EXHIBIT 2.38

                              Bona Shipholding Ltd

                                   as Borrower

                               Chase Manhattan plc

                                   as Arranger

                           Citibank International plc

                         as Arranger, Trustee And Agent

                                   and others


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                              Amended and restated
                                 US$500,000,000
                            Revolving Loan Agreement
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                                    CONTENTS
Clause                                                                      Page
       Part 1        DEFINITIONS AND INTERPRETATION
1.     Definitions and Interpretation..........................................1
       Part 2        THE FACILITIES
2.     The Facilities.........................................................17
3.     Utilisation of the Facilities..........................................18
       Part 3        INTEREST
4.     Payment and Calculation of Interest....................................20
5.     Market Disruption and Alternative Interest Rates.......................20
       Part 4        REPAYMENT, REDUCTION, CANCELLATION AND PREPAYMENT
6.     Repayment and Reduction................................................21
7.     Cancellation...........................................................22
       Part 5        RISK ALLOCATION
8.     Taxes..................................................................24
9.     Tax Receipts and Credits...............................................25
10.    Changes in Circumstances...............................................26
       Part 6        REPRESENTATIONS, COVENANTS AND EVENTS OF DEFAULT
11.    Representations........................................................29
12.    Financial Information..................................................31
13.    Financial Condition and Security.......................................33
14.    Covenants..............................................................38
15.    Events of Default......................................................40
       Part 7        DEFAULT INTEREST AND INDEMNITY
16.    Default Interest and Indemnity.........................................44
       Part 8        PAYMENTS
17.    Currency of Account and Payment........................................46
18.    Payments...............................................................46
19.    Set-Off................................................................48
20.    Sharing................................................................48
       Part 9        FEES, COSTS AND EXPENSES
21.    Commitment Commission and Fees.........................................50
22.    Costs and Expenses.....................................................51
       Part 10       AGENCY PROVISIONS
23.    The Agent, the Trustee, the Arrangers and the Banks....................52
       Part 11       ASSIGNMENTS AND TRANSFERS
24.    Assignments and Transfers..............................................57
       Part 12       MISCELLANEOUS
25.    Calculations and Evidence of Debt......................................59
26.    Remedies and Waivers, Partial Invalidity...............................59
27.    Notices................................................................60
28.    Amendments.............................................................61
       Part 13       LAW AND JURISDICTION
29.    Law....................................................................63
30.    Jurisdiction...........................................................63








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                     London-3/140335/04 - 61 - C0828/29464

THIS AGREEMENT originally made on 16 December 1998 is amended and restated on 11
June 1999

BETWEEN

(1)......BONA SHIPHOLDING LTD. (the "Borrower");

(2)      CHASE MANHATTAN plc and CITIBANK INTERNATIONAL plc (the "Arrangers");

(3)      CITIBANK INTERNATIONAL plc (the "Trustee");  and

(4)      CITIBANK INTERNATIONAL plc (the "Agent")

(5) THE BANKS (as defined below).



NOW IT IS HEREBY AGREED as follows:



Part 1
                                     DEFINITIONS AND INTERPRETATION

1.       Definitions and Interpretation

1.1      Definitions
        In this Agreement the following terms have the meanings given to them in
this Clause 1.1.

        "A Advance" means,  save as otherwise  provided  herein,  an Advance (as
        from time to time reduced by repayment or prepayment) made or to be made
        by the Banks under the A Facility.

        "A Available  Commitment"  means,  in relation to a Bank at any time and
        save as otherwise  provided  herein,  its A Commitment at such time less
        the aggregate of its portions of A Advances  which are then  outstanding
        and not due for  repayment  Provided  that such amount shall not be less
        than zero.

        "A Available Facility" means, at any time, the aggregate amount of the A
        Available Commitments at such time.

        "A  Commitment"  means,  in relation to any Bank at any time and save as
        otherwise  provided  herein,  the  amount set  opposite  its name in the
        second column of the First Schedule.

        "Advance" means,  save as otherwise  provided  herein,  an advance under
        either Facility made or to be made by the Banks hereunder.

        "A Facility"  means the revolving  dollar loan  facility  granted to the
        Borrower pursuant to paragraph (i) of Clause 2.1 (Grant of Facilities).

        "Affiliate"  means a  corporation  or  partnership  at least  33% of the
        equity or partnership capital of which is beneficially  owned,  directly
        or indirectly,  by any member of the Parent's Group and the value of the
        interest of such member of the Parent's  Group therein (as determined in
        accordance with US GAAP) is not less than $10,000,000.

        "Aggregate A  Commitment"  means the aggregate for the time being of the
        Banks' A Commitments.

        "Aggregate B  Commitment"  means the aggregate for the time being of the
        Banks' B Commitments.

        "Aggregate Total  Commitments" means the aggregate for the time being of
        the Banks' Total Commitments.

        "Available Commitment" means, in relation to a Bank at any time and save
        as otherwise  provided herein,  the aggregate of its Total Commitment at
        such time less the aggregate of its portions of the Advances  which have
        then been made hereunder.

        "Available  Facility"  means,  at any time, the aggregate  amount of the
        Available Commitments at such time.

        "Average  Age of the  Vessels"  at any time means the average age of the
        Vessels  in the  Security  Pool at such  time,  but so  that  for  these
        purposes,  if an  asset  in the  Security  Pool  comprises  shares  in a
        vessel-owning company, the vessel owned by that company shall be brought
        into account as if it were a Vessel.

        "B Advance" means,  save as otherwise  provided  herein,  an Advance (as
        from time to time reduced by repayment or prepayment) made or to be made
        by the Banks under the B Facility.

        "Bank" means:

(i)               any  financial  institution  named in the First  Schedule (The
                  Banks)  (other than one which has ceased to be a party  hereto
                  in accordance with the terms hereof); or

(ii)              any financial  institution  which has become a party hereto in
                  accordance with the provisions of Clause 24.4  (Assignments by
                  Banks) or Clause 24.5 (Transfers by Banks).

        "Basle Paper" means the paper  entitled  "International  Convergence  of
        Capital  Measurement and Capital Standards" dated July 1988 and prepared
        by the Basle  Committee  on  Banking  Regulations  and  Supervision,  as
        amended in November 1991.

        "B Available  Commitment"  means,  in relation to a Bank at any time and
        save as otherwise  provided  herein,  its B Commitment at such time less
        the aggregate of its portions of B Advances  which are then  outstanding
        and not due for  repayment  Provided  that such amount shall not be less
        than zero.

        "B Available Facility" means, at any time, the aggregate amount of the B
        Available Commitments at such time.

        "Bermuda" means the Islands of Bermuda.

        "B  Commitment"  means,  in relation to any Bank at any time and save as
        otherwise provided herein, the amount set opposite its name in the third
        column of the First Schedule.

        "B Facility"  means the dollar  revolving  loan facility  granted to the
        Borrower pursuant to paragraph (ii) of Clause 2.1 (Grant of Facilities).

        "Borrower's Group" means the Borrower and its  subsidiaries for the time
        being.

        "Capital Adequacy  Requirement" means a request or requirement  relating
        to the maintenance of capital,  including one which makes any change to,
        or is based on any alteration in, the  interpretation of the Basle Paper
        or which  increases the amounts of capital  required  thereunder,  other
        than a request or requirement made by way of implementation of the Basle
        Paper in the manner in which it is being  implemented as at the Original
        Facility Date.

        "Chase  Revolver" means the revolving credit facility agreement dated 27
        March 1996 between the Borrower, Chemical Bank and others.

        "Citibank  Revolver" means the revolving credit facility agreement dated
        11 October 1994 between the Borrower, Citibank, N.A. and others.

        "Commitment  Termination  Date" means the date which is one month before
        the Final Maturity Date.

        "Cover  Ratio" at any time means,  in  relation  to the A Facility,  the
        Estimated Value of Security Pool 1 divided by Loan 1 and, in relation to
        the B Facility  means the Estimated  Value of Security Pool 2 divided by
        Loan 2.

        "Current Assets" means all assets of the members of the Borrower's Group
        (excluding  Intra-Group Assets) which, in accordance with US GAAP, would
        be classed as current assets plus the aggregate of all amounts available
        for drawing for more than one year but undrawn  under  committed  credit
        lines  (excluding  the  Facilities)  made available to any member of the
        Borrower's Group by its bankers or by any other financial institution.

        "Current  Liabilities"  means  all  obligations  of the  members  of the
        Borrower's Group to pay money on demand or within one year from the date
        of  computation  and  any  other  obligations  of  the  members  of  the
        Borrower's  Group which, in accordance with US GAAP, would be considered
        as current liabilities.

        "Current Ratio" at any time means  Current  Assets  divided  by  Current
        Liabilities.

        "Deeds of  Assignment"  means the deeds of  assignment  of earnings  and
        insurances  in the form or  substantially  the form  attached  hereto as
        Exhibit  B  (with  such  amendments  as may in the  Agent's  opinion  be
        appropriate to reflect the place of registration of the relevant Vessel)
        to be executed by the Borrower in favour of the Trustee over the Vessels
        as contemplated by paragraph 19 of Part 1, and by paragraph 11 of Part 2
        of the Third Schedule.

        "Estimated Value" means

(i)  (subject  to (iii) below in respect of a New Vessel) in respect of a vessel
     the average of the most recent  estimates of the Market  Value  thereof set
     forth in the summary  furnished  to the Agent  pursuant  to Clause  12.6(i)
     Provided  that if a vessel is the subject of a charter which had an initial
     duration of over 24 months and which was  approved  by the Agent  acting on
     the  instructions of the Banks, the Estimated Value of such vessel shall be
     increased  (or  reduced) to reflect any  difference  between (a) the amount
     determined  by the  Agent to be the net  present  value of the  charterhire
     payable  over the  remaining  period  of such  charter  and (b) the  amount
     determined by the Agent to be the net present value of the charterhire that
     would be payable  under a charter of such vessel for such period if it were
     to be  chartered  in the  market at  charterhire  rates  current  as at the
     preceding Quarter Date;

(ii) in respect of any asset in a  Security  Pool other than a vessel,  the most
     recent  estimate of the value  thereof  furnished to the Agent  pursuant to
     Clause 12.6(ii); and

(iii)in respect of a New Vessel and for the purposes only of Clause  3.1(vi) the
     value as determined pursuant to Clause 13.9

     Provided  Always  That any  Vessel  older  than 27 years 6 months  shall be
     deemed to have a value of zero.

        "Estimated  Value of Security Pool 1" and  "Estimated  Value of Security
        Pool 2" at any time mean the  aggregate of the  Estimated  Values of the
        relevant  Vessels  and the  Estimated  Values  of the  other  assets  in
        Security  Pool 1, or, as the case may be, the aggregate of the Estimated
        Values of the  relevant  Vessels and the  Estimated  Values of the other
        assets in Security Pool 2 at such time.

        "Event of Default" means any circumstance described as such in Clause 15
        (Events of Default).

        "Excluded  Entity" means any subsidiary of the Borrower (i) which is not
        controlled,  directly or  indirectly,  by the Borrower and (ii) in which
        the Borrower's  direct or indirect  interest is as holder of equal to or
        less than 50% of the issued share capital or as  contributor of equal to
        or less than 50% of the  partnership  capital  and for these  purposes a
        company or corporation  shall be treated as being  controlled by another
        if that other  company  or  corporation  is able to direct  its  affairs
        and/or  to  control  the  composition  of  its  board  of  directors  or
        equivalent  body  Provided  Always,  for the  avoidance  of doubt,  that
        Soponata-Bona  Limited shall be an Excluded  Entity,  for so long as the
        Borrower's  direct or indirect  interest therein is 50% (or less) of the
        issued share capital thereof and Soponata-Bona Limited is not controlled
        directly or indirectly by the Borrower.

        "Existing  Swaps" means the two interest  rate swap  agreements  entered
        into by the Borrower with Royal Bank of Scotland and BankBoston, both to
        expire on February 19 2005 and both for a notional  principal  amount of
        $50,000,000.

         "Facilities"  means the A Facility  and the B  Facility  granted to the
        Borrower  in  this   Agreement   and   "Facility"   shall  be  construed
        accordingly.

        "Facility  Office"  means,  in  relation  to the Agent or any Bank,  the
        office  identified  with  its  signature  below  (or,  in the  case of a
        Transferee,  at the end of the  Transfer  Certificate  to  which it is a
        party as  Transferee)  or such other  office as it may from time to time
        select.

        "Final  Maturity  Date"  means the tenth  anniversary  of  the  Original
        Facility Date.

        "Finance Documents" means:

(i)               this Agreement;

(ii)              the Guarantee;

(iii)             the Security Agreements; and

(iv)              any other  document from time to time entered into in relation
                  to this  Agreement  which is agreed  between the Agent and the
                  Borrower to  constitute  a Finance  Document  for the purposes
                  hereof.

        "Finance Parties" means the Parent and the Borrower.

        "Free Cash" means,  on any date,  the  aggregate  amount  (expressed  in
        dollars  or as a dollar  equivalent)  on such  date of the then  current
        market value of:

(i)               all amounts  which are legally and  beneficially  owned by the
                  Borrower  and which are  standing to the credit of current and
                  deposit   accounts  with  banks  and  other   deposit   taking
                  institutions  excluding  any such amount to which the right of
                  access or use of the owner is blocked or  restricted  (whether
                  by an encumbrance or otherwise);

(ii)              to the extent not within  (i)  above,  all  unencumbered  time
                  deposits with banks and other deposit taking  institutions and
                  certificates  of  deposit   issued,   and  bills  of  exchange
                  accepted, by banks and other deposit taking institutions which
                  are legally and  beneficially  owned by the Borrower free from
                  encumbrances; and

(iii)             debt securities  quoted on a trading exchange  approved by the
                  Agent acting on the instructions of an Instructing Group which
                  are rated AA or better by  Standard  & Poor's  Corporation  or
                  such other rating  agency as the Agent acting as aforesaid may
                  approve,

        to which the Borrower shall have free,  immediate and direct access (but
        limited,  if  appropriate,  to that portion  thereof  which the Borrower
        shall be entitled to appropriate for its own account) plus the aggregate
        amount (expressed in dollars or as a dollar equivalent) of the items set
        out in (i), (ii) and (iii) above which shall be legally and beneficially
        owned  by any  subsidiary  of the  Borrower  and to which  the  Borrower
        (through such subsidiary)  shall have free,  immediate and direct access
        (but  limited,  if  appropriate,  to that  portion  thereof  which  such
        subsidiary  shall be entitled  to  appropriate  for its own  benefit) as
        multiplied by the Relevant Percentage in respect of that subsidiary, but
        excluding  from such  computation  (i)  Intra-Group  Assets and (ii) any
        amounts attributable to any Excluded Entity or minority interests.

        "Future  Vessel"  means  (subject  always to Clause  13.11)  any  vessel
        purchased by the Borrower and which is mortgaged to provide security for
        the Borrower's  obligations hereunder and which is allocated to Security
        Pool 2.

        "Guarantee" means the guarantee of the Borrower's  obligations hereunder
        given by the Parent substantially in the form of Exhibit D.

        "Initial Vessels" means the following Vessels:

                  Vessels flagged in Liberia:

                  "Bona Shimmer",  "Bona Spinner", "Bona Skipper", "Bona Robin",
                  "Bona Rider",  "Bona Rover", "Bona Ray", "Bona Ranger";

                  Vessels flagged in the Bahamas:

                  "Bona  Forum",  "Bona  Fulmar",  "Bona Foam",  "Bona  Favour",
                  "Bona  Spring",  "Bona Sparrow", "Bona Sailor", "Bona Spray";

                  Vessels flagged in the Norwegian International Register:

                  "Bona Fountain", "Bona Fair"

                  and "Initial Vessel" means any of them;

        "Instructing Group" means:

(i)               whilst no Advances are outstanding  hereunder, a Bank or group
                  of Banks  whose Total  Commitments  amount (or, if each Bank's
                  Total  Commitment  has been reduced to zero,  did  immediately
                  before such  reduction  to zero,  amount) in aggregate to more
                  than 662/3 per cent. of the Aggregate Total Commitments; and

(ii)              whilst at least one Advance is outstanding  hereunder,  a Bank
                  or group of Banks to whom in  aggregate  more  than  662/3 per
                  cent. of the Loan is (or  immediately  prior to its prepayment
                  or repayment, was then) owed.

        "Interest  Payment  Date" means any date upon which  interest is payable
        pursuant to Clause 4.1.

        "Intra-Group  Asset"  means  (i) any  indebtedness  which is owed to any
        member of the Borrower's Group by any member of the Parent's Group or by
        any Affiliate;  (ii) any capital  contribution made by any member of the
        Borrower's  Group in any member of the Parent's  Group or any Affiliate;
        and (iii) any equity security issued by any member of the Parent's Group
        or by any  Affiliate  which is  beneficially  owned by any member of the
        Borrower's  Group (the values of (i), (ii) and (iii) to be determined in
        accordance with US GAAP).

        "ISM  Code"  means  the  International  Management  Code  for  the  Safe
        Operation of Ships for pollution prevention adopted by the International
        Maritime Organisation.

        "Leverage" at any time means Total Liabilities divided by Total Assets.

        "Liberia" means the Republic of Liberia.

        "LIBOR"  means,  in relation to any period for which an interest rate is
        to be determined  hereunder,  the rate determined by the Agent to be the
        rate  displayed on the Telerate  screen (or, if there is no such rate on
        the Telerate  screen,  the rate displayed on the Reuters screen) for the
        British  Bankers'  Association rate for deposits in dollars for a period
        corresponding  to such period at or about  11.00 a.m.  on the  Quotation
        Date  therefor  Provided  that if no such rate is so displayed on either
        the Telerate screen or the Reuters screen at such time it means the rate
        per annum  determined  by the Agent to be the  arithmetic  mean (rounded
        upwards,  if not already such a multiple,  to the nearest whole multiple
        of  one-thirty-second of one per cent.) of the rates (as notified to the
        Agent) at which each of the Reference  Banks was offering to prime banks
        in  the  London  Interbank  Market  deposits  in  dollars  for a  period
        corresponding to such period at such time.

        "Liquid  Assets"  means  the  aggregate  of  Free  Cash  and  marketable
        securities as defined by US GAAP.

        "Loan 1" means the aggregate  principal amount  outstanding  under the A
        Facility, from time to time.

        "Loan 2" means the aggregate  principal amount  outstanding  under the B
        Facility from time to time.

        "Loan" means the aggregate principal amount of Loan 1 and Loan 2 for the
        time being outstanding hereunder.

        "Margin  1" means (a)  0.775%  per annum up to (but not  including)  the
        fifth  anniversary  of the first  drawdown  hereunder and (b) 0.825% per
        annum thereafter until the Final Maturity Date Provided That during such
        time as Net  Leverage is equal to or less than 50%, (on the basis of the
        most recent financial  statements  delivered  pursuant to Clause 12.1 or
        Clause 12.2),  then the  applicable  Margin 1 for any A Advance shall be
        0.725%  p.a.  (or,  if  the  rate  in (b)  would  otherwise  apply,  the
        applicable Margin 1 shall be 0.775% p.a.).

        "Margin 2" means (a) 0.9% per annum up to (but not  including) the fifth
        anniversary  of the  first  drawdown  hereunder  and (b) 0.95% per annum
        thereafter  until the Final Maturity Date Provided That during such time
        as Net  Leverage is equal to or less than 50%, (on the basis of the most
        recent financial  statements delivered pursuant to Clause 12.1 or Clause
        12.2),  then the  applicable  Margin 2 for any B Advance  shall be 0.85%
        p.a.  (or,  if the rate in (b) would  otherwise  apply,  the  applicable
        Margin 2 shall be 0.9% p.a.).

        "Market  Value"  means,  in relation  to a vessel at any time,  the sale
        value thereof in dollars determined on the basis of a sale (for cash and
        prompt delivery) by a willing seller to a willing buyer, free of charter
        and encumbrances and at arm's length on normal commercial terms;

        "Material  Subsidiary"  means (i) the Borrower;  (ii) Bona Shipping A.S.
        and (iii) any  subsidiary of the Parent whose  assets,  as determined in
        accordance with US GAAP and as shown from whose most recently  available
        financial  statements,  as  multiplied  by the  Relevant  Percentage  in
        respect  of such  subsidiary,  equal or  exceed  10% of the value of the
        assets of the Parent's  Group as determined  in accordance  with US GAAP
        and as shown from the most recently  available  financial  statements of
        the Parent's Group Provided that:

(i)               in respect of any subsidiary of the Parent,  only the value of
                  its assets as multiplied by the Relevant Percentage in respect
                  of  such  subsidiary  shall  be  taken  into  account  in  the
                  computation of the value of the assets of the Parent's  Group;
                  and

(ii)              a statement  by the auditors of the Parent to the effect that,
                  in their opinion,  a subsidiary is or is not or was or was not
                  at any particular  time a Material  Subsidiary  shall,  in the
                  absence of manifest  error,  be conclusive  and binding on the
                  parties hereto;

        "Mortgages" means the first preferred (or first priority) ship mortgages
        over the Vessels in the form or substantially  the form of that attached
        hereto as  Exhibits  C1, C2 and C3 (with such  amendments  as may in the
        Agent's  reasonable  opinion  be  appropriate  to  reflect  the place of
        registration  of the  relevant  Vessel) to be granted by the Borrower in
        favour of the  Trustee as  contemplated  by  paragraph  18 of Part 1 and
        paragraph 10 of Part 2 of the Third Schedule;



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         "Net Leverage" means:

                  Total Liabilities less (Liquid Assets exceeding $25,000,000)

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

                  Total Assets less (Liquid Assets exceeding $25,000,000)

        "Newbuilding  Facility" means the facility  agreement dated 17 June 1997
        between the  Borrower,  Chase  Investment  Bank  Limited,  and  Citibank
        International  plc as  arrangers  and Chase  Manhattan  Bank Norge AS as
        agent and others.

        "New  Vessels"  means New  Vessel 1, New  Vessel 2, New Vessel 3 and New
        Vessel 4 or any combination  thereof and "New Vessel" shall be construed
        accordingly.

        "New Vessel 1" means the vessel scheduled to be delivered by the Yard to
        the Borrower in January 1999 and having the Yard's Hull No 1234.

        "New Vessel 2" means the vessel scheduled to be delivered by the Yard to
        the Borrower in April 1999 and having the Yard's Hull No 1235.

        "New Vessel 3" means the vessel scheduled to be delivered by the Yard to
        the Borrower in June 1999 and having the Yard's Hull No 1236.

        "New Vessel 4" means the vessel scheduled to be delivered by the Yard to
        the Borrower in February  2000 if the Borrower  exercises  its option to
        purchase such vessel.

        "NIS" means the Norwegian International Ship Register.

        "Notice of Drawdown" means a notice substantially in the form set out in
        the Fourth Schedule (Notice of Drawdown).

        "Option Declaration Date" means 15 July 1999;

        "Original   Consolidated   Financial   Statements"   means  the  audited
        consolidated  financial  statements  of the  Borrower's  Group  for  its
        financial year ended 31 December 1997.

        "Original Facility Date" means 16 December 1998.

        "Parent" means Teekay Shipping Corporation, a Liberian corporation.

        "Parent's  Group"  means  the  Parent and its  subsidiaries for the time
        being.

        "Potential  Event of Default" means any event which may become (with the
        passage of time, the giving of notice,  the making of any  determination
        hereunder or any combination thereof) an Event of Default.

        "Proportion" means, in relation to a Bank:

(i)               whilst no Advances are outstanding  hereunder,  the proportion
                  borne  by  its  Total   Commitment  to  the  Aggregate   Total
                  Commitments  (or, if the Aggregate Total  Commitments are then
                  zero,  by  its  Total   Commitment  to  the  Aggregate   Total
                  Commitments immediately prior to their reduction to zero); or

(ii)              whilst at least one  Advance  is  outstanding  hereunder,  the
                  proportion borne by its share of the Loan to the Loan.

        "Quarter Date" means 31 March,  30 June, 30 September and 31 December in
        any year.

        "Quotation  Date" means, in relation to any period for which an interest
        rate is to be determined  hereunder,  the day on which  quotations would
        ordinarily  be given by prime banks in the London  Interbank  Market for
        deposits  in  dollars  for  delivery  on the  first  day of that  period
        Provided that, if, for any such period,  quotations  would ordinarily be
        given on more than one date, the Quotation Date for that period shall be
        the last of those dates.

        "Reduction  Dates"  means  (i) the  date  which is 6  months  after  the
        Original  Facility Date, (ii) each of the days which fall at six monthly
        intervals after such date specified in (i), and (iii) the Final Maturity
        Date.

        "Reference  Banks" means the principal  London offices of Citibank N.A.,
        The Chase  Manhattan  Bank, and  Christiania  Bank og Kreditkasse ASA or
        such other Bank or Banks as may from time to time be agreed  between the
        Borrower  and the Agent  acting on the  instructions  of an  Instructing
        Group.

        "Relevant  Percentage" means, in respect of any subsidiary of the Parent
        at  any  time,  the  percentage  of  the  equity  share  capital  or the
        partnership  capital,  as the case may be, of such  subsidiary  which is
        beneficially owned (free from encumbrances) by the Parent at that time.

       "Repayment Date" means, in relation to any  Advance,  the last day of the
       Term thereof.

        "Security Agreements" means each of the following:

(i)               the Mortgages;

(ii)              the Deeds of Assignment; and

(iii)             any other  document from time to time entered into in relation
                  to this Agreement which it is agreed between the Agent (or, as
                  the  case  may  be,  the  Trustee)  and  the  Borrower  is  to
                  constitute a Security Agreement for the purposes hereof.

        "Security  Pool" means Security Pool 1 and Security Pool 2, or either of
        them as the context requires.

        "Security Pool 1" means the Initial Vessels, the New Vessels and each of
        the other  assets from time to time  mortgaged  or charged to secure the
        Borrower's  obligations  under this  Agreement and allocated to Security
        Pool 1.

        "Security  Pool 2" means the Future Vessels and each of the other assets
        from  time to  time  mortgaged  or  charged  to  secure  the  Borrower's
        obligations under this Agreement and allocated to Security Pool 2.

        "Security  Trust Deed" means the security trust  agreement to be entered
        into  between the Trustee  and others in the form or  substantially  the
        form of that attached  hereto as Exhibit A whereby the Trustee will hold
        the benefit of the Security Documents on behalf of the Beneficiaries (to
        be defined therein).

        "Soponata  -  Bona  Guarantee"   means  the  guarantee  of  50%  of  the
        outstanding amounts from time to time under a $75,000,000 loan agreement
        dated  26  June  1996  between  Soponata  - Bona  Limited  as  borrower,
        Christiania Bank og Kreditkasse as agent and others.

        "Term"  means,  save as otherwise  provided  herein,  in relation to any
        Advance,  the period for which such  Advance is borrowed as specified in
        the Notice of Drawdown relating thereto.

        "Total  Assets" means (subject to the second proviso to Clause 13.1) the
        aggregate  of the  assets  of the  Borrower's  Group  as  determined  in
        accordance with US GAAP (excluding  Intra-Group Assets), but so that for
        the purposes of this definition the value attributable to each vessel in
        the  Borrower's  Group's fleet (or, if different,  each Vessel) shall be
        adjusted to reflect her most recent Estimated Value.

        "Total Commitments" means, in relation to a Bank at any time and save as
        otherwise provided herein, the amount set opposite its name in the First
        Schedule in the column headed "Total Commitment".

        "Total  Liabilities"  means  the  aggregate  of the  obligations  of the
        Borrower and its subsidiaries for the payment of money, whether borrowed
        or not and whether  present or future,  as determined in accordance with
        US GAAP.

        "Transfer Certificate" means a certificate substantially in the form set
        out in the Second  Schedule (Form of Transfer  Certificate)  signed by a
        Bank and a Transferee whereby:

(i)               such Bank seeks to procure the transfer to such  Transferee of
                  all or a part of such Bank's rights,  benefits and obligations
                  hereunder  as  contemplated  in Clause 24.3  (Assignments  and
                  Transfers by Banks); and

(ii)              such Transferee  undertakes to perform the obligations it will
                  assume  as a result of  delivery  of such  certificate  to the
                  Agent as is contemplated in Clause 24.5 (Transfers by Banks).

        "Transfer Date" means, in relation to any Transfer Certificate, the date
        for the making of the  transfer  as  specified  in the  schedule to such
        Transfer Certificate.

        "Transferee" means a bank or other financial  institution  (unless it is
        another  Bank,  approved by the  Borrower in  writing,)  to which a Bank
        seeks  to  transfer  all or part of such  Bank's  rights,  benefits  and
        obligations hereunder.

        "US GAAP" at any time means accounting  policies  generally  accepted in
        the United States of America at such time.

        "Vessels"  means the  Initial  Vessels,  the New  Vessels and the Future
        Vessels  or any  combination  thereof  and any  other  vessel  which  is
        mortgaged to provide security for the Borrower's  obligations  hereunder
        pursuant to any of the provisions of Clause 13.1, 13.2, 13.4 or 13.6 and
        "Vessel" shall be construed accordingly.

        "Yard" means Samsung Heavy Industries Co. Ltd of Korea.

1.2      Interpretation
        Any reference in this Agreement to:

        "acting in concert" shall be construed as a reference to any two or more
        persons  co-operating  pursuant to any agreement or arrangement (whether
        or not legally  binding or formally  recorded)  in  connection  with the
        acquisition,  or attempted  acquisition,  by any of them of control over
        any company;

        the "Agent",  the  "Trustee",  or any "Bank" shall be construed so as to
        include its and any  subsequent  successors,  Transferees  and permitted
        assigns in accordance with their respective interests;

        a "business  day" shall be construed as a reference to a day (other than
        a Saturday or Sunday) on which banks  generally are open for business in
        London, New York City and Oslo;

        a "charter"  shall be construed as a reference to any  agreement  (other
        than, for the purposes of the definition of "Market  Value",  a contract
        of affreightment) pursuant to which a vessel is, or will be, employed;

        the "date  hereof"  shall be a  reference  to the date upon  which  this
        Agreement  was amended and restated  rather than the  Original  Facility
        Date.

        an  "encumbrance"  shall be  construed  as a  reference  to a  mortgage,
        charge, pledge, lien or other encumbrance securing any obligation of any
        person, or any other type of preferential  arrangement  (including title
        transfer and retention arrangements) having a similar effect;

        the   "equivalent"  in  one  currency  (in  this  paragraph  the  "first
        currency")  of an  amount  denominated  in  another  currency  (in  this
        paragraph the "second  currency")  on any date shall,  save as otherwise
        provided,  be  construed  as a  reference  to the  amount  of the  first
        currency  which  could be  purchased  with  that  amount  of the  second
        currency at the spot rate of exchange quoted by the Agent in the foreign
        exchange  market in London at or about  11.00 a.m.  on such date for the
        purchase of the first  currency with the second  currency for the second
        business day thereafter;

        a "guarantee"  includes any guarantee,  indemnity or other obligation to
        pay, purchase, provide funds for the payment of or indemnify against the
        consequences  of default in the  payment  of  indebtedness  of any other
        person and any encumbrance which secures the payment of any indebtedness
        of any other person;

        a "holding  company" of a company or corporation shall be construed as a
        reference  to any company or  corporation  of which the  first-mentioned
        company or corporation is a subsidiary;

        "indebtedness"  shall  be  construed  so as to  include  any  obligation
        (whether  incurred  as  principal  or as  surety)  for  the  payment  or
        repayment of money,  whether  present or future,  actual or  contingent;
        "indebtedness  for borrowed  money" shall be construed as a reference to
        any indebtedness of any person for or in respect of:

(i)      moneys borrowed or raised;

(ii)     amounts raised under any acceptance credit facility;

(iii)             amounts raised  pursuant to any note purchase  facility or the
                  issue of  bonds,  notes,  debentures,  loan  stock or  similar
                  instruments;

(iv)              amounts  raised  pursuant to any issue of shares of any member
                  of the Borrower's Group which are expressed to be redeemable;

(v)               the  amount  of any  liability  in  respect  of leases or hire
                  purchase  contracts which would, in accordance with US GAAP be
                  treated as finance or capital leases;

(vi)              the amount of any  liability in respect of any purchase  price
                  for assets or services  the payment of which is deferred for a
                  period in excess of one hundred and eighty (180) days;

(vii)             all  reimbursement  obligations  whether  contingent or not in
                  respect  of  amounts  paid under a letter of credit or similar
                  instrument;

(viii)            all  interest  rate and currency  swap and similar  agreements
                  obliging the making of payments,  whether periodically or upon
                  the  happening  of  a  contingency  (and  the  value  of  such
                  indebtedness  shall be the  mark-to-market  valuation  of such
                  transaction at the relevant time);

(ix)              amounts raised under any other transaction (including, without
                  limitation, any forward sale or purchase agreement) having the
                  commercial effect of a borrowing; and

(x) any guarantee of indebtedness falling within paragraphs (i) to (ix) above.

        a "month" is a reference  to a period  starting on one day in a calendar
        month  and  ending  on the  numerically  corresponding  day in the  next
        succeeding  calendar  month  save  that,  where  any such  period  would
        otherwise  end on a day which is not a business day, it shall end on the
        next  succeeding  business  day,  unless that day falls in the  calendar
        month  succeeding  that in which it would otherwise have ended, in which
        case it shall end on the  immediately  preceding  business  day Provided
        that, if a period starts on the last business day in a calendar month or
        if there is no numerically  corresponding day in the month in which that
        period  ends,  that period  shall end on the last  business  day in that
        later month (and references to "months" shall be construed accordingly);

        a "person"  shall be  construed  as a  reference  to any  person,  firm,
        company,  corporation,  government,  state or  agency  of a state or any
        association  or  partnership  (whether  or  not  having  separate  legal
        personality) of two or more of the foregoing;

        a  "subsidiary"  of a company or  corporation  shall be  construed  as a
        reference to any company or corporation:

(i)  which is controlled, directly or indirectly, by the first-mentioned company
     or corporation;

(ii) more than half the issued  share  capital of which is  beneficially  owned,
     directly or indirectly, by the first-mentioned company or corporation; or

(iii)which is a subsidiary of another subsidiary of the first-mentioned  company
     or corporation

        and, for these  purposes,  a company or corporation  shall be treated as
        being controlled by another if that other company or corporation is able
        to direct its affairs and/or to control the  composition of its board of
        directors or  equivalent  body Provided that neither Bona Fortuna KS nor
        Bona  Freighter KS shall  constitute  subsidiaries  of any member of the
        Group;

        "tax"  shall be  construed  so as to include  any present or future tax,
        levy,  impost,  duty or other charge of a similar nature  (including any
        penalty or interest payable in connection with any failure to pay or any
        delay in paying any of the same);

        a "total  loss" of a Vessel  shall be  construed so as to include (a) an
        actual, constructive, agreed, arranged or compromised total loss of such
        Vessel including such as may occur during a requisition for hire of such
        Vessel and (b) the requisition for title of a Vessel  (otherwise than by
        requisition for hire) by any government or other competent  authority or
        by any person  acting or  purporting to act by the authority of the same
        and from which  such  Vessel  has not been  released  within a period of
        ninety days of such event occurring;

        "VAT" shall be construed as a reference to value added tax including any
        similar tax which may be imposed in place thereof from time to time;

        "vessel" means any Vessel and any other vessel owned by the Borrower  or
        any of its subsidiaries; and

        the  "winding-up",  "dissolution"  or  "administration"  of a company or
        corporation  shall be  construed  so as to  include  any  equivalent  or
        analogous  proceedings  under the law of the  jurisdiction in which such
        company or corporation is incorporated or any jurisdiction in which such
        company or  corporation  carries on  business  including  the seeking of
        liquidation, winding-up,  reorganisation,  dissolution,  administration,
        arrangement, adjustment, protection or relief of debtors.

1.3      Currency Symbols
          "$" and  "dollars"  denote  lawful  currency  of the United  States of
          America.

1.4      Amendments
        Save where the contrary is indicated,  any  reference in this  Agreement
to:

(i)               this  Agreement or any other  agreement  or document  shall be
                  construed as a reference to this Agreement or, as the case may
                  be,  such other  agreement  or  document  as the same may have
                  been,  or may  from  time  to  time  be,  amended,  varied  or
                  supplemented;

(ii)              a statute shall be construed as a reference to such statute as
                  the same may have been,  or may from time to time be,  amended
                  or re-enacted; and

(iii)             a time of day shall be construed as a reference or  re-enacted
                  to London time.

1.5      Headings
        Clause, Part and Schedule headings are for ease of reference only.

1.6      Total Loss of Vessel
        For the  purposes  of the  Finance  Documents,  a total loss of a Vessel
        shall be deemed to have occurred:

(i)               if it consists of an actual total loss, at noon Greenwich Mean
                  Time on the actual  date of loss or, if that is not known,  on
                  the date on which such Vessel was last heard of;

(ii)              if  it  consists  of  a  requisitioning  for  title,  at  noon
                  Greenwich Mean Time on the date on which the same is expressed
                  to take effect by the person making the same; and

(iii)             if it consists of a constructive or compromised or arranged or
                  agreed total loss, at noon  Greenwich Mean Time on the date at
                  which  notice of  abandonment  of such  Vessel is given to her
                  insurers  for the time being or (if her  insurers for the time
                  being do not admit  the  claim for total  loss) at the time on
                  which a total loss is  subsequently  adjudged to have occurred
                  by a competent  court or arbitration  tribunal or liability in
                  respect thereof as a total loss is admitted by insurers.

1.7      Construction
        In the event of a conflict  between  any words and  expressions  defined
        herein  and  any  words  and  expressions  used  in any of the  Security
        Agreements,  unless otherwise defined therein, the words and expressions
        defined herein will prevail for the purpose of the Finance Documents.

Part 2

<PAGE>



                                             THE FACILITIES

2.                The Facilities

2.1      Grant of the Facilities
          The Banks  grant to the  Borrower,  upon the terms and  subject to the
          conditions hereof:-

(i)  the A Facility  being a dollar  revolving  loan  facility  in an  aggregate
     amount of $400,000,000 and;

(ii) the B Facility  being a dollar  revolving  loan  facility  in an  aggregate
     amount of $100,000,000.

2.2      Purpose and Application
(i)               The A  Facility  is  intended  to enable the  Borrower  (a) to
                  refinance the outstandings under the Citibank Revolver and the
                  Chase  Revolver and (b) to finance part of the purchase  price
                  of each New Vessel in an amount of up to  $30,000,000  (or, in
                  the case of New Vessel 4 in an amount of up to $25,000,000) on
                  the date of delivery of such New Vessel;

(ii)              The B Facility is  intended to enable the  Borrower to finance
                  part of the purchase  price of each Future  Vessel on the date
                  of delivery  of such Future  Vessel (or acquire all the issued
                  shares in a company which itself owns such Future Vessel)

                  and accordingly the Borrower shall apply all amounts raised by
                  it hereunder in or towards such purposes.

2.3      Condition Precedent Documents
        Save as the Banks may otherwise agree the Borrower may not deliver:-

(i)               the first  Notice of Drawdown  hereunder  unless the Agent has
                  confirmed  to the  Borrower  that it has  received  all of the
                  documents  listed in Part 1 of the Third  Schedule  (Condition
                  Precedent Documents) (excepting those documents referred to in
                  paragraphs  6, 7, 15,  16,  17,  18, 19, 20, 22 and 23 thereof
                  which must be received,  in form and  substance  acceptable to
                  the Agent,  concurrently with the relevant Advance being made)
                  and that each is, in form and substance,  satisfactory  to the
                  Agent;

(ii)              any  Notice  of  Drawdown  which  is in  connection  with  the
                  delivery of any New Vessel or Future  Vessel  unless the Agent
                  (without  prejudice  to Clause  13.11)  has  confirmed  to the
                  Borrower that:

(a)                     it has received all of the relevant  documents listed in
                        Part  2  of  the  Third  Schedule  (Condition  Precedent
                        Documents) relating to the New Vessel (or Future Vessel)
                        to  which  such  Facility   relates   (excepting   those
                        documents  referred to in paragraphs 7, 8, 9, 10, 11 and
                        12 of  Part 2 of  the  Third  Schedule,  which  must  be
                        received, in form and substance acceptable to the Agent,
                        concurrently with the relevant Advance being made); and

(b) the Borrower has complied with its obligations under Clause 13.8.

(iii)and that each  document  referred  to in (a) and (b) above is in a form and
     substance satisfactory to the Agent.

2.4      Banks' Obligations Several
        The  obligations of each Bank hereunder are several and the failure by a
        Bank  to  perform  its  obligations   hereunder  shall  not  affect  the
        obligations of the Borrower towards any other party hereto nor shall any
        other  party be  liable  for the  failure  by such Bank to  perform  its
        obligations hereunder.

3.       Utilisation of the Facilities

3.1      Drawdown Conditions
        An Advance will be made by the Banks to the Borrower if:

(i)               not more than ten nor less than three business days before the
                  proposed  date for the making of such  Advance,  the Agent has
                  received  from the  Borrower  a Notice of  Drawdown  therefor,
                  receipt  of which  shall  oblige  the  Borrower  to borrow the
                  amount  therein  requested on the date therein stated upon the
                  terms and subject to the conditions contained herein;

(ii)              the proposed date for the making of such Advance is a business
                  day falling before the Commitment Termination Date;

(iii)             the  proposed  date for the making of such Advance is not less
                  than five business days after the date upon which the previous
                  Advance (if any) was made hereunder;

(iv)              the proposed  amount of such Advance is in a minimum amount of
                  $5,000,000  and  subject  thereto  an  integral   multiple  of
                  $1,000,000  which is equal to or less than the amount of the A
                  Available  Facility  or, as the case may be,  the B  Available
                  Facility;

(v)               there would not, immediately after the making of such Advance,
                  be more than six (6) Advances outstanding;

(vi)              following the making of any Advance under the A Facility which
                  increases the amount of the Loan  outstanding  (other than the
                  first Advance) Loan 1 shall not exceed  seventy-five per cent.
                  of the  Estimated  Value of Security  Pool 1; Provided that in
                  relation to an Advance  made in respect of the delivery of any
                  New Vessel from the Yard,  the  Borrower  shall be entitled to
                  borrow  up to  $30,000,000  ($25,000,000,  in the  case of New
                  Vessel 4) or, if less, up to the  Estimated  Value of such New
                  Vessel  notwithstanding  that  such  Advance  may  cause  such
                  percentage to be exceeded;

(vii)             following the making of a B Advance which increases the amount
                  outstanding  under the B  Facility,  Loan 2 shall  not  exceed
                  seventy five per cent of the Estimated  Value of Security Pool
                  2;

(viii)            the  proposed  Term of such  Advance is a period of one,  two,
                  three,  six or twelve  months (or such other periods as may be
                  agreed between the Borrower and the Banks) ending on or before
                  the Final Maturity Date;

(ix)              no Event of Default or Potential Event of Default has occurred
                  and the representations set out in Clause 11 (Representations)
                  are true in all  material  respects on and as of the  proposed
                  date for the making of such Advance; and

(x)               following  the making of a B Advance  (and on the basis of the
                  statement  which shall have been delivered  pursuant to Clause
                  12.8, if applicable) Leverage shall not be more than 75%.

3.2      Each Bank's Participation
        Each Bank will  participate  through its Facility Office in each Advance
        made  pursuant to Clause 3.1  (Drawdown  Conditions)  in the  proportion
        borne by its A Available  Commitment to the A Available Facility (in the
        case of an A Advance) or (in the case of a B Advance) in the  proportion
        borne by its B  Available  Commitment  to the B  Available  Facility  in
        either case immediately prior to the making of that Advance.

3.3      Reduction of Available Commitment
        If a Bank's A Commitment  (or, as the case may be, its B Commitment)  is
        reduced in accordance with the terms hereof after the Agent has received
        the Notice of  Drawdown  for an A Advance  (or,  as the case may be, a B
        Advance),  then the  amount of that A Advance  (or,  as the case may be,
        that B Advance) shall be reduced accordingly.

3.4     On  the  second  anniversary  of  the  Original  Facility  Date,  the  A
        Commitment of each Bank shall be permanently  reduced by the A Available
        Commitment  of  such  Bank  immediately  prior  to such  date  and the B
        Commitment of each Bank shall be permanently  reduced by the B Available
        Commitment of such Bank immediately prior to such date.

3.5     The first  Advance  hereunder  shall be made under the A Facility  which
        shall be used to refinance the  outstandings  and related expenses under
        the Citibank  Revolver and the Chase  Revolver and shall be in an amount
        of $285,000,000.
Part 3

<PAGE>



                                                INTEREST

4.       Payment and Calculation of Interest

4.1      Payment of Interest
        On the Repayment Date relating to each Advance (and, in the case where a
        Term has a duration  exceeding six months,  on the last day of the sixth
        of those  months)  the  Borrower  shall  pay  accrued  interest  on that
        Advance.

4.2      Calculation of Interest
        The rate of interest  applicable  to an Advance from time to time during
        its Term shall be the rate per annum which is the sum of the  applicable
        Margin 1 (or the applicable Margin 2 in the case of a B Advance) at such
        time and LIBOR on the Quotation Date therefor.

4.3     For the purposes of determining the amount of accrued  interest  payable
        on each Advance on an Interest  Payment Date pursuant to Clause 4.1, the
        Net Leverage (and  accordingly  the applicable  Margin 1, or as the case
        may be, the applicable  Margin 2) shall be assumed to be as disclosed in
        the most recent financial  statements  delivered pursuant to Clause 12.1
        or Clause 12.2  Provided  Always That if, on the basis of the  financial
        statements  delivered  in respect  of the next  following  Quarter  Date
        (having  regard to the proviso to the  definition  of "Margin 1" and the
        proviso to the  definition of "Margin 2") the Borrower has overpaid (or,
        as the case may be, underpaid) interest then the amount so overpaid (or,
        as the case may be,  underpaid)  shall be deducted from (or, as the case
        may be, added to) the amount of interest which would otherwise have been
        payable by the Borrower on the next following Interest Payment Date.
5.       Market Disruption and Alternative Interest Rates

        If, in relation to any Advance for which LIBOR falls to be determined in
        accordance  with  the  proviso  to the  definition  thereof,  the  Agent
        determines  that at or about 11.00 a.m.  (London  time) on the Quotation
        Date for the Term in respect of such Advance none of the Reference Banks
        was offering to prime banks in the London  Interbank  Market deposits in
        dollars for the proposed duration of such Term then, notwithstanding the
        provisions of Clause 4 (Payment and  Calculation of Interest) the length
        of the Term of such Advance shall be one month (unless otherwise agreed)
        and the rate of interest  applicable  to such  Advance from time to time
        during  such Term  shall be the rate per  annum  which is the sum of the
        applicable  Margin  1 (or the  applicable  Margin  2 in the  case of a B
        Advance)  and the  arithmetic  mean of the  respective  rates  per annum
        notified to the Agent by each Bank before the last day of the Term to be
        that which  expresses as a  percentage  rate per annum the cost to it of
        funding such Advance  during such Term from  whatever  sources such Bank
        may select (and the Agent shall notify the Borrower accordingly).



<PAGE>




Part 4
                           REPAYMENT, REDUCTION, CANCELLATION AND PREPAYMENT

6.       Repayment and Reduction

6.1      Repayment
        The  Borrower  shall  repay  each  Advance  made  to it in  full  on the
Repayment Date relating thereto.

6.2      Reduction
(i)               subject  always  to  Clause  7.4,  on  each  of the  following
                  Reduction  Dates  the  Aggregate  Total  Commitments  shall be
                  permanently  reduced to the amounts shown  opposite such dates
                  below:-

                  first Reduction Date               $490,000,000

                  second Reduction Date              $480,000,000

                  third Reduction Date               $470,000,000

                  and not less than five business  days prior to each  Reduction
                  Date  referred  to above in this  Clause  6.2(i) the  Borrower
                  shall by notice in writing to the Agent  specify  whether  the
                  relevant  reduction  on such  Reduction  Date shall be applied
                  against  the   Aggregate  A  Commitment  or  the  Aggregate  B
                  Commitment  (and in default of such notice,  the  reduction on
                  the  relevant  Reduction  Date  shall be applied  against  the
                  Aggregate B Commitment);

(ii) subject always to Clause 7.4, and without  prejudice to Clause 3.4, on each
     Reduction Date (other than the Reduction  Dates  specified in (i) above and
     the Final Maturity Date),  the Aggregate A Commitment  shall be permanently
     reduced by an amount equal to  one-twenty-fifth  (1/25) of the  Aggregate A
     Commitment as at the second  anniversary of the Original  Facility Date and
     the Aggregate B Commitment shall be permanently  reduced by an amount equal
     to  one-twenty-fifth  (1/25) of the Aggregate B Commitment as at the second
     anniversary of the Original  Facility Date,  respectively  Provided  Always
     That if, as at the second  anniversary of the Original Facility Date, after
     the application of Clause 3.4, and on the basis of the reductions specified
     in this  Clause  6.2(ii),  the sum of the  Aggregate A  Commitment  and the
     Aggregate B Commitment on the  penultimate  Reduction Date (the  "Balloon")
     would exceed  $150,000,000  then the  proportion  by which the  Aggregate A
     Commitment  and the  Aggregate B Commitment  would  otherwise be reduced on
     each of the  Reduction  Dates  specified  in this Clause  6.2(ii)  shall be
     increased  by such  amount as shall  ensure  that the  Balloon  is equal to
     $150,000,000  (without  prejudice  to any  further  cancellation  or deemed
     cancellation in accordance  with the provisions of this Agreement  pursuant
     to which the Balloon would be further reduced); and

(iii) on the  Final  Maturity  Date the  Aggregate  Total  Commitments  shall be
reduced to zero.

6.3      Rateable Reduction
        Each  reduction  pursuant to Clause 6.2 of Aggregate A Commitment or, as
        the case may be,  Aggregate  B  Commitment,  shall  reduce  the Banks' A
        Commitments or, as the case may be, the Banks' B Commitments,  pro rata.
        In any event the  amount of the  Facilities  shall be reduced to zero on
        the Final Maturity Date.

6.4      Reduction of Outstandings
        If on any date the Loan exceeds the Aggregate Total  Commitments on such
        date, the Borrower shall repay on such date the amount of the excess and
        the repayment of such excess shall reduce the  principal  amount of such
        Advance or Advances as is or are nominated by the Borrower.

6.5      Prepayment
        The Borrower may, by giving to the Agent not less than fifteen  business
        days' notice to that effect,  prepay (without penalty but subject to the
        Borrower complying with Clause 16.4) the whole or any part of an Advance
        (being an amount such that such  Advance will be reduced by an amount or
        integral multiple of $5,000,000).

6.6      Reborrowing of Prepayments
        Subject to the other  provisions of this Agreement,  any prepayment made
        by the Borrower  pursuant to Clause 6.5 shall increase the amount of the
        A Available  Facility or the B Available Facility as the case may be and
        may be reborrowed in accordance with the provisions of this Agreement.

6.7      No Other Repayments
        The  Borrower  shall not repay or prepay all or any part of any  Advance
        outstanding  hereunder  except at the times and in the manner  expressly
        provided herein and, subject to the terms and conditions  hereof,  shall
        be entitled to reborrow any amount repaid up to the Available Facilities
        at such time.

7.       Cancellation

7.1  Cancellation  (i) the  Borrower  may,  by giving to the Agent not less than
     fifteen business days' prior notice to that effect, cancel the whole or any
     part (being an amount or integral  multiple of $5,000,000) of the Aggregate
     Total  Commitments;  any  such  cancellation  shall  specify  the  relevant
     Facility and shall be applied (a) pro rata against the scheduled reductions
     in the Aggregate A Commitment or Aggregate B Commitment as the case may be,
     as at each Reduction Date as determined  pursuant to Clause 6.2 unless (b),
     at the time the relevant notice of  cancellation is given,  the Borrower is
     in breach of any  provision  of Clause  13.1,  in which case the  cancelled
     amount  shall be applied  against the relevant  Aggregate A  Commitment  or
     Aggregate B  Commitment  as the case may be, as at each  Reduction  Date as
     determined pursuant to Clause 6.2 in inverse chronological order.

(ii)              any such cancellation  shall reduce the relevant A Commitment,
                  or as the case may be, B Commitment, of each Bank rateably. No
                  premium or other compensation shall be payable by the Borrower
                  by reason of such cancellation.

(iii)             if the  Borrower  decides not to exercise or does not exercise
                  its option to purchase New Vessel 4 from the Yard on or before
                  the Option  Declaration  Date,  the Borrower  shall  forthwith
                  notify the Agent  accordingly  and an amount of $25,000,000 in
                  respect of the A  Facility  shall be  cancelled  automatically
                  with  effect from the date that it has elected not to exercise
                  such option or the Option  Declaration  Date (whichever  shall
                  first occur).

7.2      Notice of Cancellation
        Any notice of cancellation  given by the Borrower pursuant to Clause 7.1
        (Cancellation)  shall be  irrevocable  and shall  specify  the date upon
        which  such   cancellation  is  to  be  made  and  the  amount  of  such
        cancellation.

7.3      Repayment of a Bank's Share of the Loan
        If any Bank claims  indemnification  from the Borrower  under Clause 8.2
        (Tax  Indemnity)  or Clause 10.1  (Increased  Costs),  the Borrower may,
        within thirty days  thereafter  and by not less than ten business  days'
        prior notice to the Agent (which  notice shall be  irrevocable),  cancel
        such  Bank's  Total  Commitment  whereupon  such Bank shall  cease to be
        obliged to  participate  in further  Advances  and its Total  Commitment
        shall be reduced to zero.

7.4      Satisfaction of Clause 6.2
        Subject  always  to  Clause  6.4,  the  reductions  in  Aggregate  Total
        Commitment,  Aggregate A Commitment  or  Aggregate B Commitment  (as the
        case may be) pursuant to Clause 6.2 (Reduction)  shall be deemed to have
        been satisfied to the extent a cancellation  has been effected  pursuant
        to Clause 7.1  (Cancellation)  and such cancellation has been applied in
        accordance with Clause 7.1(i)(a) or Clause 7.1(iii) as the case may be.

Part 5

<PAGE>



                                            RISK ALLOCATION

8.                Taxes

8.1      Tax Gross-up
        All  payments to be made by the  Borrower to any person under any of the
        Finance  Documents shall be made free and clear of and without deduction
        for or on account of tax unless the  Borrower is required to make such a
        payment  subject to the deduction or  withholding  of tax, in which case
        the sum payable by the  Borrower in respect of which such  deduction  or
        withholding  is  required  to be made shall be  increased  to the extent
        necessary to ensure that, after the making of the required  deduction or
        withholding,  such person  receives and retains (free from any liability
        in respect of any such deduction or  withholding) a net sum equal to the
        sum which it would have  received and so retained had no such  deduction
        or withholding been made or required to be made.

8.2      Tax Indemnity
        Without prejudice to the provisions of Clause 8.1 (Tax Gross-up), if any
        person or the Agent on its  behalf is  required  to make any  payment on
        account of tax (not being a tax imposed on and  calculated  by reference
        to the net income  paid to and  received by its  Facility  Office by the
        jurisdiction in which it is incorporated or in which its Facility Office
        is  located)  or  otherwise  on or in  relation  to any sum  received or
        receivable  hereunder  by  such  person  or  the  Agent  on  its  behalf
        (including  any sum received or  receivable  under this Clause 8) or any
        liability in respect of any such payment is asserted, imposed, levied or
        assessed  against  such person or the Agent on its behalf,  the Borrower
        shall, upon demand of the Agent,  promptly indemnify such person against
        such payment or liability,  together with any interest, penalties, costs
        and expenses payable or incurred in connection  therewith  Provided that
        if a Bank or the Agent or the Trustee considers that it is reasonable to
        do so and that it would not be otherwise  prejudiced  thereby,  it will,
        prior to  instructing  the Agent to make a demand under this Clause 8.2,
        use  reasonable  endeavours  to  determine  whether any such  payment or
        liability  was  correctly  or  legally  imposed  or  asserted  or  could
        reasonably be mitigated.

8.3      Claims by Banks
        If a Bank or the Trustee  intends to make a claim pursuant to Clause 8.2
        (Tax  Indemnity)  it shall  notify  the  Agent of the event by reason of
        which it is entitled  to do so and  provide the Agent with a  reasonable
        written  explanation  of  the  basis  and  calculation  of  such  claim,
        whereupon  the Agent shall notify the  Borrower  thereof and provide the
        Borrower with a copy of the  explanation  and  calculation  which it has
        received  from such Bank or the Trustee  Provided  that  nothing  herein
        shall  require  any Bank or the  Trustee to  disclose  any  confidential
        information relating to the organisation of its affairs.

9.       Tax Receipts and Credits

9.1      Notification of Requirement to Deduct Tax
        If, at any time,  the Borrower is required by law to make any  deduction
        or  withholding  from any sum  payable  by it under  any of the  Finance
        Documents (or if thereafter there is any change in the rates at which or
        the manner in which such deductions or withholdings are calculated), the
        Borrower  shall  promptly  notify the Agent,  whereupon  the Agent shall
        notify the Banks and the Trustee accordingly.

9.2      Evidence of Payment of Tax
        If the Borrower makes any payment under any of the Finance  Documents in
        respect of which it is required to make any deduction or withholding, it
        shall pay the full  amount  required  to be  deducted or withheld to the
        relevant  taxation or other  authority  within the time allowed for such
        payment  under  applicable  law and shall  deliver to the Agent for each
        Bank,  within  thirty  days after it has  received  the same an original
        receipt  (or  a  certified  copy  thereof)   issued  by  such  authority
        evidencing  the payment to such  authority of all amounts so required to
        be deducted or withheld in respect of that Bank's share of such payment.

9.3      Tax Credits
        In the event that an  additional  payment is made under  Clause 8.2 (Tax
        Indemnity) and the person for whose benefit such payment is made, in its
        sole opinion,  determines  that it has received or been granted a credit
        against  relief or remission for, or repayment of, any relevant tax paid
        or  payable  by it in respect of or  calculated  with  reference  to the
        deduction  or  withholding  giving  rise  to  the  relevant  payment  or
        liability,  such person  shall,  to the extent that it can do so without
        prejudice  to the  retention  of the  amount  of  such  credit,  relief,
        remission or  repayment,  pay to the Borrower such amount as such person
        shall,  in its sole opinion,  have concluded to be  attributable  to the
        relevant  payment or  liability.  Any such payment  shall be  conclusive
        evidence  of the  amount  due to the  Borrower  hereunder  and  shall be
        accepted by the Borrower in full and final  settlement  of its rights of
        reimbursement hereunder in respect of the relevant payment or liability.
        Nothing herein  contained shall interfere with the right of the Agent or
        any Bank to arrange  its tax  affairs in  whatever  manner it thinks fit
        and,  in  particular,  neither the Agent nor any Bank shall be under any
        obligation  to claim  credit,  relief,  remission or  repayment  from or
        against its corporate profits or similar tax liability in respect of the
        amount of the  relevant  payment or  liability  in priority to any other
        claims,  reliefs,  credits  or  deductions  available  to it.  Any  such
        reimbursement  to be made by a Bank  pursuant  to this  Clause  9.3 (Tax
        Credits)  shall  be made  as  soon as  possible  after  such  credit  or
        remission or repayment has, in the reasonable opinion of such Bank, been
        received or granted.

10.

<PAGE>



Changes in Circumstances

10.1     Increased Costs
        If,  by  reason of (i) any  change  in law or in its  interpretation  or
        administration  coming  into effect  after the  Original  Facility  Date
        and/or (ii)  compliance  with any Capital  Adequacy  Requirement  or any
        other request from or  requirement  of any central bank or other fiscal,
        monetary  or other  authority  coming  into  effect  after the  Original
        Facility Date  compliance with which is obligatory or customary for such
        Bank:

(i)               a Bank or any holding company of such Bank is unable to obtain
                  the rate of return on its overall  capital which it would have
                  been  able to  obtain  but for such  Bank's  entering  into or
                  assuming  or   maintaining  a  commitment  or  performing  its
                  obligations  (including  its  obligation to participate in the
                  making of Advances) under this Agreement;

(ii)              a Bank or any holding  company of such Bank incurs a cost as a
                  result of such Bank's entering into or assuming or maintaining
                  a commitment  or performing  its  obligations  (including  its
                  obligation  to  participate  in the making of Advances)  under
                  this Agreement;

(iii)             there is any  increase  in the  cost to a Bank or any  holding
                  company of such Bank of funding or  maintaining  all or any of
                  the loans comprised in a class of loans formed by or including
                  such Bank's share of the Advances; or

(iv)              a Bank or any holding  company of such Bank becomes  liable to
                  make any payment on account of tax or  otherwise  (not being a
                  tax imposed on and  calculated  by reference to the net income
                  paid to and  received  by such Bank's  Facility  Office by the
                  jurisdiction  in which  it is  incorporated  or in  which  its
                  Facility  Office is located) on or  calculated by reference to
                  the amount of such Bank's share of the Advances  and/or to any
                  sum received or receivable by it hereunder,

        then the  Borrower  shall,  from time to time on  demand  of the  Agent,
        promptly  pay  to the  Agent  for  the  account  of  that  Bank  amounts
        sufficient  to hold  harmless  and  indemnify  that Bank or such  Bank's
        holding company from and against, as the case may be, (1) such reduction
        in the rate of return on its overall  capital,  (2) such cost,  (3) such
        increased cost (or such  proportion of such increased cost as is, in the
        opinion of that Bank,  attributable to its  participating in the funding
        or  maintaining  of Advances) or (4) such  liability.  No claim shall be
        made by any Bank under this Clause 10.1 (Increased  Costs) in respect of
        any  increased  cost which arises out of a change to  applicable  law or
        regulation  affecting  that Bank which has been issued prior to the date
        of the first drawdown  hereunder and compliance  with which by that Bank
        is commercially reasonable (including, without limitation, any reduction
        in return or increased  cost which arises as a consequence of any law or
        directive  implementing  the  Basle  Paper in the  manner in which it is
        being implemented at the Original Facility Date).


10.2     Increased Costs Claims
        A Bank  intending  to make a claim  pursuant to Clause  10.1  (Increased
        Costs) shall as soon as reasonably  practicable  after becoming aware of
        the circumstance  which would give rise to such a claim notify the Agent
        of the event by reason of which it is  entitled to do so and provide the
        Agent with a reasonable written explanation of the basis and calculation
        of such claim,  whereupon the Agent shall  promptly  notify the Borrower
        thereof and  provide the  Borrower  with a copy of the  explanation  and
        calculation  which it has  received  from such Bank or Trustee  Provided
        that nothing herein shall require such Bank to disclose any confidential
        information relating to the organisation of its affairs.

10.3     Illegality
        If, at any time:

(i)               it is  unlawful  for a Bank to make,  fund or allow to  remain
                  outstanding  all or part of its  share of the  Advances,  then
                  that Bank shall,  promptly  after  becoming aware of the same,
                  deliver  to the  Borrower  through  the Agent a notice to that
                  effect and:

(a)                     such Bank shall not thereafter be obliged to participate
                        in the  making  of any  Advances  and the  amount of its
                        Total Commitment  shall be immediately  reduced to zero;
                        and

(b)                     if the Agent on behalf  of such  Bank so  requires,  the
                        Borrower  shall on such  date as the  Agent  shall  have
                        specified  repay such  Bank's  share of any  outstanding
                        Advances  together with accrued interest thereon and all
                        other amounts owing to such Bank hereunder; or

(ii) it is or will become  unlawful  for the  Borrower to perform or comply with
     any or all of its  obligations  under any  Finance  Document  or any of the
     obligations  of the  Borrower  under any Finance  Document  are not or will
     cease to be legal  valid  and  binding,  the  Agent  may by  notice  to the
     Borrower  require the  Borrower to enter into  negotiations  with a view to
     amending the terms of such Finance Document in such a way as to ensure that
     the Borrower's obligations thereunder remain substantially the same but are
     lawful or, as the case may be, legal,  valid and binding;  if within thirty
     days  following any such notice from the Agent such Finance  Document shall
     not have been so amended, the Borrower shall, on such date as the Agent may
     require,  repay the Loan  together  with accrued  interest  thereon and any
     other sums then due from the Borrower hereunder.

10.4     Mitigation
        If circumstances  arise which would (or would upon the giving of notice)
result in:

(i)  the  reduction  of a  Bank's  Total  Commitment  pursuant  to  Clause  10.3
     (Illegality) ;

(ii) the  prepayment  of a Bank's  share of an Advance  pursuant  to Clause 10.3
     (Illegality);

(iii)             an  increase in the amount of any payment to be made to or for
                  account of any Bank pursuant to Clause 8.1(Tax Gross-up); or

(iv)              a claim by any Bank for indemnification pursuant to Clause 8.2
                  (Tax  Indemnity)  or a claim by any  Bank for  indemnification
                  pursuant to Clause 10.1 (Increased Costs),

        then, without in any way limiting,  reducing or otherwise qualifying the
        obligations of the Borrower under any of the Clauses  referred to above,
        that Bank shall,  in  consultation  with the  Borrower  and the Agent on
        behalf of the Banks,  take such  reasonable  steps as may be  reasonably
        open to it to mitigate the effects of such  circumstances,  including by
        transferring its Facility Office to another jurisdiction or by assigning
        its rights hereunder to another  financial  institution  approved by the
        Borrower Provided that no Bank shall have any obligation to transfer its
        Facility Office or assign its rights  hereunder as aforesaid if it is of
        the opinion  that to do so would or might have an adverse  effect on its
        business, operations or financial condition.



<PAGE>




Part 6
                            REPRESENTATIONS, COVENANTS AND EVENTS OF DEFAULT

11.      Representations

        Subject to any reservations  and/or  qualifications  as to matter of law
        which may be made in the legal  opinions  referred to in paragraphs 6, 7
        and 16 of Part 1 and  paragraph 8 of Part 2 of the Third  Schedule,  the
        Borrower represents that:

(i)               Status  and  Due   Authorisation  It  is  a  corporation  duly
                  organised  under the laws of Bermuda  with power to enter into
                  the Finance  Documents  and to exercise its rights and perform
                  its obligations  under the Finance Documents and all corporate
                  and other action  required to authorise  its  execution of the
                  Finance  Documents  and  its  performance  of its  obligations
                  thereunder has been duly taken.

(ii)              No  Deductions  or  Withholding  Under the laws of  Bermuda in
                  force at the date hereof,  it will not be required to make any
                  deduction  or  withholding  from any payment it may make under
                  any of the Finance Documents.

(iii)             Claims Pari Passu  (Without  prejudice  to the  security to be
                  constituted by or pursuant to the Security  Agreements)  under
                  the  laws  of  Bermuda  in  force  at  the  date  hereof,  its
                  indebtedness hereunder will, to the extent that it exceeds the
                  realised  value of the security  therefor,  rank at least pari
                  passu  with all its  other  unsecured  indebtedness  save that
                  which is preferred  solely by any  bankruptcy,  insolvency  or
                  other similar laws of general application.

(iv)              No Immunity In any proceedings taken in Bermuda in relation to
                  any of the Finance Documents, it will not be entitled to claim
                  for itself or any of its assets immunity from suit, execution,
                  attachment or other legal process.

(v)               Governing  Law  and  Judgments  In any  proceedings  taken  in
                  Bermuda in relation to any of the Finance  Documents  in which
                  there is an express choice of the law of a particular  country
                  as the  governing  law  thereof  that  choice  of law  and any
                  judgment  obtained  in that  country  will be  recognised  and
                  enforced.

(vi)              Validity and  Admissibility  in Evidence As at the date hereof
                  all acts, conditions and things required to be done, fulfilled
                  and  performed  in order (a) to enable  it  lawfully  to enter
                  into,  exercise  its rights  under and perform and comply with
                  the  obligations  expressed to be assumed by it in the Finance
                  Documents,  (b) to ensure that the obligations expressed to be
                  assumed by it in the Finance  Documents  are legal,  valid and
                  binding and (c) to make the Finance  Documents  admissible  in
                  evidence in Bermuda have been done, fulfilled and performed.

(vii)             No Filing or Stamp Taxes Under the laws of Bermuda in force at
                  the date hereof,  it is not necessary  that any of the Finance
                  Documents  be filed,  recorded or  enrolled  with any court or
                  other  authority  in  Bermuda  other  than  the  Registrar  of
                  Companies  or that any stamp,  registration  or similar tax be
                  paid on or in relation to any of the Finance Documents.

(viii)            Binding Obligations The obligations expressed to be assumed by
                  it in the Finance  Documents  are legal and valid  obligations
                  binding  on it in  accordance  with the  terms of the  Finance
                  Documents.

        The Borrower further represents that:

(ix)              No Winding-up No member of the Borrower's  Group has taken any
                  corporate  action nor have any other steps been taken or legal
                  proceedings  been  started  or (to the best of the  Borrower's
                  knowledge  and  belief)  threatened  against any member of the
                  Borrower's    Group   for   its    winding-up,    dissolution,
                  administration or  re-organisation or for the appointment of a
                  receiver,  administrator,  administrative receiver, trustee or
                  similar  officer  of it or of any or  all  of  its  assets  or
                  revenues.

(x)               No Material  Defaults No member of the Borrower's  Group is in
                  breach of or in default  under any  agreement to which it is a
                  party or which is  binding  on it or any of its  assets  to an
                  extent or in a manner  which  might  have a  material  adverse
                  effect  on  the  business  or   financial   condition  of  the
                  Borrower's Group as a whole.

(xi)              No Material Proceedings No action or administrative proceeding
                  of or  before  any  court or agency  which is not  covered  by
                  insurance or which might have a material adverse effect on the
                  business  or   financial   condition  of  any  member  of  the
                  Borrower's  Group has been started or is reasonably  likely to
                  be started.

(xii)             Original   Consolidated   Financial  Statements  The  Original
                  Consolidated  Financial Statements were prepared in accordance
                  with US GAAP and give (in conjunction  with the notes thereto)
                  a true  and  fair  view  of  the  financial  condition  of the
                  Borrower's  Group at the date as of which  they were  prepared
                  and the results of the Borrower's  Group's  operations  during
                  the financial year then ended.

(xiii)            No Material  Adverse  Change  Since  publication  of the third
                  quarter results for 1998,  there has been no material  adverse
                  change in the business or financial condition of any member of
                  the Borrower's Group.

(xiv)             No  Undisclosed  Liabilities  As at the date as of  which  the
                  Original  Consolidated  Financial  Statements were prepared no
                  member of the Borrower's Group had any liabilities (contingent
                  or  otherwise)  which were not  disclosed  thereby  (or by the
                  notes thereto) or reserved  against therein nor any unrealised
                  or anticipated losses arising from commitments entered into by
                  it which were not so disclosed or reserved against (other than
                  pursuant to the Soponata - Bona Guarantee).

(xv)              No  Obligation  to  Create  Security  Its  execution  of  this
                  Agreement  and its exercise of its rights and  performance  of
                  its obligations  hereunder will not result in the existence of
                  nor oblige any  member of the  Borrower's  Group to create any
                  encumbrance  over all or any of its present or future revenues
                  or assets, other than pursuant to the Finance Documents.

(xvi)             Execution  of this  Agreement  Its  execution  of the  Finance
                  Documents  and its exercise of its rights and  performance  of
                  its  obligations  under any of the  Finance  Documents  do not
                  constitute  and will not result in any breach of any agreement
                  or treaty to which the Borrower is a party.

(xvii)            Year  2000   Problem  The  Borrower   believes   (having  made
                  reasonable  enquiry)  that the Year 2000 Problem (that is, the
                  risk that any computer hardware or software used by any member
                  of the Borrower's Group may be unable to recognise and perform
                  properly any date-sensitive functions involving a date before,
                  on,  or  after 31  December  1999)  will  not have a  material
                  adverse effect on its ability to perform its obligations under
                  this Agreement.

(xviii)           Money  Laundering  Any  borrowing  by it  hereunder,  and  the
                  performance of its  obligations  hereunder and under the other
                  Finance  Documents,  will be for its own  account and will not
                  involve  any  breach  by it of any law or  regulatory  measure
                  relating to "money  laundering" as defined in Article 1 of the
                  Directive   (91/308/EEC)   of  the  Council  of  the  European
                  Communities.

12.      Financial Information

12.1     Annual Statements
        The  Borrower  shall as soon as the same  become  available,  but in any
        event within 180 days after the end of its financial  years,  deliver to
        the Agent in sufficient  copies for the Banks its  consolidated  and (if
        requested by the Agent)  unconsolidated  financial  statements  for such
        financial year.

12.2     Quarterly Statements
        The  Borrower  shall as soon as the same  become  available,  but in any
        event within 60 days after the end of each quarterly  accounting  period
        in each of its  financial  years,  deliver  to the  Agent in  sufficient
        copies for the Banks its  consolidated  and (if  requested by the Agent)
        unconsolidated financial statements for such period.

12.3     Other Financial Information
        The  Borrower  shall from time to time  promptly  on the  request of the
        Agent,  furnish the Agent with such  information  about the business and
        financial  condition of itself and the Borrower's Group as the Agent may
        reasonably require.

12.4     Any Communication
        The Borrower  shall as and when it despatches any  communication  to its
        shareholders  deliver to the Agent copies  thereof in sufficient  copies
        for the Banks.

12.5    Requirements as to Financial Statements The Borrower shall ensure that:

(i)               each set of financial  statements  delivered by it pursuant to
                  this  Clause 12 is  prepared  on the same basis as was used in
                  the  preparation  of  the  Original   Consolidated   Financial
                  Statements  and in  accordance  with US GAAP and  consistently
                  applied;

(ii)              each set of financial  statements  delivered by it pursuant to
                  this Clause 12 is  certified by a duly  authorised  officer of
                  the  Borrower as giving a true and fair view of its  financial
                  condition or, as the case may be, the  financial  condition of
                  the  Borrower's  Group  as at the end of the  period  to which
                  those  financial  statements  relate and of the results of its
                  operations or, as the case may be, the Borrower's Group during
                  such period; and

(iii)             each set of financial  statements  delivered by it pursuant to
                  Clause  12.1  (Annual  Statements)  has  been  audited  by  an
                  internationally   recognised  firm  of  independent   auditors
                  qualified to audit accounts in accordance with US GAAP.

12.6     Estimated Value of Vessels and of Borrower's Group's Fleet
        The Borrower  shall (a) within thirty days of each Quarter Date, and (b)
        not less than five  business  days  prior to the  proposed  date for the
        making of any B Advance deliver to the Agent:

(i)               a summary showing the estimates of the Market Value of each of
                  the Vessels,  and each of the other vessels in the  Borrower's
                  Group's  fleet,   made  by  at  least  three   recognised  and
                  independent valuers acceptable to the Agent as at such Quarter
                  Date  (or,  as the  case may be,  as at a date  not more  than
                  thirty days prior to the proposed  date for the making of such
                  B Advance),

(ii)              a written  estimate  of the  value of any other  asset in each
                  Security Pool prepared (by a recognised and independent valuer
                  acceptable  to the Agent) on the basis  established  when such
                  asset was introduced to such Security Pool,

        each such  estimate  to be  provided  at the sole  cost of the  Borrower
        Provided Always That if valuations have been supplied pursuant to Clause
        12.6(i)  and the  proposed  date for the making of such B Advance  falls
        less than 30 days  after  the  Quarter  Date in  respect  of which  such
        valuations  were prepared,  then the Borrower shall be obliged to comply
        with Clause  12.6(ii) in respect of such B Advance  only if the Agent so
        requires.

12.7     Statement of Free Cash, Current Ratio and Leverage
        On each date on which it delivers its  consolidated  and  unconsolidated
        financial  statements  pursuant to Clause 12.1 (Annual  Statements)  and
        12.2 (Quarterly  Statements),  the Borrower shall deliver to the Agent a
        statement showing the level of Free Cash, the Current Ratio and Leverage
        as at such date,  such statement to contain full details of how the same
        were determined (if different from the method of the determination  used
        in the  preparation of the previous such  statement) and, in the case of
        Leverage,  to be based on the  estimates  of the  Market  Values  of the
        Vessels and each of the other  vessels in the  Borrower's  Group's fleet
        delivered at the same time as the  Borrower's  most recent  consolidated
        financial statements.

12.8     Statement of Leverage
        On any date on which the Borrower delivers the estimates  required to be
        supplied  pursuant to Clause  12.6(ii)  in relation to a B Advance,  the
        Borrower  shall also deliver to the Agent a statement  showing the level
        of Leverage as at such date (such  statement  of Leverage to be based on
        the estimates of the Market Values of the Vessels so delivered  pursuant
        to Clause 12.6 (ii).

13.      Financial Condition and Security

13.1     Financial Condition of the Borrower's Group
        The Borrower shall ensure that at all times the  consolidated  financial
        condition of the Borrower's  Group,  as evidenced by the Borrower's then
        most recent consolidated financial statements shall be such that:

(i)      Free Cash is at least $25,000,000 (without prejudice to Clause 13.4);
(ii)     the Current Ratio is at least 1:1; and

(iii)Leverage is not more than 75% (or,  if the Current  Ratio is less than 2:1,
     not more than 66.7%),

        Provided that if the Borrower changes its accounting policies from those
        adopted in its annual  report  for the year ended 31  December,  1997 or
        from US GAAP  generally,  the  Agent,  following  consultation  with the
        Borrower and acting on the  instructions of the Banks,  may by notice to
        the Borrower specify an alternative to any of the requirements specified
        in paragraphs (ii) and (iii) above which is logical having regard to the
        changes in accounting  policies that have  occurred,  in which event the
        Borrower  shall be obliged to ensure  that at all times  thereafter  the
        consolidated  financial  condition of the Borrower's Group, as evidenced
        by the Borrower's then most recent consolidated financial statements, is
        such as to meet the alternative requirement so specified

        And Provided Further That if :

(iv) any  member of the  Parent's  Group  (for the  purposes  of this  proviso a
     "guarantor") shall have provided,  in favour of the Trustee, a guarantee of
     the Borrower's obligations hereunder; and

(v)  such guarantee is secured by a first priority or first  preferred  mortgage
     in favour of the Trustee  over a vessel owned by such  guarantor  (together
     with a first priority  assignment of her  insurances  and  earnings),  such
     guarantee,  mortgage  and  other  security  documents  being  in  form  and
     substance  satisfactory  to the Agent and consistent (so far as applicable)
     with  the form of the  then  existing  Security  Agreements  (and  recourse
     against such guarantor under such guarantee may be limited to such mortgage
     and other security documents); and

(vi) such  vessel  shall  have  been   approved  by  the  Agent  acting  on  the
     instructions of an Instructing Group

        then, in  calculating  the Total Assets (and therefore the Leverage) for
        the purposes of this Agreement there shall be deemed to be included,  in
        the value of Total  Assets,  the Market Value of any such  vessel.  Such
        vessel  shall,  for the  purposes  of this  Agreement,  be a "Vessel" as
        defined.

13.2     Remedy by Parent of Breaches of Financial Covenants
        If the  Parent  or any  other  member  of the  Parent's  Group  has made
        available any loan to, or has made an equity contribution in, any member
        of the Borrower's  Group and a group of Banks  comprising an Instructing
        Group  determines in its discretion that the Borrower would otherwise be
        in breach of any of the  provisions  of Clause  13.1,  then the Borrower
        shall ensure that the proceeds of such loan or equity  contribution (and
        whether such proceeds are cash or assets (including  without  limitation
        vessels))  are  secured in favour of the  Trustee  by way of  additional
        security for the Borrower's obligations hereunder,  pursuant to security
        documents in form and  substance  satisfactory  to the Agent and (in the
        case of  security  over  vessels)  consistent  with the form of the then
        existing Security Agreements.

13.3     Release of Additional Security
        If, on the basis of the Borrower's  most recent  consolidated  financial
        statements  delivered  pursuant  to Clause  12.1 or, as the case may be,
        Clause 12.2,

(i)  the Borrower is in compliance  with each of the covenants  assumed by it in
     Clause 13.1 and 13.4; and

(ii) the Trustee has previously been supplied with additional  security pursuant
     to Clause 13.1 or 13.2,

        then the Borrower may by written notice to the Trustee request that such
        additional security be released, whereupon, provided no Event of Default
        or Potential Event of Default shall have occurred and be continuing, and
        the Borrower would  thereafter still be in compliance with all its other
        obligations  under this  Agreement,  the Trustee shall promptly  procure
        that such additional security is released at the cost of the Borrower if
        the Borrower would thereafter still be in compliance with such covenants
        assumed by it in Clause 13.1 and 13.4,  but on the  assumption  that the
        value of such additional security were disregarded in the computation of
        the Borrower's  Free Cash,  Current  Assets,  and Total Assets.  For the
        purpose of this Clause 13.3, the value of such additional security shall
        be as  determined  by the  Agent,  acting  reasonably,  in the  case  of
        additional  security  other than vessels and shall be  determined on the
        basis of the most recent estimates of Market Value supplied  pursuant to
        Clause 12.6, in the case of additional  security  constituting  security
        over vessels.

13.4     Free Cash Shortfall
        If, on the basis of the Borrower's  most recent  consolidated  financial
        statements  delivered  pursuant  to Clause  12.1 or, as the case may be,
        Clause 12.2, the aggregate of

(i)      Free Cash; and

(ii)              the value of any additional  security  previously  supplied to
                  the Trustee  pursuant to this Clause 13.4 (such value to be as
                  determined on the basis of the most recent estimates of Market
                  Value supplied pursuant to Clause 12.6)

        is less than the greater of

(iii)                                       $75,000,000   x  (balance   of  Loan
                                            outstanding) ; and (375,000,000)
(iv)     $25,000,000

                  (the amount by which the aggregate of Free Cash and the amount
                  referred  to in (ii)  above is less than the  greater of (iii)
                  and (iv)  above  being  the  "Shortfall"),  then,  within  ten
                  business  days of receipt by the  Borrower  of written  notice
                  from the Trustee to such effect,  the Borrower  shall  provide
                  the Trustee additional security for the Borrower's obligations
                  under the  Finance  Documents  over such  vessel or vessels as
                  shall have  previously  been approved by the Trustee acting on
                  the  instructions  of an Instructing  Group,  such  additional
                  security to be provided pursuant to security documents in form
                  and substance  satisfactory to the Trustee and consistent with
                  the form of the then existing Security Agreements.

13.5     Release of Security for Free Cash Shortfall
        If, on the basis of the Borrower's  most recent  consolidated  financial
        statements  delivered  pursuant  to Clause  12.1 or, as the case may be,
        Clause 12.2,  the aggregate of Free Cash and the value of the additional
        security  referred to in  paragraph  13.4(ii)  above  exceeds the amount
        determined  pursuant to paragraph 13.4(iii) or (iv), as the case may be,
        and the Borrower has previously,  pursuant to Clause 13.4,  provided the
        Trustee  with  additional  security as  referred  to  therein,  then the
        Borrower  may by  written  notice  to the  Trustee,  request  that  such
        additional security be released, whereupon (provided no Event of Default
        or Potential  Event of Default shall have occurred and be continuing and
        the Borrower would  thereafter still be in compliance with all its other
        obligations under this Agreement  (including,  without limitation Clause
        13.1 and 13.4)) the  Trustee  shall  promptly  procure  that the same is
        released at the cost of the Borrower.

13.6     Loss or Sale of Vessel
        If:-

(i)               any Vessel shall become a total loss; or

(ii)              any Vessel shall be sold,

        then the  Borrower  shall  within the period  prescribed  by Clause 13.7
        (Time Periods) at the Borrower's option:

(a)                     prepay a portion of Loan 1 or, if such Vessel forms part
                        of the  Security Pool 2, Loan 2 and/or

(b)                     provide  to the  Trustee  additional  security  for  its
                        obligations  under the  Finance  Documents  by way of an
                        encumbrance over dollar deposits and/or  certificates of
                        deposit  made by the  Borrower  with or, as the case may
                        be,  issued  in  favour  of the  Borrower  by a bank  or
                        financial  institution  acceptable  to the  Agent,  such
                        encumbrance  to  be  created   pursuant  to  a  security
                        document  in  form  and  substance  satisfactory  to the
                        Agent; and/or

(c)                     provide  to the  Trustee  additional  security  for  the
                        Borrower's  obligations under the Finance Documents over
                        such  vessel or vessels as shall  have  previously  been
                        approved by the Agent acting on the  instructions  of an
                        Instructing  Group, such approval not to be unreasonably
                        withheld  in the  case of  vessel(s)  of a type and size
                        substantially  comparable  to the  other  Vessels,  such
                        additional  security to be provided pursuant to security
                        documents  in form  and  substance  satisfactory  to the
                        Agent and consistent  with the form of the then existing
                        Security Agreements

        to the extent necessary to ensure that the Cover Ratio in respect of the
        A Facility  or, as the case may be, the B Facility  is  restored  to the
        level at which it was  immediately  before the  occurrence of such total
        loss or,  as the  case  may be,  the  date of  completion  of such  sale
        Provided  That a prepayment  pursuant to Clause  13.6(a) shall be deemed
        also to be a cancellation pursuant to Clause 7.1 (Cancellation) of the A
        Facility, or, as the case may be, the B Facility, in the amount prepaid.

13.7     Time Periods
        For the  purposes  of Clause 13.6 (Loss or Sale of Vessel) the period in
        which the Borrower shall be obliged to do the things specified in Clause
        13.6 (Loss or Sale of Vessel) shall be:

(i)               where Clause 13.6(i)  applies,  on the earlier of the last day
                  of  the  Term  of  any  current   Advance   during  which  the
                  requisition  compensation or insurance  proceeds in respect of
                  the relevant total loss were received and the date which falls
                  three months after the date of such total loss; and

(ii)              where Clause 13.6(ii)  applies,  on the date of the completion
                  of the sale of the relevant Vessel.

13.8     Advances for New Vessels or Future Vessels
        If the  Borrower  draws  down any  Advance  to  assist in  financing  or
        refinancing  the purchase price of any New Vessel or Future  Vessel,  as
        the  case  may  be,  on its  delivery  to  the  Borrower,  the  Borrower
        undertakes  that on or before the date of delivery of such New Vessel or
        Future Vessel,  as the case may be, it will deliver to the Agent each of
        the documents  specified in Part 2 of the Third  Schedule in relation to
        such New  Vessel,  or  Future  Vessel,  as the case  may be,  each  such
        document to be in such form and to be  executed  and  delivered  in such
        manner as the Agent may  reasonably  require and as may be  necessary to
        ensure that any Security Agreement  comprised therein provides effective
        security  for  the  performance  by  the  Borrower  of  its  obligations
        hereunder Provided that if the Borrower does not draw down an Advance to
        assist in financing or  refinancing  the purchase  price of a New Vessel
        within six months of the  contractual  delivery  date in respect of such
        New Vessel,  (or, with the consent of the Agent,  such consent not to be
        unreasonably withheld or delayed, such longer period as the Borrower may
        request,  and having  regard to any wish on the part of the Borrower not
        to rescind the relevant  building contract with the Yard) the provisions
        of this Clause 13.8  (Advances for New Vessels or Future  Vessels) shall
        not apply and at the  expiry of such six month  period  (or such  longer
        period  as the  case  may  be)  the  Aggregate  A  Commitment  shall  be
        permanently  reduced by $30,000,000 (or, in the case of New Vessel 4, by
        $25,000,000), the A Commitment of each Bank being reduced pro rata.

13.9     Independent Valuation of New Vessels at Delivery
        For the purpose of Clause 3.1(vi),  and in respect of an Advance made in
        respect of the  delivery of a New Vessel,  the  Borrower  shall,  if the
        Agent  requires,  procure  that there shall have been  furnished  to the
        Agent a summary showing the estimates of the Market Value of such Vessel
        as at the expected  delivery date prepared by at least three  recognised
        and  independent  valuers  acceptable to the Agent (such estimates to be
        dated no earlier than 30 days before such  expected  delivery  date) and
        for the  purposes  of Clause  3.1(vi)  the  Estimated  Value of such New
        Vessel shall be the average of such estimates.

13.10    Average Age of Vessels
        If at any time the Average Age of the Vessels is more than fifteen years
        the Borrower  shall,  within thirty business days (or such longer period
        as the Agent,  acting on the  instructions of an Instructing  Group, may
        agree) after such has become the case, either (i) provide to the Trustee
        substitute  security for the  Borrower's  obligations  under the Finance
        Documents  over  such  other  newer  vessel  or  vessels  as shall  have
        previously  been approved by the Agent acting on the  instructions of an
        Instructing  Group  (or,  if  such  vessel(s)  shall  not  be  vessel(s)
        currently in the Borrower's Group's fleet,  approved by the Agent acting
        on the  instructions of the Instructing  Group,  such approval not to be
        unreasonably  withheld  in the  case of  vessel(s)  of a type  and  size
        comparable to vessel(s) currently in the Borrower's Group's fleet), such
        substitute  security to be provided in place of the  security  over such
        Vessel or  Vessels  as the  Borrower  may select  pursuant  to  security
        documents in form and substance satisfactory to the Agent and consistent
        with the form of the then existing  Security  Agreements or (ii) request
        the  Security  Trustee to release a Vessel or Vessels  from the Security
        Agreements  applicable  thereto  and  thereby  bring the  Average Age of
        Vessels to fifteen years or below,  which  release the Security  Trustee
        shall promptly effect after whatever  prepayment  pursuant to Clause 6.5
        (Prepayment), or cancellation pursuant to Clause 7.1 (Cancellation),  is
        necessary  to ensure  that after such  release,  the Cover Ratio will be
        what it was  immediately  before such release  Provided  Always That any
        such  prepayment  shall be deemed also to be a cancellation  pursuant to
        Clause 7.1  (Cancellation)  of the A Facility  (or, if such Vessel forms
        part of Security Pool 2, the B Facility), in the amount prepaid.

13.11    Future Vessels
        A  proposal  for the  inclusion  of a Future  Vessel  (or all the issued
        shares in a company  which  itself owns such Future  Vessel) in Security
        Pool 2 shall be communicated in writing to the Agent by the Borrower and
        acceptance of such proposal  shall be subject to the approval of (and to
        any conditions imposed by) an Instructing Group. Each Bank shall use its
        reasonable  endeavours  to indicate  its approval or otherwise to such a
        proposal  within  10 days of  receipt  by the  Agent  thereof  from  the
        Borrower.

14.      Covenants

        The  Borrower  shall  for so  long  as the  Available  Facilities  exist
        hereunder or the Borrower remains under any liability  hereunder observe
        the following covenants:

(i)               Maintenance  of Legal  Validity  The  Borrower  shall  obtain,
                  comply  with  the  terms of and do all  that is  necessary  to
                  maintain   in  full  force  and  effect  all   authorisations,
                  approvals,  licences and  consents  required in or by the laws
                  and   regulations   of  Bermuda   and  all  other   applicable
                  jurisdictions  to enable it lawfully to enter into and perform
                  its obligations  under the Finance Documents and to ensure the
                  legality,   validity,   enforceability   or  admissibility  in
                  evidence in Bermuda and all other applicable  jurisdictions of
                  the Finance Documents.

(ii)              Notification of Events of Default The Borrower shall promptly,
                  upon  becoming  aware of the  same,  inform  the  Agent of the
                  occurrence  of any  Event of  Default  or  Potential  Event of
                  Default and, upon receipt of a written  request to that effect
                  from the Agent,  confirm to the Agent that, save as previously
                  notified to the Agent or as notified in such confirmation,  no
                  Event of Default or Potential Event of Default has occurred.

(iii)             Claims Pari Passu The Borrower  shall ensure that at all times
                  the claims of the Agent,  the  Arrangers and the Banks against
                  it under  this  Agreement  rank at least  pari  passu with the
                  claims of all its other  unsecured  creditors save those whose
                  claims   are   preferred   by  any   bankruptcy,   insolvency,
                  liquidation or other similar laws of general application.

(iv)              Management  of Vessels  The  Borrower  shall  ensure  that the
                  Vessels (other than "Bona Fair") are at all times  technically
                  and  commercially  managed  by Bona  Shipping  AS or any other
                  subsidiary of the Borrower or of Teekay Shipping Corporation.

(v)               Classification  The  Borrower  shall  ensure  that the Vessels
                  maintain the highest class with Det norske  Veritas or, as the
                  case may be, the Lloyds Register or such other  classification
                  society as is acceptable to the Agent.

(vi)                Indebtedness  for Borrowed  Money The Borrower shall procure
                    that,   save   pursuant  to  (a)  this   Agreement  (b)  the
                    Soponata-Bona  Guarantee (c) the Existing  Swaps and (d) its
                    obligations  to make future  capital  contributions  to Bona
                    Fortuna K/S and Bona  Freighter  K/S if and when called upon
                    to do so, neither it nor any of its subsidiaries shall incur
                    any indebtedness for borrowed money Provided Always that the
                    Borrower may incur  indebtedness  for borrowed  money to the
                    Parent or any other  member of the Parent's  Group  provided
                    that such  indebtedness  is  subordinated  to the Borrower's
                    obligations  hereunder  in terms  satisfactory  to the Agent
                    acting  on the  instructions  of an  Instructing  Group  and
                    provided  further that the  Borrower may incur  indebtedness
                    for  borrowed  money to any person not being a member of the
                    Parent's  Group and otherwise than pursuant to the foregoing
                    paragraphs   (a)  to  (d)   inclusive   provided  that  such
                    indebtedness does not exceed $5,000,000 in aggregate.

(vii)             No Charters in The Borrower  shall not, and shall procure that
                  each of its  subsidiaries  shall not,  charter in any  vessel,
                  whether on time, bareboat or voyage charter.

(viii)            Negative  Pledge The Borrower  shall not (other than  pursuant
                  to, or as permitted  by, the Security  Agreements),  and shall
                  procure that each of its subsidiaries  shall not,  create,  or
                  permit to subsist, any encumbrance over all or any part of its
                  present or future revenues or assets.

(ix)              Consolidation The Borrower shall not merge or consolidate with
                  any  other  entity  except  where  the  Borrower  is the  only
                  surviving entity.

(x)               Registration  The  Borrower  shall ensure that all the Vessels
                  are registered in Liberia,  Bahamas,  NIS or (with the consent
                  of the Agent, not to be unreasonably  withheld or delayed) any
                  other international ship register.

(xi)                ISM  Compliance  The Borrower shall comply (and procure that
                    the  manager  of any  Vessel  not  managed  by the  Borrower
                    complies) with the ISM Code or any  replacement  thereof and
                    in particular  (without  prejudice to the  generality of the
                    foregoing) ensure that it holds (or procure that the manager
                    of any Vessel not managed by the Borrower holds) a valid and
                    current  Document of Compliance  issued  pursuant to the ISM
                    Code and a valid and current Safety  Management  Certificate
                    issued to each Vessel pursuant to the ISM Code; the Borrower
                    shall,  promptly  upon  request  from the Agent,  supply the
                    Agent with copies of the foregoing documents.

(xii)             Restriction  on Charters  The  Borrower  shall not charter any
                  Vessel  to  any  member  of  the  Parent's  Group  or  to  any
                  Affiliate.

15.      Events of Default

        If:

(i)               Failure  to Pay  the  Borrower  fails  to pay  any  amount  of
                  principal  due from it hereunder at the time,  in the currency
                  and in the manner  specified herein or, in the case of any sum
                  due from it hereunder other than principal, the Borrower fails
                  to pay such sum and such failure continues unremedied for five
                  business  days or, in the case of sums payable on demand,  ten
                  business days after demand has been duly made on the Borrower;

(ii)              Misrepresentation  any representation or statement made by any
                  Finance  Party in any Finance  Document to which it is a party
                  or in any notice or other  document,  certificate or statement
                  delivered by it pursuant thereto or in connection therewith is
                  or proves to have been incorrect or misleading in any material
                  respect when made;

(iii)               Specific  Covenants  (a) the Borrower  fails duly to perform
                    or  comply  with  any of  the  obligations  expressed  to be
                    assumed  by it in Clause 14 (iv)  (Management  of  Vessels),
                    Clause 14 (vi) (Indebtedness for Borrowed Money),  Clause 14
                    (ix) (Consolidation) or Clause 14(ix)  (Registration) or (b)
                    the Borrower fails duly to perform or comply with any of the
                    obligations  expressed  to be assumed by it in Clause  14(i)
                    (Maintenance of Legal Validity), Clause 14(ii) (Notification
                    of Events of Default), Clause 14(iii) (Claims Pari Passu) or
                    Clause  14(v)  (Classification)  and  such  failure  is  not
                    remedied within thirty days after the Agent has given notice
                    thereof to the Borrower or (c) the  Guarantor  fails duly to
                    perform or comply with any of the  obligations  expressed to
                    be  assumed  by it in Clause 5 of the  Guarantee  or (d) the
                    Guarantor  fails duly to  perform or comply  with any of the
                    obligations expressed to be assumed by it in Clause 6 of the
                    Guarantee  and such failure is not  remedied  within 30 days
                    after  the Agent has given  written  notice  thereof  to the
                    Guarantor;

(iv)              Financial  Condition  at any time any of the  requirements  of
                  Clause  13   (Financial   Condition   and  Security)  are  not
                  satisfied;

(v)               Other Obligations the Borrower fails duly to perform or comply
                  with any other obligation expressed to be assumed by it in any
                  Finance  Document  and such  failure  is not  remedied  within
                  thirty  days after the Agent has given  notice  thereof to the
                  Borrower;

(vi)              Cross Default (a) any indebtedness of the Parent, any Material
                  Subsidiary,  or any  Affiliate is not paid when due (or within
                  any  applicable  grace  period  applicable   thereto)  or  any
                  indebtedness of the Parent,  any Material  Subsidiary,  or any
                  Affiliate  is  declared  to be or  otherwise  becomes  due and
                  payable prior to its specified  maturity and (b) the aggregate
                  of all such unpaid or accelerated  indebtedness referred to in
                  (a) above exceeds  $5,000,000  or its  equivalent in any other
                  currency;

(vii)             Insolvency   and   Rescheduling   the  Parent,   any  Material
                  Subsidiary,  or any  Affiliate  is  unable to pay its debts as
                  they fall due, commences  negotiations with any one or more of
                  its  creditors  with a view  to the  general  readjustment  or
                  rescheduling of its indebtedness or makes a general assignment
                  for the benefit of its  creditors  or a  composition  with its
                  creditors;

(viii)            Winding-up   (otherwise   than   for   the   purposes   of   a
                  reconstruction  on  terms  previously  approved  by the  Agent
                  acting  on  the  instructions  of an  Instructing  Group)  the
                  Parent,  any Material  Subsidiary,  or any Affiliate takes any
                  corporate action or other steps are taken or legal proceedings
                  are started for its winding-up, dissolution, administration or
                  re-organisation  or  for  the  appointment  of  a  liquidator,
                  receiver, administrator, administrative receiver, conservator,
                  custodian,  trustee or similar  officer of it or of any or all
                  of its revenues and assets;

(ix)                Execution or Distress  (a) any  execution or distress for an
                    aggregate  amount of $5,000,000  (or its  equivalent) in any
                    other currency is levied against,  or an encumbrancer  takes
                    possession  of,  the  whole or any part  of,  the  property,
                    undertaking or assets of any member of the Parent's Group or
                    any Affiliate (other than any execution or distress which is
                    being contested in good faith and which is either discharged
                    within thirty days or in respect of which adequate  security
                    has been provided  within thirty days to the relevant  court
                    or other  authority  to enable  the  relevant  execution  or
                    distress to be lifted or released), or (b) any member of the
                    Parent's Group or any Affiliate fails (within thirty days of
                    being obliged to do so) to comply with or pay any sum for an
                    aggregate  amount in excess of $5,000,000 (or its equivalent
                    in any other  currency) due from it under any final judgment
                    (being one against which there is no appeal or if a right of
                    appeal  exists,  the time limit for making  such  appeal has
                    expired) or any final order  (being one against  which there
                    is no appeal or if a right of appeal exists,  the time limit
                    for making  such  appeal has  expired)  made or given by any
                    court of competent jurisdiction;

(x)                 Governmental  Intervention  by or under the authority of any
                    government, (a) the management of the Parent or any Material
                    Subsidiary is wholly or partially displaced or the authority
                    of the Parent or any Material  Subsidiary  in the conduct of
                    its business is wholly or partially  curtailed or (b) all or
                    a  majority  of  the  issued  shares  of the  Parent  or any
                    Material  Subsidiary  or the whole or any part  (the  market
                    value of which is ten per cent.  or more of the market value
                    of the  whole) of the  Parent or any  Material  Subsidiary's
                    revenues or assets are seized, nationalised, expropriated or
                    compulsorily acquired;

(xi)              Insurance   the  Borrower   fails  to  insure  any  Vessel  in
                  accordance  with the  requirements  of any Security  Agreement
                  relating thereto;

(xii)             Repudiation any Finance Party  repudiates any Finance Document
                  to which it is a party or does or causes to be done any act or
                  thing  evidencing  an intention to repudiate  any such Finance
                  Document;

(xiii)                Validity and Admissibility at any time any act,  condition
                    or thing  required to be done,  fulfilled  or  performed  in
                    order (a) to enable  any  Finance  Party  lawfully  to enter
                    into,  exercise its rights under and perform the  respective
                    obligations  expressed  to be assumed  by it in the  Finance
                    Documents,  (b) to ensure that the obligations  expressed to
                    be assumed by the Finance  Parties in the Finance  Documents
                    are  legal,  valid and  binding  or (c) to make the  Finance
                    Documents   admissible   in  evidence   in  any   applicable
                    jurisdiction  is not done,  fulfilled  or  performed  within
                    thirty  days  after  notification  from  the  Agent  to  the
                    Borrower  requiring  the  same  to  be  done,  fulfilled  or
                    performed;

(xiv)             Illegality  at any  time  it is or  becomes  unlawful  for any
                  Finance  Party to  perform  or  comply  with any or all of its
                  obligations under the Finance Documents to which it is a party
                  or any of  the  obligations  of  the  relevant  Finance  Party
                  hereunder are not or cease to be legal,  valid and binding and
                  such   illegality   is  not   remedied  or  mitigated  to  the
                  satisfaction  of the Agent within  thirty days after the Agent
                  has given notice thereof to the Borrower;

(xv)              Material Adverse Change at any time there shall occur a change
                  in  the  financial  condition  of  any  Finance  Party  or any
                  Material  Subsidiary  which  materially  impairs  such Finance
                  Party's ability to discharge its obligations under the Finance
                  Documents  to  which  it is a  party  in the  manner  provided
                  therein;

(xvi)             Ownership  of Borrower The Parent  ceases to own  beneficially
                  one hundred per cent. of the issued shares of the Borrower; or
(xvii)            Ownership  of Parent  at any time  more  than  fifty per cent.
                  (50%) of the issued shares of the Parent shall be beneficially
                  owned  (whether  directly or  indirectly) by any one person or
                  any group or persons  acting in  concert  (other  than  Cirrus
                  Trust, JTK Trust or any successor thereto)

                  then, and in any such case and at any time thereafter (if such
                  Event of Default  is  continuing),  the Agent may (and,  if so
                  instructed by an Instructing  Group,  shall) by written notice
                  to the Borrower:

(a)                     declare  the  Loan to be  immediately  due  and  payable
                        (whereupon  the same shall  become so  payable  together
                        with  accrued  interest  thereon and any other sums then
                        owed by the Borrower  hereunder)  or declare the Loan to
                        be due and payable on demand of the Agent; and/or

(b)                     declare   that  the   Available   Facilities   shall  be
                        cancelled, whereupon the same shall be cancelled and the
                        amount of each Bank's Total  Commitment shall be reduced
                        to zero

                  Provided  Always That for the purposes of a declaration  under
                  Clause 15(a) or 15(b) in relation only to the Event of Default
                  referred to in Clause  15(xvii)  (Ownership  of  Parent),  the
                  definition of "Instructing Group" shall be construed as if the
                  expression  "66 2/3 per cent" were replaced by the  expression
                  "50 per cent" wherever it occurs.

15.1    If,  pursuant  to Clause 15, the Agent  declares  the Loan to be due and
        payable on demand of the Agent,  then, and at any time  thereafter,  the
        Agent may (and,  if so  instructed by an  Instructing  Group,  shall) by
        written notice to the Borrower:


(i)               call for  repayment of the Loan on such date as it may specify
                  in such  notice  (whereupon  the  same  shall  become  due and
                  payable on such date  together with accrued  interest  thereon
                  and any other  sums then owed by the  Borrower  hereunder)  or
                  withdraw its declaration  with effect from such date as it may
                  specify in such notice; and/or

(ii)              select as the  duration  of any Term  relating  to an  Advance
                  which  begins  whilst  such  declaration  remains  in effect a
                  period of six months or less.



Part 7

<PAGE>



                                     DEFAULT INTEREST AND INDEMNITY

16.      Default Interest and Indemnity

16.1     Default Interest Periods
        If any sum due and payable by the Borrower  hereunder is not paid on the
        due date  therefor  in  accordance  with the  provisions  of  Clause  18
        (Payments)  or if any sum due and  payable  by the  Borrower  under  any
        judgment of any court in connection  herewith is not paid on the date of
        such judgment, the period beginning on such due date or, as the case may
        be,  the date of such  judgment  and  ending on the date upon  which the
        obligation of the Borrower to pay such sum (the balance  thereof for the
        time being  unpaid  being  herein  referred  to as an  "unpaid  sum") is
        discharged  shall be  divided  into  successive  periods,  each of which
        (other than the first) shall start on the last day of the preceding such
        period and the  duration  of each of which  shall  (except as  otherwise
        provided in this Clause 16) be selected by the Agent.

16.2     Default Interest
        During each such period relating  thereto as is mentioned in Clause 16.1
        (Default Interest Periods) an unpaid sum shall bear interest at the rate
        per  annum  which is the sum  from  time to time of two per  cent.,  the
        applicable  Margin  1 (or the  applicable  Margin  2, in the case of a B
        Advance) at such time, and LIBOR on the Quotation Date therefor Provided
        that:

(i)                 if  in  relation  to  any  such  period  LIBOR  falls  to be
                    determined in accordance  with the proviso to the definition
                    thereof and none of the Reference  Banks was offering dollar
                    deposits  for the  requisite  period,  the rate of  interest
                    applicable  to such unpaid sum during  such period  shall be
                    the arithmetic mean (rounded upwards,  if not already such a
                    multiple, to the nearest whole multiple of one-thirty-second
                    of one per cent.) of the rates  notified by each Bank to the
                    Agent  before the last day of such  period to be those which
                    express  as a  percentage  rate per  annum the cost to it of
                    funding  from  whatever  source it may select its portion of
                    such unpaid sum for such period; and

(ii)              if such unpaid sum is all or part of an Advance  which  became
                  due  and  payable  on a day  other  than  the  last  day of an
                  Interest  Period  relating  thereto,  the  first  such  period
                  applicable  thereto  shall  be  of a  duration  equal  to  the
                  unexpired  portion  of that  Interest  Period  and the rate of
                  interest  applicable  thereto during such period shall be that
                  which exceeds by two per cent.  the rate which would have been
                  applicable to it had it not so fallen due.

16.3     Payment of Default Interest
        Any  interest  which  shall have  accrued  under  Clause  16.2  (Default
        Interest) in respect of an unpaid sum shall be due and payable and shall
        be paid by the  Borrower at the end of the period by  reference to which
        it is  calculated  or on such  other  dates as the Agent may  specify by
        written notice to the Borrower.

16.4     Broken Periods
        If any Bank or the Agent on its behalf  receives or recovers  all or any
        part of such Bank's share of an Advance  otherwise  than on the last day
        of the Term thereof,  the Borrower  shall pay to the Agent on demand for
        account of such Bank an amount equal to the amount (if any) by which (a)
        the  additional  interest which would have been payable on the amount so
        received or recovered  had it been received or recovered on the last day
        of the Term  thereof  exceeds  (b) the amount of  interest  which in the
        opinion of the Agent  would  have been  payable to the Agent on the last
        day of the Term  thereof  in respect  of a dollar  deposit  equal to the
        amount so received or recovered placed by it with a prime bank in London
        for a period  starting on the third  business day  following the date of
        such receipt or recovery and ending on the last day of the Term thereof.

16.5     Borrower's Indemnity
        The Borrower undertakes to indemnify:

(i)               each of the Agent,  the  Arrangers,  the Banks and the Trustee
                  against any cost, claim,  loss, expense (including legal fees)
                  or liability together with any VAT thereon,  which any of them
                  may  reasonably  sustain  or  incur  as a  consequence  of the
                  occurrence  of any  Event of  Default  or any  default  by any
                  Finance  Party in the  performance  of any of the  obligations
                  expressed to be assumed by it in any of the Finance Documents;
                  and

(ii)              each Bank against any loss it may suffer or  reasonably  incur
                  as a result of its funding or making  arrangements to fund its
                  portion of an Advance requested by the Borrower  hereunder but
                  not made by reason of the  operation of any one or more of the
                  provisions hereof (but excluding any loss arising by reason of
                  that Bank's default).

        Each claim for an indemnity from the Borrower under this Clause shall be
        accompanied by a written explanation supporting such claim.

16.6     Unpaid Sums as Advances
        Any  unpaid  sum shall  (for the  purposes  of this  Clause 16  (Default
        Interest and Indemnity) and Clause 10.1 (Increased Costs)) be treated as
        an advance and  accordingly in this Clause 16 and Clause 10.1 (Increased
        Costs))  the term  "Advance"  includes  any  unpaid sum and  "Term",  in
        relation to an unpaid sum, includes each such period relating thereto as
        is mentioned in Clause 16.1 (Default Interest Periods).

Part 8

<PAGE>



                                                PAYMENTS

17.      Currency of Account and Payment

17.1     Currency of Account
        The dollar is the currency of account and payment for each and every sum
        at any time due from the Borrower hereunder Provided that:

(i)                 each payment in respect of costs and expenses  shall be made
                    in the currency in which the same were incurred; and

(ii)              each payment  pursuant to Clause 8.2 (Tax Indemnity) or Clause
                  10.1 (Increased Costs) shall be made in the currency specified
                  by the party claiming thereunder.

17.2     Currency Indemnity
        If any sum due from the Borrower under any Finance Document or any order
        or judgment  given or made in relation  thereto has to be converted from
        the  currency  (the  "first  currency")  in which  the  same is  payable
        hereunder  or under such order or judgment  into another  currency  (the
        "second  currency")  for the  purpose of (a) making or filing a claim or
        proof  against the  Borrower,  (b) obtaining an order or judgment in any
        court or other  tribunal or (c) enforcing any order or judgment given or
        made in relation hereto,  the Borrower shall indemnify and hold harmless
        each of the  persons to whom such sum is due from and  against  any loss
        suffered or incurred as a result of any discrepancy between (i) the rate
        of exchange  used for such  purpose to convert the sum in question  from
        the first  currency into the second  currency and (ii) the rate or rates
        of exchange at which such person may in the ordinary  course of business
        purchase the first  currency with the second  currency upon receipt of a
        sum paid to it in satisfaction,  in whole or in part, of any such order,
        judgment, claim or proof.

18.      Payments

18.1     Payments to the Agent
        On each date on which this Agreement  requires an amount  denominated in
        dollars to be paid by the  Borrower or any of the Banks  hereunder,  the
        Borrower or, as the case may be, such Bank shall make the same available
        to the Agent by  payment  in  dollars  and in same day funds (or in such
        other funds as may for the time being be  customary in New York City for
        the settlement in New York City of international banking transactions in
        dollars)  to  Citibank,  N.A.,  New York for  further  account  Citibank
        International plc account number 10963054 (or such other account or bank
        as the Agent may have specified for this purpose).


18.2     Alternative Payment Arrangements
        If, at any time, it shall become  impracticable (by reason of any action
        of any  governmental  authority or any change in law,  exchange  control
        regulations  or any similar event) for the Borrower to make any payments
        hereunder  in the  manner  specified  in Clause  18.1  (Payments  to the
        Agent),  then the  Borrower  may  agree  with  each or any of the  Banks
        alternative  arrangements for the payment direct to such Bank of amounts
        due to such Bank  hereunder  Provided  that,  in the absence of any such
        agreement  with any Bank,  the  Borrower  shall be  obliged  to make all
        payments due to such Bank in the manner specified herein.  Upon reaching
        such agreement the Borrower and such Bank shall  immediately  notify the
        Agent  thereof  and shall  thereafter  promptly  notify the Agent of all
        payments made direct to such Bank.

18.3     Payments by the Agent
        Save as otherwise  provided  herein,  each payment received by the Agent
        for the account of another  person  pursuant to Clause 18.1 (Payments to
        the Agent) shall:

(i)               in the  case of a  payment  received  for the  account  of the
                  Borrower,  be made  available  by the Agent to the Borrower by
                  application:

(a)                     first,  in or towards payment the same day of any amount
                        then due from the Borrower  hereunder to the person from
                        whom the amount was so received; and

(b)                     secondly,  in or  towards  payment  the  same day to the
                        account of the Borrower  with such bank in New York City
                        as the Borrower  shall have  previously  notified to the
                        Agent for this purpose; and

(ii)              in the case of any other  payment,  be made  available  by the
                  Agent  to the  person  for  whose  account  such  payment  was
                  received  (in  the  case of a Bank,  for  the  account  of the
                  Facility  Office)  for value the same day by  transfer to such
                  account of such person with such bank in New York City as such
                  person shall have previously notified to the Agent.

18.4     No Set-off
        All  payments  required  to be made  by the  Borrower  under  any of the
        Finance  Documents shall be calculated  without reference to any set-off
        or  counterclaim  and shall be made free and  clear of and  without  any
        deduction for or on account of any set-off or counterclaim.

18.5     Clawback
        Where a sum is to be paid  hereunder to the Agent for account of another
        person,  the Agent  shall not be obliged to make the same  available  to
        that  other   person  until  it  has  been  able  to  establish  to  its
        satisfaction  that it has actually  received such sum, but if it does so
        and it proves to be the case that it had not actually received such sum,
        then the person to whom such sum was so made available  shall on request
        refund  the same to the  Agent  together  with an amount  sufficient  to
        indemnify  the Agent  against  any cost or loss it may have  suffered or
        reasonably  incurred  by reason of its having paid out such sum prior to
        its having received such sum.

19.      Set-Off

19.1     Contractual Set-off
        The Borrower  authorises  each Bank at any time following the occurrence
        of an Event of Default (and so long as the same is  continuing) to apply
        any credit  balance to which the  Borrower is entitled on any account of
        the Borrower with that Bank in  satisfaction  of any sum due and payable
        from the  Borrower to such Bank under any of the Finance  Documents  but
        unpaid;  for this purpose,  each Bank is authorised to purchase with the
        moneys standing to the credit of any such account such other  currencies
        as may be necessary to effect such application.

19.2     Set-off not Mandatory
        No Bank  shall be obliged to  exercise  any right  given to it by Clause
19.1 (Contractual Set-off).

20.      Sharing

20.1     Redistribution of Payments
        If, at any time, the proportion which any Bank (a "Recovering Bank") has
        received or  recovered  (whether by payment,  the exercise of a right of
        set-off or  combination  of  accounts  or  otherwise)  in respect of its
        portion of any  payment  (a  "relevant  payment")  to be made under this
        Agreement by the Borrower for account of such Recovering Bank and one or
        more other  Banks is greater  (the  portion of such  receipt or recovery
        giving rise to such excess  proportion  being  herein  called an "excess
        amount")  than the  proportion  thereof so received or  recovered by the
        Bank or  Banks  so  receiving  or  recovering  the  smallest  proportion
        thereof, then:

(i)               such Recovering Bank shall inform the Agent of such receipt or
                  recovery  and pay to the Agent an amount  equal to such excess
                  amount;

(ii)              there  shall  thereupon  fall due from  the  Borrower  to such
                  Recovering Bank an amount equal to the amount paid out by such
                  Recovering Bank pursuant to paragraph (i) above, the amount so
                  due being, for the purposes  hereof,  treated as if it were an
                  unpaid part of such Recovering Bank's portion of such relevant
                  payment; and

(iii)             the Agent  shall  treat the  amount  received  by it from such
                  Recovering  Bank  pursuant to  paragraph  (i) above as if such
                  amount had been received by it from the Borrower in respect of
                  such  relevant  payment  and shall pay the same to the persons
                  entitled thereto  (including such Recovering Bank) pro rata to
                  their respective entitlements thereto,

        Provided that to the extent that any excess amount is  attributable to a
        payment to a Bank pursuant to paragraph  (i)(a) of Clause 18.3 (Payments
        by the Agent) such portion of such excess  amount as is so  attributable
        shall not be required to be shared pursuant hereto.

20.2     Repayable Recoveries
        If any sum (a "relevant sum") received or recovered by a Recovering Bank
        in respect of any amount owing to it by the Borrower  becomes  repayable
        and is repaid by such Recovering Bank, then:

(i)               each Bank which has  received a share of such  relevant sum by
                  reason of the implementation of Clause 20.1 (Redistribution of
                  Payments)  shall,  upon request of the Agent, pay to the Agent
                  for  account of such  Recovering  Bank an amount  equal to its
                  share of such relevant sum; and

(ii)              there shall  thereupon fall due from the Borrower to each such
                  Bank an amount  equal to the amount paid out by it pursuant to
                  paragraph (i) above, the amount so due being, for the purposes
                  hereof,  treated  as if it were the sum  payable  to such Bank
                  against  which  such  Bank's  share of such  relevant  sum was
                  applied.



Part 9

<PAGE>



                                        FEES, COSTS AND EXPENSES

21.      Commitment Commission and Fees

21.1     Commitment Commission
        The  Borrower  shall  pay to the Agent  for the  account  of each Bank a
        commitment   commission  on  the  amount  of  such  Bank's  A  Available
        Commitment and B Available  Commitment from day to day during the period
        beginning on the Original  Facility Date up to (but not  including)  the
        Commitment Termination Date, such commitment commission to be calculated
        at the rate of one half of the applicable  Margin 1 from time to time in
        the  case of such  Bank's  A  Available  Commitment  and one half of the
        applicable  Margin  2 from  time to time in the  case of such  Bank's  B
        Available Commitment.

        Commitment commission shall be payable in arrear on the last day of each
        successive  period of three months  starting from the Original  Facility
        Date and on the  Final  Maturity  Date  (each  such  date a  "Commitment
        Commission  Payment  Date")  Provided  Always  That for the  purposes of
        determining the amount of accrued commitment  commission payable on each
        Commitment Commission Payment Date the Net Leverage (and accordingly the
        applicable  Margin 1, or as the case may be,  the  applicable  Margin 2)
        shall  be  assumed  to be as  disclosed  in the  most  recent  financial
        statements  delivered  pursuant to Clause 12.1  (Annual  Statements)  or
        Clause 12.2  (Quarterly  Statements)  Provided  Further  That if, on the
        basis of the  financial  statements  delivered  in  respect  of the next
        following  Quarter Date (having  regard to the proviso to the definition
        of  "Margin  1" and the  proviso to the  definition  of "Margin  2") the
        Borrower has  overpaid  (or, as the case may be,  underpaid)  commitment
        commission  then  the  amount  so  overpaid  (or,  as the  case  may be,
        underpaid) shall be deducted from (or, as the case may be, added to) the
        amount of commitment  commission which would otherwise have been payable
        by the  Borrower on the next  following  Commitment  Commission  Payment
        Date.

21.2     Participation Fee
        The Borrower  shall pay to the Agent on the dates therein  specified the
        arrangement  fees specified in the letter of even date herewith from the
        Agent to the Borrower,  such fees to be  distributed  by the Agent among
        the Banks in the  proportions  agreed  between  the  Banks  prior to the
        Original Facility Date.

21.3     Agency Fee
        The Borrower  shall pay to the Agent for its own account the agency fees
        specified in the letter dated the Original  Facility Date from the Agent
        to the  Borrower,  such agency fees to be paid at the times,  and in the
        amounts, specified in such letter.

22.      Costs and Expenses

22.1     Transaction Expenses
        The Borrower shall, from time to time on demand of the Agent,  reimburse
        each of the Agent,  the  Arrangers and the Trustee for all out of pocket
        costs and expenses  (including  reasonable legal fees) together with any
        VAT  thereon   reasonably   incurred  by  it  in  connection   with  the
        negotiation,  preparation  and execution of the Finance  Documents,  any
        amendment  and/or  supplement to or any waiver of any of the obligations
        of any Finance Party under the Finance  Documents and the  completion of
        the transactions herein contemplated.

22.2     Preservation and Enforcement of Rights
        The Borrower shall, from time to time on demand of the Agent,  reimburse
        the  Agent,  the  Arrangers  and the Banks  for all  costs and  expenses
        (including legal fees) together with any VAT thereon reasonably incurred
        in or in connection with the preservation  and/or  enforcement of any of
        the rights of the Agent,  the  Arrangers and the Banks under the Finance
        Documents.

22.3     Stamp Taxes
        The Borrower shall pay all stamp,  registration and other taxes to which
        any Finance Document or any judgment given in connection therewith is or
        at any time may be subject and shall, from time to time on demand of the
        Agent,  indemnify  the Agent,  the  Arrangers  and the Banks against any
        liabilities,  costs,  claims and expenses  resulting from any failure to
        pay or any delay in paying any such tax.

22.4     Banks' Liabilities for Costs
        If the  Borrower  fails to  perform  any of its  obligations  under this
        Clause 22 (Costs and  Expenses),  each Bank  shall,  in its  Proportion,
        indemnify each of the Agent and the Arrangers  against any loss incurred
        by any of them  as a  result  of such  failure  and the  Borrower  shall
        forthwith  reimburse  each Bank for any  payment  made by it pursuant to
        this Clause 22.4.

Part 10

<PAGE>



                                           AGENCY PROVISIONS

23.      The Agent, the Trustee, the Arrangers and the Banks

23.1     Appointment of the Agent and the Trustee
        The Arrangers and each Bank hereby appoints the Agent and the Trustee to
        act as its  agent in  connection  with  this  Agreement  and each  other
        Finance  Document  and  authorises  each of the Agent and the Trustee to
        exercise  such  rights,  powers,  authorities  and  discretions  as  are
        specifically  delegated  to the  Agent  by  the  terms  of  the  Finance
        Documents  together  with  all  such  rights,  powers,  authorities  and
        discretions as are reasonably incidental thereto. The provisions of this
        Clause 23 are,  in the case of the  Trustee,  without  prejudice  to the
        provisions of the Security  Trust Deed and, in the event of any conflict
        between this Clause 23 and the Security  Trust Deed,  the  provisions of
        the Security Trust Deed will prevail.

23.2     Agent's and the Trustee's Discretions
        Each of the Agent and the Trustee may:

(i)               assume, unless it has, in its capacity as agent for the Banks,
                  received  notice to the contrary  from any other party hereto,
                  that  (i) any  representation  made by any  Finance  Party  in
                  connection with any of the Finance  Documents is true, (ii) no
                  Event of Default or Potential  Event of Default has  occurred,
                  (iii) no Finance  Party is in breach of or  default  under its
                  obligations  under any of the Finance  Documents  and (iv) any
                  right,  power,  authority or discretion vested therein upon an
                  Instructing  Group,  the Banks or any other person or group of
                  persons has not been exercised;

(ii)              assume  that  the  Facility   Office  of  each  Bank  is  that
                  identified  with its  signature  below  (or,  in the case of a
                  Transferee, at the end of the Transfer Certificate to which it
                  is a party as Transferee) until it has received from such Bank
                  a notice designating some other office of such Bank to replace
                  its  Facility  Office and act upon any such  notice  until the
                  same is superseded by a further such notice;

(iii)             engage  and pay for the  advice or  services  of any  lawyers,
                  accountants,  surveyors  or  other  experts  whose  advice  or
                  services may to it seem necessary,  expedient or desirable and
                  rely upon any advice so obtained;

(iv)              rely (as to any  matters of fact  which  might  reasonably  be
                  expected to be within the knowledge of any Finance Party) upon
                  a certificate signed by or on behalf of such Finance Party;

(v)      rely upon any communication or document believed by it to be genuine;

(vi)              refrain from exercising any right,  power or discretion vested
                  in it as agent  hereunder  unless and until  instructed  by an
                  Instructing  Group as to whether or not such  right,  power or
                  discretion  is to be exercised  and, if it is to be exercised,
                  as to the manner in which it should be exercised; and

(vii)             refrain from acting in accordance with any  instructions of an
                  Instructing  Group to begin  any legal  action  or  proceeding
                  arising  out of or in  connection  with any  Finance  Document
                  until it shall have  received  such security as it may require
                  (whether  by way of payment in advance or  otherwise)  for all
                  costs,  claims,  losses,  expenses  (including legal fees) and
                  liabilities together with any VAT thereon which it will or may
                  expend or incur in complying with such instructions.

23.3     Agent's and Trustee's Obligations
        The Agent and the Trustee shall:

(i)               promptly  inform  each Bank of the  contents  of any notice or
                  document  received  by it in its  capacity as Agent or Trustee
                  from any Finance Party under any Finance Document;

(ii)              promptly  notify each Bank of the  occurrence  of any Event of
                  Default  or  any  default  by any  Finance  Party  in the  due
                  performance of or compliance  with its  obligations  under any
                  Finance  Document of which the Agent or the Trustee has notice
                  from any other party hereto;

(iii)             save as otherwise provided herein or therein,  act as agent or
                  trustee  under the Finance  Documents in  accordance  with any
                  instructions  given  to  it  by an  Instructing  Group,  which
                  instructions shall be binding on all of the Banks; and

(iv)              if  so  instructed  by  an  Instructing  Group,  refrain  from
                  exercising  any  right,  power or  discretion  vested in it as
                  agent hereunder or under any of the other Finance Documents.

23.4     Excluded Obligations
        Notwithstanding  anything to the contrary  expressed or implied  herein,
        none of the Agent, the Trustee or the Arrangers shall:

(i)               be  bound  to   enquire   as  to  (i)   whether   or  not  any
                  representation  made by the any  Finance  Party in  connection
                  with any Finance  Document  is true,  (ii) the  occurrence  or
                  otherwise  of any  Event  of  Default  or  Potential  Event of
                  Default,  (iii) the performance by any Finance Document of its
                  obligations  under any of the  Finance  Documents  or (iv) any
                  breach  of or  default  by any  Finance  Party of or under its
                  obligations thereunder;

(ii)                be bound to  account  to any Bank for any sum or the  profit
                    element of any sum received by it for its own account;

(iii)             be bound to  disclose  to any  other  person  any  information
                  relating  to  any  member  of  the  Parent's   Group  if  such
                  disclosure  would or might in its opinion  constitute a breach
                  of any law or  regulation  or be otherwise  actionable  at the
                  suit of any person; or

(iv) be under any  obligations  other than those for which express  provision is
made herein.

23.5     Indemnification
        Each Bank shall, in its  Proportion,  from time to time on demand by the
        Agent or, as the case may be, the Trustee,  indemnify the Agent, against
        any and all reasonable costs, claims, losses,  expenses (including legal
        fees) and liabilities  together with any VAT thereon which the Agent or,
        as the case may be, the Trustee may incur,  otherwise  than by reason of
        its own gross negligence or wilful misconduct, in acting in its capacity
        as agent or trustee under any of the Finance  Documents  Provided Always
        That this  Clause  23.5  (Indemnification)  shall not apply to any cost,
        claim, loss,  expense or liability  expressed to be recoverable from the
        Borrower under Clause 22.1 (Transaction  Expenses),  22.2  (Preservation
        and Enforcement of Rights) or 22.3 (Stamp Taxes) (but without  prejudice
        to Clause 22.4 (Bank's Liabilities for Costs)).

23.6     Exclusion of Liabilities
        Neither the Agent, the Trustee and the Arrangers nor any of them accepts
        any  responsibility   for  the  accuracy  and/or   completeness  of  any
        information  supplied by the any Finance Party in connection with any of
        the Finance  Documents  or for the  legality,  validity,  effectiveness,
        adequacy or  enforceability  of any of the Finance Documents and neither
        the Agent,  the Trustee and the Arrangers nor any of them shall be under
        any  liability  as a result of taking or  omitting to take any action in
        relation  to any of the  Finance  Documents,  save in the  case of gross
        negligence or wilful misconduct.

23.7     No Actions
        Each of the  Banks  agrees  that it will not  assert  or seek to  assert
        against any director,  officer or employee of the Agent,  the Trustee or
        Arrangers  any claim it might have against any of them in respect of the
        matters referred to in Clause 23.6 (Exclusion of Liabilities).

23.8     Business with the Parent's Group
        The Agent,  the Trustee and the Arrangers may accept deposits from, lend
        money to and generally  engage in any kind of banking or other  business
        with any member of the Parent's Group.

23.9     Resignation
        Each of the Agent and the Trustee may resign its  appointment  under any
        Finance  Document at any time without  assigning any reason  therefor by
        giving not less than thirty days' prior written notice to that effect to
        each of the other parties hereto Provided that no such resignation shall
        be effective until a successor for the Agent or, as the case may be, the
        Trustee is appointed in  accordance  with the  succeeding  provisions of
        this Clause 23 or the Security Trust Deed.

23.10    Successor Agent
        If the Agent or, as the case may be,  the  Trustee  gives  notice of its
        resignation  pursuant to Clause 23.9 (Resignation),  then any Bank whose
        participation  in the  Facility  is at least ten per cent.  (10%) may be
        appointed by an  Instructing  Group with the  Borrower's  prior  written
        consent (such consent not to be  unreasonably  delayed or withheld) as a
        successor  to the  Agent  or,  as the case  may be,  the  Trustee  by an
        Instructing  Group  during the  period of such  notice  but,  if no such
        successor is so appointed, the Agent or, as the case may be, the Trustee
        may appoint such a successor itself.

23.11    Rights and Obligations
        If a  successor  to the  Agent or, as the case may be,  the  Trustee  is
        appointed under the provisions of Clause 23.10 (Successor  Agent),  then
        (a) the  retiring  Agent or, as the case may be,  the  Trustee  shall be
        discharged  from  any  further  obligation  under  any  of  the  Finance
        Documents but shall remain  entitled to the benefit of the provisions of
        this  Clause  23 and (b) its  successor  and each of the  other  parties
        hereto shall have the same rights and obligations  amongst themselves as
        they would have had if such successor had been a party hereto.

23.12    Own Responsibility
        It is  understood  and agreed by each Bank that it has itself been,  and
        will continue to be, solely  responsible  for making its own independent
        appraisal  of  and   investigations   into  the   financial   condition,
        creditworthiness,  condition,  affairs, status and nature of each member
        of the Parent's Group and, accordingly, each Bank warrants to the Agent,
        the  Trustee  and the  Arrangers  that it has not relied on and will not
        hereafter  rely on the Agent,  the Trustee and the  Arrangers  or any of
        them:

(i)               to check or enquire on its behalf into the adequacy,  accuracy
                  or  completeness  of any  information  provided by any Finance
                  Party  in  connection  with  the  Finance   Documents  or  the
                  transactions   contemplated   thereby  (whether  or  not  such
                  information  has been or is hereafter  circulated to such Bank
                  by the Agent,  the Trustee and the  Arrangers or any of them);
                  or

(ii)              to assess or keep under  review on its  behalf  the  financial
                  condition,  creditworthiness,  condition,  affairs,  status or
                  nature of any member of the Parent's Group.

23.13    Agency Division Separate
        In acting as Agent or, as the case may be, the Trustee hereunder for the
        Banks,  the Agent or, as the case may be, the Trustee  shall be regarded
        as acting  through  its  agency  division  which  shall be  treated as a
        separate  entity from any other of its  divisions  or  departments  and,
        notwithstanding  the  foregoing   provisions  of  this  Clause  23,  any
        information  received by some other  division or department of the Agent
        or, as the case may be, the Trustee may be treated as  confidential  and
        shall  not be  regarded  as  having  been  given to the  Agent's  or the
        Trustee's agency division.

23.14    Confidential Information
        Notwithstanding anything to the contrary expressed or implied herein and
        without  prejudice to the  provisions of Clause 23.13  (Agency  Division
        Separate), neither the Agent nor the Trustee shall as between itself and
        the  Banks  be  bound  to  disclose  to any  Bank or  other  person  any
        information which is supplied by any member of the Parent's Group to the
        Agent in its  capacity as agent or trustee  hereunder  for the Banks and
        which is identified by such member of the Parent's  Group at the time it
        is so supplied as being confidential information.

Part 11

<PAGE>



                                       ASSIGNMENTS AND TRANSFERS

24.      Assignments and Transfers

24.1     Binding Agreement
        This  Agreement  shall be binding  upon and enure to the benefit of each
        party  hereto  and its or any  subsequent  successors,  Transferees  and
        permitted assigns.

24.2     No Assignments and Transfers by the Borrower
        The  Borrower  shall not be entitled to assign or transfer all or any of
        its rights, benefits and obligations hereunder.

24.3     Assignments and Transfers by Banks
        Any Bank may at any time  (and at its own  cost)  assign  to any bank or
        financial institution all or any of its rights and benefits hereunder or
        transfer to any bank or financial  institution in accordance with Clause
        24.5  (Transfers  by  Banks)  all or any of  its  rights,  benefits  and
        obligations hereunder Provided that:

(i)               (save  in  the  case  of an  assignment  or  transfer  to  any
                  subsidiary  or holding  company,  or to any  subsidiary of any
                  holding  company,  of such  Bank or to  another  Bank) no such
                  assignment  or transfer may be made without the prior  written
                  approval of the Borrower, such approval not to be unreasonably
                  withheld or delayed;

(ii)              no Bank shall be  entitled  to effect any such  assignment  or
                  transfer  (otherwise  than with the prior written  approval of
                  the  Borrower)  if as a  result  thereof  (and as at the  date
                  thereof)  the  Borrower  would be obliged to make a payment to
                  the  assignee  or  transferee  which  it would  not have  been
                  obliged  to make to such  Bank or  which is  greater  than the
                  payment it would have been  obliged to make to the assignor or
                  transferor;

(iii)             no Bank party hereto as at the Original Facility Date shall be
                  entitled to assign or transfer  any of its rights and benefits
                  hereunder   to  more   than  one  other   bank  or   financial
                  institution; and

(iv) a Bank may only assign or transfer the same  proportion of its A Commitment
and B Commitment.

24.4     Assignments by Banks
        If any Bank assigns all or any of its rights and  benefits  hereunder in
        accordance with Clause 24.3 (Assignments and Transfers by Banks),  then,
        unless and until the  assignee  has agreed with the Agent,  the Trustee,
        the  Arrangers  and the  other  Banks  that it shall  be under  the same
        obligations  towards  each of them as it would have been under if it had
        been an original party hereto as a Bank  (whereupon  such assignee shall
        become  a party  hereto  as a  "Bank"),  the  Agent,  the  Trustee,  the
        Arrangers  and the other  Banks shall not be obliged to  recognise  such
        assignee as having the rights  against  each of them which it would have
        had if it had been such a party hereto.

24.5     Transfers by Banks
        If any Bank wishes to transfer all or any of its rights, benefits and/or
        obligations  hereunder as contemplated in Clause 24.3  (Assignments  and
        Transfers by Banks),  then such transfer may be effected by the delivery
        to the Agent and the  Borrower  of a duly  completed  and duly  executed
        Transfer  Certificate in which event,  on the later of the Transfer Date
        specified in such Transfer  Certificate and the fifth business day after
        (or such earlier  business  day  endorsed by the Agent on such  Transfer
        Certificate  falling on or after) the date of delivery of such  Transfer
        Certificate to the Agent:

(i)               to the extent that in such Transfer Certificate the Bank party
                  thereto seeks to transfer its rights, benefits and obligations
                  hereunder,  the Borrower and such Bank shall be released  from
                  further  obligations  towards one another  hereunder and their
                  respective rights against one another shall be cancelled (such
                  rights and  obligations  being referred to in this Clause 24.5
                  as "discharged rights and obligations");

(ii)              the Borrower and the  Transferee  party  thereto  shall assume
                  obligations  towards one another and/or acquire rights against
                  one  another  which  differ  from such  discharged  rights and
                  obligations only in so far as the Borrower and such Transferee
                  have assumed and/or acquired the same in place of the Borrower
                  and such Bank;

(iii)             the Agent, the Trustee the Arrangers,  such Transferee and the
                  other Banks shall  acquire  the same rights and  benefits  and
                  assume the same obligations  between  themselves as they would
                  have acquired and assumed had such Transferee been an original
                  party  hereto  as a Bank  with  the  rights,  benefits  and/or
                  obligations  acquired  or  assumed  by it as a result  of such
                  transfer; and

(iv) such Transferee shall become a party hereto as a "Bank".

24.6     Transfer Fees
        On the date upon which a transfer  takes effect  pursuant to Clause 24.5
        (Transfers by Banks) the  Transferee  in respect of such transfer  shall
        pay to the Agent for its own account a transfer fee of $1,000.

24.7     Disclosure of Information
        Any Bank may  disclose  with the prior  written  consent of the  Finance
        Parties (such consent in either case not to be unreasonably withheld) to
        any actual or potential  assignee or Transferee or to any person who may
        otherwise enter into contractual relations with such Bank in relation to
        this Agreement such information  about the Parent,  the Borrower and the
        Parent's Group as such Bank shall consider appropriate Provided That the
        Borrower  may require  such Bank to obtain from such actual or potential
        assignee,   Transferee,   or  such  other  person,   a   confidentiality
        undertaking  (in a form  reasonably  acceptable to both the Borrower and
        such  Bank) in  relation  to such  information  about  the  Parent,  the
        Borrower  and/or the Parent's Group as has been supplied to the Banks on
        a confidential basis.

Part 12

<PAGE>



                                             MISCELLANEOUS

25.      Calculations and Evidence of Debt

25.1     Basis of Accrual
        Interest  and  commitment  commission  shall  accrue from day to day and
        shall be  calculated  on the basis of a year of 360 days and the  actual
        number of days elapsed.

25.2     Quotations
        If on any occasion a Reference  Bank or a Bank fails to supply the Agent
        with a quotation  required of it under the foregoing  provisions of this
        Agreement,  the rate for which  such  quotation  was  required  shall be
        determined from those quotations which are supplied to the Agent.

25.3     Evidence of Debt
        Each Bank shall maintain in accordance with its usual practice  accounts
        evidencing  the  amounts  from  time to time  lent  by and  owing  to it
        hereunder.

25.4     Control Accounts
        The Agent shall  maintain on its books a control  account or accounts in
        which  shall be recorded  (a) the amount of any Advance  made or arising
        hereunder  and  each  Bank's  share  therein,  (b)  the  amount  of  all
        principal,  interest  and  other  sums  due or to  become  due  from the
        Borrower  hereunder  and each Bank's share therein and (c) the amount of
        any sum  received or recovered  by the Agent  hereunder  and each Bank's
        share therein.

25.5     Prima Facie Evidence
        In any legal action or proceeding  arising out of or in connection  with
        this Agreement,  the entries made in the accounts maintained pursuant to
        Clause 25.3 (Evidence of Debt) and Clause 25.4 (Control  Accounts) shall
        be prima facie  evidence of the  existence  and amounts of the specified
        obligations of the Borrower.

25.6     Certificates of Banks
        A  certificate  of a Bank as to (a) the amount by which a sum payable to
        it hereunder is to be increased  under Clause 8.1 (Tax  Gross-up) or (b)
        the amount for the time being  required to indemnify it against any such
        cost, payment or liability as is mentioned in Clause 8.2 (Tax Indemnity)
        or Clause  10.1  (Increased  Costs)  shall,  in the  absence of manifest
        error,  be prima  facie  evidence  of the  existence  and amounts of the
        specified obligations of the Borrower.

26.      Remedies and Waivers, Partial Invalidity

26.1     Remedies and Waivers
        No failure to exercise, nor any delay in exercising,  on the part of the
        Agent,  the Trustee,  the  Arrangers  and the Banks or any of them,  any
        right or remedy under any of the Finance  Documents  shall  operate as a
        waiver thereof, nor shall any single or partial exercise of any right or
        remedy prevent any further or other exercise  thereof or the exercise of
        any other right or remedy.  The rights and remedies  herein provided are
        cumulative and not exclusive of any rights or remedies provided by law.

26.2     Partial Invalidity
        If, at any time, any provision hereof is or becomes illegal,  invalid or
        unenforceable in any respect under the law of any jurisdiction,  neither
        the legality,  validity or  enforceability  of the remaining  provisions
        hereof nor the legality,  validity or  enforceability  of such provision
        under the law of any other  jurisdiction shall in any way be affected or
        impaired thereby.

27.      Notices

27.1     Communications in Writing
        Each  communication  to be made hereunder  shall be made in writing but,
        unless otherwise stated, shall be made by facsimile or letter.

27.2     Delivery
        Any  communication  or document to be made or  delivered by one party to
        the other pursuant to this  Agreement  shall (unless the other party has
        by fifteen days' written notice to the one specified  another address or
        facsimile  number)  be made or  delivered  to that  other  party  at the
        address or facsimile  number  identified  with its  signature  below and
        shall be  deemed  to have  been  made or  delivered  (in the case of any
        communication  made by facsimile) when  despatched and the  transmission
        report of the sender indicates that the facsimile  transmission has been
        received by the addressee or (in the case of any  communication  made by
        letter) when  delivered to that address or (as the case may be) ten days
        after  being  deposited  in the  post  postage  prepaid  in an  envelope
        addressed to it at that address Provided that:

(i)               if any such  communication  or  document  would  otherwise  be
                  deemed to have been  received on a day which is not a business
                  day it shall be  deemed  to have  been  received  on the first
                  business day thereafter;

(ii)              any  communication  or document to be made or delivered by the
                  Borrower  to a Bank  shall  be  effective  only  when  legibly
                  received  by such Bank and then only if the same is  expressly
                  marked  for  the  attention  of  the   department  or  officer
                  identified  with such Bank's  signature below or as set out in
                  the relevant Transfer Certificate (or such other department or
                  officer as such Bank shall from time to time  specify for this
                  purpose);

(iii)             if any facsimile  transmission has not been legibly  received,
                  the addressee shall as soon as reasonably  practicable  notify
                  the   giver   by   telephone   and  in   such   circumstances,
                  notwithstanding   any  of  the  foregoing   provisions,   such
                  facsimile  communication  shall not be  deemed to be  received
                  until it has been re-transmitted and legibly received; and

(iv) any communication or document to be made or delivered to the Borrower shall
be copied also to:

                  Bona Shipping AS
                  Radhusgaten 27
                  P.O. Box 470 Sentrum
                  0105 Oslo
                  Norway

                  Attn:    Finance and Control Department
                  Fax:     47 22 31 00 01
                  Tel:     47 22 31 00 00

                  and to:-

                  Teekay Shipping (Canada) Ltd.
                  1400-505 Burrard Street
                  Vancouver
                  British Columbia
                  Canada

                  Attn:     Manager of Finance
                  Fax :     604 681 3011
                  Tel :     604 683 3526

27.3     English Language
        Each  communication  and  document  made or  delivered  by one  party to
        another  pursuant to this Agreement shall be in the English  language or
        accompanied  by a  translation  thereof  into English  certified  (by an
        officer of the person making or delivering the same) as being a true and
        accurate  translation thereof and in the event of a conflict between the
        original and the English  translation  thereof,  the translation will be
        taken to be the  definitive  version  for the  purposes  of the  Finance
        Documents.

28.      Amendments

28.1     Amendments
        If the Agent has the prior consent of an Instructing  Group,  the Agent,
        the  Parent and the  Borrower  may from time to time agree in writing to
        amend this Agreement or to waive, prospectively or retrospectively,  any
        of the  requirements  of this Agreement and any amendments or waivers so
        agreed  shall be binding on all parties  hereto,  provided  that no such
        waiver  or  amendment  shall  subject  any  party  hereto  to any new or
        additional obligations without the consent of such party.

28.2     Amendments Requiring the Consent of all the Banks
        An amendment or waiver which relates to:-

(i)      Clause 20 (Sharing) or this Clause 28 (Amendments);

(ii)              a  change  in the  principal  amount  of any  Advance,  or the
                  deferral of any Repayment Date or Reduction Date;

(iii)             a change in Margin 1 or Margin 2 or the amount of any  payment
                  of interest, fees or any other amount payable hereunder to any
                  party or the deferral of the date for payment thereof;

(iv)     the definition of "Instructing Group"; or

(v)      any provision which  contemplates  the need for the consent or approval
         of all the Banks,

        shall not be made without the prior consent of all the Banks.

28.3     Exceptions
        Notwithstanding  any other  provisions  hereof,  the Agent  shall not be
        obliged to agree to any such amendment or waiver if the same would:

(i)      amend or waive this  Clause  28.3,  Clause 22 (Costs and  Expenses)  or
         Clause 23 (The Agent, the Arrangers and the Banks); or

(ii)              otherwise  amend or waive any of the Agent's rights  hereunder
                  or  subject  the  Agent  or the  Arrangers  to any  additional
                  obligations hereunder.

Part 13

<PAGE>



                                          LAW AND JURISDICTION

29.      Law

29.1     English Law
        This  Agreement  shall  be  governed  by,  and  shall  be  construed  in
accordance with, English law.

30.      Jurisdiction

30.1    Each of the  parties  hereto  irrevocably  agrees for the benefit of the
        Agent,  the Trustee and the Banks that the courts of England  shall have
        jurisdiction to hear and determine any suit,  action or proceeding,  and
        to settle any  disputes,  which may arise out of or in  connection  with
        this  Agreement  and,  for such  purposes,  irrevocably  submits  to the
        jurisdiction of such courts.


30.2    The  Borrower  irrevocably  waives any  objection  which it might now or
        hereafter have to the courts  referred to in Clause 30.1 being nominated
        as the forum to hear and determine any suit,  action or proceeding,  and
        to settle any  disputes,  which may arise out of or in  connection  with
        this  Agreement  and  agrees  not to claim  that any such court is not a
        convenient or appropriate forum.

30.3    The  Borrower  agrees  that the  process  by which any  suit,  action or
        proceeding in England is begun may be served on it by being delivered to
        Teekay Shipping (UK) Limited at its registered office for the time being
        (which is currently at 49 St. James Street, London SW1A 1JT).


30.4    The submission to the  jurisdiction  of the courts referred to in Clause
        30.1 shall not (and shall not be  construed so as to) limit the right of
        the Agent,  the  Trustee  or any Bank to take  proceedings  against  the
        Borrower  in any other  court of  competent  jurisdiction  nor shall the
        taking of  proceedings  in any one or more  jurisdictions  preclude  the
        taking of proceedings in any other jurisdiction, whether concurrently or
        not.
AS  WITNESS  the hands of the duly  authorised  representatives  of the  parties
hereto the day and year first before written.



<PAGE>


                                           THE FIRST SCHEDULE
                                               The Banks

<TABLE>
<CAPTION>
==================================================================================================================
                                                 A                   B                      Total

Bank                                             Commitment          Commitment             Commitment

                                                 ($)                 ($)                    ($)
==================================================================================================================
<S>                                               <C>                 <C>                 <C>

Citibank, N.A.                                   48,000,000          12,000,000             60,000,000

The Chase Manhattan Bank                         48,000,000          12,000,000             60,000,000

The Royal Bank of Scotland plc                   40,000,000          10,000,000             50,000,000

Christiana Bank og Kreditkasse ASA               34,000,000          8,500,000              42,500,000

Den norske Bank                                  34,000,000          8,500,000              42,500,000

Credit Agricole Indosuez                         28,000,000          7,000,000              35,000,000

KBC Finance Ireland                              28,000,000          7,000,000              35,000,000

MeesPierson N.V.                                 28,000,000          7,000,000              35,000,000

Schiffshypothekenbank zu Lubeck AG               26,000,000          6,500,000              32,500,000

BankBoston, N.A.                                 20,000,000          5,000,000              25,000,000

Landesbank Schleswig-Holstein Girozentrale       20,000,000          5,000,000              25,000,000

Merita Bank plc

Deutsche Bank (Hamburg)                          14,400,000          3,600,000              18,000,000

Deutsche Schiffsbank AG                          14,000,000          3,500,000              17,500,000

VIKING Ship Finance Limited                      9,600,000           2,400,000              12,000,000

                                                 8,000,000           2,000,000              10,000,000

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

                                                                                            500,000,000
==================================================================================================================
</TABLE>



<PAGE>


                                          THE SECOND SCHEDULE
                                      Form of Transfer Certificate



To:      Citibank International plc



                                          TRANSFER CERTIFICATE



relating to the  agreement  (as from time to time  amended,  varied,  novated or
supplemented,  the "Facility Agreement") dated 16th December 1998 as amended and
restated  on  ___________  1999  whereby  a  U.S.$500,000,000  revolving  credit
facility was made available to Bona  Shipholding  Ltd. as borrower by a group of
banks on whose behalf  Citibank  International  plc acted as agent in connection
therewith.

1.      Terms defined in the Facility  Agreement shall,  subject to any contrary
        indication, have the same meanings herein. The terms Bank and Transferee
        are defined in the schedule hereto.

2.        The Bank (i) confirms  that the details in the  schedule  hereto under
          the heading  "Total  Bank's  Commitment"  or  "Advance(s)"  accurately
          summarises  its  Total  Commitment  and/or,  as the case  may be,  its
          participation  in,  and the Term and  Repayment  Date of,  one or more
          existing  Advances  and (ii)  requests  the  Transferee  to accept and
          procure the transfer to the Transferee of the portion specified in the
          schedule  hereto of, as the case may be, its Total  Commitment  and/or
          its participation in such Advance(s) by counter-signing and delivering
          this Transfer  Certificate to the Agent at its address for the service
          of notices specified in the Facility Agreement.

3.      The  Transferee  hereby  requests  the  Agent to  accept  this  Transfer
        Certificate  as being  delivered  to the Agent  pursuant  to and for the
        purposes of Clause 24.5  (Transfers by Banks) of the Facility  Agreement
        so as to take  effect  in  accordance  with  the  terms  thereof  on the
        Transfer  Date or on such later date as may be  determined in accordance
        with the terms thereof.

4.      The  Transferee  confirms  that it has  received  a copy of the  Finance
        Documents  together  with such other  information  as it has required in
        connection with this transaction and that it has not relied and will not
        hereafter  rely on the Bank to check or enquire  on its behalf  into the
        legality, validity, effectiveness, adequacy, accuracy or completeness of
        any such  information and further agrees that it has not relied and will
        not rely on the Bank to assess or keep  under  review on its  behalf the
        financial condition,  creditworthiness,  condition,  affairs,  status or
        nature of the Borrower.

5.      The  Transferee  hereby  undertakes  with the Bank and each of the other
        parties to the Facility  Agreement  that it will  perform in  accordance
        with  their  terms  all  those  obligations  which  by the  terms of the
        Facility Agreement will be assumed by it after delivery of this Transfer
        Certificate  to the Agent and  satisfaction  of the  conditions (if any)
        subject to which this Transfer Certificate is expressed to take effect.

6.      The  Bank  makes  no   representation   or   warranty   and  assumes  no
        responsibility  with respect to the legality,  validity,  effectiveness,
        adequacy or  enforceability  of the  Facility  Agreement or any document
        relating  thereto  and  assumes  no  responsibility  for  the  financial
        condition of the Borrower or for the  performance  and observance by the
        Borrower of any of its obligations  under the Facility  Agreement or any
        document   relating   thereto  and  any  and  all  such  conditions  and
        warranties,  whether express or implied by law or otherwise,  are hereby
        excluded.

7.        The Bank hereby gives  notice that  nothing  herein or in the Facility
          Agreement (or any document  relating thereto) shall oblige the Bank to
          (a) accept a re-transfer  from the Transferee of the whole or any part
          of  its  rights,   benefits  and/or  obligations  under  the  Facility
          Agreement  transferred  pursuant  hereto  or (b)  support  any  losses
          directly or indirectly sustained or incurred by the Transferee for any
          reason whatsoever including the non-performance by the Borrower or any
          other  party  to the  Facility  Agreement  (or any  document  relating
          thereto) of its  obligations  under any such document.  The Transferee
          hereby  acknowledges the absence of any such obligation as is referred
          to in (a) or (b) above.

8.      This Transfer  Certificate  and the rights,  benefits and obligations of
        the parties  hereunder  shall be governed by and construed in accordance
        with English law.



                                              THE SCHEDULE

1.       Bank:

2.       Transferee:

3.       Transfer Date:

4.       Total Commitment:

              Bank's A Commitment   Portion Transferred

              Bank's B Commitment   Portion Transferred

5.       Advance(s):

         Amount of                  Term and
         Bank's Participation       Repayment Date   Portion Transferred


[Transferor Bank]                             [Transferee Bank]

By:                                                            By:

Date:                                                 Date:

                                  Administrative Details of Transferee

Address:

Contact Name:

Account for Payments:

Fax:

Telephone:



<PAGE>


                               THE THIRD SCHEDULE

                                     Part 1
          Condition Precedent Documents for the first Advance hereunder



1.      A copy,  certified  a true  copy  by a duly  authorised  officer  of the
        Borrower, of the Borrower's constitutive documents.

2.      A copy,  certified  a true  copy  by a duly  authorised  officer  of the
        Borrower, of a resolution of the Borrower's Board of Directors approving
        the execution, delivery and performance of the Finance Documents and the
        terms and  conditions of the Finance  Documents and  authorising a named
        person  or  persons  to sign  this  Agreement  and any  documents  to be
        delivered  by the  Borrower  pursuant  hereto or  pursuant to any of the
        other Finance Documents.

3.      A certificate of a duly authorised  officer of the Borrower  setting out
        the names and signatures of the persons authorised to sign, on behalf of
        the Borrower,  this  Agreement  and the other Finance  Documents and any
        documents to be delivered by the Borrower pursuant hereto or thereto.

4.      A copy,  certified  a true  copy  by a duly  authorised  officer  of the
        Borrower,  of the powers of  attorney,  if any,  issued  pursuant to the
        resolution referred to in paragraph 2 above.

5.      A copy,  certified a true copy by or on behalf of the Borrower,  of each
        such  law,  decree,   consent,   licence,   approval,   registration  or
        declaration as is, in the opinion of counsel to the Agent,  necessary to
        render the Finance Documents legal, valid,  binding and enforceable,  to
        make this Agreement admissible in evidence in Bermuda.

6.      An opinion of the Agent's  counsel in Bermuda,  Messrs  Conyers,  Dill &
        Pearman in form and substance satisfactory to the Agent.

7.      An opinion of the Agent's English counsel,  Messrs.  Clifford Chance, in
        form and substance satisfactory to the Agent.

8.      Evidence that Sinclair  Services  Limited has agreed to act as the agent
        of the Borrower for the service of process in England.

9.      A copy,  certified  a true copy by a director  of the  Borrower,  of the
        Original Consolidated Financial Statements.

10.     A certificate  as at the most recent  Quarter Date prior to the Original
        Facility Date showing the Borrower's  level of Free Cash,  Current Ratio
        and Leverage at such date.

11.     A  security  trust  deed in the form or  substantially  the form of that
        attached hereto as Exhibit A.

12.     Evidence  that the  Borrower  has,  on or  before  the date of the first
        Advance  hereunder,  (i)  cancelled  the  whole of the  Aggregate  Total
        Commitments  (as defined in the  Newbuilding  Facility) and the whole of
        the Total Commitments (as defined in the Citibank Revolver and the Chase
        Revolver)  and (ii) given notice of its  intention to prepay all amounts
        outstanding (as at the date of the of the first Advance hereunder) under
        the Citibank Revolver and the Chase Revolver

13.     Notice from the Borrower  cancelling  the whole of the  Aggregate  Total
        Commitments as defined in the Newbuilding  Facility and the whole of the
        Total  Commitments  as defined in the  Citibank  Revolver  and the Chase
        Revolver.

14.     Evidence  in form and  substance  satisfactory  to the  Agent  that each
        Initial  Vessel is insured in accordance  with the  requirements  of the
        relevant Security Agreements.

15.     Evidence  in form and  substance  satisfactory  to the  Agent  that each
        Initial Vessel is classified with a classification society in accordance
        with the requirements of the relevant Security Agreements.

16.     An opinion of the  counsel  to the Agent in the  countries  in which the
        Initial Vessels are registered in form and substance satisfactory to the
        Agent.

17.     Evidence   that  there  are  no  other   existing   mortgages  or  other
        encumbrances  (other than  permitted  liens and other than  encumbrances
        created to secure the Borrower's obligations under the Citibank Revolver
        or the Chase  Revolver)  over the Initial  Vessels or their earnings and
        insurances.

18.     A Mortgage  over each Initial  Vessel duly executed and delivered by the
        Borrower  and  registered  against  each  such  Initial  Vessel  in  its
        appropriate registry.

19.     Deeds of  Assignment  duly  executed  and  delivered  by the Borrower in
        respect of the earnings and  insurances of each Initial Vessel (the said
        assignment of earnings to provide that the Trustee shall not be entitled
        to require the  assigned  earnings to be paid to the Trustee  thereunder
        unless and until an Event of Default has occurred and is continuing).

20.     All notices required to be given by the terms of the Deeds of Assignment
        referred to in paragraph 19 above.

21.     Evidence that all outstandings under the Citibank Revolver and the Chase
        Revolver will be met from the proceeds of the first drawdown hereunder.

22.     Evidence that all security  granted  pursuant to the Chase  Revolver and
        the Citibank  Revolver  over the Initial  Vessels,  their  insurances or
        earnings, shall have been discharged concurrently with the making of the
        first Advance hereunder.

23.      Confirmation from Clifford Chance as to the status of items referred to
         in paragraphs 1 to 22 above, included.



<PAGE>


                                                 Part 2

1.      A copy,  certified  a true  copy  by a duly  authorised  officer  of the
        Borrower,  of the  Borrower's  constitutive  documents  or,  where  such
        documents have not changed since being provided  pursuant to paragraph 1
        of Part 1 of the Third  Schedule,  a  certificate  of a duly  authorised
        officer of the Borrower to that effect.

2.      A copy,  certified  a true  copy  by a duly  authorised  officer  of the
        Borrower, of a resolution of the Borrower's Board of Directors approving
        the  execution,  delivery  and  performance  of the  additional  Finance
        Documents  and  the  terms  and  conditions  of the  additional  Finance
        Documents  and  authorising  a named  person  or  persons  to  sign  any
        documents to be delivered  by the Borrower  pursuant to such  additional
        Finance Documents.

3.      A certificate of a duly authorised  officer of the Borrower  setting out
        the names and signatures of the persons authorised to sign, on behalf of
        the Borrower,  the additional  Finance Documents and any documents to be
        delivered by the Borrower pursuant thereto.

4.      A copy,  certified  a true  copy  by a duly  authorised  officer  of the
        Borrower,  of the powers of  attorney,  if any,  issued  pursuant to the
        resolution referred to in paragraph 2 above.

5.      A copy,  certified a true copy by or on behalf of the Borrower,  of each
        such  law,  decree,   consent,   licence,   approval,   registration  or
        declaration as is, in the opinion of counsel to the Agent,  necessary to
        render the  additional  Finance  Documents  legal,  valid,  binding  and
        enforceable,  to make them  admissible  in  evidence  in Bermuda  and to
        enable the  Borrower  lawfully  to perform  its  respective  obligations
        thereunder.

6.      Evidence  in form  and  substance  satisfactory  to the  Agent  that the
        relevant New Vessel or Future Vessel,  as the case may be, is insured in
        accordance with the requirements of the relevant Security Agreements.

7.      Evidence  in form  and  substance  satisfactory  to the  Agent  that the
        relevant New Vessel or Future  Vessel (as the case may be) is classified
        with a classification society in accordance with the requirements of the
        relevant Security Agreements.

8.      An opinion of the  counsel to the Agent in the  country in which the New
        Vessel or Future  Vessel,  as the case may be, in  respect  of which the
        relevant  Advance  is made is to be  registered  in form  and  substance
        satisfactory to the Agent.

9.      Evidence   that  there  are  no  other   existing   mortgages  or  other
        encumbrances  (other than permitted  liens) over the relevant New Vessel
        or Future Vessel, as the case may be, or its earnings and insurances.

10.     A Mortgage  over the relevant  New Vessel or Future  Vessel (as the case
        may be) duly  executed and  delivered  by the  Borrower  and  registered
        against  such New  Vessel or Future  Vessel,  as the case may be, in its
        appropriate registry.

11.     A Deed of  Assignment  duly  executed  and  delivered by the Borrower in
        respect of the  earnings  and  insurances  of the relevant New Vessel or
        Future Vessel,  as the case may be, (the said  assignment of earnings to
        provide  that the Trustee  shall not be entitled to require the assigned
        earnings to be paid to the Trustee  thereunder unless and until an Event
        of Default has occurred as is continuing).

12.     All notices  required to be given by the terms of the Deed of Assignment
        referred to in paragraph 11 above.







<PAGE>


                                          THE FOURTH SCHEDULE
                                           Notice of Drawdown

From:    Bona Shipholding Ltd.

To:      Citibank International plc

Dated:

Dear Sirs,

1.      We refer to the agreement (as from time to time amended, varied, novated
        or supplemented,  the "Facility  Agreement") dated 16th December 1998 as
        amended  and  restated  on   __________   1999  and  made  between  Bona
        Shipholding   Ltd.  as  borrower,   Chase  Manhattan  plc  and  Citibank
        International plc as arrangers,  Citibank International Plc as agent and
        trustee and the financial  institutions  named  therein as Banks.  Terms
        defined in the  Facility  Agreement  shall have the same meaning in this
        notice.

2.      We hereby give you notice that,  pursuant to the Facility  Agreement and
        upon the terms and subject to the conditions  contained therein, we wish
        an Advance to be made to us as follows:

(a)      Amount:

(b)      Facility: [insert Facility A, Facility B as appropriate]

(c)      Drawdown Date:

(d)      Term:

3.      We confirm  that,  at the date hereof,  the  representations  set out in
        Clause 11  (Representations)  of the Facility  Agreement are true and no
        Event of Default or Potential Event of Default has occurred.

4. The proceeds of this drawdown should be credited to [insert account details].

                                            Yours faithfully

                                     .............................

                                          for and on behalf of



<PAGE>


The Borrower

BONA SHIPHOLDING LTD.

By:               RAGNAR BELCK OLSEN

Address: P.O. Box HM1179
                  Cedar House, 41 Cedar Avenue
                  Hamilton HM12
                  Bermuda

Attn:             Mr Warren Cabral
Fax:              (441) 296 8666


Arranger

CHASE MANHATTAN plc

By:               EINAR STAVRUM

Address: 125 London Wall
                  London  EC2Y 5AJ

Attn:             Kristian Orssten
Fax:              0171 777 4759


Arranger, Agent and Trustee

CITIBANK INTERNATIONAL plc

By:               RORY HUSSEY

Address: P.O. Box 200
                  Cottons Centre
                  Hays Lane
                  London SE1 2QT

Attn:             Debbie Caulfield
Fax:              0171 500 4482




<PAGE>


The Banks

CITIBANK, N.A.

By:               SIMON BOOTH

Address: P.O. Box 200
                  Cottons Centre
                  Hays Lane
                  London SE1 2QT

Attn:             Simon Booth - Global Shipping
Fax:              + 44 171 500 2762


THE CHASE MANHATTAN BANK



By:               EINAR STAVRUM

Address: 125 London Wall
                  London EC2Y 5AJ

Attn:Credit matters: Einar Stavrum; Operational matters: European Loan Services
Fax: Credit matters: + 47 22 42 5861; Operational matters: + 44 1202 343 706


THE ROYAL BANK OF SCOTLAND PLC

By:               RORY HUSSEY (Attorney)

Address: Shipping Business Centre
                  P.O. Box 450
                  5-10 Great Tower Street
                  London  EC3P 3HX

Attn: Graham Locker (Credit matters); Carolyn Peal (Operational matters)
Fax: + 44 171 283 7538






<PAGE>


CHRISTIANIA BANK OG KREDITKASSE ASA

By:               PETER D. KNUDSEN                 OLAV RINGDAL

Address: PB 1166 Sentrum
                  0106 Oslo
                  Norway

Attn:Olav Ringdal - Shipping  Dept (Credit  matters);  Aud Sandnes  (Operational
     matters)
Fax: + 47 22 48 66 68 (Credit matters); + 47 22 48 50 79 (Operational matters)


DEN NORSKE BANK ASA

By:               PETER BEHNCKE

Address: Stranden 21
                  N-0107 Oslo
                  Norway

Attn:
Fax:              + 47 22 48 88 94


CREDIT AGRICOLE INDOSUEZ

By:               RORY HUSSEY (Attorney)

Address: 2, quai de President Paul Dommer
                  92920 Paris La Defense Cedex
                  France

Attn:             Pierre de Fontenay (Credit matters);
                  Frederic Noel (Operational matters)
Fax:              + 33 1 41 89 19 34 (Credit matters);
                  + 33 1 41 89 20 79 (Operational matters)




<PAGE>


KBC FINANCE IRELAND

By:               RORY HUSSEY (Attorney)

Address: KBC House
                  International Financial Services Centre
                  Dublin 1
                  Ireland

Attn:             Peter H. Stowell
Fax:              + 353 1 670 0855


MEESPIERSON N.V.

By:               RORY HUSSEY (Attorney)

Address: Munkedamsveien 53b
N-0250, Oslo
Norway

Attn:             Diederik Legger
Fax:              + 47 22 11 49 40

SCHIFFSHYPOTHEKENBANK ZU LUBECK AG

By:               TORE EIKELAND           NILS CHRISTIAN GREEN

Address: Brandstwiete 1
                  20457 Hamburg
                  Germany

Attn:             Jorg Zickermann
Fax:              + 49 40 3701 4649




<PAGE>


BANKBOSTON, N.A.

By:               RORY HUSSEY (Attorney)

Address: 100 Federal Street
                  Boston MA 02110
                  USA

Attn: Credit matters: Sean McCarthy; Operational matters: Edward Swiatek
Fax: Credit matters: + 1 617 434 1955; Operational matters: + 1 617 434 9820


LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE

By:               DR. JURGEN MONZEL

Address: Martensdamm 6
                  D-24 103 Kiel

Attn:             Matthias Happich
Fax:              + 49 431 900 1130


MERITA BANK PLC, LONDON BRANCH

By:               HENNY O'BRIEN

Address: 19 Thomas More Street
                  London, E1 9YW

Attn:             Kirsten Kaarre Jensen
Fax:              0171 709 7001


DEUTSCHE BANK AG IN HAMBURG

By:               TORE EIKELAND        OLIVER TRENNT

Address: Adolphsplatz 7
                  20457 Hamburg
                  Germany

Attn:             Jorg Zickermann, Ship Financing Dept.
Fax:              + 49 40 3701 4649




<PAGE>


DEUTSCHE SCHIFFSBANK AG

By:               RORY HUSSEY (Attorney)

Address: Domshof 17
                  D-28195 Bremen
                  Germany

Attn:             Peter Zimmermann
Fax:              + 49 421 323 539


VIKING SHIP FINANCE LTD

By:               RORY HUSSEY (Attorney)

Address: Claridenstrasse 40
                  P.O. Box 645
                  CH-8021 Zurich
                  Switzerland

Attn:             Alexander Schaffert
Fax:              + 41 1 234 4066