may be declared due and payable in the manner and
with the effect provided in the Loan Agreement and the Syndicate Agent
may exercise whatever rights and remedies provided for therein.

               The right of the Holder of this Note to institute action
for any remedy under the Loan Agreement, including the enforcement of
payment of any amount due hereon, is subject to certain restrictions
specified in the Loan Agreement.

               As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is transferable, and upon
surrender of this Note for registration of transfer at the principal
office of the Registrar, or at the office or agency maintained for such
purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by, the
Holder or his attorney duly authorized in writing, one or more new Notes
of the same maturity and type and of authorized denominations and for
the same aggregate principal amount will be issued to the designated
transferee or transferees.

               As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is exchangeable for a like
aggregate principal amount of LIBO Rate Notes of the same maturity and
type and of authorized denominations, as requested by the Holder
surrendering the same, upon presentation thereof for such purpose at the
principal office of the Registrar, or at an office or agency maintained
for such purpose.

               Prior to due presentment for registration of exchange or
transfer of this Note, the Syndicate Agent, the Paying Agent and the
Registrar may deem and treat the Person in whose name this Note is
registered as the absolute owner hereof for the purpose of receiving
payment of the principal of and interest on this Note and for all other
purposes whatsoever whether or not this Note be overdue, and neither the
Syndicate Agent, the Paying Agent nor the Registrar shall be affected by
notice to the contrary.

               This Note shall not be entitled to any benefit under the
Loan Agreement or be valid or obligatory for any purpose unless this
Note has been executed pursuant to the provisions in the Loan Agreement.

               Notwithstanding anything herein or in any other Loan
Document to the contrary, each of the Companies (other than APL) agrees
that, upon its execution of this Note, it shall be jointly and
severally, directly and primarily liable as a co-Borrower, together with
all of the other Transferees that have or shall have executed a Note
under the Loan Agreement for payment in full of all Vessel Indebtedness
respecting any or all of the Daewoo Vessels and the HDW Vessels. APL
agrees that, upon its execution of this Note, it shall be jointly and
severally, directly and primarily liable, with the Transferees also
liable therefor, with respect to any Daewoo Note executed by APL as co-
Borrower under the Loan Agreement for payment in full of the Vessel
Indebtedness relating to the related Daewoo Vessel or Vessels. The
liability of the Companies shall be independent of the duties,
obligations and liabilities of each and all of the other joint and
several Transferees. Any Holder (subject to the provisions of the Loan
Agreement) may bring a separate action or actions on each, any or all of
such Vessel Indebtedness against each, any or all of such Transferees
liable therefor and APL (to the extent it is or becomes a co-Borrower),
whether action is brought against any other or all of such Transferees
and APL (as provided herein), or any one or more of the Transferees or
APL (as provided herein) is or is not joined therein.

               Notwithstanding anything herein, in the Daewoo Notes or
in any other Loan Document to the contrary, except with respect to APL,
by acceptance of this Note the Holder agrees that it will look solely to
the Recourse Assets for all amounts coming due from the Transferees (or
any Transferee) under the Loan Agreement, under the Daewoo Notes or
under any of the other Loan Documents, and for the performance of all
covenants, agreements and obligations and for the breach of
representations and warranties or covenants of the Companies (other than
APL) (or any Transferee) under the Loan Agreement or under the Daewoo
Notes or any of the other Loan Documents, or under any certificate or
other documents executed and delivered by the Companies (other than APL)
as contemplated by the Loan Documents, and, therefore, notwithstanding
anything contained in any of the aforesaid documents, no judgment or
recourse (except a judgment against the Recourse Assets or any of them)
shall be sought or enforced for the payment or performance of the
Companies' (other than APL's) (or any Transferee's) obligations under
the Loan Agreement, the Daewoo Notes, any other Loan Document or any
such other certificate or document: (a) against the Companies (other
than APL) in their individual or personal capacities, other than in
connection with the enforcement of remedies against the Recourse Assets
or (b) against any assets or property of the Companies (other than APL)
other than the Recourse Assets; provided, however, that nothing in this
paragraph shall (x) limit or otherwise prejudice in any way the rights
of the Holders to proceed against the Guarantor under the Guarantee or
(y) constitute or be deemed to be a release of the obligations secured
by, or impair the enforceability of, the liens, mortgage interests or
other security interests created by the Security Documents, or to
restrict the remedies available to Holders to realize upon the Security
Documents or enforce the Guarantee.

               AS PROVIDED IN THE LOAN AGREEMENT, THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (OTHER THAN THE LAW OF THE STATE OF NEW YORK GOVERNING CHOICE
OF LAW).

               IN WITNESS WHEREOF, the Companies have caused this
instrument to be duly executed under its corporate seal.

                                                    [               ]


                                                    By:_________________
                                                       Title:



Attest:


By:___________________
   Title:

                                                             EXHIBIT B-1
                                                      to Amendment No. 2
                                                       to Loan Agreement





                        FIRST PREFERRED SHIP MORTGAGE ON
                             THE "[           ]" TO
                           [                         ]

               THIS FIRST PREFERRED SHIP MORTGAGE dated this ___ day of
__________ 199_, made and given by American President Lines, Ltd., a
Delaware corporation (the "Borrower"), to [Kreditanstalt fur
Wiederaufbau, a public law company incorporated in the Federal Republic
of Germany (the "Mortgagee", which term shall include the Mortgagee's
successors and assignees)] [Commerzbank AG, Hamburg, a public law
company incorporated in the Federal Republic of Germany (the "Syndicate
Agent") and Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg,
Vereins- und Westbank AG, Deutsche Schiffsbank AG, Norddeutsche
Landesbank-Girozentrale, Deutsche Verkehrs-Bank AG (Hamburg Branch) and
Banque Internationale a Luxembourg S.A. (collectively, the "Syndicate"
and, together with the Syndicate Agent, the "Mortgagee", which term
shall include any successors and assignees of each)].

               WHEREAS:

               A. The Borrower is the sole owner of the Republic of The
Marshall Islands flag vessel, "APL [      ]", Official No. MI [     ],
of [     ] Gross Tons and [    ] Net Tons (the "Vessel", which term
shall include all of the boilers, engines, machinery, bowsprits, masts,
spars, sails, rigging, boats, anchors, cables, apparel, furniture,
fitting, equipment and all other appurtenances to the Vessel
appertaining or belonging, whether now owned or hereafter acquired,
whether on board or not, and all additions, improvements and
replacements hereafter made in or to the Vessel, or any part thereof, or
in or to the equipment and appurtenances aforesaid, but shall exclude
any leased equipment).

               B. This Mortgage is granted to secure, among other
things, certain obligations of the Borrower under that certain Loan
Agreement dated March 14, 1994, as amended by Amendment No. 1 thereto
dated May 19, 1995 and as further amended by Amendment No. 2 thereto
dated September 1, 1995, among the Borrower, [        ] ("[      ]"),
the other Transferees, the Mortgagee and [  ] ("     ") (the "Loan
Agreement"). Terms used herein without definition shall have the
respective meanings provided in the Loan Agreement (a copy of which
without attachments (other than the forms of [HDW] [Daewoo] Notes) is
attached hereto as Exhibit A).

               C. The Mortgagee has agreed to make loans with respect to
three (3) vessels (the Marshall Islands flag vessels [     ] (Official
Number [    ]), [     ] (Official Number [    ]) and [ ] (Official
Number [ ])), pursuant to the Loan Agreement and that certain Second
Amended and Restated Agreement to Acquire and Charter dated September 1,
1995 among the parties to the Loan Agreement (the "Acquisition
Agreement") (a copy of which is attached hereto as Exhibit B), such
loans to be in an aggregate amount not to exceed [         ] United
States Dollars (USD[       ]) (collectively, the "Loans"'). The total
amount of the Loans is or shall be evidenced by the [HDW] [Daewoo]
Notes. The portion of the Loans relating to the acquisition of the
Vessel is in the principal amount of [     ] United States Dollars (USD
[               ]), which portion has been advanced by the Mortgagee on
the date hereof, for which the Borrower is justly indebted and is
evidenced by the specific [HDW] [Daewoo] Notes dated ______, 199_ (the
"[HDW] [Daewoo] [          ] Notes") (a copy of which is attached hereto
as Exhibit C), and in order to induce the Mortgagee to make the Loans,
the Borrower has agreed to grant this Mortgage to the Mortgagee to
secure the [HDW] [Daewoo] [      ] Notes and the Borrower's joint and
several liability under the Loan Agreement for the repayment of the
[HDW] [Daewoo] Notes issued or to be issued by the Borrower or any
remaining Transferee (which shall be the owner[s] of the Vessel[s]
[        ]) [(such Notes, together with the [HDW] [Daewoo] [      ]
Notes are referred to herein for purposes of this Mortgage as the "[HDW]
[Daewoo] Notes")] and the other obligations stated in Paragraph D below
with respect to the acquisition [and financing] of the other [HDW]
[Daewoo] Vessels other than the Vessel.

               D. The term "Obligations" shall mean [(i)] all of the
obligations of the Borrower to pay any amount to the Mortgagee under (A)
this Mortgage, (B) the [HDW] [Daewoo] Notes and (C) the Loan Agreement
insofar as it relates to the [HDW] [Daewoo] Notes, [and (ii) all payment
and performance obligations of the Borrower under that certain Bareboat
Charter Party dated May 19, 1995 between the Borrower, as charterer, and
M.V. President Kennedy, Ltd., assigned by M.V. President Kennedy, Ltd.
to the Mortgagee pursuant to that certain APL China Charter Assignment
dated May 19, 1995,] whether by reason of reimbursement, interest,
indemnity or for any other reasons whatsoever.

               E. To secure payment of the Obligations to the Mortgagee,
the Borrower has duly authorized the execution, delivery and recording
of this First Preferred Ship Mortgage under and pursuant to the laws of
the Republic of The Marshall Islands.

               F. Upon transfer of the Vessel, the Borrower will, on the
date hereof, enter into that certain Bareboat Charter Party dated the
date hereof (the "Charter") with [    ].

               NOW, THEREFORE, THIS DEED, WITNESSETH:

               That the Borrower, in consideration of the premises and
other valuable consideration, the receipt whereof is hereby
acknowledged, and for the purpose of securing payment and performance of
the Obligations and to secure the performance, observance and accuracy
of and compliance with all the covenants, representations, warranties,
terms and conditions in the [HDW] [Daewoo] Notes, the Loan Agreement
insofar as it relates to the [HDW] [Daewoo] Notes, in favor of the
Mortgagee and in this Mortgage expressed, for the benefit of the
Mortgagee, has granted, conveyed, mortgaged, pledged, assigned,
transferred, set over and confirmed and does by these presents grant,
convey, mortgage, pledge, assign, transfer, set over and confirm unto
the Mortgagee the whole of the Vessel;

               TO HAVE AND TO HOLD the same unto the Mortgagee forever
in accordance with the terms herein set forth for the enforcement of the
payment and performance of the Obligations and to secure the
performance, observance and accuracy of and compliance with all the
covenants, representations, warranties, terms and conditions contained
in the [HDW] [Daewoo] Notes, the Loan Agreement insofar as it relates to
the [HDW] [Daewoo] Notes, the Loans and this Mortgage expressed, for the
benefit of the Mortgagee;

               PROVIDED ONLY and the conditions of these presents are
such that if and when the Mortgagee shall have received (i) the full
amount and full performance of the Obligations or (ii) the full amount
required to be paid in respect of the Subportion of the [HDW] [Daewoo]
Tranche relating to the Vessel evidenced by the [HDW] [Daewoo] [    ]
Notes in accordance with the provisions of Section 5.04 of the Loan
Agreement, together with payment of all other amounts then due and owing
and secured by this Mortgage, these presents and the rights of the
Mortgagee hereunder shall cease, determine and be void, otherwise to be
and remain in full force and effect.

               The Borrower for itself, its successors and assignees,
hereby covenants and agrees with the Mortgagee that the Vessel is to be
held by the Mortgagee as long as the Obligations and obligation of the
Borrower under the [HDW] [Daewoo] Notes, the Loan Agreement (to the
extent it relates to the [HDW] [Daewoo] Notes) and this Mortgage remains
in force, subject to the further covenants, conditions, provisions,
terms and uses hereinafter set forth.

                                    ARTICLE I
                                        
                         REPRESENTATIONS OF THE BORROWER

               (1) The Borrower is a corporation duly organized and
validly existing in good standing under the laws of the jurisdiction of
its incorporation with full corporate power and authority to conduct its
business as the same is presently conducted;

               (2) the Borrower has legal power and authority to enter
into and carry out the terms of this Mortgage;

               (3) this Mortgage has been duly authorized by all
necessary action, corporate or other, on the part of the Borrower, and
this Mortgage constitutes, and upon due execution and delivery by the
Borrower this Mortgage will constitute, in accordance with its
respective terms, a legal, valid and binding instrument enforceable
against the Borrower, except to the extent limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other laws of
general application relating to or affecting the enforcement of
creditors' rights from time to time in effect;

               (4) except as previously disclosed to the Mortgagee in
writing, there are no actions, suits or proceedings pending or, to the
Borrower's knowledge, threatened against the Borrower or any of its
properties affecting this Mortgage which would materially and adversely
affect the ability of the Borrower to perform its obligations hereunder;

               (5) the consummation of the transactions contemplated by,
and compliance by the Borrower with all the terms and provisions of,
this Mortgage will not violate any provisions of the Certificate of
Incorporation or Bylaws of the Borrower and will not result in a breach
of the terms and provisions of, or constitute a default under, any other
agreement or undertaking by the Borrower or by which it or any of its
property is bound or any order of any court or administrative agency
entered in any proceedings binding on the Borrower, or violate any
applicable statute, rule or regulation;

               (6) the Borrower is not in default and no condition
exists which with notice or lapse of time or both would constitute a
default by the Borrower, in any respect which would materially and
adversely affect the ability of the Borrower to perform its obligations
under this Mortgage, under any mortgage, loan agreement, deed of trust,
indenture or other agreement with respect thereto or evidence of
indebtedness to which it is a party or by which it is bound, and is not
in violation of or in default, in any respect which would materially and
adversely affect the ability of the Borrower to perform its obligations
under this Mortgage, under any order, writ, judgment or decree of any
court, arbitrator or governmental authority, commission, board, agency
or instrumentality, domestic or foreign;

               (7) the Borrower has more than one place of business and
the location of the place of business which is its chief executive
office is 1111 Broadway, Oakland, California 94607;

               (8) all taxes (other than taxes based on or measured by
income), liability for the payment of which has been incurred by the
Borrower in connection with the execution, delivery and performance by
it of this Mortgage, have been paid (or provided for in its accounts if
not payable on or prior to the delivery date of the Vessel);

               (9) all governmental consents, licenses, permissions,
approvals, registrations or authorizations or declarations required (i)
to enable it lawfully to enter into and perform its respective
obligations under this Mortgage, (ii) to ensure that its respective
obligations hereunder and thereunder are legal, valid and enforceable
and (iii) to make this Mortgage admissible in evidence in the Republic
of The Marshall Islands, and the United States of America has been
obtained or made and are in full force and effect;

               (10) it has not taken any corporate action nor to its
knowledge have any other steps been taken or legal proceedings been
started or threatened against it for its winding-up, dissolution or
reorganization or for the appointment of a receiver, administrative
receiver, administrator, trustee or similar officer of it or of any or
all of its respective assets and revenues;

               (11) except for registration of this Mortgage in
accordance with the provisions of the Republic of The Marshall Islands'
Maritime Act of 1990, as amended, it is not necessary to ensure the
legality, validity, enforceability or admissibility in evidence of this
Mortgage in the country of the Borrower or the United States of America,
or the flag of its registry or, to the best of its knowledge, elsewhere,
that it be filed, recorded or enrolled with any governmental authority
or agency in the country of the Borrower or, to the best of its
knowledge, elsewhere, or that it be stamped with any stamp, registration
or similar transaction tax in the country of the Borrower or the United
States of America, or the flag of its registry or to the best of its
knowledge, elsewhere;

               (12) the Vessel is duly documented in the name of the
Borrower under the flag of the Republic of The Marshall Islands; and

               (13) the Vessel is in the absolute and unencumbered
ownership of the Borrower except as contemplated by this Mortgage [and
the Second Preferred Ship Mortgage dated the date hereof (the "Second
Mortgage") in favor of KfW (the "Second Mortgagee")].


                                   ARTICLE II
                                        
                            COVENANTS OF THE BORROWER

               (14) The Borrower represents and warrants that it
lawfully owns and possesses the Vessel free from any mortgage, security
interest, lien or charge whatsoever other than this Mortgage and
covenants with the Mortgagee that it shall warrant and defend the title
to and lawful possession of the Vessel and every part thereof for the
benefit of the Mortgagee, and shall hold harmless and indemnify the
Mortgagee against the claims and demands of all Persons whomsoever
arising as the result of any mortgage, security interest, lien or charge
whatsoever on the Vessel; provided that the Borrower's foregoing
obligations (other than its agreements to defend title and indemnify and
hold the Mortgagee harmless) shall not apply to the following:

               (a) liens for crew's wages ("Crew's Wages") and salvage
(including contract salvage) which shall not have been due and payable
for more than ten (10) days after termination of a voyage or which shall
then be contested in good faith by the Borrower or any permitted
charterer in appropriate proceedings diligently prosecuted and shall not
subject the Vessel or any part thereof to risk, forfeiture or loss, or
in any material way prejudice or impair the Mortgagee's rights or
interest in or under the Mortgage;

               (b) liens for Crew's Wages and salvage (including
contract salvage) and general average which are either unclaimed or
covered by insurance;

               (c) liens incident to current operations (except for
Crew's Wages, salvage and general average) not more than thirty (30)
days past due, liens for the wages of a stevedore when employed directly
by the Shipowner or the operator, master or any agent of the Vessel, or
liens covered by insurance and any deductible applicable thereto;

               (d) liens for repairs or with respect to changes made in
the Vessel pursuant to Section 25(b) hereof;

               (e) in the event the use of or title to the Vessel is
requisitioned by any government or any agency thereof insofar as it
relates to possession of the Vessel;

               (f) [Reserved] [the Second Mortgage];

               (g) liens for taxes or assessments or other governmental
charges and levies not yet due and payable, or the validity of which is
being contested by the Borrower or any permitted charterer in good faith
by appropriate proceedings upon stay of execution of the enforcement
thereof and for which adequate reserves in accordance with generally
accepted accounting principles or other appropriate provision has been
made;

               (h) in the case of any actual or constructive total loss
or an agreed or compromised total loss of the Vessel insofar as it
relates to possession of the Vessel; and

               (i) insofar as it relates to possession of the Vessel, to
charters permitted by the terms of this Mortgage, the Loan Agreement and
the Acquisition Agreement, and by applicable law and to subcharters
permitted by the terms of the Charter;

provided that any liens described in paragraphs (c), (d) and (g) hereof
shall be permitted only to the extent they are subordinate to lien of
the Mortgage.

               (15)(a) Neither the Borrower, any 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 lien whatsoever, other than this Mortgage [, the Second
Mortgage] and the liens referred to in Section 14 hereof.

               (b) The Borrower shall forthwith remove or cause to be
removed within thirty (30) days of its knowledge thereof any lien or
encumbrance (other than the items referred to in Section 14(e), (h) and
(i) of this Article II) which shall be filed against the Vessel, unless
the same is being contested by appropriate proceedings in good faith
and (i) such proceedings shall suspend the collection of the related
claim from the Vessel, (ii) neither the Vessel nor any interest therein
would be in any danger of being sold, forfeited or lost during the
pendency of such proceedings, and (iii) the Borrower or any permitted
charterer shall have furnished such security, if any, or cause or make
adequate provision for release prior to foreclosure, sale, or similar
disposition as may be required in such proceedings.

               (16) If the Vessel shall be attached, levied upon or
taken into custody by virtue of any legal proceeding in any court or
tribunal or by any government or other authority, the Borrower or any
permitted charterer shall promptly notify the Mortgagee thereof by
telex and within fifteen (15) days after any such arrest (except in the
case of requisition or other taking by any government or governmental
body) shall cause the Vessel to be released within thirty (30) days and
shall promptly notify the Mortgagee thereof in the manner aforesaid.

               (17) Except as provided in the Granting Clause hereof
the Borrower has not assigned, pledged or otherwise granted a security
interest in or lien on, and shall not assign, pledge or otherwise grant
a security interest in or lien on, the whole or any part of, any rights
assigned by the Granting Clause hereof [, except the Second Mortgage].

               (18) Upon the occurrence of any Event of Default, the
Borrower shall promptly notify the Mortgagee by telex or telecopy,
confirmed by letter, unless such Event of Default shall have been
cured.

               (19) The Borrower shall make all payments of principal
and interest on the [HDW] [Daewoo] [    ] Notes and the other [HDW]
[Daewoo] Notes and shall perform in full its obligations and
liabilities under this Mortgage and the Loan Agreement to the extent it
relates to the [HDW] [Daewoo] [    ] Notes, the other [HDW] [Daewoo]
Notes and the [HDW] [Daewoo] Security Documents to which it is a party.

               (20) (a) The Borrower represents and warrants that on
the date hereof the Vessel is, and the Borrower covenants with the
Mortgagee that it shall (subject to clauses (b) and (c) below)
hereafter remain, documented under the laws of the Republic of The
Marshall Islands.

               (b) The Borrower shall have the right to change the
registry and flag of the Vessel to the registry and flag of the
Republic of Panama, the Republic of Liberia, the Republic of Vanuatu
and the Commonwealth of The Bahamas. Prior to any such change in
registry and flag, the Borrower shall (i) obtain all necessary
approvals of governmental authorities including, without limitation,
those of the then current country of the Vessel's registry and the
jurisdiction of its incorporation, if any, and otherwise comply with
all applicable law if any, (ii) execute and deliver to the Mortgagee,
in form and substance reasonably satisfactory to the Mortgagee, and
after execution by the Mortgagee and immediately after the registration
of the Vessel, file for recordation, a replacement mortgage for this
Mortgage (the "Replacement Mortgage"), with terms and conditions
substantially similar to the terms and conditions of this Mortgage,
which Replacement Mortgage shall constitute a first priority lien on
the Vessel and shall be in compliance with all applicable laws and
regulations of any such country where the Vessel is re-registered and
re-flagged, and immediately after the filing of the Replacement
Mortgage for recordation deliver to the Mortgagee (A) an opinion of
counsel reasonably satisfactory to the Mortgagee confirming that any
Replacement Mortgage constitutes such a first priority lien under the
laws and regulations of such country and is a "preferred mortgage"
within the meaning of 46 U.S.C. Section 31301(b)(B), and that, if there
shall have been any change in the applicable laws and regulations of
such country of re-registration and re-flagging after March 14, 1994,
such change does not materially adversely affect the interests of the
Mortgagee with respect to the Vessel, and (B) a certificate of the
Borrower that the Vessel is duly documented under the laws of the
country where the Vessel is re-registered and re-flagged, and that the
Vessel is free of any claim, lien, charge, mortgage or other
encumbrance of any character (except the Replacement Mortgage [and the
Second Mortgage]). In connection with any such change of registry and
flag, the Mortgagee shall, at the request of the Borrower and at the
Borrower's cost and expense, and upon compliance with subclauses (i)
and (ii) of this clause (b), execute and deliver to the Borrower the
Replacement Mortgage, an instrument in recordable form duly
acknowledging the satisfaction and discharge of this Mortgage, and any
other instrument or document necessary or appropriate for the orderly
consummation of the change in registry and flag and replacement of the
Mortgage. Notwithstanding the foregoing, no such reflagging shall be
permitted (x) if an Event of Default or Incipient Default shall have
occurred and be continuing or (y) if in the sole opinion of the
Mortgagee such reflagging will, or may be expected to, adversely affect
the rights or remedies of the Mortgagee under the Loan Documents, the
value of the Vessel, or will be or may otherwise be expected to be,
disadvantageous to the Mortgagee.

               (c) The Borrower shall have the right to change the
registry and flag of the Vessel to the registry and flag of the United
States of America. Prior to any such change in registry and flag, the
Borrower shall (i) obtain all necessary approvals of governmental
authorities including, without limitation, those of the then current
country of the Vessel's registry and the jurisdiction of its
incorporation, if any, and otherwise comply with all applicable law, if
any, (ii) execute and deliver to the Mortgagee (or an approved trustee
to act as mortgagee), a replacement mortgage with terms and conditions
substantially the same as the terms and conditions of this Mortgage, in
form and substance reasonably satisfactory to the Mortgagee (the
"Replacement Mortgage"), and after execution by the Mortgagee and
immediately after the registration of the Vessel, file for recordation,
the Replacement Mortgage for this Mortgage, which Replacement Mortgage
shall constitute a first priority lien on the Vessel and shall be in
compliance with all applicable laws and regulations of the United States
of America, and, immediately after the filing of the Replacement
Mortgage for recordation, deliver to the Mortgagee (A) an opinion of
counsel reasonably satisfactory to the Mortgagee confirming that any
Replacement Mortgage constitutes such a first "preferred" ship mortgage
under the laws and regulations of the United States of America and (B) a
certificate of the Borrower that the Vessel is duly documented under the
laws of the United States of America, and that the Vessel is free of any
claim, lien, charge, mortgage or other encumbrance of any character
(except the Replacement Mortgage [, the Second Mortgage] and the
Charter). In connection with any such change of registry and flag, the
Mortgagee shall, at the request of the Borrower and at the Borrower's
cost and expense, and upon compliance with subclauses (i) and (ii) of
this clause (c), execute and deliver to the Borrower the Replacement
Mortgage, an instrument in recordable form duly acknowledging the
satisfaction and discharge of this Mortgage, and any other instrument or
document necessary or appropriate for the orderly consummation of the
change in registry and flag and replacement of the Mortgage.
Notwithstanding the foregoing, no such reflagging shall be permitted if,
an Event of Default or Incipient Default shall have occurred and be
continuing.

               (21) The Borrower (x) shall not cause or permit the
Vessel to be operated in any manner contrary to applicable law except to
the extent that such provision shall have been contested or caused to be
contested in good faith by the Borrower in appropriate proceedings
diligently prosecuted and shall not subject the Vessel to risk,
forfeiture or loss, or in any material way prejudice or impair the
Mortgagee's rights or interests in or under the Mortgage, (y) shall not
operate the Vessel in any way contrary to any of the terms or conditions
of the insurance required by Section 29 hereof (unless it shall first
have arranged for continuation of the coverage afforded thereby), and
(z) shall not abandon the Vessel in any foreign port unless (i) there
shall have been an actual or constructive total loss or an agreed or
compromised total loss of the Vessel; or (ii) there has been any other
loss with respect to the Vessel and the Borrower shall not have had
reasonable time to repair or rectify the same; or (iii) the use or title
of the Vessel has been taken or requisitioned by any government or
governmental authority; provided, however, that if an Event of Default
shall have occurred and be continuing, the Borrower shall not abandon
the Vessel unless it shall have first received the written consent of
the Mortgagee.

               (22) The Borrower shall pay and discharge or cause to be
paid and discharged when due and payable all claims against, and taxes,
assessments, governmental charges, fines and penalties imposed on, the
Vessel or the Vessel's cargo; provided, however, that the Borrower shall
have the right to contest or cause to be contested, in good faith and by
appropriate proceedings, any such claim, tax, assessment, governmental
charge, fine or penalty and, pending such contest, may defer the payment
thereof so long as such contest or deferment in payment shall not
subject the Vessel or any part thereof to risk or forfeiture or loss, or
in any material way prejudice or impair the Mortgagee's rights or
interests in or under the Mortgage.

               (23) The Borrower shall, at its expense and at no cost to
the Mortgagee, comply with and satisfy all of the provisions of the flag
of the Republic of The Marshall Islands, in order to establish, record
and maintain this Mortgage as a preferred mortgage thereunder on the
Vessel until it is re-registered, reflagged and this Mortgage is
replaced by a Replacement Mortgage as provided in Section 20(b) or (c)
hereof.

               (24) The Borrower shall place and at all times and places
shall retain a properly certified copy of this Mortgage on board the
Vessel with her papers and shall cause such certified copy and such
papers to be exhibited to any and all Persons having business with the
Vessel and to any representative of the Mortgagee. The Borrower shall
also place and keep prominently displayed on the Vessel a framed printed
or typewritten notice in plain type which shall cover a space of not
less than six inches wide by nine inches high (or of such other
dimensions as may be required by law) reading substantially as follows:

               "NOTICE OF FIRST PREFERRED SHIP MORTGAGE"

              "This Vessel is owned by American President Lines, Ltd.,
       a Delaware corporation (the "Shipowner"), and is covered by a
       First Preferred Ship Mortgage in favor of [Kreditanstalt fur
       Wiederaufbau] [Commerzbank AG, Hamburg, Commerzbank AG (Kiel
       Branch), Dresdner Bank AG in Hamburg, Vereins- und Westbank AG,
       Deutsche Schiffsbank AG, Norddeutsche Landesbank-Girozentrale,
       Deutsche Verkehrs-Bank AG (Hamburg Branch) and Banque
       Internationale a Luxembourg S.A.], under authority of the
       Republic of The Marshall Islands. Under the terms of said
       Mortgage, neither the Shipowner, any charterer, the master of the
       Vessel nor any other person has any right, power or authority to
       create, incur or permit to be placed or imposed upon this Vessel
       any lien whatsoever other than the lien of said Mortgage and
       liens for wages of a stevedore when employed directly by the
       Shipowner, operator, master, or any agent of the Vessel, for
       Crews' Wages, for general average, for salvage, and, to the
       extent subordinate to the lien of said Mortgage, for certain
       liens incident to current operations or for repairs or changes
       permitted by the Mortgage [and a Second Preferred Ship Mortgage
       in favor of Kreditanstalt fur Wiederaufbau]."
       
               (25)(a) The Borrower shall at all times and without cost
or expense to the Mortgagee (i) maintain and preserve, or cause to be
maintained and preserved, the Vessel in good running order and repair,
so that the Vessel shall be, insofar as due diligence can make her so,
strong and well and sufficiently tackled, appareled, furnished, equipped
and in every respect seaworthy and in good operating condition, ordinary
wear and tear and depreciation excepted; and (ii) keep the Vessel, or
cause her to be kept, in such condition as will entitle her to the
highest classification and rating for vessels of the same age and type
of The American Bureau of Shipping, and annually shall furnish to the
Mortgagee a certificate by The American Bureau of Shipping that such
classification is maintained; provided that in any event the Borrower
shall notify the Mortgagee of any change in the classification of the
Vessel; and provided, further, that the foregoing shall not apply if
there shall have been an Event of Loss or during such period as (1) the
Vessel has been taken or requisitioned by any government or governmental
body or (2) there has been any other loss with respect to the Vessel and
the Borrower shall not have had a reasonable time to repair the same.
The Borrower shall furnish from time to time upon reasonable demand of
the Mortgagee such information and documents as the Mortgagee may
require concerning the classification of the Vessel. Except during any
period in which the provided further proviso in the first sentence of
this paragraph shall apply, the Vessel shall, and the Borrower covenants
that she will, at all times comply with all applicable laws, treaties
and conventions of the Republic of The Marshall Islands and all rules
and regulations issued thereunder, and shall have on board as and when
required thereby valid certificates showing compliance therewith except
to the extent that such provision shall have been contested in good
faith by the Borrower in appropriate proceeding diligently prosecuted,
so long as such proceeding shall not subject the Vessel or any part
thereof to risk orforfeiture or loss, or in any material way prejudice
or impair the Mortgagee's rights or interests in or under the Mortgage.

               (b) The Borrower shall not make, or permit to be made,
any substantial change in the structure, type or speed of the Vessel or
change in her rig unless it shall have received the Mortgagee's prior
written approval thereto, which approval shall not be unreasonably
withheld or delayed; provided, however, that no such approval need be
obtained in respect of any change which shall be necessary to comply
with the requirements of the United States Coast Guard, the Republic of
The Marshall Islands or The American Bureau of Shipping in order to
entitle the Vessel to the classification and rating required by
paragraph (a) hereof.

               (c) Until an Event of Default shall occur, the Borrower
(i) shall be suffered and permitted to retain actual possession and use
of the Vessel and (ii) shall have the right, from time to time, in its
discretion, and without application to the Mortgagee, and without
obtaining a release thereof by the Mortgagee, to dispose of, free from
the lien hereof, any boilers, engines, machinery, bowsprits, masts,
spars, sails, rigging, boats, anchors, apparel, furniture, equipment or
any other appurtenances to the Vessel that are no longer useful,
necessary, profitable or advantageous in the operation of the Vessel,
first or simultaneously replacing the same by new boilers, engines,
machinery, bowsprits, masts, spars, sails, rigging, boats, anchors,
apparel, furniture, fittings, equipment or other appurtenances of at
least equal value to the Borrower which shall forthwith become subject
to the lien of this Mortgage.

               (26) The Borrower shall at all reasonable times afford
the Mortgagee or its authorized representatives full and complete access
to the Vessel for the purpose of inspecting or surveying the same and
her papers and, at the request and expense of the Mortgagee, the
Borrower shall deliver or cause to be delivered for inspection by such
parties copies of any and all contracts and documents relating to the
Vessel, whether on board or not.

               (27) The Borrower shall not sell, demise charter, except
for the Charter, mortgage (except for this Mortgage [and the Second
Mortgage]) or transfer the Vessel (except any sale of the Vessel after
repayment of the amounts of the related Subportion of the [HDW] [Daewoo]
Tranche in accordance with Section 5.04 of the Loan Agreement or by way
of requisition or other governmental taking by the United States of
America or the Republic of The Marshall Islands or in accordance with
Section 9.02(b) of the Loan Agreement) without the prior written consent
of the Mortgagee, which consent shall not be unreasonably withheld. Any
such written consent to any one sale, demise charter, mortgage or
transfer shall not be construed to be a waiver of this provision with
respect to any subsequent proposed sale, demise charter, mortgage or
transfer. Any sale, demise charter, mortgage or transfer of the Vessel
shall be subject to the provisions of this Mortgage and the lien
thereof.

               (28) The Borrower will reimburse the mortgagee promptly
for any and all expenditures which the Mortgagee may from time to time
make, lay out or expend in providing protection in respect of insurance,
discharge or purchase of any liens, taxes, dues, assessments,
governmental charges, tolls, fines and penalties imposed, repairs,
attorneys' fees and other matters as the Borrower is obligated herein to
provide but fails to provide. Such obligation of the Borrower to
reimburse the Mortgagee shall constitute Obligations secured by this
Mortgage, and shall be payable by the Borrower on demand, together with
interest thereon from the date of demand until the date of payment (both
before and after judgment) at the Default Interest Rate (as such rate is
set forth in Section [3.08(a)] [3.08(b)] of the Loan Agreement). The
Mortgagee, though privileged so to do, shall be under no obligation to
the Borrower to make any such expenditures, nor shall the making thereof
relieve the Borrower of any default in that respect.

               (29)(a) The Borrower shall, at its own expense, provide
and maintain insurance on or with respect to the Vessel and the
operation thereof, as follows:
       
       (1) Marine navigating risk hull and machinery insurance and
       marine war navigating risk hull and machinery insurance, together
       with, at the Borrower's option, such amounts of increased value
       and total loss only insurance as are permitted by such hull and
       machinery insurance policies. While the Vessel is idle or laid
       up, at the option of the Borrower and in lieu of the coverage
       described in the immediately preceding sentence, port risk hull
       and machinery insurance may be taken out on the Vessel by the
       Borrower. The foregoing insurance shall be in aggregate amounts
       equal at all times to the greater of (a) one hundred ten percent
       (110%) of the aggregate amount of the [HDW] [Daewoo]      [    ]
       Notes outstanding and (b) the full commercial value of the
       Vessel. Any of the foregoing may provide for a deductible amount
       approved by the Mortgagee, but no consent or approval of the
       Mortgagee shall be required for a deductible amount of up to One
       Million United States Dollars (USD1,000,000) with respect to any
       one accident, occurrence or event. The preceding sentence shall
       not apply in the event of an actual, constructive, compromised or
       agreed total loss of the Vessel. All policies of insurance
       required under this Section 29(a)(1) shall, unless the Mortgagee
       shall otherwise consent in writing, be under the broadest forms
       which are carried by prudent shipowners for similar vessels
       engaged in similar trades (at the time of issue of the policies
       in question) and approved by the Mortgagee. The Borrower shall
       have the right to procure in excess of the above requirements for
       its own sole benefit.
       
       (2) Marine and war risk, full form protection and indemnity
       insurance with such clubs or insurance companies acceptable to
       the Mortgagee, for such amounts as the Mortgagee may require or
       approve. Such protection and indemnity insurance shall be
       maintained in the broadest forms generally available in the
       United States/United Kingdom markets and shall include a cross
       liability endorsement, if obtainable. The Borrower shall have the
       right to carry, for its own benefit, excess protection and
       indemnity insurance and marine multiliability insurance. The
       Mortgagee shall have the right to approve the amounts of
       deductibles; provided, however, that no approval of the Mortgagee
       shall be required if such deductibles aggregate not more than
       Five Hundred Thousand United States Dollars (USD500,000) with
       respect to any single accident, occurrence or event excluding
       cargo and Five Hundred Thousand United States Dollars
       (USD500,000) per vessel voyage with respect to total cargo or
       property carried on such voyage.
       
       (3) Insurance against liability under law or international
       convention arising out of pollution, spillage or leakage in an
       amount not less than the greater of:
       
                    (y)      the maximum amount available, as that
                    amount may from time to time change, from the
                    International Group of Protection and Indemnity
                    Associations or alternatively such sources of
                    pollution, spillage or leakage coverage as are
                    commercially available in any absence of such
                    coverage by the International Group as shall be
                    carried by prudent shipowners for similar vessels
                    engaged in similar trades plus amounts available
                    from customary excess insurers of such risks as
                    excess amounts shall be carried by prudent
                    shipowners for similar vessels engaged in similar
                    trades; and
                    
                    (z)      the amounts required by the laws or
                    regulations of the United States of America and
                    any applicable jurisdiction in which the Vessel
                    may be trading from time to time except to the
                    extent that any such laws or regulations shall
                    have been contested in good faith by the Borrower
                    or any permitted charterer in appropriate
                    proceedings diligently prosecuted, as long as such
                    proceedings or the failure to provide such
                    insurance shall not subject the Vessel or any part
                    thereof to risk, forfeiture or loss, or in any
                    material way prejudice or impair the Mortgagee's
                    rights or interests in or under this Mortgage.
                    
       The foregoing insurance shall be against such risks and in such
       form as are in the reasonable opinion of the Mortgagee,
       necessary or advisable for the protection of the interests of
       the Mortgagee.
       
       (4) Single interest mortgagee's insurance covering the
       Mortgagee against any acts or omissions of the Borrower whereby
       marine and war risk hull and machinery insurance covered by
       this paragraph (a) shall or may be suspended, impaired or
       defeated; and any loss under such insurance shall be payable
       directly to the Mortgagee. Such single interest mortgagee's
       insurance may, at the option of the Mortgagee, be placed by the
       Mortgagee at the expense of the Borrower, unless the Borrower
       can arrange coverage acceptable to the Mortgagee at cheaper
       rates which can be directly placed by the Mortgagee.
       
       (5) Mortgagee's additional perils insurance (pollution), and
       any loss under such insurance shall be payable directly to the
       Mortgagee. Such additional perils insurance may, at the option
       of the Mortgagee, be placed by the Mortgagee at the expense of
       the Borrower, unless the Borrower can arrange acceptable
       coverage to the Mortgagee at cheaper rates which can be
       directly placed by the Mortgagee.
       
       (6) The Borrower shall carry at its own expense, for the
       benefit of the Mortgagee, (i) in connection with any voyage
       outside the territorial waters of the United States of America,
       such insurance against political risks of confiscation and
       expropriation by any government (except the United States of
       America and the country of registry) as would be carried by
       prudent owners and operators on similar voyages, (ii)
       additional insurance in such amounts and against such risks
       arising from or connected with the ownership or operation of
       the Vessel as from time to time may be commonly insured against
       and may be reasonably required by the Mortgagee and (iii) such
       other insurance as may at the time be required by applicable
       law except to the extent that such law shall have been
       contested in good faith by the Borrower or any permitted
       charterer in appropriate proceedings diligently prosecuted as
       long as such proceedings or the failure to provide such
       insurance shall not subject the Vessel or any part thereof to
       risk, forfeiture or loss, or in any material way prejudice or
       impair the Mortgagee's rights or interests in or under this
       Mortgage.
       
               (b) (1) All insurance required to be taken out and
maintained pursuant to the terms of this Mortgage (except insurance
pursuant to Section 29(a)(4) and (5) of this Article II) shall name the
Mortgagee (as Mortgagee), [the Second Mortgagee,] the Borrower and any
permitted charterer, as named insured or additional named insured, and
the policies or certificates of insurance shall provide that there shall
be no recourse against the Mortgagee for the payment of premiums,
commissions, club calls, assessments or advances.

       (2) All insurance carried pursuant to paragraph (a) of this
       Section 29 shall contain provisions or endorsements stating that
       such insurance is primary insurance without any right of
       contribution with respect to any insurance carried by or on
       behalf of the Mortgagee [or the Second Mortgagee] other than as
       provided pursuant to this Section 29 on the same interest
       insured.
       
       (3) The policies in respect of insurance carried pursuant to
       paragraph (a) hereof shall provide that at least ten (10) days'
       prior written notice shall be given to the Mortgagee and the
       Borrower 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 that (except in the case of automatic termination and
       cancellation clauses pursuant to the terms of the war risk
       policies other than for nonpayment of premium) at least ten (10)
       days' prior written notice shall be given to the Mortgagee [and
       the Second Mortgagee] and the Borrower by the underwriter of any
       termination, cancellation, lapse or material modification of the
       terms of such policy. Each policy in respect of such insurance
       shall contain provisions waiving underwriters' rights of
       subrogation thereunder against any assured named in such policy.
       The Mortgagee shall have the right, but not the obligation, to
       pay any such amounts on behalf of the Borrower which shall not
       have been timely paid by the Borrower and to recover such amounts
       together with interest pursuant to this Section 29.
       
       (c) All policies of insurance in respect of insurance required to
be taken out and maintained pursuant to the terms of this Mortgage or
other evidence thereof (except policies taken out pursuant to Sections
29(a)(4) and (a)(5) of this Article II) shall provide that losses
thereunder shall be payable (i) until this Mortgage shall have been
discharged, first to the Mortgagee for application pursuant to this
Mortgage; [and] (ii) [and after underwriters shall have been given
notice by the Mortgagee of discharge of this Mortgage, to the Second
Mortgagee for application pursuant to the Second Mortgage; and (iii)]
thereafter, to the Borrower; provided, however, that such policies of
insurance or other evidence thereof shall provide that:

       (1) In the case of insurance carried pursuant to paragraph (a)(1)
       of this Section 29 (to the extent liability insurances are
       afforded thereunder) or pursuant to paragraph (a)(2) of this
       Section:
       
       (i) if the Borrower shall not have incurred the loss, damage or
       expense in question, any loss under such insurance may be paid
       directly to the Person by whom such liability covered by such
       policies has been incurred (whether or not an Incipient Default
       or an Event of Default then exists); and
       
       (ii) if the Borrower shall have incurred the loss, damage or
       expense in question or if the Borrower shall have paid 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 Borrower or to its order in reimbursement if there is
       not then an existing Event of Default or Incipient Default of
       which the underwriter has written notice from the Mortgagee, or,
       if there is such an existing Event of Default or Incipient
       Default, to the Mortgagee to apply such amounts in accordance
       with Section 39 hereof, or (y) if such Event of Default or
       Incipient Default shall have been cured or waived, in which case
       such amounts shall be applied as otherwise provided in this
       Section 29, and if this Mortgage shall have been discharged, such
       loss shall be paid to the Borrower; and
       
                     (iii) upon the occurrence of an Event of Loss, all
       insurance payments and other compensation therefor shall be paid
       to the Mortgagee for application in accordance with Section
       5.04(b) of the Loan Agreement.
       
              (2) In the case of insurance carried pursuant to
       paragraph (a)(1) of this Section (to the extent liability
       insurances are not afforded thereunder), so long as the accident,
       occurrence or event does not result in an Event of Loss, payment
       of all losses up to Two Million United States Dollars
       (USD2,000,000) (or such higher figure as the Mortgagee 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, (ii) directly to the
       Borrower or to its order as reimbursement if the Borrower or any
       permitted charterer shall have first fully repaired the damage
       and paid the cost thereof and any other charges involved, and the
       underwriters shall have received evidence that such repair and
       payment have been made or will be made simultaneously with the
       payment by the underwriters; provided that if such loss exceeds
       Two Million United States Dollars (USD2,000,000), the
       underwriters shall not make payment without first obtaining the
       prior written consent of the Mortgagee, which consent shall not
       be unreasonably withheld, and provided, further, that if the
       underwriters shall have received written notice from the
       Mortgagee as to the occurrence of an Event of Default or
       Incipient Default, unless the underwriters shall thereafter have
       been notified by the Mortgagee in writing that such Event of
       Default or Incipient Default has been cured or waived, in which
       event all such payments shall be made to the Mortgagee for
       application in accordance with Section 39 hereof, and after this
       Mortgage has been satisfied and discharged, to the Borrower or to
       its order.
       
               (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 Borrower 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 such claim, the Mortgagee, on written request of the
Borrower, shall assign to any Person executing a surety or guaranty
bond or other agreement to save or release the Vessel from such arrest
all right, title and interest of the Mortgagee in and to such insurance
proceeds covering such loss, damage or expense as collateral security
to indemnify against liability under such bond or other agreement.

               (e) The Borrower shall have the duty and responsibility
to make all proofs of loss and taken any and all other steps necessary
to effect collections from underwriters for any loss under any
insurance carried pursuant to paragraph (a) of this Section 29.

               (f)(1) The Borrower shall furnish, or cause to be
furnished, to the Mortgagee [and the Second Mortgagee] on the date
hereof and annually (between each January 15th and no later than March
15th) thereafter, copies of (i) cover notes, (ii) policies of
insurance, (iii) letters of undertaking, if any, and (iv) a detailed
report signed by independent marine insurance brokers designated by the
Borrower and satisfactory to the Mortgagee describing the insurance
carried 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 Section.

       (2) Such report shall state that, in the opinion of such
       insurance broker, the forms of policies or other evidence of
       such insurance and the amounts of insurance and other terms are
       (i) not less than what is necessary or advisable for the
       protection of the interests of the Mortgagee and (ii) are
       customary at the time for vessels of similar size, type, trade
       and cargo. Such report shall set forth any recommendations such
       insurance broker may have for additional or reduced insurance
       which prudent shipowners or operators of vessels of similar
       size, type, trade and cargo are then carrying. Such report
       shall further state that, in the opinion of such independent
       insurance broker, all insurance carried pursuant to paragraph
       (a) of this Section 29 is underwritten by insurance companies,
       underwriters' associations or underwriting funds which should
       be satisfactory to the Mortgagee.
       
       (3) The Borrower shall cause such independent insurance broker
       to agree (i) to advise the Mortgagee [and the Second Mortgagee]
       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 independent insurance broker has knowledge
       and which in its sole judgment (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 paragraph (a) of this Section, (B) has
       resulted 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 Section and (ii) to furnish the Mortgagee
       [and the Second Mortgagee] 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.
       
               (g) In addition, upon request from time to time, the
Borrower shall deliver, or cause or be delivered to the Mortgagee
evidence satisfactory to the Mortgagee that the insurance required to
be provided and maintained pursuant to this Section 29 has been issued
and is then in full force and effect.

               (h) The Borrower shall cause all insurance required to
be provided and maintained by this Mortgage to be carried with marine
insurance companies, underwriters' associations or underwriting funds
approved by the Mortgagee, which approval shall not be unreasonably
withheld or delayed.

               (i) The Borrower shall not declare or agree upon a
compromised, constructive or agreed total loss of the Vessel without
the prior written consent of the Mortgagee which approvals shall not be
unreasonably withheld.

               (j) The Borrower agrees that it will not do any act or
voluntarily suffer or permit any act to be done whereby any insurance
shall or may be suspended, impaired or defeated and will not suffer or
permit the Vessel to engage in any voyage or to carry out any
operations not permitted under the insurance policies in effect without
first covering the Vessel to the amount herein provided with insurance
satisfactory to the Mortgagee in all other respects for such voyage or
such operations.


                                   ARTICLE III
                                        
                         EVENTS OF DEFAULT AND REMEDIES

               (30) The term "Event of Default", whenever used herein,
means any one of the following events:

               (a) Default by the Borrower in the due and punctual
observance and performance of any provisions of Sections 14, 15(b) 16,
17, 20, 21(y) and (z), 23, 27 and 29(a), (b), (f) and (j) hereof (and,
to the extent that such default exposes the Vessel to forfeiture,
Sections 21(x) and 22 hereof); or

               (b) Default (other than as specified in paragraph (a) or
(b) of this Section 30) in the due and punctual observance and
performance of any of the covenants of the Borrower herein and
continuance of such default for thirty (30) days after written notice
thereof from the Mortgagee to the Borrower or the Guarantor, as the
case may be; or

               (c) An Event of Default shall have occurred under the
Loan Agreement.

               (31) If an Event of Default shall have occurred and be
continuing, the Mortgagee shall be entitled to, without further notice
or demand, declare the whole or any part of the Obligations to be
forthwith due and payable, upon which declaration the principal of and
interest on the [HDW] [Daewoo] [        ] Notes shall become immediately
due and payable together with interest thereafter on overdue principal
at the Default Interest Rate; provided that the occurrence of an Event
of Default under Sections 12.02(m) and (n) of the Loan Agreement shall
be deemed to be a declaration by the Mortgagee as aforesaid, whereupon
the Mortgagee may:

               (a) Enforce and exercise all or any of its rights and
powers as a secured party or mortgagee under and in accordance with the
[HDW] [Daewoo] Security Documents at law, in equity, or in admiralty;

               (b) Exercise all the rights and remedies in foreclosure
and otherwise given to mortgagees by the country of its registry, or by
the applicable laws of any jurisdiction where the Vessel or other
security may be found, and initiate and prosecute such other judicial,
extra-judicial, or administrative proceedings as it may consider
appropriate to recover any or all sums due, or declared due, on the
Obligations, with the right to enforce payment of said sum against any
assets of the Borrower, whether they are covered by any [HDW] [Daewoo]
Security Document or otherwise, and in connection therewith obtain a
decree ordering the sale of the Vessel in accordance with paragraph (e)
of this Section 31;

               (c) Have a receiver of the Vessel appointed as a matter
of right in any suit under this Section (and any such receiver may have
the rights of the Mortgagee under paragraphs (e) and (f) of this Section
31);

               (d) Take possession of the Vessel, with or without legal
proceedings, at any place where the Vessel may be found (and the
Borrower or other Person in possession of the Vessel shall forthwith
surrender possession of the Vessel to the Mortgagee on demand), and the
Mortgagee shall, subject to any governmental approval required under the
country of its registry, or any other applicable law, have the right,
but shall not be obligated, to manage, insure, maintain, repair, employ,
lay up, hold, charter, lease, operate or otherwise use the Vessel for
such period and under such terms as it may reasonably deem most
expedient for its interest, accounting only for the net profits, if any,
arising from such use and charging against all receipts from such use of
the Vessel, all reasonable charges and expenses in connection with such
use;

               (e) Sell the Vessel at public sale with sealed bids, on
such terms and conditions as it deems best, free of any claim of the
Borrower and, except as provided by law, any other Person, upon advance
notice of ten (10) consecutive days published in a newspaper authorized
to publish legal notices of that kind in San Francisco, California, and
by sending notice of such sale no later than the date of first
publication, by telegraph, cable, telecopy or telex, to the Borrower as
provided in Section 49 hereof. Any such sale may be held at such place
and at such time as the Mortgagee by notice may have specified, or may
be adjourned by the Mortgagee from time to time by announcement at the
time and place appointed for such sale or for such adjourned sale, and
without further notice or publication the Mortgagee may make any such
sale at the time and place to which the same shall be so adjourned. Any
such sale may be conducted without bringing the Vessel to the place
designated for such sale. The Mortgagee or (subject to the provisions
of the laws of the country of its registry and any other applicable
law) any Holder may become the purchaser at any such sale, and shall
have the right to credit on the purchase price any and all sums of
money due in respect of the [HDW] [Daewoo] Notes or other Obligations;
and

               (f) Accept a conveyance of title to, and to take without
legal process (and the Borrower or other Person in possession shall
forthwith surrender possession to the Mortgagee), the whole or any part
of the Vessel wherever the same may be, and to take possession of and
hold the same.

               (32) The Borrower hereby irrevocably appoints the
Mortgagee the true and lawful attorney of the Borrower, in its name and
stead, to make all necessary transfers of the whole or any part of the
Vessel in connection with a sale, use or other disposition pursuant to
Section 31 hereof, and for that purpose to execute all necessary
instruments of assignment and transfer. Nevertheless, the Borrower
shall, if so requested by the Mortgagee, ratify and confirm any sale,
assignment, transfer or delivery by executing and delivering such
proper bill of sale, assignment, conveyance, instrument of transfer or
other instrument as may be designated in such request.

               (33) A sale of the Vessel made pursuant hereto whether
under the power of sale hereby granted or any judicial proceedings,
shall operate to divest all right, title and interest of any nature
whatsoever of the Borrower therein and thereto, and shall bar the
Borrower, its successors and assigns, and all Persons claiming by,
through or under them. No purchaser shall be bound to inquire whether
notice has been given or whether any Event of Default has occurred, or
as to the propriety of the sale, or as to application of the proceeds
thereof.

               (34)(a) In the event that the Vessel shall be arrested
or detained by a marshal or other officer of any court of law, equity
or admiralty jurisdiction in any country of the world or by any
government or other authority and shall not be released from arrest or
detention within thirty (30) days from the date of arrest or detention,
the Borrower hereby authorizes the Mortgagee, in the name of the
Borrower, to apply for and receive possession of and to take possession
of the Vessel with all of the rights and powers that the Borrower might
have, possess and exercise in any such event. This authorization is
irrevocable.

               (b) The Borrower irrevocably authorizes the Mortgagee or
its appointees (with full power of substitution) to appear in the name
of the Borrower in any court of any country or nation of the world
where a suit is pending against the Vessel because of or on account of
any alleged lien or claim against the Vessel from which the Vessel
shall not have been released in accordance with Section 16 hereof.

               (35) The Mortgagee is hereby appointed as attorney-infact
of the Borrower, during the continuance of any Event of Default, in the
name of the Borrower to demand, collect, receive, compromise and sue
for, so far as may be permitted by law, all freights, hire, earnings,
issues, revenues, compensation, income and profits of the Vessel, and
all amounts due from underwriters under any insurance thereon as payment
of losses or as return premiums or otherwise, salvage awards and
recoveries, recoveries in general average or otherwise, and to make,
give and execute in the name of the Borrower acquittances, receipts,
releases or other discharges for the same, whether under seal or
otherwise, and to endorse and accept in the name of the Borrower all
checks, notes, drafts, warrants, agreements and all other instruments in
writing with respect to the foregoing.

               (36)(a) The Borrower covenants that upon acceleration of
maturity pursuant to Section 31 hereof, the Borrower will pay to the
Mortgagee the whole amount then due and payable on the Obligations plus
an amount calculated in accordance with Section 11 of the Loan
Agreement. If the Borrower fails to pay such amount forthwith upon
receipt of such notice, the Mortgagee, in its own name and as agent, may
institute a judicial proceeding for the collection of the amount so due
and unpaid, and prosecute such proceeding to judgment or final decree,
and may enforce the same against the Borrower or any other obligor in
respect of the Obligations and the [HDW] [Daewoo] Notes and collect the
money adjudged or decreed to be payable in the manner provided by law
out of the property of the Borrower or any other obligor in respect of
the Obligations and the [HDW] [Daewoo] Notes, wherever situated. All
monies collected by the Mortgagee under this Section shall be applied by
the Mortgagee in accordance with the provisions of Section 39 hereof.

               (b) If an Event of Default shall occur and be continuing,
irrespective of whether notice of acceleration shall have been given
pursuant to Section 31 hereof, the Mortgagee may in its discretion
proceed to protect its rights and the rights of the Holders of the [HDW]
[Daewoo] [    ] Notes by such appropriate judicial proceedings as the
Mortgagee shall deem most effectual to protect any such rights, or to
protect any other proper right, power or remedy then available to the
Mortgagee under any [HDW] [Daewoo] Security Document.

               (37) In case there shall be pending proceedings for the
bankruptcy or for the reorganization of the Borrower or any other
obligor in respect of the Obligations and the [HDW] [Daewoo] Notes under
the Bankruptcy Code of the United States of America or any other
applicable law or in connection with the insolvency of the Borrower or
any other obligor in respect of the Obligations and the [HDW] [Daewoo]
Notes or in case a receiver or trustee shall have been appointed for its
property, or any other obligor on the [HDW] [Daewoo] [    ] Notes, its
creditors or its property, the Mortgagee, irrespective of whether any
amount of the Obligations shall then be due and payable as therein
expressed or by declaration or otherwise, shall be entitled and
empowered to intervene in such proceedings or otherwise, to file and
prove a claim or claims for the whole amount of the Obligations, and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Mortgagee and of the Holders allowed in
any judicial proceeding relative to the Borrower, the Obligations or any
obligor on such [HDW] [Daewoo] Notes, its creditors, or its property,
and to collect and receive any money or other property payable or
deliverable on any such claims, and to distribute the same after the
deduction of any amount payable to the Mortgagee under Section 39
hereof. Nothing contained in this Mortgage shall be deemed to give the
Mortgagee any right to accept or consent to any plan of reorganization
or otherwise by action of any character in any such proceeding to waive
or change in any way any right of any Holder or to constitute a waiver
by the Borrower of its right to contest the validity of any claim made
against it.

               (38) All rights of action and claims under this Mortgage,
the [HDW] [Daewoo] [    ] Notes or the other Obligations may be
prosecuted and enforced by the Mortgagee without the possession of the
[HDW] [Daewoo] [   ] Notes or any other evidence of such indebtedness or
the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Mortgagee shall be brought in its own name
as agent, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and
advances of the Mortgagee, its agents and counsel, be for the benefit of
the Holders of the [HDW] [Daewoo] [   ] Notes and the other Obligations.

               (39) Any monies collected by the Mortgagee pursuant to
any sale of the Vessel or other enforcement of any of its rights
hereunder or under any other [HDW][Daewoo] Security Document on account
of the occurrence of an Event of Default or Incipient Default by the
Mortgagee shall be distributed in accordance with Section 5.09 (a) of
the Loan Agreement.

               (40) No Holder shall have any right to institute any
independent proceeding, judicial or otherwise, with respect to this
Mortgage and the other [HDW] [Daewoo] Security Documents or for any
other remedy hereunder or thereunder except the Mortgagee.

               (41) Notwithstanding any other provision of this Article
III, each Holder of an [HDW] [Daewoo] [   ] Note or any other Obligation
shall have the right which is absolute and unconditional to receive
payment (whether directly or through its agent) of the principal of and
interest on such Holder's [HDW] [Daewoo] [   ] Notes or other
Obligations, as and when the same shall become due, and to demand
payment thereof, and such right shall not be impaired or affected
without the consent of such Holder.

               (42) No right or remedy herein conferred upon or reserved
to the Mortgagee or such Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or under the other [HDW] [Daewoo] Security
Documents or now or hereafter existing at law, in equity, in admiralty,
by statute or otherwise. The assertion or employment of any right or
remedy hereunder or otherwise shall not prevent the concurrent or
subsequent assertion or employment of any other right or remedy
hereunder or otherwise.

               (43) No delay or omission of the Mortgagee or any Holder
to exercise any right or remedy accruing upon any Event of Default nor
any course of dealings between the Mortgagee, the Holders (or any of
them) and, the Borrower shall impair any such right or remedy or
constitute a waiver of any Event of Default or an acquiescence therein
nor shall any single exercise or partial exercise of any such right or
remedy preclude any other exercise thereof or any exercise of any other
or further right or remedy; nor shall the acceptance by the Mortgagee of
any security or any payment of any part of the Obligations maturing
after any Event of Default or of any payment on account of any past
default be construed to be a waiver of any right to take advantage of
any future Event of Default or of any past Event of Default not
completely cured thereby. Every right or remedy given by this Mortgage
or any other [HDW] [Daewoo] Security Document or by law to the Mortgagee
or the Holders may be exercised from time to time, and as often and in
such order as may be deemed expedient, by the Mortgagee or the Holders,
as the case may be.

               (44) In case the Mortgagee shall have proceeded to
enforce any right, power or remedy under this Mortgage or under any
other [HDW] [Daewoo] Security Document by foreclosure, entry or
otherwise, and such proceeding shall have been discontinued or abandoned
for any reason or shall have been adversely determined to the Mortgagee,
then, and in every such case, the Borrower and the Mortgagee shall be
restored to their former positions and rights hereunder with respect to
the property subject or intended to be subject to this Mortgage or any
other [HDW] [Daewoo] Security Document, as the case may be, and all
rights, remedies and powers of the Mortgagee shall continue as if no
such proceedings had been taken.

               (45) Subject to the provisions of Section 31 hereof, the
Mortgagee shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Mortgagee
under this Mortgage or any other [HDW] [Daewoo] Security Document or
exercising any trust or power conferred on the Mortgagee herein or
therein.


                                   ARTICLE IV
                                        
                                SUNDRY PROVISIONS

               (46) For the purposes of recording this First Preferred
Mortgage as required by the Republic of The Marshall Islands' Maritime
Act of 1990, as amended, the aggregate of all possible advances and
other outstanding obligations that may be made under, or otherwise
secured by, this Mortgage is (i) [               ] United States
Dollars (USD[             ]), and (ii) interest and performance of
mortgage covenants. The discharge amount is the same as the total
amount.

               (47) All the covenants, promises, stipulations and
agreements of the Borrower contained in this Mortgage shall bind the
Borrower, its successors and assignees, and shall inure to the benefit
of the Mortgagee.

               (48) Wherever and whenever herein any right, power or
authority is granted or given to the Mortgagee, such right, power or
authority may be exercised in all cases by the Mortgagee or such agent
or agents as it may appoint; and the authorized acts of such agent or
agents when taken shall constitute the act of the Mortgagee hereunder.

               (49) Any notice or demand or other communication to the
Borrower or the Mortgagee under this Mortgage shall be made in
accordance with Section 15.04 of the Loan Agreement.
               (50) The Borrower will pay to the Mortgagee on demand:

               (a) All monies whatsoever which the Mortgagee reasonably
and in good faith shall or may expend, be put to or become liable for
in or about the protection, maintenance or enforcement of the security
created by this Mortgage or in or about the exercise by the Mortgagee
of any of the powers vested in it hereunder; and

               (b) The amount of all expenses of any kind whatsoever,
stamp duties (if any), registration fees and any other charges incurred
by the Mortgagee in connection with the registration of this Mortgage.

               (51) The Mortgagee shall, without prejudice to its other
rights and powers hereunder, be entitled (but not bound) at any time
and from time to time, to take any such action as it may in its
discretion think fit for the purpose of protecting the security created
by this Mortgage, and each and every expense or liability reasonably
and in good faith so incurred by the Mortgagee in or about the
protection of the security shall be repayable to it by the Borrower on
demand.

               (52) The Mortgagee shall be entitled at any time and
from time to time to delegate all or any of the powers and discretions
vested in it by this Mortgage (including, without limitation, the power
vested in it by virtue of Section 32 hereof) in such manner, upon such
terms and to such persons as the Mortgagee in its absolute discretion
may think fit.

               (53) The provisions of this Mortgage shall, with respect
to its validity, effect, recordation and enforcement, be governed by
and construed in accordance with the applicable Laws of the Republic of
The Marshall Islands. Where, however, rules of interpretation,
construction or usage, with respect to the internal provisions of this
Mortgage, may be made subject to the decisional law of a jurisdiction
other than that of the Republic of The Marshall Islands, the parties
hereto hereby agree that the provisions of this Mortgage shall be
governed by the decisions of the courts of the State of New York.

               (54) No course of dealing between the Mortgagee and the
Borrower or any delay or failure on the part of the Mortgagee thereof
in exercising any rights hereunder shall operate as a waiver of any
rights of the Mortgagee thereof or of the preferred status of this
Mortgage.

               [(55) Deutsche Schiffsbank AG may not without the prior
written consent of its public trustee (TreuhSnder) sell, assign, waive
or encumber its interest in this Mortgage until the Loans and all
interest on the Loans have been repaid in full.]

               IN WITNESS WHEREOF, the Borrower has caused this Mortgage to be
duly executed by its authorized representative the day and year first above
written.

                                             AMERICAN PRESIDENT LINES, LTD.


                                             ______________________________
                                             Name:
                                             Title:
STATE OF NEW YORK     )
                              )      ss.:
COUNTY OF NEW YORK    )

       On this _____ day of ____________, 199_, before me personally appeared  
   ___________________, known to me, and known to be the person who executed 
the foregoing instrument, who, being by me duly sworn, did depose
and say that he resides at      ______________________; that he is 
________________ of American President Lines, Ltd., a Delaware corporation, 
the party described in and which executed the foregoing instrument; that he 
signed his name thereto by authority of the Board of Directors of said 
corporation and as the free act and deed of such corporation.



                                                    __________________________
                                                         Notary Public

                                                             EXHIBIT B-2
                                                      TO AMENDMENT N0. 2
                                                       TO LOAN AGREEMENT


       Omitted pursuant to Instruction 2 to Item 601 of Regulation S-K.
Same as Exhibit B-1 hereto together with the subordination provisions of
Appendix B-2 to Exhibit 10.4 to Registrant's Form 10-Q for the quarter
ended April 8, 1994.

                                                            EXHIBIT B-3
                                                     to Amendment No. 2
                                                      to Loan Agreement



                   ASSUMPTION OF FIRST PREFERRED SHIP MORTGAGE


               THIS ASSUMPTION OF FIRST PREFERRED SHIP MORTGAGE dated
___________, 199_ (this "Assumption"), supplements the First Preferred
Ship Mortgage dated _____________, 199_ (the "Mortgage"; capitalized
terms used herein without definition shall have the respective meanings
provided in the Mortgage), with respect to the vessel [         ],
Official Number MI [      ] (the "Vessel"), by American President
Lines, Ltd., a Delaware corporation (the "Original Mortgagor"), in
favor of [Kreditanstalt fur Wiederaufbau, a public law corporation
incorporated in the Federal Republic of Germany (the "Mortgagee")]
[Commerzbank AG, Hamburg, a banking corporation incorporated in the
Federal Republic of Germany (the "Syndicate Agent") and Commerzbank AG
(Kiel Branch), Dresdner Bank AG in Hamburg, Vereins- und Westbank AG,
Deutsche Schiffsbank AG, Norddeutsche Landesbank-Girozentrale, Deutsche
Verkehrs-Bank AG (Hamburg Branch) and Banque Internationale a
Luxembourg S.A., (the "Syndicate and, collectively with the Syndicate
Agent, the "Mortgagee")].  The Mortgage was recorded at the office of
the Deputy Commissioner of Maritime Affairs of the Republic of The
Marshall Islands in New York, New York on ____________, 199_, at
_________ _.m., in book PM ____ at Page __.  By this Assumption, [
], a Delaware corporation (the "Additional Mortgagor"), assumes all of
the rights and obligations of the Original Mortgagor under the
Mortgage, jointly and severally with the Original Mortgagor.

WHEREAS:

               A.     The Original Mortgagor and the Additional
Mortgagor are jointly and severally liable to the Mortgagee for certain
obligations pursuant to the Loan Agreement.

               B.     The Original Mortgagor, as sole owner of the
Vessel, has heretofore executed  and delivered the Mortgage to the
Mortgagee to secure payment and performance of the Obligations referred
to therein and payment and performance of all other obligations secured
by the Mortgage (the "Secured Obligations").

               C.     The Original Mortgagor has transferred all of its
right, title and interest in and to the Vessel to the Additional
Mortgagor and concurrently therewith has bareboat chartered the Vessel
from the Additional Mortgagor;

               D.     The Vessel has been duly documented in the name
of the Additional Mortgagor as the owner thereof in the office of the
Deputy Commissioner of Maritime Affairs of the Republic of The Marshall
Islands in New York, New York; and

               E.     The execution and delivery of this instrument has
been duly authorized and all conditions and requirements necessary to
make this instrument a valid and binding agreement and to effect the
assumption of the Mortgage provided herein and to continue that
Mortgage, as assumed by this instrument, as a valid, binding and legal
first preferred ship mortgage as security for the due payment and
performance of the Secured Obligations.

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

               Section 1.     The Additional Mortgagor hereby assumes
all the obligations and duties of the Original Mortgagor under the
Mortgage.  The Additional Mortgagor hereby promises an agreement to pay,
jointly and severally with the Original Mortgagor, in accordance with
and subject to the terms of the Loan Agreement, the Acquisition
Agreement and the [HDW] [Daewoo] [        ] Notes, the unpaid principal
of and interest on the [HDW] [Daewoo] [         ] Notes and agrees to
observe each and every covenant, agreement and condition of the Mortgage
which, by the terms thereof, is to be performed or observed, or both, by
the mortgagor thereunder.  The Mortgagee hereby consents to the transfer
of the Vessel from the Original Mortgagor to the Additional Mortgagor
and to the assumption of the Mortgage by the Additional Mortgagor.

               Section 2.     All of the covenants and agreements on the
part of the Original Mortgagor which are set forth in, and all the
rights, privileges, powers and immunities of the Mortgagee which are
provided for in the Mortgage are incorporated herein and shall apply to
the Additional Mortgagor with the same force and effect as though set
forth in their entirety in this Assumption.

               Section 3.     Except as amended by this Assumption, the
Mortgage is in all respects ratified and confirmed and all the terms,
provisions and conditions thereof shall be and remain in full force and
effect.

               Section 4.     Notwithstanding anything herein, in the
Mortgage, in the [HDW] [Daewoo] [           ] Notes or in any other Loan
Document to the contrary, by acceptance of this Assumption, the
Mortgagee agrees that it will look solely to the Vessel and the other
assets and property covered by the Mortgage and the other [HDW] [Daewoo]
Security Documents (collectively, the "Recourse Assets") for all amounts
coming due from the Additional Mortgagor hereunder, under the Mortgage,
the [HDW] [Daewoo] [          ] Notes or any other Loan Documents, and
for the performance of all covenants, agreements and obligations and for
the breach of representations and warranties or covenants of the
Additional Mortgagor hereunder, under the Mortgage or under the [HDW]
[Daewoo] [         ] Notes or any of the other Loan Documents, or under
any certificate or other documents executed and delivered by the
Original Mortgagor or the Additional Mortgagor as contemplated by the
Loan Documents, and, therefore, notwithstanding anything contained in
any of the aforesaid documents, no judgment or recourse (except a
judgment against the Recourse Assets or any of them) shall be sought or
enforced for the payment or performance of the obligations of the
Additional Mortgagor hereunder, under the Mortgage, the [HDW] [Daewoo [
] Notes, any other Loan Document or any such other certificate or
document: (a) against the Additional Mortgagor, in its individual or
personal capacity, other than in connection with the enforcement of
remedies against the Recourse Assets or (b) against any assets or
property of the Additional Mortgagor other than the Recourse Assets;
provided, however, that nothing in this paragraph shall (x) limit or
otherwise prejudice in any way the rights of the Mortgagee to proceed
against the Guarantor under the Guarantee, or (y) constitute or be
deemed to be a release of the obligations secured by, or impair the
enforceability of, the liens, mortgage interests or other security
interests created by the [HDW] [Daewoo] Security Documents, or to
restrict the remedies available to the Mortgagee to realize upon the
[HDW] [Daewoo] Security Documents or enforce the Guarantee.

               Section 5.     For the purposes of recording this
Assumption of First Preferred Mortgage as required by the Republic of
The Marshall IslandsO Maritime Act of 1990, as amended, the aggregate of
all possible advances and other outstanding obligations that may be made
under or otherwise secured by the Mortgage as supplemented hereby is (i)
__________ ______________________ United States Dollars
(USD_________________), and (ii) interest and performance of mortgage
covenants, The discharge amount is the same as the total amount.

               Section 6.     This instrument may be executed in any
number of counterparts, and each of such counterparts shall for all
purposes be deemed to be an original.

               Section 7.     Any notice or demand or other
communication to the Original Mortgagor under the Mortgage shall be sent
to both the Original Mortgagor and the Additional Mortgagor and made in
accordance with Section 15.04 of the Loan Agreement.

               [Remainder of this page intentionally left blank.]

               IN WITNESS WHEREOF, this instrument has been executed and
delivered the day and year first above written.



                                             AMERICAN PRESIDENT LINES, LTD



                                             By ________________________________
                                                    Name:
                                                    Title:


                                             [                           ]


                                             By ________________________________
                                                    Name:
                                                    Title:


                                             [                           ]


                                             By ________________________________
                                                    Name:
                                                    Title:

                                                            EXHIBIT B-4
                                                     TO AMENDMENT NO. 2
                                                      TO LOAN AGREEMENT


       Omitted pursuant to Instruction 2 to Item 601 of Regulation S-
K.  Differs from Exhibit B-3 hereto only in that the assumption is of a
second mortgage rather than a first mortgage.