Document:

11.028                                                             EXHIBIT 10.12

                               DATED 30 JUNE 2006

                            XENIA INTERNATIONAL CORP.
                                  (as Borrower)

                                     - and -

                      FORTIS BANK N.V./S.A., ATHENS BRANCH
                                   and others
                                  (as lenders)

                                      -and-

                      FORTIS BANK N.V./S.A., ATHENS BRANCH
                         (as agent and security trustee)

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

                            US$8,250,000 SECURED LOAN
                               FACILITY AGREEMENT
                              m.v. "TASMAN TRADER"

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

                               STEPHENSON HARWOOD
                            One St. Paul's Churchyard
                                 London EC4M 8SH
                               Tel: 020 7329 4422
                               Fax: 020 7606 0822
Ref: 11.028

<PAGE>
                                    CONTENTS

                                                                            Page

1    Definitions and Interpretation............................................5

2    The Loan and its Purpose.................................................19

3    Conditions Precedent and Subsequent......................................21

4    Representations and Warranties...........................................25

5    Repayment and Prepayment.................................................29

6    Interest.................................................................30

7    The Master Agreement.....................................................32

8    Fee......................................................................34

9    Security Documents.......................................................34

10   Agency and Trust.........................................................35

11   Covenants................................................................44

12   Accounts.................................................................58

13   Events of Default........................................................59

14   Set-Off and Lien.........................................................64

15   Assignment and Sub-Participation.........................................66

16   Payments, Mandatory Prepayment, Reserve Requirements and Illegality......67

17   Communications...........................................................72

18   General Indemnities......................................................73

19   Miscellaneous............................................................75

20   Law and Jurisdiction.....................................................79

SCHEDULE 1....................................................................81
          The Banks and the Commitments.......................................81

APPENDIX A....................................................................83
          Drawdown Notice.....................................................83

APPENDIX B....................................................................84
          Form of Transfer Certificate........................................84

<PAGE>

LOAN AGREEMENT

Dated:   30 June 2006

BETWEEN:-

(1)  XENIA INTERNATIONAL CORP., a company  incorporated  according to the law of
     the  Marshall  Islands,  with its  registered  office at The Trust  Company
     Complex,  Ajeltake Island,  Ajeltake Road,  Majuro Marshall  Islands,  M.H.
     96960, c/o The Trust Company of the Marshall Islands Inc. ("the Borrower");

(2)  FORTIS BANK  N.V./S.A.,  ATHENS BRANCH (the "Original  Bank") AND THE BANKS
     AND FINANCIAL  INSTITUTIONS  (together  with the Original Bank, the "Banks"
     and each a  "Bank")  named in  Schedule  1, of the  offices  listed in that
     Schedule  or such other  offices as they may select and notify to the Agent
     from time to time;

(3)  FORTIS BANK N.V./S.A., ATHENS BRANCH acting as arranger, agent and security
     trustee through its office at 166, Syngrou Ave. 176 71, Athens,  Greece (in
     that capacity "the Agent").

WHEREAS:-

(A)  The Borrower is the registered owner of the Vessel.  which is registered in
     the ownership of the Borrower under the flag of the Marshall Islands.

(B)  Each of the Banks have  agreed to advance to the  Borrower  its  respective
     Commitment  of an aggregate  amount not  exceeding  the lesser of (i) eight
     million  two  hundred  and fifty  thousand  Dollars  ($8,250,000)  and (ii)
     seventy seven per centum (77%) of the lower of (a) the Fair Market Value of
     the Vessel and (b) the Acquisition  Price of the Vessel, in order to assist
     the Borrower in re-financing part of the Acquisition Price of the Vessel.

IT IS AGREED  as follows:-

1      Definitions and Interpretation

       1.1    Definitions

       In this Agreement:-

          1.1.1     "the Accounts" means the Earnings  Account and the Retention
                    Account.

          1.1.2     "the  Accounts  Security  Deed" means the Accounts  Security
                    Deed referred to in Clause 9.5.

          1.1.3     "Acquisition  Price",  in  respect of the  Vessel,  means an
                    amount which shall not exceed ten million  seven hundred and
                    seventy five thousand Dollars ($10,775,000).

          1.1.4     "the Address for Service" means HTD, Irongate House,  Duke's
                    Place,  London,  EC3A 7LP, United Kingdom or, in relation to
                    any of the Security  Parties,  such other address in England
                    and  Wales as that  Security  Party  may  from  time to time
                    designate by no fewer than ten days'  written  notice to the
                    Agent.

          1.1.5     "the   Administration"  has  the  meaning  given  to  it  in
                    paragraph 1.1.3 of the ISM Code.

          1.1.6     "Annex VI" means Annex VI (Regulations for the Prevention of
                    Air Pollution  from Ships) to the  International  Convention
                    for the Prevention of Pollution from Ships 1973 (as modified
                    in 1978 and 1997).

          1.1.7     "Approved  Brokers"  means  independent  sale  and  purchase
                    brokers appointed by the Agent in its discretion.

          1.1.8     "the  Assignment"  means  the  deed  of  assignment  of  the
                    Insurances,   Earnings,   Charter  Rights  and   Requisition
                    Compensation referred to in Clause 9.2.

          1.1.9     "the  Availability  Termination  Date" means 15 July 2006 or
                    such later date as the  Borrower  may  request and the Banks
                    may  in  their  discretion  agree  (such  consent  not to be
                    unreasonably withheld).

          1.1.10    "Break Costs" means all costs, losses, premiums or penalties
                    incurred  by the  Agent  or any  Bank  in the  circumstances
                    contemplated  by Clause 18.4, or as a result of it receiving
                    any  prepayment  of all or any  part  of the  Loan  (whether
                    pursuant  to Clause 5 or  otherwise),  or any other  payment
                    under or in  relation  to the  Security  Documents  on a day
                    other than the due date for payment of the sum in  question,
                    and  includes  (without  limitation)  any  losses  or  costs
                    incurred in liquidating or re-employing  deposits from third
                    parties  acquired  to effect or maintain  the Loan,  and any
                    liabilities, expenses or losses incurred by the Agent or any
                    Bank in terminating or reversing, or otherwise in connection
                    with,  any  Transaction  or any other  interest  rate and/or
                    currency swap,  transaction  or arrangement  entered into by
                    the Agent or any Bank to hedge any  exposure  arising  under
                    this Agreement, or in terminating or reversing, or otherwise
                    in connection  with,  any open  position  arising under this
                    Agreement or the Master Agreement.

          1.1.11    "Business  Day" means a day on which  banks are open for the
                    transaction of business of the nature  contemplated  by this
                    Agreement  (and not authorised by law to close) in New York,
                    United States of America;  London,  England;  Athens, Greece
                    and any other  financial  centre which any Bank may consider
                    appropriate  for the  operation  of the  provisions  of this
                    Agreement.

          1.1.12    "Charter"  means (a) the time charter dated 17 December 2003
                    (as  amended  and  supplemented  by  addendum  no.1 dated 17
                    December  2003,  as  further  amended  and  supplemented  by
                    addendum no.2 dated 17 December 2003 and as further  amended
                    and supplemented by addendum no.3 dated 17 December 2003) at
                    a gross  daily  rate of hire  of (i)  eight  thousand  eight
                    hundred and fifty  Dollars  ($8,850)  per day with two point
                    two five per centum  (2.25%)  commission  from the  Drawdown
                    Date until  December  2008,  (ii) nine thousand five hundred
                    Dollars  ($9,500)  per day with two  point  five per  centum
                    (2.5%)   commission  until  December  2010  and  (iii)  nine
                    thousand  Dollars  ($9,000)  per day with two point five per
                    centum (2.5%) commission until March 2012, and (b) any other
                    time  charter,   consecutive  voyage  charter,  contract  of
                    affreightment  or any other  contract of  employment  of the
                    Vessel in excess of twelve (12) months.

          1.1.13    "Charterer"  means  Tasman  Orient  Line  (Cyprus  Ltd.)  of
                    Limassol, Cyprus in respect of the Vessel.

          1.1.14    "Charter  Rights" means all rights and benefits  accruing to
                    the  Borrower in respect of the Vessel  under or arising out
                    of the  Charter or any other  charterparty  or  contract  of
                    employment  in respect of the Vessel and not forming part of
                    the Earnings.

          1.1.15    "Commitment"  means, in relation to each Bank, the amount of
                    the Loan which that Bank  agrees to advance to the  Borrower
                    as its several  liability as  indicated  against the name of
                    that Bank in Schedule 1 and/or,  where the context  permits,
                    the amount of the Loan  advanced by that Bank and  remaining
                    outstanding.

          1.1.16    a  "Communication"  means  any  notice,  approval,   demand,
                    request  or  other  communication  from  one  party  to this
                    Agreement to the other.

          1.1.17    "the   Communications   Address"  means  c/o  Eurobulk  Ltd,
                    Aethrion  Center,  40  Ag.   Konstantinou   Avenue,  151  24
                    Maroussi,  Greece, marked for the attention of Mr. Aristides
                    J. Pittas.

          1.1.18    "the  Company"   means,  at  any  given  time,  the  company
                    responsible  for the Vessel's  compliance  with the ISM Code
                    pursuant to paragraph 1.1.2 of the ISM Code.

          1.1.19    a "Confirmation" means a Confirmation  exchanged,  or deemed
                    exchanged,   between   the   Agent  and  the   Borrower   as
                    contemplated by the Master Agreement.

          1.1.20    "Corporate  Guarantee"  means the  guarantee  and  indemnity
                    referred to in Clause 9.3.

          1.1.21    "Corporate   Guarantor"   means  Euroseas  Ltd.,  a  company
                    incorporated  according to the law of the Marshall  Islands,
                    with  registered   office  at  The  Trust  Company  Complex,
                    Ajeltake  Island,  Ajeltake Road,  Majuro Marshall  Islands,
                    M.H.  96960,  c/o The Trust Company of the Marshall  Islands
                    Inc. and/or (where the context  permits) any other person or
                    company  who shall at any time  during the  Facility  Period
                    give  to  the  Banks  or to the  Agent  a  guarantee  and/or
                    indemnity   for  the   repayment  of  all  or  part  of  the
                    Indebtedness.

          1.1.22    "Credit Support  Document"  means any document  described as
                    such in the Master Agreement and, where the context permits,
                    any  other  document  referred  to  in  any  Credit  Support
                    Document  which has the effect of creating an Encumbrance in
                    favour of the Agent.

          1.1.23    "Credit  Support  Provider" means any person (other than the
                    Borrower) described as such in the Master Agreement.

          1.1.24    "Currency of Account"  means,  in relation to any payment to
                    be made to the Agent or a Bank under or  pursuant  to any of
                    the Security  Documents,  the currency in which that payment
                    is required to be made by the terms of the relevant Security
                    Document.

          1.1.25    "Default  Rate" means the  aggregate  rate of the Margin and
                    two per centum (2%) per annum above the cost to the Agent of
                    obtaining  funds in  amount  similar  to the  amount  of the
                    Indebtedness  or any relevant part of the  Indebtedness  for
                    such periods as the Agent shall determine in its discretion.

          1.1.26    "DOC" means a valid  Document of  Compliance  issued for the
                    Company by the Administration  pursuant to paragraph 13.2 of
                    the ISM Code.

          1.1.27    "Dollars"   and  "$"  each   means   available   and  freely
                    transferable and convertible funds in lawful currency of the
                    United States of America.

          1.1.28    "the  Drawdown  Date"  means  the date on which  the Loan is
                    advanced by the Banks to the Borrower pursuant to Clause 2.

          1.1.29    "Drawdown Notice" means a notice complying with Clause 2.2.

          1.1.30    "Earnings" means all hires, freights,  pool income and other
                    sums  payable  to or for  the  account  of the  Borrower  in
                    respect of the Vessel  including  (without  limitation)  all
                    remuneration for salvage and towage services,  demurrage and
                    detention   moneys,   contributions   in  general   average,
                    compensation  in respect of any  requisition  for hire,  and
                    damages and other payments  (whether awarded by any court or
                    arbitral  tribunal or by agreement or otherwise) for breach,
                    termination  or variation of any contract for the operation,
                    employment or use of the Vessel.

          1.1.31    "the Earnings  Account" means a bank account to be opened in
                    the name of the  Borrower  with  the  Agent  and  designated
                    "Xenia International Corp. - Earnings Account".

          1.1.32    "Encumbrance"   means  any   mortgage,   charge   (fixed  or
                    floating),   pledge,   lien,   assignment,    hypothecation,
                    preferential  right,   option,   title  retention  or  trust
                    arrangement or any other agreement or arrangement  which has
                    the effect of creating security or payment priority.

          1.1.33    "Environmental   Affiliate"   means  an   agent,   employee,
                    independent contractor,  sub-contractor or other person in a
                    contractual  relationship  with the Borrower relating to the
                    Vessel or its carriage of cargo or its operation  whose acts
                    or omissions would have a Material Adverse Effect.

          1.1.34    "Environmental  Approval"  means  all  approvals,  licences,
                    permits,  exemptions and  authorisations  required under any
                    applicable Environmental Laws.

          1.1.35    "Environmental  Claim" means any and all enforcement,  clean
                    up, removal or other  governmental or regulatory  actions or
                    orders instituted or completed pursuant to any Environmental
                    Laws or Environmental  Approval together with claims made by
                    any third party relating to damage,  contributions,  loss or
                    injury,   resulting   from  any  Release  of   Materials  of
                    Environmental Concern.

          1.1.36    "Environmental  Laws"  means all local,  state,  provincial,
                    federal,   state  local,  foreign  and  international  laws,
                    regulations,   treaties  and   conventions   (including  any
                    amendments  and/or protocols  thereto) for the time being in
                    force  pertaining  to the  pollution or  protection of human
                    health or the environment  (including  ambient air,  surface
                    water,  ground water,  land surface or subsurface strata and
                    all  or  any  part  of  navigable  waters,   waters  of  the
                    contiguous  zone,  ocean  waters  and  international  waters
                    (howsoever called)),  including laws, regulations,  treaties
                    and conventions  (including any amendments  and/or protocols
                    thereto) for the time being in force relating to the Release
                    (or  threatened   Release)  of  Materials  of  Environmental
                    Concern.

          1.1.37    "Event of Default" means any of the events set out in Clause
                    13.2.

          1.1.38    "the Facility Period" means the period beginning on the date
                    of this  Agreement  and ending on the date when the whole of
                    the  Indebtedness  has been repaid in full and the  Borrower
                    has  ceased to be under  any  further  actual or  contingent
                    liability  to the Banks or the Agent under or in  connection
                    with the Security Documents.

          1.1.39    "Fair  Market  Value"  means the  average of two  valuations
                    obtained from two Approved Brokers.

          1.1.40    "Final  Maturity Date" means the earlier of the date falling
                    sixety nine (69) months after the Drawdown Date and 15 April
                    2012.

          1.1.41    a "Hedging  Transaction"  means a  Transaction  entered into
                    between  the Agent and the  Borrower  pursuant to the Master
                    Agreement for the express  purpose of hedging all or part of
                    the   Borrower's   interest   rate  risk  pursuant  to  this
                    Agreement.

          1.1.42    "IAPPC" means a valid international air pollution prevention
                    certificate for the Vessel issued under Annex VI.

          1.1.43    "the  Indebtedness"  means the Loan;  any  Master  Agreement
                    Liabilities; all other sums of any nature (together with all
                    interest  on any of those  sums) which from time to time may
                    be  payable  by the  Borrower  to the  Agent or to the Banks
                    pursuant to the Security Documents; any damages payable as a
                    result of any breach by the  Borrower of any of the Security
                    Documents; and any damages or other sums payable as a result
                    of any of the  obligations of the Borrower under or pursuant
                    to any of  the  Security  Documents  being  disclaimed  by a
                    liquidator  or any  other  person,  or,  where  the  context
                    permits, the amount thereof for the time being outstanding.

          1.1.44    an  "Instructing  Group"  means any one or more Banks  whose
                    combined  Proportionate  Shares  exceed  seventy  per centum
                    (70%).

          1.1.45    "Insurances",  in respect of the Vessel,  means all policies
                    and  contracts of insurance  (including  all entries in hull
                    and  machinery,   protection  and  indemnity  or  war  risks
                    associations)  which  are  from  time to time  taken  out or
                    entered into in respect of or in connection  with the Vessel
                    or her  increased  value or her Earnings or the loss of hire
                    and  (where  the  context  permits)  all  benefits  thereof,
                    including all claims of any nature and returns of premium.

          1.1.46    "Interest  Payment  Date" means each date for the payment of
                    interest in accordance with Clause 6.

          1.1.47    "Interest Period" means each interest period selected by the
                    Borrower or agreed by the Agent pursuant to Clause 6.

          1.1.48    "the ISM Code" means the  International  Management Code for
                    the Safe  Management of Ships and for Pollution  Prevention,
                    as adopted by the  Assembly  of the  International  Maritime
                    Organisation on 4 November 1993 by resolution A.741 (18) and
                    incorporated  on 19 May 1994 as  chapter IX of the Safety of
                    Life at Sea Convention 1974.

          1.1.49    "the  ISPS  Code"  means  the  International  Ship  and Port
                    Facility Security Code adopted by the International Maritime
                    Organisation (as the same may be amended from time to time).

          1.1.50    "law"   means   any  law,   statute,   treaty,   convention,
                    regulation,  instrument or other subordinate  legislation or
                    other legislative or  quasi-legislative  rule or measure, or
                    any order or decree of any government, judicial or public or
                    other body or authority, or any directive, code of practice,
                    circular,  guidance  note or other  direction  issued by any
                    competent  authority  or agency  (whether  or not having the
                    force of law).

          1.1.51    "LIBOR"  means the rate  displayed  as the British  Bankers'
                    Association  Interest  Settlement  Rate  on any  information
                    service  selected  by  the  Agent  on  which  that  rate  is
                    displayed  (without  rounding),  for  deposits in Dollars of
                    amounts equal to the amount of the Loan or any relevant part
                    of the Loan for a period  equal in  length  to the  relevant
                    Interest  Period,  or (if the Agent is for any reason unable
                    to ascertain  that rate) the average rate at which  deposits
                    in Dollars of amounts  comparable  to the amount of the Loan
                    (or any relevant  part of the Loan) are offered to the Agent
                    in the London  Interbank market for a period equal in length
                    to the relevant Interest Period.

          1.1.52    "the  Loan"  means the  aggregate  amount  from time to time
                    advanced by the Banks to the  Borrower  pursuant to Clause 2
                    or, where the context  permits,  the amount advanced and for
                    the time being outstanding.

          1.1.53    "the Managers" means Eurobulk Ltd., or such other commercial
                    and/or  technical  managers of the Vessel  nominated  by the
                    Borrower as the Agent may in its discretion approve.

          1.1.54    "Manager's  Undertakings"  means  the  Undertakings  of  the
                    Managers referred to in Clause 9.5.

          1.1.55    "the Margin"  means zero point nine five per centum  (0.95%)
                    per annum.

          1.1.56    "Master  Agreement"  means any ISDA Master Agreement (or any
                    other  form of master  agreement  relating  to  interest  or
                    currency  exchange  transactions)  entered  into between the
                    Agent and the Borrower during the Facility Period, including
                    each Schedule to any Master Agreement and each  Confirmation
                    exchanged pursuant to any Master Agreement.

          1.1.57    "the Master  Agreement  Liabilities"  means, at any relevant
                    time, all  liabilities of the Borrower to the Agent under or
                    pursuant  to  the  Master   Agreement,   whether  actual  or
                    contingent, present or future.

          1.1.58    "Material Adverse Effect" means a material adverse effect on
                    the Borrower's  ability to meet its obligations to the Agent
                    in respect of the  Indebtedness or on the security  provided
                    to the Agent and the Banks in respect of the Indebtedness.

          1.1.59    "Material of  Environmental  Concern" means and includes all
                    pollutants,   contaminants,   toxic   substances,   oil  and
                    hazardous  substances  as may be defined  in any  applicable
                    local,   state,    provincial,    federal,    national   and
                    international  laws,  regulations,  treaties and conventions
                    (including any amendments and/or protocols  thereto) for the
                    time being in force.

          1.1.60    "the  Maximum Loan  Amount"  means an  aggregate  amount not
                    exceeding  the lesser of (i) eight  million  two hundred and
                    fifty thousand  Dollars  ($8,250,000) and (ii) seventy seven
                    per centum (77%) of the lower of (a) the  Acquisition  Price
                    and (b) the Fair Market Value.

          1.1.61    "the   Mortgagees'   Insurances"   means  all  policies  and
                    contracts of  mortgagees'  interest  insurance and any other
                    insurance from time to time taken out by the Agent on behalf
                    of the Banks in  relation to the Vessel for an amount of not
                    less  than one  hundred  and ten per  centum  (110%)  of the
                    outstanding Loan.

          1.1.62    "the Mortgage" means the first preferred  mortgage  referred
                    to in Clause 9.1.

          1.1.63    "Notional  Amount",  in respect of any Hedging  Transaction,
                    means the  Notional  Amount as defined  in the  Confirmation
                    relating to that Hedging Transaction.

          1.1.64    "Operating   Expenses"  means  cash  expenses  properly  and
                    reasonably  incurred by the Borrower in connection  with the
                    operation, employment,  maintenance, repair and insurance of
                    the Vessel.

          1.1.65    "Potential Event of Default" means any event which, with the
                    giving of notice  and/or  the  passage  of time  and/or  the
                    satisfaction of any materiality  test,  would  constitute an
                    Event of Default.

          1.1.66    "Proceedings" means any suit, action or proceedings begun by
                    the  Agent  or  any  of  the  Banks  arising  out  of  or in
                    connection with the Security Documents.

          1.1.67    "Proportionate  Share" means,  at any time,  the  proportion
                    which that Bank's Commitment  (whether or not advanced) then
                    bears to the aggregate Commitments of all the Banks (whether
                    or not advanced).

          1.1.68    "Release"  means an  emission,  spill,  release or discharge
                    into or upon the air, surface water,  groundwater,  or soils
                    of any  Material  of  Environmental  Concern  for  which the
                    Borrower has any liability under  Environmental  Law, except
                    in accordance with a valid Environmental Approval.

          1.1.69    "Repayment Date" means the date for payment of any Repayment
                    Instalment in accordance with Clause 5.

          1.1.70    "Repayment  Instalment"  means any instalment of the Loan to
                    be repaid by the Borrower pursuant to Clause 5.

          1.1.71    "Requisition  Compensation"  means all compensation or other
                    money which may from time to time be payable to the Borrower
                    as a result of the Vessel being  requisitioned  for title or
                    in any other way compulsorily acquired (other than by way of
                    requisition for hire).

          1.1.72    "the Retention Account" means the bank account to be opened,
                    in the  name of the  Borrower,  with the  Agent,  designated
                    "Xenia International Corp. - Retention Account".

          1.1.73    "the Security Documents" means this Agreement, the Mortgage,
                    the  Assignment,   the  Corporate  Guarantee,  the  Accounts
                    Security  Deed,  the  Managers'  Undertakings,   the  Master
                    Agreement and any other Credit  Support  Documents or (where
                    the context  permits) any one or more of them, and any other
                    agreement  or document  which may at any time be executed by
                    any person as security for the payment of all or any part of
                    the Indebtedness.

          1.1.74    "Security   Parties"  means  the  Borrower,   the  Corporate
                    Guarantor, the Managers, any other Credit Support Providers,
                    and any other  person or company  who may at any time during
                    the Facility Period be liable for, or provide  security for,
                    all or any part of the  Indebtedness,  and "Security  Party"
                    means any one of them.

          1.1.75    "SMC" means a valid safety management certificate issued for
                    the Vessel by or on behalf of the Administration pursuant to
                    paragraph 13.4 of the ISM Code.

          1.1.76    "SMS"  means a  safety  management  system  for  the  Vessel
                    developed and  implemented  in accordance  with the ISM Code
                    and  including  the  functional  requirements,   duties  and
                    obligations required by the ISM Code.

          1.1.77    "Taxes" means all taxes, levies,  imposts,  duties, charges,
                    fees,  deductions  and  withholdings  (including any related
                    interest,   fines,   surcharges   and   penalties)  and  any
                    restrictions  or conditions  resulting in any charge,  other
                    than  taxes on the  overall  net income of the Agent or of a
                    Bank,  and  "Tax"  and   "Taxation"   shall  be  interpreted
                    accordingly.

          1.1.78    "Total Loss" means:-

                    (a)  an   actual,   constructive,    arranged,   agreed   or
                         compromised total loss of the Vessel; or

                    (b)  the requisition for title or compulsory  acquisition of
                         the Vessel by or on behalf of any  government  or other
                         authority  (other than by way of requisition for hire);
                         or

                    (c)  the capture, seizure, arrest, detention or confiscation
                         of the  Vessel,  unless  the  Vessel  is  released  and
                         returned to the  possession of the Borrower  within one
                         month after the capture,  seizure, arrest, detention or
                         confiscation in question.

          1.1.79    "Transaction"  means a transaction  entered into between the
                    Agent and the Borrower governed by the Master Agreement.

          1.1.80    "Transfer Certificate" means a certificate materially in the
                    form of Appendix B.

          1.1.81    "Transfer  Date",  in  relation  to a  transfer  of any of a
                    Bank's rights and/or  obligations  under or pursuant to this
                    Agreement,  means the fifth  Business  Day after the date of
                    delivery of the relevant Transfer  Certificate to the Agent,
                    or  such  later  Business  Day as may  be  specified  in the
                    relevant Transfer Certificate.

          1.1.82    "Transferee"  means  any bank or  financial  institution  to
                    which a Bank transfers any of its rights and/or  obligations
                    under or pursuant to this Agreement.

          1.1.83    "the Trust Property" means:-

                    (a)  the benefit of the covenant contained in Clause 10; and

                    (b)  all  benefits   arising   under   (including,   without
                         limitation, all proceeds of the enforcement of) each of
                         the  Security  Documents  (other than this  Agreement),
                         with the exception of any benefits  arising  solely for
                         the benefit of the Agent.

          1.1.84    "the  Vessel"  means  the  container  motor  vessel  "TASMAN
                    TRADER",  built in 1990 of approximately  22,568 dwt and 950
                    TEU,  currently  registered  under the flag of the  Marshall
                    Islands in the ownership of the Borrower and  everything now
                    or in the future belonging to her on board and ashore.

       1.2    Interpretation

       In this Agreement:-

          1.2.1     words  denoting the plural  number  include the singular and
                    vice versa;

          1.2.2     words denoting persons include  corporations,  partnerships,
                    associations  of persons  (whether  incorporated  or not) or
                    governmental or quasi-governmental bodies or authorities and
                    vice versa;

          1.2.3     references   to  Recitals,   Clauses  and   Appendices   are
                    references  to recitals and clauses of, and  appendices  to,
                    this Agreement;

          1.2.4     references  to this  Agreement  include the Recitals and the
                    Appendices;

          1.2.5     the  headings  and  contents  page(s) are for the purpose of
                    reference  only,  have no legal or other  significance,  and
                    shall be ignored in the interpretation of this Agreement;

          1.2.6     references to any document  (including,  without limitation,
                    to all or any of the  Security  Documents)  are,  unless the
                    context otherwise  requires,  references to that document as
                    amended,  supplemented,  novated  or  replaced  from time to
                    time;

          1.2.7     references   to  statutes  or  provisions  of  statutes  are
                    references to those statutes,  or those provisions,  as from
                    time to time amended, replaced or re-enacted;

          1.2.8     words  and  expressions  defined  in the  Master  Agreement,
                    unless  the  context  otherwise  requires,   have  the  same
                    meaning;

          1.2.9     references to a Bank or to the Agent include its successors,
                    transferees and assignees;

          1.2.10    references to times of day are to London time.

       1.3    Offer letter

          This Agreement  supersedes  the terms and conditions  contained in any
          correspondence  relating  to the  subject  matter  of  this  Agreement
          exchanged  between  the Agent or any of the Banks and the  Borrower or
          their representatives prior to the date of this Agreement.

2      The Loan and its Purpose

       2.1    Agreement  to lend  Subject  to the terms and  conditions  of this
              Agreement,  and in  reliance  on each of the  representations  and
              warranties made or to be made in or in accordance with each of the
              Security  Documents,  each of the Banks  agrees to  advance to the
              Borrower an aggregate amount not exceeding the Maximum Loan Amount
              to be used by the Borrower for the purpose  referred to in Recital
              (B).

       2.2    Advance of the Loan Subject to satisfaction by the Borrower of the
              conditions  set out in Clause  3.1,  the Loan shall be advanced to
              the Borrower in one amount by such method of funds transfer as the
              Banks and the Borrower shall agree.  The Loan shall be advanced in
              Dollars on a Business Day,  provided that the Borrower  shall have
              given to the  Agent not more  than ten and not  fewer  than  three
              Business  Days'  notice  (or such  lesser  period of notice as the
              Agent may accept in its  discretion) in writing  materially in the
              form set out in  Appendix A of the  required  Drawdown  Date.  The
              Drawdown   Notice  once  given  shall  be  irrevocable  and  shall
              constitute a warranty by the Borrower that:-

          2.2.1     all  conditions  precedent  to the  advance of the Loan will
                    have  been   satisfied  on  or  before  the  Drawdown   Date
                    requested;

          2.2.2     no Event of Default or Potential  Event of Default will then
                    have occurred;

          2.2.3     no Event of  Default  or  Potential  Event of  Default  will
                    result from the advance of the Loan; and

          2.2.4     there has been no material  adverse  change in the business,
                    affairs  or  financial  condition  of any  of  the  Security
                    Parties from that pertaining at the date of this Agreement.

          The  Agent  shall  promptly  notify  each Bank of the  receipt  of the
          Drawdown Notice,  following which each Bank will make,  subject to the
          provisions of Clause 3, its  Proportionate  Share of the amount of the
          Loan available to the Borrower  through the Agent on the Drawdown Date
          requested.

       2.3    Availability   Termination   Date  No  Bank  shall  be  under  any
              obligation  to  advance  all or any  part of the  Loan  after  the
              Availability Termination Date.

       2.4    Several  obligations  The  obligations  of the  Banks  under  this
              Agreement  are  several.  The  failure  of a Bank to  perform  its
              obligations  under this Agreement shall not affect the obligations
              of the Borrower to the Agent or to the other Banks,  nor shall the
              Agent or any other  Bank be liable  for the  failure  of a Bank to
              perform any of its  obligations  under or in connection  with this
              Agreement.

       2.5    Application  of Loan Without  prejudice to the  obligations of the
              Borrower  under this  Agreement,  neither  the Banks nor the Agent
              shall be obliged to concern  itself  with the  application  of the
              Loan by the Borrower.

       2.6    Loan and control accounts The Borrower will open and maintain with
              the Agent such loan and control accounts as the Agent shall in its
              discretion consider necessary or desirable.

       2.7    Interest several  Notwithstanding any other term of this Agreement
              (but  without  prejudice  to  the  provisions  of  this  Agreement
              relating  to or  requiring  action by the  Instructing  Group) the
              interest of the Banks is several and the amount due to any Bank is
              separate and independent debt.

       2.8    General  terms  and  conditions  In  addition  to  the  terms  and
              conditions  set-out in this Loan  Agreement  the General Terms and
              Conditions of the Agent will apply.

3      Conditions Precedent and Subsequent

       3.1    Conditions  Precedent Before any Bank shall have any obligation to
              advance any part of the Loan,  the Borrower shall deliver or cause
              to be  delivered  to or to the order of the  Agent  the  following
              documents and evidence:-

          3.1.1     Evidence  of  incorporation  Such  evidence as the Agent may
                    reasonably   require  that  each  Security   Party  is  duly
                    incorporated in its country of incorporation  and remains in
                    existence and,  where  appropriate,  in good standing,  with
                    power to enter  into,  and perform  its  obligations  under,
                    those  of the  Security  Documents  to  which  it is,  or is
                    intended to be, a party,  including  (without  limitation) a
                    copy,  certified  by a  director  or  the  secretary  of the
                    Security Party in question as true,  complete,  accurate and
                    unamended,  of all  documents  establishing  or limiting the
                    constitution of each Security Party.

          3.1.2     Corporate authorities A copy, certified by a director or the
                    secretary  of  the  Security  Party  in  question  as  true,
                    complete,  accurate and neither  amended nor  revoked,  of a
                    resolution   of  the  directors  and  a  resolution  of  the
                    shareholders  of  each  Security  Party   (together,   where
                    appropriate, with signed waivers of notice of any directors'
                    or  shareholders'  meetings)  approving,  and authorising or
                    ratifying the execution of, those of the Security  Documents
                    to which that Security Party is or is intended to be a party
                    and all matters incidental thereto.

          3.1.3     Officer's   certificate  A  certificate  signed  by  a  duly
                    authorised  officer of each of the Security  Parties setting
                    out the names of the directors, officers and shareholders of
                    that Security Party.

          3.1.4     Power of attorney  The  notarially  attested  and  legalised
                    power of  attorney  of each of the  Security  Parties  under
                    which  any  documents  are to be  executed  or  transactions
                    undertaken by that Security Party.

          3.1.5     Vessel documents  Photocopies,  certified as true,  accurate
                    and complete by a director or the secretary of the Borrower,
                    of:-

                    (a)  the Charter  and/or any other contract of employment of
                         the Vessel which will be in force on the Drawdown  Date
                         and must be reviewed and accepted by the Agent;

                    (c)  the management  agreement  between the Borrower and the
                         Managers relating to the Vessel;

                    (d)  the  Vessel's  current  Safety   Construction,   Safety
                         Equipment,  Safety  Radio,  Oil  Pollution  Prevention,
                         International Tonnage and Load Line Certificates;

                    (e)  the   Vessel's   current   Certificate   of   Financial
                         Responsibility issued pursuant to the United States Oil
                         Pollution Act 1990;

                    (f)  the Vessel's  International  Ship Security  Certificate
                         issued pursuant to the ISPS Code;

                    (g)  the Vessel's current SMC; and

                    (h)  the Company's current DOC;

                    (i)  the Vessel's current IAPPC;

                    in each  case  together  with  all  addenda,  amendments  or
                    supplements.

          3.1.6     Evidence  of  ownership   Certificate(s)  of  ownership  and
                    encumbrance (or equivalent) issued by the Registrar of Ships
                    (or  equivalent  official) at the Vessel's  port of registry
                    confirming  that the Vessel is on the Drawdown Date owned by
                    the Borrower and free of registered Encumbrances.

          3.1.7     Evidence of insurance  Evidence  that the Vessel is, or will
                    from the Drawdown Date be, insured in the manner required by
                    the Security  Documents and that letters of undertaking will
                    be issued in the manner required by the Security  Documents,
                    together with the written  approval of the  Insurances by an
                    insurance adviser appointed by the Agent (at the cost of the
                    Borrower)   confirming   (inter   alia)  that  the  required
                    Insurances  have been placed and are acceptable to the Agent
                    and that the underwriters are acceptable to the Agent.

          3.1.8     Confirmation of class A Certificate of Confirmation of Class
                    for hull and machinery confirming that the Vessel is classed
                    with the highest class applicable to Vessel of her type with
                    Nippon   Kaiji   Kyokai   free  and  clear  of  all  overdue
                    recommendations or such other classification  society as may
                    be acceptable to the Agent.

          3.1.9     Survey  reports The latest  annual  survey and class  status
                    reports  prepared  by  surveyors  instructed  by  the  class
                    society for the Vessel (namely Nippon Kaiji Kyokai),  and at
                    the cost of the  Borrower,  confirming  the condition of the
                    Vessel,  such condition to be in all respects  acceptable to
                    the Agent.

          3.1.10    Valuations A valuation of the Vessel  addressed to the Agent
                    from  two  Approved  Brokers  appointed  by  the  Agent  and
                    approved by the Borrower  certifying a value for the Vessel,
                    assessed in such manner as the Agent may require, acceptable
                    to the Agent and at the cost of the Borrower.

          3.1.11    The Security Documents The Security Documents, together with
                    all  notices  and other  documents  required by any of them,
                    duly executed  and, in the case of the Mortgage,  registered
                    with  first  priority  through  the  Registrar  of Ships (or
                    equivalent official) at the Vessel's port of registry.

          3.1.12    Drawdown Notice A Drawdown Notice.

          3.1.13    Process  agent A letter  from HTD,  Irongate  House,  Duke's
                    Place,  London,  EC3A 7LP, United  Kingdom,  accepting their
                    appointment  by each of the  Security  Parties  as agent for
                    service of Proceedings pursuant to the Security Documents.

          3.1.14    Mandates  Such duly signed  forms of mandate,  and/or  other
                    evidence of opening of the Accounts,  as the Agent or any of
                    the Banks may require.

          3.1.15    Fee  Payment of the fee due from the  Borrower  to the Banks
                    pursuant to the terms of Clause 8 or any other  provision of
                    the Security Documents.

          3.1.16    Legal opinions  Confirmation  satisfactory to the Agent that
                    all  legal  opinions  required  by the  Agent  will be given
                    substantially in the form required by the Agent.

       3.2    Conditions  Subsequent  The Borrower  undertakes  to deliver or to
              cause to be  delivered  to the Agent,  in the case of Clause 3.2.1
              not later than three days after the Drawdown Date and, in the case
              of  Clauses  3.2.2 and 3.2.3  not later  than two weeks  after the
              Drawdown Date, the following additional documents and evidence:-

          3.2.1     Evidence of registration Evidence of permanent  registration
                    of the Vessel and the Mortgage  (with first  priority)  with
                    the  Registrar  of Ships  (or  equivalent  official)  at the
                    Vessel's port of registry.

          3.2.2     Letters of undertaking Letters of undertaking as required by
                    the Security  Documents in form and substance  acceptable to
                    the Agent including, without limitation confirmation notices
                    of assignment of  Insurances,  notices of  cancellation  and
                    loss payable clause in form and substance  acceptable to the
                    Agent.

          3.2.3     Legal  opinions  Such  legal  opinions  as the  Agent  shall
                    require.

          3.2.4     Companies Act  registrations  Evidence  that the  prescribed
                    particulars  of the Corporate  Guarantee have been delivered
                    to the  Registrar  of  Companies  of the  United  States  of
                    America within the statutory time limit.

          3.2.5     Master's receipt The master's receipt for the Mortgage.

       3.3    No waiver If the Banks in their sole  discretion  agree to advance
              the Loan to the Borrower  before all of the documents and evidence
              required by Clause 3.1 have been  delivered  to or to the order of
              the Agent,  the  Borrower  undertakes  to deliver all  outstanding
              documents  and  evidence  to or to the order of the Agent no later
              than five (5) Business  Days,  and the Banks'  advance of the Loan
              shall not be taken as a waiver  of the  Agent's  right to  require
              production of all the  documents  and evidence  required by Clause
              3.1.

       3.4    Form and content All documents and evidence delivered to the Agent
              pursuant to this Clause shall:-

          3.4.1     be in form and substance acceptable to the Agent;

          3.4.2     be  accompanied,  if required by the Agent,  by translations
                    into the English language,  certified in a manner acceptable
                    to the Agent;

          3.4.3     if required by the Agent, be certified, notarised, legalised
                    or attested in a manner acceptable to the Agent.

       3.5    Event of Default No Bank shall be under any  obligation to advance
              any part of the Loan nor to act on any Drawdown  Notice if, at the
              date of the Drawdown Notice or at the date on which the advance of
              the Loan is requested in the Drawdown Notice,  an Event of Default
              or Potential Event of Default shall have occurred,  or if an Event
              of Default or  Potential  Event of Default  would  result from the
              advance of the Loan.

4      Representations and Warranties

       The  Borrower  represents  and  warrants to the Agent at the date of this
       Agreement  and  (by  reference  to  the  facts  and  circumstances   then
       pertaining) at the date of the Drawdown Notice,  at the Drawdown Date and
       at each Interest Payment Date as follows:-

       4.1    Incorporation  and capacity Each of the Security Parties is a body
              corporate duly constituted and existing and (where  applicable) in
              good standing  under the law of its country of  incorporation,  in
              each case with perpetual  corporate existence and the power to sue
              and be sued, to own its assets and to carry on its  business,  and
              all of the corporate  shareholders (if any) of each Security Party
              are  duly  constituted  and  existing  under  the  laws  of  their
              countries of incorporation with perpetual  corporate existence and
              the power to sue and be sued,  to own their assets and to carry on
              their business.

       4.2    Solvency  None  of  the  Security   Parties  is  insolvent  or  in
              liquidation or  administration  or subject to any other insolvency
              procedure,    and   no    receiver,    administrative    receiver,
              administrator,  liquidator,  trustee or analogous officer has been
              appointed in respect of any of the Security  Parties or all or any
              part of their assets.

       4.3    Binding  obligations The Security Documents when duly executed and
              delivered will constitute the legal, valid and binding obligations
              of the  Security  Parties  enforceable  in  accordance  with their
              respective terms.

       4.4    Satisfaction  of  conditions  All  acts,   conditions  and  things
              required to be done and satisfied  and to have  happened  prior to
              the execution  and delivery of the Security  Documents in order to
              constitute  the Security  Documents  the legal,  valid and binding
              obligations  of the  Security  Parties  in  accordance  with their
              respective  terms have been done,  satisfied  and have happened in
              compliance with all applicable laws.

       4.5    Registrations   and  consents  With  the  exception  only  of  the
              registrations  referred to in Clause 3.2.1, all (if any) consents,
              licences,  approvals and  authorisations of, or registrations with
              or declarations to, any governmental  authority,  bureau or agency
              which may be required in connection with the execution,  delivery,
              performance,  validity or enforceability of the Security Documents
              have been obtained or made and remain in full force and effect and
              the Borrower is not aware of any event or circumstance which could
              reasonably be expected adversely to affect the right of any of the
              Security  Parties  to  hold  and/or  obtain  renewal  of any  such
              consents, licences, approvals or authorisations.

       4.6    Disclosure  of  material  facts The  Borrower  is not aware of any
              material facts or  circumstances  which have not been disclosed to
              the Agent and which might, if disclosed,  have adversely  affected
              the decision of a person  considering  whether or not to make loan
              facilities of the nature  contemplated by this Agreement available
              to the Borrower.

       4.7    No material  litigation There is no action,  suit,  arbitration or
              administrative  proceeding pending or to its knowledge about to be
              pursued  before  any  court,  tribunal  or  governmental  or other
              authority  which  would,  or would be likely to, have a materially
              adverse  effect on the business,  assets,  financial  condition or
              creditworthiness of any of the Security Parties.

       4.8    No  breach  of  law  or  contract  The  execution,   delivery  and
              performance  of the Security  Documents  will not  contravene  any
              contractual  restriction or any law binding on any of the Security
              Parties or on any shareholder (whether legal or beneficial) of any
              of the Security Parties, or the constitutional documents of any of
              the  Security  Parties,  nor result in the creation of, nor oblige
              any of the Security Parties to create, any Encumbrance over all or
              any of its assets, with the exception of the Encumbrances  created
              by or pursuant to the  Security  Documents  and, in entering  into
              those of the  Security  Documents  to which it is,  or is to be, a
              party,  and in borrowing the Loan,  the Borrower is acting for its
              own account.

       4.9    No  deductions  The Borrower is not required to make any deduction
              or withholding from any payment which it may be obliged to make to
              the Agent or any of the Banks under or  pursuant  to the  Security
              Documents.

       4.10   No  established  place of business in the United Kingdom or United
              States None of the  Security  Parties  (other  than the  Corporate
              Guarantor)  has,  nor will any of them have  during  the  Facility
              Period,  an established place of business in the United Kingdom or
              the United States of America.

       4.11   Use of Loan The Loan  will be used for the  purpose  specified  in
              Recital (B).

       4.12   Pari passu The  obligations  of the Borrower  under this Agreement
              are direct, general and unconditional  obligations of the Borrower
              and rank at least  pari passu  with all other  present  and future
              unsecured and unsubordinated indebtedness of the Borrower with the
              exception of any obligations  which are  mandatorily  preferred by
              law and not by contract.

       4.13   No default under any other  indebtedness  Neither the Borrower nor
              any other  Security  Party is (nor would with the giving of notice
              or lapse of time or the  satisfaction  of any other  condition  or
              combination  thereof  be) in  breach  of or in  default  under any
              agreement  relating to any  indebtedness to which it is a party or
              by which it may be bound.

       4.14   Information The information, exhibits and reports furnished by any
              Security Party to the Agent in connection with the negotiation and
              preparation of the Security Documents are true and accurate in all
              material  respects and not misleading,  do not omit material facts
              and all  reasonable  enquiries  have been made to verify the facts
              and  statements  contained  therein;  to the best knowledge of the
              Borrower there are no other facts the omission of which would make
              any fact or statement therein misleading.

       4.15   No material  adverse  change  There has been no  material  adverse
              change in the  financial  position  of the  Borrower  or any other
              Security Party from that described to the Agent in the negotiation
              of this Agreement.

       4.16   Environment  Except  as may  already  have been  disclosed  by the
              Borrower in writing to, and acknowledged in writing by, the Agent,
              the Borrower represents and warrants to the Agent as follows:

          4.16.1    the Borrower and (to the best of the  Borrower's  knowledge)
                    its   Environmental   Affiliates  have  without   limitation
                    complied with the  provisions  of  applicable  Environmental
                    Laws, except where  non-compliance would not have a Material
                    Adverse Effect;

          4.16.2    the Borrower and (to the best of the  Borrower's  knowledge)
                    its  Environmental  Affiliates  have  obtained all requisite
                    Environmental  Approvals  and are in  compliance  with  such
                    Environmental Approvals,  except where the failure to obtain
                    or comply with any such  Environmental  Approvals  would not
                    have a Material Adverse Effect;

          4.16.3    neither  the  Borrower  nor (to the  best of the  Borrower's
                    knowledge) any of its Environmental Affiliates have received
                    notice of any  Environmental  Claim which  alleges  that the
                    Borrower is not in compliance with applicable  Environmental
                    Laws or Environmental  Approvals,  where such non-compliance
                    would have a Material Adverse Effect;

          4.16.4    there  is  no   Environmental   Claim  pending  or,  to  the
                    Borrower's knowledge, threatened which would have a Material
                    Adverse Effect; and

          4.16.5    to the best of the Borrower's  knowledge,  there has been no
                    Release of Material of  Environmental  Concern  except where
                    the event would not have a Material Adverse Effect.

5      Repayment and Prepayment

       5.1    Repayment  The  Borrower  agrees to repay the Loan to the Agent as
              agent for the Banks by twenty  three  (23)  consecutive  quarterly
              Repayment  Instalments,  the first twenty two (22) such  Repayment
              Instalments  in the sum of two  hundred  and  sixty  five  hundred
              thousand  Dollars  ($265,000) each and the twenty third (23rd) and
              final Repayment  Instalment in the sum of two million four hundred
              and  twenty  thousand  Dollars  ($2,420,000)   (consisting  of  an
              instalment of two hundred and sixty five hundred  thousand Dollars
              ($265,000)  and a balloon  payment of two  million one hundred and
              fifty five thousand Dollars  ($2,155,000) ("the Balloon Payment"))
              the first  Repayment  Date being the date which is three  calendar
              months  after the Drawdown  Date and  subsequent  Repayment  Dates
              being at consecutive intervals of three calendar months thereafter
              and the final Repayment Instalment shall be due and payable on the
              Final Maturity Date.

       5.2    Reduction  of  Repayment   Instalments  If  the  aggregate  amount
              advanced to the Borrower is less than the Maximum Loan Amount, the
              amount of each Repayment  Instalment  shall be reduced pro rata to
              the amount actually advanced.

       5.3    Voluntary  Prepayment  The  Borrower  may  without  any premium or
              penalty  prepay  the Loan in whole or in part in  minimum  amounts
              equal to one hundred  thousand  Dollars  ($100,000) or an integral
              multiple  of that  amount  (or as  otherwise  may be agreed by the
              Agent)  provided  that it has  first  given to the Agent not fewer
              than  fifteen  (15)  days'  prior  written  notice  expiring  on a
              Business  Day of its  intention  to do so. Any notice  pursuant to
              this Clause once given shall be  irrevocable  and shall oblige the
              Borrower to make the  prepayment  referred to in the notice on the
              Business Day  specified in the notice,  together with all interest
              accrued on the amount  prepaid up to and  including  that Business
              Day.

       5.4    Prepayment  indemnity If the  Borrower  shall,  subject  always to
              Clause 5.3,  make a  prepayment  on a Business  Day other than the
              last day of an  Interest  Period,  it shall,  in  addition  to the
              amount prepaid and accrued  interest,  pay to the Agent any amount
              which the Agent may certify is necessary to  compensate  the Agent
              and the Banks for any Break Costs  incurred by the Agent or any of
              the Banks as a result of the making of the prepayment in question.

       5.5    Application of prepayments  Any prepayment  pursuant to Clause 5.3
              in an  amount  less  than the  Indebtedness  shall be  applied  in
              satisfaction  or  reduction  first of any costs and other  amounts
              outstanding; secondly of all interest outstanding; and thirdly pro
              rata against the outstanding Repayment Instalments  (including the
              Balloon Payment).

       5.6    No  reborrowing  No amount  repaid  or  prepaid  pursuant  to this
              Agreement may in any circumstances be reborrowed.

       5.7    Mandatory  Prepayment  - sale or Total Loss of Vessel In the event
              of  the  Vessel   being  sold  or  becoming  a  Total  Loss,   the
              Indebtedness  shall be  repaid  in full.  In the case of a sale or
              disposal of the Vessel,  the  proceeds of such sale or disposal of
              the  Vessel  shall be used to repay the  Indebtedness  immediately
              upon the date of such sale or disposal of the Vessel.  In the case
              of a Total Loss of  theVessel,  the proceeds of the  Insurances of
              the Vessel shall be used to prepay the Indebtedness on the earlier
              of the  date on  which  Insurance  proceeds  are  received  by the
              Borrower  and the date which is ninety (90) days after the date on
              which the Vessel was declared a Total Loss.

6      Interest

       6.1    Interest  Periods  The  period  during  which  the  Loan  shall be
              outstanding  pursuant  to this  Agreement  shall be  divided  into
              consecutive  Interest  Periods of one,  three six,  nine or twelve
              months' duration, as selected by the Borrower by written notice to
              the Agent not later  than  11.00 a.m.  on the third  Business  Day
              before the beginning of the Interest  Period in question,  or such
              other duration as may be agreed by the Agent in its discretion.

       6.2    Beginning and end of Interest  Periods The first  Interest  Period
              shall begin on the Drawdown Date,  and the final  Interest  Period
              shall end on the Repayment Date  applicable to the final Repayment
              Instalment.

       6.3    Interest  Periods to meet  Repayment  Dates If the Borrower  shall
              select,  or the Borrower  and the Banks shall  agree,  an Interest
              Period  which does not expire on the next  Repayment  Date,  there
              shall,  in respect  of each part of the Loan equal to a  Repayment
              Instalment  falling  due for  payment  before  the  expiry of that
              Interest Period,  be a separate Interest Period which shall expire
              on the relevant  Repayment  Date, and the Interest Period selected
              or agreed shall apply to the balance of the Loan only.

       6.4    Interest rate During each Interest Period interest shall accrue on
              the Loan at the rate  determined  by the Agent to be the aggregate
              of (a) the Margin and (b) LIBOR  determined at or about 11.00 a.m.
              on the second Business Day prior to the beginning of that Interest
              Period.

       6.5    Failure  to select  Interest  Period If the  Borrower  at any time
              fails to select or to agree an Interest  Period in accordance with
              Clause 6.1, the interest rate  applicable  after the expiry of the
              then current  Interest  Period shall be the rate determined by the
              Agent in  accordance  with  Clause  6.4 for  consecutive  Interest
              Periods each of such  duration  (not  exceeding six months) as the
              Agent may in its discretion select.

       6.6    Accrual and payment of interest  Interest shall accrue from day to
              day,  shall be  calculated  on the basis of a 360 day year and the
              actual number of days elapsed and shall be paid by the Borrower to
              the  Agent  on  the  last  day  of  each   Interest   Period   and
              additionally,  during any Interest Period  exceeding three months,
              on the last day of each  successive  three month  period after the
              beginning of that Interest Period.

       6.7    Ending of Interest Periods Each Interest Period shall,  subject to
              Clauses 6.2 and 6.3, end on the date which numerically corresponds
              to the date on which the  immediately  preceding  Interest  Period
              ended  (or,  in the  case of the  first  Interest  Period,  to the
              Drawdown Date) in the calendar month which is the number of months
              selected  or  agreed  after  the  calendar   month  in  which  the
              immediately  preceding  Interest  Period ended (or, in the case of
              the first Interest  Period,  in which the Drawdown Date occurred),
              except that:-

          6.7.1     if  there  is  no  numerically  corresponding  date  in  the
                    calendar  month in  which  the  Interest  Period  ends,  the
                    Interest  Period shall end on the last  Business Day in that
                    calendar month; and

          6.7.2     if any  Interest  Period  would  end on a day which is not a
                    Business  Day,  that  Interest  Period shall end on the next
                    succeeding Business Day (unless the next succeeding Business
                    Day falls in the next  calendar  month,  in which  event the
                    Interest  Period in question shall end on the next preceding
                    Business Day).

          Any adjustment made pursuant to Clause 6.7.1 or 6.7.2 shall be ignored
          for the  purpose  of  determining  the  date on which  any  subsequent
          Interest Period shall end.

       6.8    Default Rate If an Event of Default shall occur,  the whole of the
              Indebtedness  shall,  from the date of the occurrence of the Event
              of Default,  bear interest up to the date of actual  payment (both
              before and after judgment) at the Default Rate, compounded at such
              intervals as the Agent shall in its  discretion  determine,  which
              interest shall be payable from time to time by the Borrower to the
              Agent on demand.

       6.9    Determinations  conclusive Each  determination of an interest rate
              made by the Agent in  accordance  with Clause 6 shall (save in the
              case of  manifest  error or on any  question  of law) be final and
              conclusive.

7      The Master Agreement

       7.1    Purpose The Agent and the Borrower have entered, and/or may during
              the Facility Period enter, into one or more Transactions  pursuant
              to a Master  Agreement,  the terms and conditions of each of which
              are or will be  specified in a  Confirmation  sent by the Agent to
              the Borrower.

       7.2    Additional  Termination  Event If the Loan is for any  reason  not
              advanced to the Borrower on or before the Availability Termination
              Date,  and the  Agent  and the  Borrower  have  entered  into  any
              Transactions on or before the Availability  Termination  Date, for
              the  purposes of the Master  Agreement an  Additional  Termination
              Event (with the Agent as the  Affected  Party)  shall be deemed to
              have occurred on the Availability Termination Date.

       7.3    Adjustment of Notional Amounts If the aggregate amount of the Loan
              actually  advanced  by the Banks to the  Borrower is less than the
              Notional Amount (or the aggregate Notional Amounts) of the Hedging
              Transactions  entered  into on or before the  Drawdown  Date,  the
              obligations   of  the   Borrower  in  respect  of  those   Hedging
              Transactions  shall,  unless  otherwise  agreed by the  Agent,  be
              calculated, so far as the Agent considers it practicable to do so,
              by reference to a Notional Amount (or aggregate  Notional Amounts)
              equal to the amount of the Loan actually advanced, reduced on each
              Repayment  Date by the amount of the Repayment  Instalment  due on
              that  Repayment  Date,  adjusted if necessary in  accordance  with
              Clause 5.2.

       7.4    Effect of prepayment If the Borrower,  subject always to Clause 5,
              prepays  part of the Loan  (whether  pursuant  to Clause 5, Clause
              11.2.5 or any other provision of this  Agreement),  and the amount
              of the  Loan  remaining  outstanding  after  application  of  that
              prepayment  is less than the  Notional  Amount  (or the  aggregate
              Notional  Amounts)  of the  Hedging  Transactions  then in  effect
              (reduced,  if appropriate,  in accordance  with the  Confirmations
              relating to those Hedging  Transactions),  the  obligations of the
              Borrower in respect of those Hedging  Transactions  shall,  unless
              otherwise agreed by the Agent, be calculated,  so far as the Agent
              considers  it  practicable  to do so, by  reference  to a Notional
              Amount (or aggregate  Notional Amounts) equal to the amount of the
              Loan remaining  outstanding after application of the prepayment in
              question,  reduced  on each  Repayment  Date by the  amount of the
              Repayment  Instalment due on that Repayment Date after taking into
              account the application of the prepayment.

       7.5    Authority  In order to give  effect to Clauses  7.3 and 7.4, or in
              the event of voluntary or mandatory  prepayment by the Borrower of
              the whole of the Loan,  the Borrower  irrevocably  authorises  the
              Agent to amend,  restructure,  unwind, cancel, net out, terminate,
              liquidate, transfer or assign any of the rights and/or obligations
              created  pursuant  to the  Master  Agreement  in  respect of those
              Hedging Transactions, and/or to enter into any other interest rate
              exchange  and/or  hedging   transaction  or  commitment  with  the
              Borrower or with any other counterparty approved by the Agent.

       7.6    Termination of  Transactions If the exercise of the Agent's rights
              under Clause 7.5 results in the  termination  of any  Transaction,
              that  Transaction  shall, for the purposes of the Master Agreement
              (including,  without  limitation,  section  6(e)(i)  of the Master
              Agreement) be treated as a Terminated  Transaction  resulting from
              an Event of Default by the Borrower.

       7.7    Indemnity The Borrower will  indemnify the Agent from time to time
              on demand in respect of all liabilities, losses, costs or expenses
              suffered, incurred or sustained by the Agent arising in any way in
              relation  to the  exercise  by the Agent of its rights  under this
              Clause,  or  arising  in  any  way  from  any  other  termination,
              cancellation,  unwinding  or  restructuring  of  any  Transaction,
              together (in each case) with interest at the Default Rate from the
              date of the  Agent's  demand  until  the date on which  the  Agent
              receives  payment or  reimbursement,  before or after any relevant
              judgment.

8      Fee

       The  Borrower  shall  pay to or to the  order of the Agent on the date of
       this  Agreement  an  arrangement  fee in an  amount  equal to  forty  one
       thousand two hundred and fifty Dollars ($41,250).

9      Security Documents

       As security for the  repayment of the  Indebtedness,  the Borrower  shall
       execute and deliver to the Agent or cause to be executed and delivered to
       the  Agent,  on or before  the  Drawdown  Date,  the  following  Security
       Documents in such forms and  containing  such terms and conditions as the
       Agent shall require:-

       9.1    the Mortgage a first preferred Marshall Islands ship mortgage over
              the Vessel;

       9.2    the Assignment a deed of assignment of the  Insurances,  Earnings,
              Charter Rights and Requisition Compensation of the Vessel;

       9.3    the  Corporate  Guarantee  the  guarantee  and  indemnity  of  the
              Corporate Guarantor;

       9.4    the Accounts Security Deed an accounts security deed in respect of
              all  amounts  from  time to time  standing  to the  credit  of the
              Accounts; and

       9.5    Manager's Undertakings an undertaking from the Managers in respect
              of the Vessel and the Borrower.

10     Agency and Trust

       10.1   Appointment Each of the Banks appoints the Agent its agent for the
              purpose of administering the Loan and the Security Documents.

       10.2   Authority  Each of the  Banks  irrevocably  authorises  the  Agent
              (subject to Clauses 10.4 and 10.19):-

          10.2.1    to  execute  the   Security   Documents   (other  than  this
                    Agreement) in its capacity as Agent;

          10.2.2    to collect, receive, release or pay any money on its behalf;

          10.2.3    acting  on  the  instructions   from  time  to  time  of  an
                    Instructing Group to give or withhold any waivers,  consents
                    or  approvals  under  or  pursuant  to any  of the  Security
                    Documents;

          10.2.4    acting  on  the  instructions  from  time  to  time  of  and
                    Instructing  Group to exercise,  or refrain from exercising,
                    any  discretions  under or pursuant  to any of the  Security
                    Documents; and

          10.2.5    to enforce the Security  Documents  on its behalf  acting on
                    its instructions.

          The Agent  shall  have no duties  or  responsibilities  as agent or as
          security  trustee  other than those  expressly  conferred on it by the
          Security Documents and shall not be obliged to act on any instructions
          from the  Banks or an  Instructing  Group  if to do so  would,  in the
          opinion of the Agent,  be contrary to any  provision  of the  Security
          Documents  or to any law,  or would  expose the Agent to any actual or
          potential liability to any third party.

       10.3   Trust  The  Agent  agrees  and  declares,  and  each of the  Banks
              acknowledges,  that,  subject to the terms and  conditions of this
              Clause, the Agent holds the Trust Property on trust for the Banks,
              in  accordance  with  their   respective   Proportionate   Shares,
              absolutely. Each of the Banks agrees that the obligations,  rights
              and  benefits  vested in the  Agent in its  capacity  as  security
              trustee shall be performed  and exercised in accordance  with this
              Clause.  The Agent in its capacity as security  trustee shall have
              the benefit of all of the provisions of this Agreement benefitting
              it in its capacity as agent for the Banks,  and all the powers and
              discretions  conferred on trustees by the Trustee Act 1925 (to the
              extent not inconsistent with this Agreement). In addition:-

          10.3.1    the Agent (and any attorney, agent or delegate of the Agent)
                    may  indemnify  itself or himself out of the Trust  Property
                    against all  liabilities,  costs,  fees,  damages,  charges,
                    losses and  expenses  sustained  or incurred by it or him in
                    relation  to the  taking  or  holding  of  any of the  Trust
                    Property or in  connection  with the  exercise or  purported
                    exercise  of the  rights,  trusts,  powers  and  discretions
                    vested in the Agent or any other such  person by or pursuant
                    to the  Security  Documents  or in respect of anything  else
                    done  or  omitted  to be done  in any  way  relating  to the
                    Security Documents; and

          10.3.2    the  Banks  acknowledge  that  the  Agent  shall be under no
                    obligation  to insure any  property nor to require any other
                    person to insure any property  and shall not be  responsible
                    for any loss which may be suffered by any person as a result
                    of the lack or insufficiency of any insurance; and

          10.3.3    the Agent and the Banks  agree  that the  perpetuity  period
                    applicable to the trusts declared by this Agreement shall be
                    the period of eighty years from the date of this Agreement.

       10.4   Limitations on authority  Except with the prior written consent of
              each of the Banks, the Agent shall not be entitled to :-

          10.4.1    release  or vary  any  security  given  for  the  Borrower's
                    obligations under this Agreement; nor

          10.4.2    waive the payment of any sum of money  payable by any of the
                    Security Parties under the Security Documents; nor

          10.4.3    change the meaning of the expressions "Instructing Group" or
                    "Margin"; nor

          10.4.4    exercise,  or refrain from  exercising,  any discretion,  or
                    give or  withhold  any  consent,  the  exercise or giving of
                    which is, by the terms of this Agreement, expressly reserved
                    to the Banks; nor

          10.4.5    extend  the due  date  for the  payment  of any sum of money
                    payable by any of the  Security  Parties  under the Security
                    Documents; nor

          10.4.6    take or refrain  from  taking any step if the effect of such
                    action  or  inaction   may  lead  to  the  increase  of  the
                    obligations  of a Bank under any of the Security  Documents;
                    nor

          10.4.7    agree to change  the  currency  in which any sum is  payable
                    under the Security  Documents (other than in accordance with
                    the terms of the Security Documents); nor

          10.4.8    agree to change the covenants contained in Clause 11.2; nor

          10.4.9    agree to amend this Clause 10.4.

       10.5   Liability  Neither the Agent nor any of its  directors,  officers,
              employees or agents shall be liable to the Banks for anything done
              or omitted to be done by the Agent under or in connection with the
              Security  Documents  unless  as a  result  of the  Agent's  wilful
              misconduct or gross negligence.

       10.6   Acknowledgement Each of the Banks acknowledges that:-

          10.6.1    it has not relied on any representation made by the Agent or
                    any of the Agent's directors,  officers, employees or agents
                    or by any other person acting or purporting to act on behalf
                    of the Agent to induce it to enter into any of the  Security
                    Documents;

          10.6.2    it has made and will  continue to make  without  reliance on
                    the Agent, and based on such documents and other evidence as
                    it considers appropriate,  its own independent investigation
                    of the  financial  condition  and  affairs  of the  Security
                    Parties in connection  with the making and  continuation  of
                    the Loan;

          10.6.3    it has made its own appraisal of the creditworthiness of the
                    Security Parties;

          10.6.4    the Agent shall not have any duty or  responsibility  at any
                    time to  provide  it with any  credit  or other  information
                    relating  to  any  of  the  Security   Parties  unless  that
                    information is received by the Agent pursuant to the express
                    terms of the Security Documents.

          Each of the Banks  agrees  that it will not  assert nor seek to assert
          against  any  director,  officer,  employee  or agent of the  Agent or
          against any other person  acting or purporting to act on behalf of the
          Agent any claim which it might have  against them in respect of any of
          the matters referred to in this Clause.

       10.7   Limitations   on   responsibility   The   Agent   shall   have  no
              responsibility  to any of the Security  Parties or to the Banks on
              account of:-

          10.7.1    the failure of a Bank or of any of the  Security  Parties to
                    perform  any  of  their  respective  obligations  under  the
                    Security Documents;

          10.7.2    the financial condition of any of the Security Parties;

          10.7.3    the    completeness   or   accuracy   of   any   statements,
                    representations  or warranties made in or pursuant to any of
                    the  Security  Documents,  or in or pursuant to any document
                    delivered  pursuant  to or in  connection  with  any  of the
                    Security Documents;

          10.7.4    the  negotiation,  execution,  effectiveness,   genuineness,
                    validity,  enforceability,   admissibility  in  evidence  or
                    sufficiency  of  any  of the  Security  Documents  or of any
                    document executed or delivered  pursuant to or in connection
                    with any of the Security Documents.

       10.8   The Agent's rights The Agent may:-

          10.8.1    assume that all representations or warranties made or deemed
                    repeated  by any of the  Security  Parties in or pursuant to
                    any of the Security Documents are true and complete, unless,
                    in  its  capacity  as the  Agent,  it  has  acquired  actual
                    knowledge to the contrary; and

          10.8.2    assume  that no  Event  of  Default  or  Potential  Event of
                    Default has occurred  unless,  in its capacity as the Agent,
                    it has acquired actual knowledge to the contrary; and

          10.8.3    rely on any document or  Communication  believed by it to be
                    genuine; and

          10.8.4    rely as to legal or other  professional  matters on opinions
                    and statements of any legal or other  professional  advisers
                    selected or approved by it; and

          10.8.5    rely as to any factual  matters  which might  reasonably  be
                    expected to be within the  knowledge  of any of the Security
                    Parties  on a  certificate  signed  by or on  behalf of that
                    Security Party; and

          10.8.6    refrain from  exercising  any right,  power,  discretion  or
                    remedy  unless and until  instructed to exercise that right,
                    power,  discretion  or  remedy  and as to the  manner of its
                    exercise  by  the  Banks  (or,  where   applicable,   by  an
                    Instructing  Group)  and  unless  and  until  the  Agent has
                    received  from the  Banks  any  payment  which the Agent may
                    require on account of, or any  security  which the Agent may
                    require for, any costs,  claims,  expenses  (including legal
                    and  other  professional  fees)  and  liabilities  which  it
                    considers  it may incur or sustain in  complying  with those
                    instructions.

       10.9   The Agent's duties The Agent shall:-

          10.9.1    if requested in writing to do so by a Bank, make enquiry and
                    advise the Banks as to the  performance or observance of any
                    of the  provisions  of the Security  Documents by any of the
                    Security  Parties  or as to the  existence  of an  Event  of
                    Default; and

          10.9.2    inform the Banks  promptly  of any Event of Default of which
                    the Agent has actual knowledge.

       10.10  No deemed  knowledge  The Agent shall not be deemed to have actual
              knowledge of the falsehood or incompleteness of any representation
              or warranty made or deemed repeated by any of the Security Parties
              or actual  knowledge of the  occurrence of any Event of Default or
              Potential  Event of Default  unless a Bank or any of the  Security
              Parties  shall have given written  notice  thereof to the Agent in
              its capacity as the Agent.  Any information  acquired by the Agent
              other than  specifically in its capacity as the Agent shall not be
              deemed to be information  acquired by the Agent in its capacity as
              the Agent.

       10.11  Other business The Agent may,  without any liability to account to
              the  Banks,  generally  engage  in any  kind of  banking  or trust
              business  with  any  of the  Security  Parties  or  any  of  their
              respective  subsidiaries or associated companies or with a Bank as
              if it were not the Agent.

       10.12  Indemnity  The  Banks  shall,  promptly  on the  Agent's  request,
              reimburse the Agent in their respective Proportionate Shares, for,
              and keep the Agent fully indemnified in respect of:-

          10.12.1   all amounts payable by the Borrower to the Agent pursuant to
                    Clause 18.2 to the extent that those amounts are not paid by
                    the Borrower;

          10.12.2   all  liabilities,  damages,  costs and claims  sustained  or
                    incurred  by the  Agent  in  connection  with  the  Security
                    Documents, or the performance of its duties and obligations,
                    or  the  exercise  of its  rights,  powers,  discretions  or
                    remedies under or pursuant to any of the Security Documents;
                    or in  connection  with any  action  taken or omitted by the
                    Agent under or pursuant  to any of the  Security  Documents,
                    unless  in any case  those  liabilities,  damages,  costs or
                    claims arise solely from the Agent's  wilful  misconduct  or
                    gross negligence.

       10.13  Employment of agents In performing  its duties and  exercising its
              rights, powers,  discretions and remedies under or pursuant to the
              Security Documents,  the Agent shall be entitled to employ and pay
              agents to do anything  which the Agent is empowered to do under or
              pursuant to the Security Documents (including the receipt of money
              and documents and the payment of money) and to act or refrain from
              taking  action  in  reliance  on the  opinion  of,  or  advice  or
              information obtained from, any lawyer, banker, broker, accountant,
              valuer or any other person  believed by the Agent in good faith to
              be competent to give such opinion, advice or information.

       10.14  Distribution of payments The Agent shall pay promptly to the order
              of each of the Banks that Bank's  Proportionate Share of every sum
              of money received by the Agent pursuant to the Security  Documents
              or the Mortgagees'  Insurances  (with the exception of any amounts
              payable  pursuant to Clause 8 and any amounts which,  by the terms
              of the Security  Documents,  are paid to the Agent for the account
              of the Agent alone or specifically  for the account of one or more
              Banks) and until so paid such amount shall be held by the Agent on
              trust absolutely for that Bank.

       10.15  Reimbursement  The Agent shall have no liability to pay any sum to
              a Bank  until it has  itself  received  payment  of that sum.  If,
              however,  the Agent  does pay any sum to a Bank on  account of any
              amount  prospectively  due to that Bank  pursuant to Clause  10.14
              before it has  itself  received  payment of that  amount,  and the
              Agent does not in fact receive  payment  within five Business Days
              after the date on which that  payment  was  required to be made by
              the terms of the Security Documents or the Mortgagees' Insurances,
              each Bank receiving any such payment will, on demand by the Agent,
              refund to the Agent an amount equal to the amount  received by it,
              together with an amount  sufficient to reimburse the Agent for any
              amount  which the Agent may certify  that it has been  required to
              pay by way of  interest  on money  borrowed  to fund the amount in
              question  during  the period  beginning  on the date on which that
              amount  was  required  to be paid  by the  terms  of the  Security
              Documents or the Mortgagees'  Insurances and ending on the date on
              which the Agent receives reimbursement.

       10.16  Redistribution  of payments  Unless  otherwise  agreed between the
              Banks and the Agent, if at any time a Bank receives or recovers by
              way of set-off,  the exercise of any lien or otherwise (other than
              from any  assignee or  transferee  of or  sub-participant  in that
              Bank's   Commitment),   an  amount   greater   than  that   Bank's
              Proportionate  Share  of any  sum  due  from  any of the  Security
              Parties  under the  Security  Documents  (the amount of the excess
              being referred to in this Clause as the "Excess Amount") then:-

          10.16.1   that Bank  shall  promptly  notify  the Agent  (which  shall
                    promptly notify each other Bank);

          10.16.2   that Bank  shall  pay to the  Agent an  amount  equal to the
                    Excess  Amount within ten days of its receipt or recovery of
                    the Excess Amount; and

          10.16.3   the Agent shall  treat that  payment as if it were a payment
                    by the Security Party in question on account of the sum owed
                    to the Banks as aforesaid  and shall account to the Banks in
                    respect  of  the  Excess  Amount  in  accordance   with  the
                    provisions of this Clause.

       However, if a Bank has commenced any Proceedings to recover sums owing to
       it under the  Security  Documents  and, as a result of, or in  connection
       with,  those  Proceedings has received an Excess Amount,  the Agent shall
       not distribute any of that Excess Amount to any other Bank which had been
       notified of the Proceedings and had the legal right to, but did not, join
       those   Proceedings  or  commence  and  diligently   prosecute   separate
       Proceedings to enforce its rights in the same or another court.

       10.17  Rescission  of  Excess  Amount  If all or any  part of any  Excess
              Amount is  rescinded  or must  otherwise be restored to any of the
              Security Parties or to any other third party, the Banks which have
              received  any part of that  Excess  Amount by way of  distribution
              from the Agent  pursuant to this  Clause  shall repay to the Agent
              for the account of the Bank which originally received or recovered
              the Excess  Amount,  the amount which shall be necessary to ensure
              that  the  Banks   share   rateably  in   accordance   with  their
              Proportionate  Shares in the  amount  of the  receipt  or  payment
              retained,  together  with  interest  on  that  amount  at  a  rate
              equivalent  to  that  (if  any)  paid  by the  Bank  receiving  or
              recovering  the  Excess  Amount to the person to whom that Bank is
              liable to make  payment  in  respect  of such  amount,  and Clause
              10.16.3 shall apply only to the retained amount.

       10.18  Proceedings  Each of the  Banks  and the Agent  shall  notify  one
              another of the proposed  commencement of any Proceedings under any
              of the Security Documents prior to their commencement.

       10.19  Instructions  Where the Agent is  authorised or directed to act or
              refrain from acting in  accordance  with the  instructions  of the
              Banks or of an  Instructing  Group each of the Banks shall provide
              the Agent with  instructions  within  three  Business  Days of the
              Agent's  request (which request may be made orally or in writing).
              If a Bank does not provide the Agent with instructions within that
              period,  that Bank  shall be bound by the  decision  of the Agent.
              Nothing in this Clause shall limit the right of the Agent to take,
              or  refrain  from  taking,   any  action  without   obtaining  the
              instructions of the Banks or an Instructing  Group if the Agent in
              its  discretion  considers it necessary or appropriate to take, or
              refrain from  taking,  such action in order to preserve the rights
              of the Banks under or in connection  with the Security  Documents.
              In that event, the Agent will notify the Banks of the action taken
              by it as soon as  reasonably  practicable,  and the Banks agree to
              ratify any action taken by the Agent pursuant to this Clause.

       10.20  Communications Any Communication under this Clause shall be given,
              delivered,  made  or  served,  in the  case of the  Agent  (in its
              capacity as Agent or as one of the Banks),  and in the case of the
              other Banks, at the address or fax number indicated in Schedule 1.

       10.21  Payments All amounts  payable to a Bank under this Clause shall be
              paid to such  account  at such  bank as that Bank may from time to
              time direct in writing to the Agent.

       10.22  Retirement Subject to a successor acceptable to the Borrower being
              appointed in accordance with this Clause,  the Agent may retire as
              agent and/or  security  trustee at any time without  assigning any
              reason  by  giving to the  Borrower  and the  Banks  notice of its
              intention to do so, in which event the following shall apply:-

          10.22.1   the  Banks  may  within  thirty  days  after the date of the
                    Agent's  notice  appoint a successor  to act as agent and/or
                    security  trustee  or, if they fail to do so,  the Agent may
                    appoint  any  other  bank or  financial  institution  as its
                    successor;

          10.22.2   the   resignation   of   the   Agent   shall   take   effect
                    simultaneously  with the  appointment  of its  successor  on
                    written  notice  of  that  appointment  being  given  to the
                    Borrower and the Banks;

          10.22.3   the Agent shall  thereupon  be  discharged  from all further
                    obligations  as agent  and/or  security  trustee  but  shall
                    remain  entitled  to the benefit of the  provisions  of this
                    Clause;

          10.22.4   the Agent's  successor and each of the other parties to this
                    Agreement shall have the same rights and obligations amongst
                    themselves as they would have had if that successor had been
                    a party to this Agreement.

       10.23  No fiduciary  relationship  Except as provided in Clauses 10.3 and
              10.14, the Agent shall not have any fiduciary relationship with or
              be deemed to be a trustee of or for a Bank and  nothing  contained
              in any of the Security  Documents  shall  constitute a partnership
              between any two or more Banks or between the Agent and any Bank.

       10.24  The Agent as a Bank The  expression  "the  Banks" when used in the
              Security  Documents  includes  the Agent in its capacity as one of
              the Banks.  The Agent shall be  entitled  to exercise  its rights,
              powers, discretions and remedies under or pursuant to the Security
              Documents  in its  capacity as one of the Banks in the same manner
              as any other Bank and as if it were not also the Agent.

       10.25  The  Agent  as  security  trustee  Unless  the  context  otherwise
              requires,  the  expression  "the Agent" when used in the  Security
              Documents  includes  the Agent  acting in its  capacities  both as
              agent and security trustee.

11     Covenants

       11.1   Negative covenants

              The Borrower will not without the Agent's prior written consent:-

          11.1.1    no disposals  or third party rights  dispose of or create or
                    permit to arise or continue any  Encumbrance  or other third
                    party  right on or over all or any  part of its  present  or
                    future assets or undertaking (including, without limitation,
                    any of its  rights  under or in  connection  with the Master
                    Agreement  and any  amount at any time  payable by it to the
                    Agent under or pursuant to the Master Agreement); nor

          11.1.2    no  borrowings  borrow  any money or incur  any  obligations
                    under leases, except monies borrowed under this Agreement or
                    from  shareholders   and/or   affiliates,   which  shall  be
                    subordinated to the Agent; nor

          11.1.3    no repayments repay any loans made to it; nor

          11.1.4    no substantial  liabilities except in the ordinary course of
                    business, incur any liability to any third party which is in
                    the opinion of the Agent of a substantial nature; nor

          11.1.5    no dealings with Master Agreement  assign,  novate or in any
                    other way transfer any of its rights or obligations under or
                    pursuant  to  the  Master  Agreement,  nor  enter  into  any
                    interest  rate  exchange  or hedging  agreement  with anyone
                    other than the Agent,  nor any other agreement or commitment
                    the  effect  of  which  is,  in the  opinion  of the  Agent,
                    materially  to  prejudice  the  hedging  of  the  Borrower's
                    interest rate risk effected by the Hedging Transactions from
                    time to time  entered  into  between  the  Borrower  and the
                    Agent; nor

          11.1.6    no other  business  engage in any  business  other  than the
                    ownership,  operation,  chartering  and  management  of  the
                    Vessel; nor

          11.1.7    no loans or other  financial  commitments  make any loan nor
                    enter  into  any   guarantee   or   indemnity  or  otherwise
                    voluntarily  assume any actual or  contingent  liability  in
                    respect of any obligation of any other person; nor

          11.1.8    no sale of Vessel sell or otherwise dispose of the Vessel or
                    any shares in the Vessel nor agree to do so; nor

          11.1.9    no   chartering   after  Event  of  Default   following  the
                    occurrence  and  during  the  continuation  of an  Event  of
                    Default  let the  Vessel on  charter  or renew or extend any
                    charter or other  contract of  employment of the Vessel (nor
                    agree to do so); nor

          11.1.10   no change in Vessel's managers appoint anyone other than the
                    Managers as commercial or technical  managers of the Vessel,
                    nor terminate or materially  vary the  arrangements  for the
                    commercial or technical management of the Vessel, nor permit
                    the Managers to  sub-contract  or delegate the commercial or
                    technical management of the Vessel to any third party; nor

          11.1.11   no change in ownership  or control  permit any change in the
                    Borrower's and/or the Corporate Guarantor's  intermediate or
                    ultimate beneficial  ownership and control from that advised
                    to the Agent at the date of this Agreement; nor

          11.1.12   negative pledge permit any Encumbrance (other than in favour
                    of the Banks) to  subsist,  arise or be created or  extended
                    over all or any part of its present or future  undertakings,
                    assets,  rights or  revenues to secure or prefer any present
                    or future  Indebtedness  or other liability or obligation of
                    the Borrower or any other person; nor

          11.1.13   no merger merge or consolidate with any other person; nor

          11.1.14   acquisitions  acquire  any  further  assets  other  than the
                    Vessel and rights arising under contracts entered into by or
                    on  behalf of the  Borrower  in the  ordinary  course of its
                    business of owning, operating and chartering the Vessel; nor

          11.1.15   other   obligations   incur  any   obligations   except  for
                    obligations   arising   under  the  Security   Documents  or
                    contracts  entered  into  in  the  ordinary  course  of  its
                    business of owning, operating and chartering the Vessel; nor

          11.1.16   guarantees it will not issue any  guarantees or  indemnities
                    or otherwise become directly or contingently  liable for the
                    obligations  of any  person,  firm,  or  corporation  except
                    pursuant to the Security Documents and except for guarantees
                    or  indemnities  from time to time  required in the ordinary
                    course  by  any   protection  and  indemnity  or  war  risks
                    association  with  which the Vessel is  entered,  guarantees
                    required  to procure  the  release  of the  Vessel  from any
                    arrest,  detention,  attachment  or  levy or  guarantees  or
                    undertakings required for the salvage of the Vessel.

       11.2   Positive covenants

          11.2.1    Registration  of Vessel The Borrower  undertakes to maintain
                    the registration of the Vessel under the flag referred to in
                    Recital (A) for the duration of the Facility Period.

          11.2.2    Provision of valuation certificate The Agent will within the
                    last ninety (90) days of each calendar year commencing after
                    the  Drawdown  Date  obtain  at  the  Borrower's  expense  a
                    valuation  certificate  addressed  to  the  Agent  from  two
                    Approved Brokers  certifying the market value of the Vessel.
                    Such  valuation  shall be for the cost of the Borrower  once
                    during  each  period of twelve  calendar  months  during the
                    Facility Period (commencing on the Drawdown Date) and may be
                    made with or without  physical  inspection of the Vessel (as
                    the Agent  may  require)  on the basis of a sale for  prompt
                    delivery for cash at arm's length on normal commercial terms
                    as between a willing  seller and a willing buyer and (at the
                    option  of the  Agent)  either  free  of or  subject  to any
                    existing charter or other contract of employment.  The Agent
                    may  obtain  additional   valuations  at  any  time  at  its
                    discretion  at its own  cost  (unless  there  is an Event of
                    Default  which is continuing in which case the cost shall be
                    for the Borrower's account).

          11.2.3    Vessel valuations for purposes of Security Documents For the
                    purposes of the Security Documents,  the market value of the
                    Vessel shall be the value  certified  in the last  valuation
                    certificate obtained by the Agent pursuant to Clauses 11.2.2
                    PROVIDED  THAT if the  Vessel  at the  date  of the  Agent's
                    request  shall be subject to any charter or other contact of
                    employment or any  Encumbrance  (other than as created by or
                    pursuant to the Security  Documents) the Agent shall for the
                    purpose of the  Security  Documents,  be  entitled to deduct
                    from the market value (determined as aforesaid) such sum (if
                    any) as in the Agent's discretion shall represent the amount
                    of the  diminution in the market value of the Vessel arising
                    as a  result  of the  existence  of such  charter  or  other
                    contract of employment or Encumbrance and in that event, for
                    the purposes of the Security Documents,  the market value of
                    the  Vessel  shall be the said  value  less  any  amount  so
                    deducted by the Agent.

          11.2.4    Additional  security If and so often as the aggregate of the
                    market  value  of the  Vessel  (determined  by the  Agent in
                    accordance  with  Clause  11.2.3)  plus  the  value  of  any
                    additional security for the time being provided to the Agent
                    pursuant to this  Clause  shall be less than (i) one hundred
                    and  twenty   per  centum   (120%)  of  the  amount  of  the
                    Indebtedness for the period  commencing on the Drawdown Date
                    and  ending on 31  December  2008 and (ii) one  hundred  and
                    twenty  five  per  centum   (125%)  of  the  amount  of  the
                    Indebtedness for the remainder of the Facility  Period,  the
                    Borrower  will,  within  thirty  days of the  request of the
                    Agent to do so, at the Borrower's option:-

                    (a)  pay to the Agent or to its  nominee a cash  deposit  in
                         the amount of the  shortfall to be secured in favour of
                         the  Banks  (or  to  the  Agent  on  their  behalf)  as
                         additional security for the payment of the Loan; or

                    (b)  give to the Banks other  additional  security in amount
                         and form  acceptable to the Banks in their  discretion;
                         or

                    (c)  prepay the amount of the Loan  which will  ensure  that
                         the  aggregate  of  the  market  value  of  the  Vessel
                         (determined  as  aforesaid)  plus the value of any such
                         additional  security  is not less than (i) one  hundred
                         and  twenty  per  centum  (120%)  of the  amount of the
                         Indebtedness for the period  commencing on the Drawdown
                         Date  and  ending  on 31  December  2008  and  (ii) one
                         hundred and twenty five per centum (125%) of the amount
                         of the  Indebtedness  for the remainder of the Facility
                         Period.

                    Clauses 5.4, 5.5 and 5.6 shall apply,  mutatis mutandis,  to
                    any prepayment made pursuant to this Clause and the value of
                    any  additional  security  provided  pursuant to this Clause
                    shall be determined by the Agent in its discretion.

          11.2.5    Financial  statements  The Borrower will supply to the Agent
                    without request:

                    (a)  the Borrower's and Corporate Guarantor's annual audited
                         financial  statements  for each  financial  year of the
                         Borrower and the Corporate  Guarantor ending during the
                         Facility Period,  containing (amongst other things) the
                         Borrower's  and Corporate  Guarantor's  profit and loss
                         account for,  and balance  sheet within one hundred and
                         eighty (180) days after the end of, each such financial
                         year,  prepared in accordance  with generally  accepted
                         accounting   principles  and  practices  applicable  to
                         companies  incorporated in the Borrower's and Corporate
                         Guarantor's   country  of  incorporation   consistently
                         applied, and audited by a firm of chartered accountants
                         (or equivalent) acceptable to the Agent and in the case
                         of the Corporate Guarantor  consolidated,  in each case
                         within one  hundred  and eighty  days of the end of the
                         financial year to which they relate;

                    (b)  the  Borrower's and Corporate  Guarantor's  semi-annual
                         audited  management  accounts and financial  statements
                         within ninety days (90) after the end of each financial
                         half year.

          11.2.6    Other information The Borrower will promptly supply and will
                    procure that the Corporate  Guarantor  supplies to the Agent
                    copies of all financial and other  information  from time to
                    time given by the  Borrower and the  Corporate  Guarantor to
                    its  shareholders  and such  information and explanations as
                    the Agent may from time to time require in  connection  with
                    the  operation  of the  Vessel  and the  Borrower's  and the
                    Corporate  Guarantor's  profit  and  liquidity  based on the
                    applicable laws and regulations and the Agent's own internal
                    guidelines  relating  to  the  Agent's  verification  of the
                    identity and  knowledge of its  customers,  and will procure
                    that  the   Agent  be  given   the  like   information   and
                    explanations relating to all other Security Parties.

          11.2.7    Evidence of goodstanding The Borrower will from time to time
                    on the request of the Bank  provide the Agent with  evidence
                    in form and  substance  satisfactory  to the Agent  that the
                    Security  Parties and all corporate  shareholders  of any of
                    the Security Parties remain in good standing.

          11.2.8    Evidence of current  COFR Without  limiting  the  Borrower's
                    obligations  under  Clause  11.2.6,  and prior to the Vessel
                    entering any location  that is subject to the United  States
                    Oil Pollution Act 1990 (or any  re-enactment  thereof),  the
                    Borrower  shall notify the Agent and the Borrower shall (and
                    shall from time to time  whilst the  Vessel is  situated  in
                    such location) at the request of the Agent provide the Agent
                    with such evidence as the Agent may reasonably  require that
                    the Vessel has a valid and current  Certificate of Financial
                    Responsibility  pursuant to the United  States Oil Pollution
                    Act 1990.

          11.2.9    ISM Code compliance The Borrower will:-

                    (a)  procure that the Vessel remains for the duration of the
                         Facility Period subject to a SMS;

                    (b)  maintain  a  valid  and  current  SMC  for  the  Vessel
                         throughout the Facility Period;

                    (c)  if not itself the  Company,  procure  that each Company
                         maintains  a  valid  and  current  DOC  throughout  the
                         Facility Period;

                    (d)  immediately  notify  the Agent in writing of any actual
                         or threatened withdrawal,  suspension,  cancellation or
                         modification  of the Vessel's  SMC or of the  Company's
                         DOC;

                    (e)  immediately   notify   the  Agent  in  writing  of  any
                         "accident" or "major non-conformity",  as each of those
                         terms   is   defined   in   the   Guidelines   on   the
                         Implementation of the  International  Safety Management
                         Code by Administrations  adopted by the Assembly of the
                         International   Maritime   Organisation   pursuant   to
                         Resolution  A.788(19),  and of the steps being taken to
                         remedy the situation; and

                    (f)  not  without  the prior  written  consent  of the Agent
                         (which will not be  unreasonably  withheld)  change the
                         identity of the Company.

          11.2.10   ISPS Code compliance The Borrower will:-

                    (a)  procure that the Vessel and the Company responsible for
                         the Vessel's  compliance with the ISPS Code comply with
                         the ISPS Code; and

                    (b)  maintain for the Vessel  throughout the Facility Period
                         a  valid  and  current   International   Ship  Security
                         Certificate issued under the ISPS Code ("ISSC"); and

                    (c)  notify the Agent  immediately  in writing of any actual
                         or threatened withdrawal,  suspension,  cancellation or
                         modification  of the ISSC.

          11.2.11   Annex VI compliance The Borrower will:

                    (a)  for the  duration of the  Facility  Period  comply with
                         Annex VI in relation to the Vessel and procure that the
                         Vessel's  master and crew are familiar  with,  and that
                         the Vessel complies with, Annex VI;

                    (b)  maintain  a valid  and  current  IAPPC  for the  Vessel
                         throughout  the  Facility  Period and provide a copy to
                         the Agent; and

                    (c)  immediately  notify  the Agent in writing of any actual
                         or threatened withdrawal,  suspension,  cancellation or
                         modification of the IAPPC of the Vessel.

          11.2.12   Environment  The  Borrower   covenants  with  the  Agent  as
                    follows:

                    (a)  it shall comply with all applicable  Environmental Laws
                         including, without limitation, requirements relating to
                         the  establishment  of  financial  responsibility  (and
                         shall require that all Environmental  Affiliates of the
                         Borrower comply with all applicable  Environmental Laws
                         and obtain and comply with all  required  Environmental
                         Approvals,  which  Environmental Laws and Environmental
                         Approvals  relate to the Vessel or its operation or its
                         carriage or cargo),  except  where that  non-compliance
                         would not have a Material Adverse Effect;

                    (b)  it shall conduct and complete all reasonably  necessary
                         investigations,  studies, sampling, audits and testings
                         required in connection  with any known (or  threatened)
                         Release of Materials  of  Environmental  Concern  which
                         would have a Material Adverse Effect; and

                    (c)  it shall,  promptly  upon the  occurrence of any of the
                         following events, provide to the Agent a certificate of
                         an officer of the Borrower or of the Borrower's  agents
                         specifying   in   detail   the   nature  of  the  event
                         concerned:-

                         (i)  the receipt by the  Borrower or any  Environmental
                              Affiliate (where the Borrower has knowledge of the
                              receipt)  of any  Environmental  Claim which would
                              have a Material Adverse Effect; or

                         (ii) any (or any  threatened)  Release of  Materials of
                              Environmental  Concern which would have a Material
                              Adverse Effect;

                         and upon the written request of the Agent, the Borrower
                         shall submit to the Agent, at reasonable  intervals,  a
                         report  updating  the  status of any  occurrence  of an
                         Environmental  Claim  or  a  Release  of  Materials  of
                         Environmental  Concern,  that  would  have  a  Material
                         Adverse Effect.

          11.2.13   Inspection   of  records  The   Borrower   will  permit  the
                    inspection of its  financial  records and accounts from time
                    to time by the Agent or its nominee.

          11.2.14   Pari  passu  obligations  The  Borrower  will  ensure  that,
                    throughout  the  Facility  Period,  the  obligations  of the
                    Security Parties under or pursuant to the Security Documents
                    rank at least pari passu with all other  existing  or future
                    indebtedness,  obligations  or  liabilities  of the Security
                    Parties, other than any mandatorily preferred by law.

          11.2.15   Notification   of  Event  of  Default  The   Borrower   will
                    immediately notify the Agent in writing of the occurrence of
                    any Event of Default or Potential Event of Default.

          11.2.16   Not imperil Flag,  Ownership,  Insurances  The Borrower will
                    ensure that the Vessel is maintained and trade in conformity
                    with the laws of the Marshall Islands, of the Borrower or of
                    the nationality of its officers,  and in accordance with the
                    requirements  of the Insurances and will ensure that nothing
                    is done or  permitted  to be done which could  endanger  the
                    flag  of  the  Vessel  or  its   unencumbered   (other  than
                    Encumbrances in favour of the Banks and/or permitted by this
                    Agreement) ownership or its Insurances.

          11.2.17   Chartering  The Borrower will ensure and procure that in the
                    event of the Vessel being employed under a charterparty, the
                    duration  of which  exceeds  twelve (12)  months,  the Agent
                    shall be  furnished  forthwith  with (a)  details of the new
                    employment,  (b)  (if  required  by the  Agent)  a  specific
                    charterparty  assignment  in  favour  of  the  Agent  of the
                    benefit  of such  charterparty  and (c) a notice of any such
                    assignment  addressed to the relevant charterer and endorsed
                    with  an   acknowledgement   of  receipt  by  the   relevant
                    charterer,  all in form and  substance  satisfactory  to the
                    Agent.

          11.2.18   Earnings The Borrower will ensure and procure  that,  unless
                    and until  directed by the Agent  otherwise upon an Event of
                    Default (i) all the  Earnings of the Vessel shall be paid to
                    the  Earnings  Accounts  and (ii) the persons  from whom the
                    Earnings   are  from  time  to  time  due  are   irrevocably
                    instructed  to pay them to the Earnings  Accounts or to such
                    account in the name of the Borrower as shall be from time to
                    time   determined  by  the  Agent  in  accordance  with  the
                    provisions hereof and of the relevant Security Documents.

          11.2.19   Additional Documents The Borrower will from time to time and
                    within ten (10) days after the Agent's  request  execute and
                    deliver to the Agent or procure the  execution  and delivery
                    to the  Agent of all  such  documents  as  shall  be  deemed
                    desirable  at the  reasonable  discretion  of the  Agent for
                    giving full effect to this  Agreement,  and for  perfecting,
                    protecting   the  value  of  or  enforcing   any  rights  or
                    securities  granted  to the  Agent  under any one or more of
                    this Agreement,  the other Security  Documents and any other
                    documents  executed  pursuant  hereto or thereto and in case
                    that any  conditions  precedent  (with the Agent's  consent)
                    have not been  fulfilled  prior to the Drawdown  Date,  such
                    conditions  shall be complied with within fourteen (14) days
                    of the Drawdown  Date (unless the Agent agrees  otherwise in
                    writing) and failure to comply with this  covenant  shall be
                    an Event of Default.

          11.2.20   Physical  condition  survey of the Vessel and  inspection of
                    records  The  Borrower  will  permit  the Agent to conduct a
                    physical  condition  survey of the  Vessel  and to conduct a
                    comprehensive  inspection  of the class and other records of
                    the  Vessel  by a  surveyor  appointed  by the Agent (in its
                    discretion) from time to time during the Facility Period and
                    at the Borrower's expense.

          11.2.21   Majority  control of Corporate  Guarantor The Borrower shall
                    procure   that   members  of  the  family  of  the  ultimate
                    beneficial  shareholder  of the Borrower  and the  Corporate
                    Guarantor  shall  maintain  the  majority  control  over the
                    shares of the Corporate Guarantor.

          11.2.22   Financial  covenants of Corporate Guarantor The Borrower and
                    the  Corporate  Guarantor  shall  procure  that at all times
                    during the Facility Period:

                    (a)  the  Leverage in relation  to the  Corporate  Guarantor
                         does not exceed 75%; and

                    (b)  the Corporate Guarantor shall maintain a minimum Market
                         Adjusted  Net Worth (basis book value) of not less than
                         fifteen million Dollars ($15,000,000); and

                    (c)  the Corporate  Guarantor  shall  maintain  minimum Free
                         Liquidity  of not  less  than  three  hundred  thousand
                         Dollars ($300,000) per Fleet Vessel.

                    The  expressions  used  in  this  Clause  11.2.22  shall  be
                    construed in accordance  with law and accounting  principles
                    internationally accepted as used in the financial statements
                    produced  in  accordance  with  Clause  11.2.5,  and for the
                    purposes of this Agreement:

                    "Accounting  Information"  means the  semi-annual  financial
                    statements  and/or the  annual  financial  statements  to be
                    provided by the Borrower and the Corporate  Guarantor to the
                    Agent in accordance with Clause 11.2.5.

                    "Accounting   Period"  means  each  consecutive   period  of
                    approximately  six months falling during the Facility Period
                    (ending on the last day in June and  December  of each year)
                    for which semi-annual  Accounting Information is required to
                    be delivered pursuant to this Agreement.

                    "Current   Assets"  means,   in  respect  of  the  Corporate
                    Guarantor,  the aggregate (as of the date of calculation) of
                    the Corporate Guarantor's cash, marketable securities, trade
                    and   other   receivables   realisable   within   one  year,
                    inventories and prepaid  expenses which are to be charged to
                    income  within one year as well as any other  assets  listed
                    under  the  definition  of Total  Assets  as  stated  in the
                    Accounting  Information  then most  recently  required to be
                    delivered pursuant to Clause 11.2.5.

                    "Debt" means the aggregate  (as of the date of  calculation)
                    of  all   obligations   of  the  Corporate   Guarantor  then
                    outstanding  for the payment or repayment of money as stated
                    in the Accounting Information then most recently required to
                    be delivered  pursuant to Clause 11.2.5  including,  without
                    limitation:

                    (a)  any amounts  payable by the Corporate  Guarantor  under
                         leases or similar  arrangements  over their  respective
                         periods;

                    (b)  any credit to the Corporate  Guarantor  from a supplier
                         of goods  or under  any  instalment  purchase  or other
                         similar arrangement;

                    (c)  the aggregate  amount then  outstanding  of liabilities
                         and  obligations  of third  parties to the extent  that
                         they are guaranteed by the Corporate Guarantor;

                    (d)  any  contingent  liabilities  (including  any  taxes or
                         other payments under dispute or arbitration) which have
                         been or, under GAAP, should be recorded in the notes to
                         the Corporate Guarantor's financial statements; and

                    (e)  any deferred tax liabilities.

                    "Fleet Market Value" means the aggregate of the Market Value
                    of the Fleet Vessels.

                    "Fleet Vessels" means any vessel (including, but not limited
                    to, the  Vessel)  from time to time  owned by the  Corporate
                    Guarantor (each a "Fleet Vessel").

                    "Free  Liquidity"  means the sum of cash and bank  deposits,
                    free of any Encumbrances.

                    "GAAP"  means  accounting  principles,  concepts,  bases and
                    policies generally adopted and accepted in the United States
                    of America consistently applied.

                    "Leverage"  means  Total  Long  Term Debt  divided  by Total
                    Market Adjusted Assets.

                    "Market   Adjusted  Net  Worth"  means,  in  respect  of  an
                    Accounting Period,  the amount of the Corporate  Guarantor's
                    total  shareholders'  equity, as such equity is reflected in
                    the most  recent  Accounting  Information,  adjusted  by the
                    difference between the Fleet Market Value and the book value
                    of Tangible Fixed Assets.

                    "Tangible  Fixed Assets" means,  in respect of an Accounting
                    Period,  the value  (less  depreciation)  on a  consolidated
                    basis  of  all  tangible   fixed  assets  of  the  Corporate
                    Guarantor  as  stated  in the then  most  recent  Accounting
                    Information.

                    "Total Assets" means, in respect of an Account  Period,  the
                    aggregate of Current  Assets and Tangible  Fixed Assets,  as
                    well as any other assets listed under the  definition  Total
                    Assets  as  stated  in  the  then  most  recent   Accounting
                    Information.

                    "Total Long Term Debt" means the  aggregate  (as of the date
                    of  calculation)  of all those  component  parts of the Debt
                    which fall due or whose  final  payment is due more than one
                    year after the respective dates of the agreements  providing
                    for such  component  parts of the  Debt  (including  for the
                    avoidance  of doubt the  current  portion  of such  Debt) as
                    stated in the  Accounting  Information  then  most  recently
                    required to be delivered pursuant to Clause 11.2.5.

                    "Total  Market  Adjusted  Assets" means the aggregate at any
                    time of Current Assets and Value Adjusted Long Term Assets.

                    "Value Adjusted Long Term Assets" means the aggregate at any
                    time of the Fleet Market Value (as most recently required to
                    be calculated) and the Corporate Guarantor's other long term
                    tangible assets as stated in its Accounting Information then
                    most  recently  required to be delivered  pursuant to Clause
                    11.2.5.

12     Accounts

       12.1   Maintenance  of Accounts The Borrower  shall maintain the Accounts
              with the Agent for the  duration  of the  Facility  Period free of
              Encumbrances  and  rights of set off other  than as  created by or
              pursuant to the Security Documents.

       12.2   Earnings The Borrower  shall procure that there is credited to the
              Earnings Account, all Earnings and any Requisition Compensation of
              the Vessel.

       12.3   Transfers to Retention  Account On the day in each calendar  month
              during the Facility  Period which  numerically  corresponds to the
              day on which the Drawdown Date occurred (or, in any month in which
              there is no such day, on the last Business Day of that month), the
              Borrower shall procure that there is transferred from the Earnings
              Account (and irrevocably  authorise the Agent to transfer from the
              Earnings Account) to the Retention Account :-

          12.3.1    any costs or other amounts due and payable or outstanding in
                    respect of the Loan, other than interest and principal; and

          12.3.2    one-third of the amount of the Repayment  Instalment  due on
                    the next Repayment Date; and

          12.3.3    the amount of interest due on the next Interest Payment Date
                    divided by the number of months  between  the last  Interest
                    Payment Date and the Interest Payment Date in question.

       12.4   Additional  payments  to  Retention  Account If for any reason the
              amount  standing to the credit of the  Earnings  Account  shall be
              insufficient  to  make  any  transfer  to  the  Retention  Account
              required by Clause  12.3,  the  Borrower  shall,  without  demand,
              procure that there is credited to the  Retention  Account,  on the
              date on which the relevant amount would have been transferred from
              the  Earnings  Account,  an  amount  equal  to the  amount  of the
              shortfall.

       12.5   Application  of Retention  Account The Borrower shall procure that
              there is transferred  from the Retention  Account (and irrevocably
              authorise the Agent to transfer from the Retention Account) to the
              Agent on behalf of the Banks:-

          12.5.1    on  each  Repayment   Date,  the  amount  of  the  Repayment
                    Instalment then due; and

          12.5.2    on each Interest  Payment Date,  the amount of interest then
                    due.

       12.6   Borrower's  obligations  not affected If for any reason the amount
              standing  to  the  credit  of  the  Retention   Account  shall  be
              insufficient  to pay  any  Repayment  Instalment  or to  make  any
              payment of interest  when due, the  Borrower's  obligation  to pay
              that  Repayment  Instalment  or to make that  payment of  interest
              shall not be affected.

       12.7   Release  of  surplus  Any  amount  remaining  to the credit of the
              Earnings Account  following the making of any transfer required by
              Clause 12.3 shall  (unless an Event of Default or Potential  Event
              of Default shall have occurred and be  continuing)  be released to
              or to the order of the Borrower.

       12.8   Restriction on withdrawal During the Facility Period no sum may be
              withdrawn from the Retention  Account  (except in accordance  with
              this Clause) without the prior written consent of the Agent.

       12.9   Relocation of Accounts At any time  following the  occurrence  and
              during  the  continuation  of an Event of  Default,  the Agent may
              without  the  consent  of  the  Borrower  relocate  either  of the
              Accounts to any other  branch of the Agent,  without  prejudice to
              the  continued  application  of this  Clause and the rights of the
              Agent and the Banks under or pursuant to the Security Documents.

13     Events of Default

       13.1   The  Agent's  rights If any of the events  set out in Clause  13.2
              occurs,  the Agent may at its discretion by notice to the Borrower
              declare  itself to be under no further  obligation to the Borrower
              under or  pursuant  to this  Agreement  and may declare all or any
              part of the Indebtedness  (including such unpaid interest as shall
              have  accrued)  to be  immediately  payable,  in which  event  the
              Indebtedness (or the part of the  Indebtedness  referred to in the
              Bank's notice) shall  immediately  become due and payable  without
              any further demand or notice of any kind.

       13.2   Events of Default The events referred to in Clause 13.1 are:-

          13.2.1    payment  default if the Borrower  defaults in the payment of
                    any part of the  Indebtedness  when due; or if the Charterer
                    defaults  in the  payment  of any part of the hire under the
                    Charter when due;

          13.2.2    other  default  if any  of the  Security  Parties  fails  to
                    observe  or  perform  any  of  the  covenants,   conditions,
                    undertakings,   agreements  or   obligations   on  its  part
                    contained in any of the Security  Documents  and, where such
                    default is capable of remedy,  such  default is not remedied
                    within  thirty (30) days if the date of its  occurrence,  or
                    shall in any  other way be in breach of or do or cause to be
                    done any act  repudiating  or  evidencing  an  intention  to
                    repudiate any of the Security Documents; or

          13.2.3    misrepresentation    or   breach   of    warranty   if   any
                    representation  or warranty  made or repeated,  or any other
                    information  given,  by any of the  Security  Parties to the
                    Agent in or leading up to or during the  currency  of any of
                    the Security  Documents,  or in or pursuant to any notice or
                    other  document  delivered to the Agent under or pursuant to
                    any of the  Security  Documents,  is false or  incorrect  or
                    misleading in any respect which the Agent in its  discretion
                    considers to be material; or

          13.2.4    execution if a distress or  execution or other  process of a
                    court or  authority  is levied on any of the property of any
                    of the Security Parties before or after final judgment or by
                    order  of  any  competent  court  or  authority  and  is not
                    satisfied within seven days of levy; or

          13.2.5    insolvency  events  if any of the  Security  Parties  or the
                    Charterer:-

                    (a)  resolves to appoint,  or applies for or consents to the
                         appointment  of, a receiver,  administrative  receiver,
                         trustee,  administrator  or  liquidator of itself or of
                         all or part of its assets; or

                    (b)  is unable or admits its  inability  to pay its debts as
                         they fall due; or

                    (c)  makes a general assignment for the benefit of creditors
                         or enters  into a  moratorium  on payment of any of its
                         indebtedness; or

                    (d)  ceases trading or threatens to cease trading; or

                    (e)  has appointed an Inspector under the Companies Act 1985
                         or any  statutory  provision  which  the  Agent  in its
                         discretion considers analogous thereto; or

          13.2.6    insolvency  proceedings if any  proceedings are commenced or
                    threatened,  or any order or judgment is given by any court,
                    for the bankruptcy,  liquidation, winding up, administration
                    or re-organisation of any of the Security Parties or for the
                    appointment   of  a   receiver,   administrative   receiver,
                    administrator,  liquidator or trustee of any of the Security
                    Parties  or of  all or  part  of  the  assets  of any of the
                    Security  Parties,  or if any person appoints or purports to
                    appoint    such    receiver,     administrative    receiver,
                    administrator, liquidator or trustee; or

          13.2.7    impossibility or illegality if any event occurs which would,
                    or would with the passage of time, render performance of any
                    of the Security  Documents  by any of the  Security  Parties
                    impossible, unlawful or unenforceable by the Agent; or

          13.2.8    conditions  subsequent if any of the  conditions  set out in
                    Clause  3.2 is not  satisfied  within  the  time  reasonably
                    required by the Agent; or

          13.2.9    covenants  if any of the  covenants  set out in Clause 11 is
                    not  satisfied  within  thirty  days;  or 13.2.10  change in
                    ownership or control if any change occurs in the  Borrower's
                    and/or the Corporate  Guarantor's  beneficial  ownership and
                    control  from that  advised to the Agent at the date of this
                    Agreement,  or otherwise in accordance  with Clause  11.1.12
                    (or in the  case of the  Borrower)  or  Clause  8.1.  of the
                    Corporate   Guarantee   (in  the   case  of  the   Corporate
                    Guarantor).

          13.2.11   revocation or  modification of consents etc. if any consent,
                    licence, approval,  authorisation,  filing,  registration or
                    other  requirement  of any  governmental,  judicial or other
                    public body or authority  which is now, or which at any time
                    during the Facility Period becomes,  necessary to enable any
                    of  the  Security  Parties  to  comply  with  any  of  their
                    obligations in or pursuant to any of the Security  Documents
                    is not  obtained  or is  revoked,  suspended,  withdrawn  or
                    withheld,  or  is  modified  in a  manner  which  the  Agent
                    considers is, or may be,  prejudicial to its  interests,  or
                    ceases to remain in full force and effect; or

          13.2.12   Master  Agreement  termination  if a  notice  is sent by the
                    Agent under section 6(a) of the Master Agreement,  or by any
                    person under section  6(b)(iv) of the Master  Agreement,  in
                    either case  designating an Early  Termination  Date for the
                    purpose of the Master Agreement,  or if the Master Agreement
                    is for any other reason  terminated,  cancelled,  suspended,
                    rescinded,  revoked  or  otherwise  ceases to remain in full
                    force and effect; or

          13.2.13   curtailment  of  business  if  the  business  of  any of the
                    Security  Parties  is  wholly  or  partially   curtailed  or
                    suspended by any  intervention  by or under authority of any
                    government,   or  if  all  or  a  substantial  part  of  the
                    undertaking,  property  or  assets  of any  of the  Security
                    Parties   is   seized,    nationalised,    expropriated   or
                    compulsorily   acquired  by  or  under   authority   of  any
                    government; or

          13.2.14   acceleration of other indebtedness if any other indebtedness
                    or  obligation  for  borrowed  money of any of the  Security
                    Parties  becomes due or capable of being  declared due prior
                    to its stated  maturity  by reason of default on the part of
                    that  Security  Party,  or is not  repaid  or  satisfied  at
                    maturity; or

          13.2.15   reduction of capital if any of the Security  Parties reduces
                    its authorised or issued or subscribed capital; or

          13.2.16   challenge to registration if the  registration of the Vessel
                    or the  Mortgage is contested or becomes void or voidable or
                    liable to cancellation or termination, or if the validity or
                    priority of the Mortgage is contested; or

          13.2.17   war if the  country of  registration  of the Vessel  becomes
                    involved in war (whether or not declared) or civil war or is
                    occupied by any other power and the Agent in its  discretion
                    considers that, as a result,  the security  conferred by the
                    Security Documents is materially prejudiced; or

          13.2.18   notice  of  termination  if the  Corporate  Guarantor  gives
                    notice to the Agent to determine its  obligations  under the
                    Corporate Guarantee; or

          13.2.19   material   adverse  change  etc.  if  anything  is  done  or
                    permitted  or  omitted  to be  done  by any of the  Security
                    Parties  which  in  the  reasonable  opinion  of  the  Agent
                    jeopardises  or imperils (or may  jeopardise or imperil) the
                    rights conferred on the Agent by the Security Documents,  or
                    if there  occurs (in the opinion of the Agent) any  material
                    adverse  change  in  the  business,   affairs  or  financial
                    condition  of  any  of  the   Security   Parties  from  that
                    pertaining at the date of this Agreement; or

          13.2.20   environment  if the Borrower fails to observe or perform any
                    of the covenants,  conditions,  undertakings,  agreements or
                    obligations  contained  in  Clause  11.2.12  or shall in any
                    other  way be in breach of or do or cause to be done any act
                    repudiating  or  evidencing an intention to repudiate any of
                    the  covenants,  conditions,  undertakings,   agreements  or
                    obligations contained in Clause 11.2.12; or

          13.2.21   cross-default an event of default (howsoever defined) occurs
                    in relation  to any other loan  agreement  facility  entered
                    into by the Borrower  and/or the Corporate  Guarantor or any
                    subsidiary of the Corporate Guarantor; or

          13.2.22   Charter the Charter is  terminated,  cancelled or repudiated
                    or is not in force at any time during the  Facility  Period,
                    unless it has expired by effluxion of time,  or the Borrower
                    or the Charterer defaults in the performance of any of their
                    respective  material  obligations  under or  pursuant to the
                    Charter and unless the  Charter is replaced  within a period
                    of one month with another  charter or contract of employment
                    satisfactory  to the Agent in all  respects in its  absolute
                    discretion; or

          13.2.23   analogous  events if any event  which (in the opinion of the
                    Agent or ) is  analogous  to any of the events set out above
                    shall occur.

14     Set-Off and Lien

       14.1   Set-off  The  Borrower  irrevocably  authorises  the Agent and the
              Banks at any time after all or any part of the Indebtedness  shall
              have  become  due  and  payable  to set  off  without  notice  any
              liability  of  the  Borrower  to any of  the  Banks  or the  Agent
              (whether present or future, actual or contingent, and irrespective
              of the branch or office, currency or place of payment) against any
              credit  balance  from time to time  standing on any account of the
              Borrower  (whether current or otherwise and whether or not subject
              to  notice)  with  any  branch  of the  Agent or of any Bank in or
              towards  satisfaction of the Indebtedness  and, in the name of the
              Agent or that  Bank or the  Borrower,  to do all acts  (including,
              without  limitation,  converting or  exchanging  any currency) and
              execute  all  documents  which  may be  required  to  effect  such
              application.

       14.2   Lien The Agent and each Bank shall have a lien on and be  entitled
              to retain and realise as additional  security for the repayment of
              the Indebtedness any cheques,  drafts,  bills, notes or negotiable
              or non-negotiable instruments and any stocks, shares or marketable
              or other  securities  and property of any kind of the Borrower (or
              of the Agent or that  Bank as agent or  nominee  of the  Borrower)
              from time to time held by the Agent,  whether for safe  custody or
              otherwise.

       14.3   Restrictions  on  withdrawal  Despite any term to the  contrary in
              relation  to any  deposit  or  credit  balance  at any time on any
              account of the  Borrower  with any of Banks or with the Agent,  no
              such  deposit or balance  shall be  repayable  or capable of being
              assigned,  mortgaged,  charged or  otherwise  disposed of or dealt
              with  by  the  Borrower  during  the  Facility  Period  except  in
              accordance  with the  Security  Documents,  but the Agent may from
              time to time permit the  withdrawal of all or any part of any such
              deposit or balance without affecting the continued  application of
              this Clause.

       14.4   Application The Borrower irrevocably authorises the Agent to apply
              all sums which the Agent may receive:-

          14.4.1    pursuant to a sale or other disposition of the Vessel or any
                    right, title or interest in the Vessel; or

          14.4.2    by way of  payment to the Agent of any sum in respect of the
                    Insurances,   Earnings,   Charter   Rights  or   Requisition
                    Compensation; or

          14.4.3    otherwise  arising  under or in  connection  with any of the
                    Security Documents

          in or towards satisfaction,  or by way of retention on account, of the
          Indebtedness,  in  such  manner  as the  Agent  may in its  discretion
          determine.

       14.5   Master  Agreement rights The rights conferred on the Agent by this
              Clause  shall be in  addition  to,  and  without  prejudice  to or
              limitation  of, the rights of netting and set off conferred on the
              Agent by the Master Agreement.  The Borrower acknowledges that the
              Agent  shall be under no  obligation  to make any  payment  to the
              Borrower under or pursuant to the Master Agreement if, at the time
              that payment  becomes due,  there shall have  occurred an Event of
              Default or Potential  Event of Default,  or an Event of Default or
              Termination Event (as those terms are respectively  defined in the
              Master Agreement).

15     Assignment and Sub-Participation

       15.1   Right to assign The Original Bank may grant  sub-participations in
              all or any part of the Loan and may assign or transfer  all or any
              of its rights under or pursuant to the  Security  Documents to any
              other branch of that Bank or (in  consultation  with the Borrower)
              to one or more other banks or financial institutions.

       15.2   Borrower's  co-operation  The Borrower will co-operate  fully with
              the  Banks  in  connection  with  any   assignment,   transfer  or
              sub-participation;  will execute and procure the execution of such
              documents as the Banks may require in  connection  therewith;  and
              irrevocably  authorises the Agent to sign any Transfer Certificate
              on its behalf, and irrevocably  authorises the Agent and the Banks
              disclose to any proposed  assignee,  transferee or sub-participant
              (whether   before   or   after   any   assignment,   transfer   or
              sub-participation  and whether or not any assignment,  transfer or
              sub-participation  shall take place) all  information  relating to
              the Security Parties, the Loan or the Security Documents which the
              Agent or the Banks may in their discretion  consider  necessary or
              desirable.

       15.3   Rights of assignee Any assignee,  transferee or sub-participant of
              a  Bank  shall  (unless  limited  by  the  express  terms  of  the
              assignment,  transfer or sub-participation)  take the full benefit
              of every  provision of the  Security  Documents  benefitting  that
              Bank.

       15.4   Transfer  Certificates  If any Bank wishes to transfer  any of its
              rights and/or obligations under or pursuant to this Agreement,  it
              may do so by  delivering  to the Agent a duly  completed  Transfer
              Certificate, in which event on the Transfer Date:-

          15.4.1    to the extent  that that Bank seeks to  transfer  its rights
                    and/or  obligations,  the Borrower (on the one hand) and the
                    Bank in question (on the other)  shall be released  from all
                    further obligations towards the other(s);

          15.4.2    the  Borrower (on the one hand) and the  Transferee  (on the
                    other)  shall  assume   obligations   towards  the  other(s)
                    identical to those released pursuant to Clause 15.4.1;

          15.4.3    the Agent,  each of the Banks and the Transferee  shall have
                    the same rights and obligations  between  themselves as they
                    would have had if the  Transferee had been an original party
                    to this Agreement as a Bank; and

          15.4.4    the Transferee  shall pay to the Agent for its own account a
                    transfer fee of five thousand Dollars.

          Each Bank  irrevocably  authorises the Agent to sign on its behalf any
          Transfer  Certificate  relating  to the  transfer of any of the rights
          and/or obligations of any other Bank.

       15.5   Security  Documents  Unless  otherwise  expressly  provided in any
              Security Document or otherwise expressly agreed between a Bank and
              any proposed  Transferee and notified by that Bank to the Agent on
              or before the relevant Transfer Date, there shall automatically be
              assigned to the  Transferee  with any transfer of a Bank's  rights
              and/or  obligations under or pursuant to this Agreement the rights
              of that Bank under or pursuant to the  Security  Documents  (other
              than this  Agreement)  which  relate to the  portion of the Bank's
              rights and/or  obligations  transferred  by the relevant  Transfer
              Certificate.

16     Payments, Mandatory Prepayment, Reserve Requirements and Illegality

       16.1   Payments All amounts  payable by the Borrower under or pursuant to
              any of the Security  Documents  shall be paid to such  accounts at
              such  banks as the  Agent  may  from  time to time  direct  to the
              Borrower,  and (unless  payable in any other  Currency of Account)
              shall be paid in  Dollars  in same day funds (or such funds as are
              required by the  authorities  in the United  States of America for
              settlement  of  international   payments  for  immediate   value).
              Payments shall be deemed to have been received by the Agent on the
              date on which the Agent receives  authenticated advice of receipt,
              unless  that advice is received by the Agent on a day other than a
              Business  Day or at a time of day  (whether  on a Business  Day or
              not)  when  the  Agent  in its  discretion  considers  that  it is
              impossible  or  impracticable  for the Agent to utilise the amount
              received  for value that same day,  in which  event the payment in
              question shall be deemed to have been received by the Agent on the
              Business Day next  following  the date of receipt of advice by the
              Agent.

       16.2   No deductions or withholdings  All payments  (whether of principal
              or interest or otherwise)  to be made by the Borrower  pursuant to
              the Security Documents shall, subject only to Clause 16.3, be made
              free and clear of and without  deduction  for or on account of any
              Taxes or other deductions, withholdings,  restrictions, conditions
              or counterclaims of any nature.

       16.3   Grossing-up  If at any time any law requires (or is interpreted to
              require) the Borrower to make any  deduction or  withholding  from
              any payment, or to change the rate or manner in which any required
              deduction  or  withholding  is made,  the Borrower  will  promptly
              notify the Agent and,  simultaneously  with making  that  payment,
              will pay to the Agent  whatever  additional  amount  (after taking
              into  account  any   additional   Taxes  on,  or   deductions   or
              withholdings   from,  or   restrictions  or  conditions  on,  that
              additional  amount) is necessary to ensure that,  after making the
              deduction or  withholding,  the Agent and the Banks  receive a net
              sum equal to the sum which it would have received had no deduction
              or withholding been made.

       16.4   Evidence of  deductions If at any time the Borrower is required by
              law to make any  deduction or  withholding  from any payment to be
              made by it pursuant to any of the Security Documents, the Borrower
              will pay the amount  required  to be  deducted  or withheld to the
              relevant  authority  within the time allowed under the  applicable
              law and will, no later than thirty days after making that payment,
              deliver to the Agent an original  receipt  issued by the  relevant
              authority,  or other evidence acceptable to the Agent,  evidencing
              the  payment  to that  authority  of all  amounts  required  to be
              deducted or withheld.

       16.5   Adjustment  of due dates If any payment or transfer of funds to be
              made under any of the Security Documents,  other than a payment of
              interest  on  the  Loan  or  a  payment  pursuant  to  the  Master
              Agreement, shall be due on a day which is not a Business Day, that
              payment shall be made on the next succeeding  Business Day (unless
              the next succeeding  Business Day falls in the next calendar month
              in which  event the  payment  shall be made on the next  preceding
              Business  Day).  Any such  variation  of time  shall be taken into
              account in computing any interest in respect of that payment.

       16.6   Change in law If, by reason of the introduction of any law, or any
              change in any law, or the  interpretation or administration of any
              law, or in  compliance  with any request or  requirement  from any
              central bank or any fiscal, monetary or other authority:-

          16.6.1    any Bank or the Agent (or the holding company of the Bank or
                    the  Agent)  shall be  subject  to any Tax with  respect  to
                    payments of all or any part of the Indebtedness; or

          16.6.2    the basis of  Taxation  of payments to any Bank or the Agent
                    in respect of all or any part of the  Indebtedness  shall be
                    changed; or

          16.6.3    any  reserve  requirements  shall be  imposed,  modified  or
                    deemed  applicable  against assets held by or deposits in or
                    for the account of or loans by any branch of any Bank or the
                    Agent; or

          16.6.4    the manner in which any Bank or the Agent allocates  capital
                    resources to its obligations under this Agreement and/or the
                    Master  Agreement  or  any  ratio  (whether  cash,   capital
                    adequacy,  liquidity  or  otherwise)  which  any Bank or the
                    Agent  is  required  or  requested  to  maintain   shall  be
                    affected; or

          16.6.5    there is imposed on any Bank or the Agent (or on the holding
                    company  of any Bank or the Agent)  any other  condition  in
                    relation to the Indebtedness or the Security Documents;

          and the result of any of the above  shall be to  increase  the cost to
          any Bank (or to the  holding  company of any Bank) of that Bank making
          or maintaining the Loan or of maintaining  its  obligations  under the
          Master Agreement,  or to cause the any Bank or the Agent to suffer (in
          its opinion) a material reduction in the rate of return on its overall
          capital below the level which it reasonably anticipated at the date of
          this  Agreement  and which it would have been able to achieve  but for
          its  entering  into this  Agreement  or the  Master  Agreement  and/or
          performing  its  obligations   under  this  Agreement  or  the  Master
          Agreement,  the Bank affected  shall notify the Agent and the Borrower
          shall from time to time pay to the Agent on demand for the  account of
          the Bank affected (or, in retention to the Master  Agreement,  for the
          Agent's own account) the amount which shall  compensate  that Bank (or
          the holding  company of the Bank) for such  additional cost or reduced
          return.  A certificate  signed by an authorised  signatory of the Bank
          affected  setting out the amount of that  payment and the basis of its
          calculation shall be submitted to the Borrower and shall be conclusive
          evidence of such amount save for manifest  error or on any question of
          law.  The  Borrower  shall  have the right to prepay the Loan in full,
          subject to Clauses 5.4, 5.5 and 5.6.

       16.7   Illegality and impracticality  Notwithstanding  anything contained
              in the Security Documents,  the obligation of the Banks to advance
              or maintain the Loan shall terminate in the event that a change in
              any  law or in the  interpretation  of  any  law by any  authority
              charged with its administration  shall make it unlawful or, in the
              opinion  of any Bank,  impracticable  for that Bank to  advance or
              maintain  the Loan.  In that  event the Bank  affected  shall,  by
              written  notice to the  Borrower,  declare its  obligations  to be
              immediately terminated.  If all or any part of the Loan shall have
              been  advanced  by the  Banks to the  Borrower,  the  Indebtedness
              (including  all accrued  interest)  shall be prepaid within thirty
              days from the date of such notice.  Clause 5.4 shall apply to that
              prepayment  if it is made on a day  other  than the last day of an
              Interest Period.

       16.8   Changes in market  circumstances  If at any time a Bank determines
              (which  determination shall be final and conclusive and binding on
              the  Borrower)  that,  by reason of changes  affecting  the London
              Interbank  market,  adequate  and  fair  means  do not  exist  for
              ascertaining  the rate of  interest  on the Loan  pursuant to this
              Agreement:-

          16.8.1    that  Bank  shall  give  notice  to  the   Borrower  of  the
                    occurrence of such event; and

          16.8.2    the Agent shall as soon as reasonably practicable certify to
                    the Borrower in writing the  effective  cost to the Banks of
                    maintaining  the Loan for such  further  period  as shall be
                    selected  by the Banks and the rate of  interest  payable by
                    the Borrower for that period;  or, if that is not acceptable
                    to the Borrower,

          16.8.3    the Agent will  negotiate  with the  Borrower  in good faith
                    with a  view  to  modifying  this  Agreement  to  provide  a
                    substitute  basis  for  the  Loan  which  is  financially  a
                    substantial  equivalent  to the basis  provided  for in this
                    Agreement.

          If,  within  thirty  days of the giving of the notice  referred  to in
          Clause 16.8.1,  the Borrower and the Agent fail to agree in writing on
          a substitute basis for the Loan, the Borrower will immediately  prepay
          the  Indebtedness.  Clause 5.4 shall apply to that prepayment if it is
          made on a day other than the last day of an Interest Period.

       16.9   Non-availability of currency If a Bank is for any reason unable to
              obtain Dollars in the London Interbank market and is, as a result,
              or as a result  of any  other  contingency  affecting  the  London
              Interbank  market,  unable  to  advance  or  maintain  the Loan in
              Dollars,  that Bank shall  give  notice to the Agent and the Agent
              shall give notice to the Borrowers and the Banks'  obligations  to
              make the Loan available shall immediately cease. In that event, if
              all or any part of the Loan shall have been  advanced by the Banks
              to the Borrower,  the Agent on behalf of the Banks will  negotiate
              with the  Borrower  in good  faith with a view to  establishing  a
              mutually acceptable basis for funding the Loan from an alternative
              source.  If the Agent  and the  Borrower  have  failed to agree in
              writing on a basis for funding the Loan from an alternative source
              by 11.00 a.m. on the second  Business  Day prior to the end of the
              then current Interest Period, the Borrower will (without prejudice
              to its other  obligations  under or  pursuant  to this  Agreement,
              including,  without limitation,  its obligation to pay interest on
              the  Loan,  arising  on the  expiry of the then  current  Interest
              Period)  prepay  the  Indebtedness  to the  Agent on behalf of the
              Banks on the expiry of the then current Interest Period.

17     Communications

       17.1   Method Any Communication may be given,  delivered,  made or served
              (as the case may be) under or in  relation  to this  Agreement  by
              letter  or fax and  shall  be in the  English  language  and  sent
              addressed:-

          17.1.1    in the case of the  Banks or the  Agent to the  Agent at its
                    address at the head of this  Agreement  (fax no: +30 210 954
                    4368) marked for the attention of:  Global  Shipping  Group;
                    and

          17.1.2    in the case of the Borrower to the Communications Address;

          or to such other address or fax number as the Banks,  the Agent or the
          Borrower may designate for itself by written notice to the other.

       17.2   Timing A  Communication  shall be deemed to have been duly  given,
              delivered,  made  or  served  to  or  on,  and  received  by,  the
              Borrower:-

          17.2.1    in the case of a fax when the  sender  receives  one or more
                    transmission  reports showing the whole of the Communication
                    to have been transmitted to the correct fax number;

          17.2.2    if  delivered  to an officer of the  Borrower or left at the
                    Communications  Address at the time of  delivery or leaving;
                    or

          17.2.3    if posted, at 9.00 a.m. on the Business Day after posting by
                    prepaid first class post.

          A  Communication  shall  only be  deemed  to  have  been  duly  given,
          delivered,  made or served to or on, and received by, the Banks or the
          Agent on  actual  receipt  of the whole of that  Communication  by the
          Agent.

       17.3   Indemnity The Borrower shall indemnify the Agent against any cost,
              claim,  liability,  loss or expense  (including legal fees and any
              Value Added Tax or any similar or replacement tax (if applicable))
              which  the Agent or any of the  Banks  may  sustain  or incur as a
              consequence  of any  Communication  sent  by or on  behalf  of the
              Borrower by fax not being received by its intended  recipient,  or
              being  received  incomplete,  or by  reason  of any  Communication
              purportedly  having  been  sent by or on  behalf  of the  Borrower
              having been sent fraudulently.

18     General Indemnities

       18.1   Currency  In  the  event  of the  Agent  or a  Bank  receiving  or
              recovering any amount payable under any of the Security  Documents
              in a  currency  other than the  Currency  of  Account,  and if the
              amount received or recovered is  insufficient  when converted into
              the  Currency of Account at the date of receipt to satisfy in full
              the amount due, the Borrower shall, on the Agent's written demand,
              pay to the Bank such further  amount in the Currency of Account as
              is  sufficient  to satisfy in full the amount due and that further
              amount  shall be due to the Agent as a  separate  debt  under this
              Agreement.

       18.2   Costs and expenses The Borrower will,  within fourteen days of the
              Agent's  written  demand,  reimburse  the  Agent for all costs and
              expenses  (including Value Added Tax or any similar or replacement
              tax if applicable) of and incidental to:-

          18.2.1    the negotiation,  preparation, execution and registration of
                    the Security  Documents  (whether or not any of the Security
                    Documents are actually executed or registered and whether or
                    not all or any part of the Loan is advanced);

          18.2.2    any  amendments,  addenda  or  supplements  to  any  of  the
                    Security Documents (whether or not completed);

          18.2.3    any other documents which may at any time be required by the
                    Bank or the  Agent  to give  effect  to any of the  Security
                    Documents or which any Bank or the Agent is entitled to call
                    for or  obtain  pursuant  to any of the  Security  Documents
                    (including,  without limitation, all premiums and other sums
                    from time to time  payable by the Agent in  relation  to the
                    Mortgagees' Insurances); and

          18.2.4    the exercise of the rights, powers, discretions and remedies
                    of the Banks  and/or  the  Agent  under or  pursuant  to the
                    Security Documents.

       18.3   Events of Default The Borrower  shall  indemnify the Banks and the
              Agent  from time to time on demand  against  all  losses and costs
              incurred  or   sustained  by  any  Bank  and/or  the  Agent  as  a
              consequence   of  any  Event  of   Default,   including   (without
              limitation) any Break Costs.

       18.4   Funding costs The Borrower shall indemnify the Banks and the Agent
              from time to time on demand  against all losses and costs incurred
              or sustained  by any Bank or by the Agent if, for any reason,  the
              Loan is not advanced to the Borrower after the Drawdown Notice has
              been given to the Agent,  or is advanced on a date other than that
              requested in the Drawdown  Notice  (unless,  in either case,  as a
              result of any default by the Agent or any of the Banks), including
              (without limitation) any Break Costs.

       18.5   Protection and  enforcement The Borrower shall indemnify the Banks
              and the  Agent  from time to time on demand  against  all  losses,
              costs and liabilities which any Bank or the Agent may from time to
              time  sustain,  incur  or  become  liable  for  in  or  about  the
              protection,  maintenance or enforcement of the rights conferred on
              the Banks  and/or  the Agent by the  Security  Documents  or in or
              about the exercise or  purported  exercise by the Banks and/or the
              Agent of any of the rights, powers, discretions or remedies vested
              in them under or arising out of the Security Documents,  including
              (without  limitation) any losses,  costs and liabilities which any
              Bank or the Agent may from time to time  sustain,  incur or become
              liable for by reason of the Banks or the Agent being mortgagees of
              the Vessel  and/or a lender to the  Borrower,  or by reason of any
              Bank or the Agent being  deemed by any court or authority to be an
              operator or  controller,  or in any way concerned in the operation
              or control, of the Vessel.

       18.6   Liabilities of Banks and Agent The Borrower will from time to time
              reimburse the Banks and the Agent on demand for all sums which any
              Bank or the  Agent  may pay or  become  actually  or  contingently
              liable for on account of the  Borrower or in  connection  with the
              Vessel (whether alone or jointly or jointly and severally with any
              other person)  including  (without  limitation) all sums which any
              Bank or the  Agent  may pay or  guarantees  which  any Bank or the
              Agent may give in respect of the Insurances, any expenses incurred
              by any Bank or the Agent in  connection  with the  maintenance  or
              repair of the  Vessel or in  discharging  any lien,  bond or other
              claim  relating in any way to the  Vessel,  and any sums which any
              Bank or the  Agent  may pay or  guarantees  which  it may  give to
              procure the release of the Vessel from arrest or detention.

       18.7   Taxes The Borrower shall pay all Taxes to which all or any part of
              the  Indebtedness  or any of the Security  Documents may be at any
              time subject and shall indemnify the Agent and the Banks on demand
              against all liabilities, costs, claims and expenses resulting from
              any omission to pay or delay in paying any such Taxes.

19     Miscellaneous

       19.1   Waivers  No failure or delay on the part of the Agent or of a Bank
              in  exercising  any right,  power,  discretion  or remedy under or
              pursuant  to any of the  Security  Documents,  nor any  actual  or
              alleged  course of dealing  between the Agent and any Bank and the
              Borrower,  shall operate as a waiver of, or  acquiescence  in, any
              default on the part of any Security Party, unless expressly agreed
              to do so in writing by the Agent,  nor shall any single or partial
              exercise by the Agent or a Bank of any right, power, discretion or
              remedy  preclude  any other or  further  exercise  of that  right,
              power,  discretion  or remedy,  or the  exercise by the Agent or a
              Bank of any other right, power, discretion or remedy.

       19.2   No  oral  variations  No  variation  or  amendment  of  any of the
              Security  Documents shall be valid unless in writing and signed on
              behalf of the Banks and the Agent.

       19.3   Severability  If at any time any  provision of any of the Security
              Documents is invalid, illegal or unenforceable in any respect that
              provision  shall be severed from the  remainder  and the validity,
              legality and enforceability of the remaining  provisions shall not
              be affected or impaired in any way.

       19.4   Successors  etc.  The Security  Documents  shall be binding on the
              Security Parties and on their successors and permitted transferees
              and assignees, and shall inure to the benefit of the Banks and the
              Agent and its successors,  transferees and assignees. The Borrower
              may not assign nor transfer any of its rights under or pursuant to
              any of the Security Documents without the prior written consent of
              the Agent.

       19.5   Further assurance If any provision of the Security Documents shall
              be invalid or  unenforceable  in whole or in part by reason of any
              present or future  law or any  decision  of any  court,  or if the
              documents  at any time  held by the Banks or by the Agent on their
              behalf are considered by the Banks for any reason  insufficient to
              carry out the terms of this Agreement,  then from time to time the
              Borrower will promptly, on demand by the Agent, execute or procure
              the  execution of such further  documents as in the opinion of the
              Banks are necessary to provide adequate security for the repayment
              of the Indebtedness.

       19.6   Other  arrangements The Banks and the Agent may, without prejudice
              to its rights under or pursuant to the Security Documents,  at any
              time and from time to time, on such terms and conditions as it may
              in its discretion  determine,  and without notice to the Borrower,
              grant time or other  indulgence  to, or compound  with,  any other
              person liable  (actually or  contingently) to the Banks and/or the
              Agent in respect of all or any part of the  Indebtedness,  and may
              release  or renew  negotiable  instruments  and  take and  release
              securities  and hold  funds on  realisation  or  suspense  account
              without affecting the liabilities of the Borrower or the rights of
              the  Banks  and  the  Agent  under  or  pursuant  to the  Security
              Documents.

       19.7   Advisers The Borrower irrevocably authorise the Agent, at any time
              and from time to time  during  the  Facility  Period,  to  consult
              insurance  advisers  on any matters  relating  to the  Insurances,
              including, without limitation, the collection of insurance claims,
              and from time to time to consult or retain advisers or consultants
              to monitor or advise on any other  claims  relating to the Vessel.
              The Borrower will provide such advisers and  consultants  with all
              information  and documents  which it may from time to time require
              and will  reimburse the Agent on demand for all costs and expenses
              incurred  by the  Agent in  connection  with the  consultation  or
              retention of such advisers or consultants.

       19.8   Delegation  The  Banks and the Agent may at any time and from time
              to  time  delegate  to  any  person  any of  its  rights,  powers,
              discretions  and remedies  pursuant to the  Security  Documents on
              such terms as it may consider appropriate  (including the power to
              sub-delegate).

       19.9   Rights etc. cumulative Every right,  power,  discretion and remedy
              conferred  on the Banks  and/or the Agent under or pursuant to the
              Security  Documents  shall be cumulative  and in addition to every
              other right,  power,  discretion  or remedy to which it may at any
              time be entitled by law or in equity.  The Banks and the Agent may
              exercise each of their rights, powers, discretions and remedies as
              often and in such order as they deem appropriate.  The exercise or
              the beginning of the exercise of any right,  power,  discretion or
              remedy  shall  not be  interpreted  as a  waiver  of the  right to
              exercise  that or any other  right,  power,  discretion  or remedy
              either simultaneously or subsequently.

       19.10  No  enquiry  The  Banks and the Agent  shall not be  concerned  to
              enquire into the powers of the  Security  Parties or of any person
              purporting to act on behalf of any of the Security  Parties,  even
              if any of the Security Parties or any such person shall have acted
              in excess  of their  powers or if their  actions  shall  have been
              irregular,  defective or informal,  whether or not any Bank or the
              Agent had notice thereof.

       19.11  Continuing  security  The  security  constituted  by the  Security
              Documents  shall be  continuing  and shall not be satisfied by any
              intermediate  payment or satisfaction until the Indebtedness shall
              have been repaid in full and neither the Banks nor the Agent shall
              be under no further  actual or  contingent  liability to any third
              party in  relation  to the  Vessel,  the  Insurances,  Earnings or
              Requisition  Compensation  or any other matter  referred to in the
              Security Documents.

       19.12  Security  cumulative  The  security  constituted  by the  Security
              Documents shall be in addition to any other security now or in the
              future  held by the Banks or by the Agent for or in respect of all
              or any part of the  Indebtedness,  and  shall  not  merge  with or
              prejudice  or be  prejudiced  by any such  security  or any  other
              contractual  or  legal  rights  of the  Banks  or the  Agent,  nor
              affected by any  irregularity,  defect or  informality,  or by any
              release, exchange or variation of any such security. Section 93 of
              the Law of Property  Act 1925 and all  provisions  which the Agent
              considers  analogous  thereto under the law of any other  relevant
              jurisdiction  shall not apply to the security  constituted  by the
              Security Documents. 19.13 Re-instatement If the Banks or the Agent
              takes any steps to exercise any of its rights, powers, remedies or
              discretions  pursuant  to the  Security  Documents  and the result
              shall be adverse to the Banks  and/or the Agent,  the Borrower and
              the  Banks  and the  Agent  shall  be  restored  to  their  former
              positions as if no such steps had been taken.

       19.14  No  liability  Neither  the Banks nor the Agent,  nor any agent or
              employee  of any Bank or of the  Agent,  nor any  receiver  and/or
              manager  appointed  by the  Agent,  shall be liable for any losses
              which  may be  incurred  in or about  the  exercise  of any of the
              rights,  powers,  discretions  or remedies of the Banks and/or the
              Agent under or pursuant to the  Security  Documents  nor liable as
              mortgagee in  possession  for any loss on  realisation  or for any
              neglect  or  default  of any  nature  for  which  a  mortgagee  in
              possession might otherwise be liable.

       19.15  Rescission of payments etc. Any discharge, release or reassignment
              by the Banks and/or the Agent of any of the  security  constituted
              by, or any of the  obligations of any Security Party contained in,
              any of the Security  Documents  shall be (and be deemed  always to
              have been) void if any act  (including,  without  limitation,  any
              payment)  as  a  result  of  which  such  discharge,   release  or
              reassignment was given or made is subsequently wholly or partially
              rescinded or avoided by operation of any law.

       19.16  Subsequent  Encumbrances  If  the  Agent  receives  notice  of any
              subsequent  Encumbrance affecting the Vessel or all or any part of
              the   Insurances,   Earnings,   Charter   Rights  or   Requisition
              Compensation or the Accounts,  the Agent may open a new account in
              its  books  for the  Borrower.  If the  Agent  does not open a new
              account,  then  (unless  the  Agent  gives  written  notice to the
              contrary to the Borrower) as from the time of receipt by the Agent
              of notice of such subsequent Encumbrance, all payments made to the
              Agent shall be treated as having been credited to a new account of
              the  Borrower  and not as having been  applied in reduction of the
              Indebtedness.

       19.17  Releases  If any  Bank  or the  Agent  shall  at any  time  in its
              discretion  release  any party  from all or any part of any of the
              Security  Documents,  the  liability  of any  other  party  to the
              Security Documents shall not be varied or diminished.

       19.18  Discretions Unless otherwise expressly  indicated,  where any Bank
              or the  Agent  is  stated  in the  Security  Documents  to  have a
              discretion  and/or  where the  opinion of any Bank or the Agent is
              referred to and/or where the consent, agreement or approval of any
              Bank or the Agent is required  for any course of action,  or where
              anything is required  to be  acceptable  to any Bank or the Agent,
              the Banks and the Agent shall have a sole, absolute and unfettered
              discretion and/or may give or withhold their consent, agreement or
              approval at its sole, absolute and unfettered discretion.

       19.19  Certificates  Any certificate or statement signed by an authorised
              signatory  of the  Agent  purporting  to show  the  amount  of the
              Indebtedness (or any part of the Indebtedness) or any other amount
              referred  to in any of the  Security  Documents  shall,  save  for
              manifest  error or on any question of law, be conclusive  evidence
              as against the Borrower of that amount.

       19.20  Survival of representations and warranties The representations and
              warranties on the part of the Borrower contained in this Agreement
              shall survive the  execution of this  Agreement and the advance of
              the Loan.

       19.21  Counterparts  This  Agreement  may be  executed  in any  number of
              counterparts  each of which  shall be  original  but  which  shall
              together constitute the same instrument.

       19.22  Contracts  (Rights  of  Third  Parties)  Act  1999  No term of the
              Agreement is enforceable by a person who is not a party to it.

20     Law and Jurisdiction

       20.1   Governing law This Agreement  shall in all respects be governed by
              and interpreted in accordance with English law.

       20.2   Jurisdiction For the exclusive benefit of the Banks and the Agent,
              the parties to this Agreement irrevocably agree that the courts of
              England are to have  jurisdiction to settle any disputes which may
              arise out of or in  connection  with this  Agreement  and that any
              Proceedings may be brought in those courts.

       20.3   Alternative  jurisdictions  Nothing contained in this Clause shall
              limit  the  right  of the  Banks  or the  Agent  to  commence  any
              Proceedings  against the  Borrower in any other court of competent
              jurisdiction nor shall the commencement of any Proceedings against
              the   Borrower  in  one  or  more   jurisdictions   preclude   the
              commencement of any Proceedings in any other jurisdiction, whether
              concurrently or not.

       20.4   Waiver of objections The Borrower irrevocably waives any objection
              which it may now or in the future  have to the laying of the venue
              of any  Proceedings in any court  referred to in this Clause,  and
              any  claim  that  those   Proceedings  have  been  brought  in  an
              inconvenient or inappropriate forum, and irrevocably agrees that a
              judgment in any  Proceedings  commenced in any such court shall be
              conclusive  and binding on it and may be enforced in the courts of
              any other jurisdiction.

       20.5   Service of process Without prejudice to the right of the Agent and
              the Banks to use any other method of service permitted by law, the
              Borrower  irrevocably  agrees that any writ,  notice,  judgment or
              other  legal  process  shall  be  sufficiently  served  on  it  if
              addressed  to it and  left at or sent by post to the  Address  for
              Service,  and in that event shall be  conclusively  deemed to have
              been served at the time of leaving or, if posted,  at 9.00 a.m. on
              the Business Day after posting by prepaid first class post.

<PAGE>

                                   SCHEDULE 1

                          The Banks and the Commitments

The Banks                                                      The Commitments

FORTIS BANK N.V./S.A., ATHENS BRANCH                           100%

166, Syngrou Ave.
176 71, Athens
Greece

<PAGE>

IN WITNESS of which the parties to this Agreement have executed this Agreement
the day and year first before written.

SIGNED  by                                                )
duly authorised for and on behalf                         )
of  XENIA INTERNATIONAL CORP.                             )
in the presence of:-                                      )

SIGNED  by                                                )
duly authorised for and on behalf                         )
of FORTIS BANK N.V./S.A.,                                 )
ATHENS BRANCH (as lender)                                 )
in the presence of:-                                      )

SIGNED  by                                                )
duly authorised for and on behalf                         )
of FORTIS BANK N.V./S.A.,                                 )
ATHENS BRANCH (as agent)                                  )
in the presence of:-                                      )

<PAGE>

                                   APPENDIX A

To:      FORTIS BANK N.V./S.A., ATHENS BRANCH

From:   XENIA INTERNATIONAL CORP.

                                                                     2006

Dear Sirs,

                                 Drawdown Notice

     We refer to the Loan  Agreement  dated  2006  made  between  ourselves  and
yourselves ("the Agreement").

     Words and phrases  defined in the Agreement have the same meaning when used
in this Drawdown Notice.

     Pursuant to Clause 2.2 of the Agreement,  we  irrevocably  request that you
advance  the sum of [ ] to us on 2006,  which is a Business  Day,  by paying the
amount of the Loan to [ ].

     We warrant that the representations and warranties contained in Clause 4 of
the Agreement are true and correct at the date of this Drawdown  Notice and will
be true and  correct on 2006;  that no Event of Default nor  Potential  Event of
Default  has  occurred  and is  continuing,  and  that no Event  of  Default  or
Potential Event of Default will result from the advance of the Loan requested in
this Drawdown Notice.

     We select the period of [ ] months as the first Interest Period.

                                    Yours faithfully

                             .......................
                              For and on behalf of
                            XENIA INTERNATIONAL CORP.

<PAGE>

                                   APPENDIX B

                          Form of Transfer Certificate

To: FORTIS BANK N.V./S.A., ATHENS BRANCH

                              TRANSFER CERTIFICATE

This transfer  certificate relates to a secured loan facility agreement (as from
time to time  amended,  varied,  supplemented  or novated "the Loan  Agreement")
dated 2006,  on the terms and subject to the  conditions of which a secured loan
facility of up to $8,250,000 was made available to Xenia  International Corp. by
a syndicate of banks on whose behalf you act as agent and security trustee.

1    Terms  defined in the Loan  Agreement  shall,  unless  otherwise  expressly
     indicated,  have the same meaning when used in this certificate.  The terms
     "Transferor"   and  "Transferee"  are  defined  in  the  schedule  to  this
     certificate.

2    The Transferor:-

     2.1  confirms   that  the  details  in  the  Schedule   under  the  heading
          "Transferor's Commitment" accurately summarise its Commitment; and

     2.2  requests the  Transferee  to accept by way of novation the transfer to
          the Transferee of the amount of the Transferor's  Commitment specified
          in the Schedule by counter-signing  and delivering this certificate to
          the Agent at its  address  for  Communications  specified  in the Loan
          Agreement.

3    The  Transferee  requests  the Agent to accept  this  certificate  as being
     delivered  to the Agent  pursuant to and for the purposes of clause 15.4 of
     the Loan  Agreement  so as to take effect in  accordance  with the terms of
     that clause on the Transfer Date specified in the Schedule.

4    The Agent (on its own behalf and on behalf of the  Borrower and each of the
     Banks  other  than  the   Transferor)   confirms  its  acceptance  of  this
     certificate for the purposes of clause 15.4 of the Loan Agreement.

5    The Transferee confirms that:-

     5.1  it has received a copy of the Loan  Agreement  together with all other
          information which it has required in connection with this transaction;

     5.2  it has not relied and will not in the future rely on the Transferor or
          any  other  party to the Loan  Agreement  to check or  enquire  on its
          behalf into the legality, validity, effectiveness,  adequacy, accuracy
          or completeness of any such information; and

     5.3  it has not relied and will not in the future rely on the Transferor or
          any other  party to the Loan  Agreement  to keep  under  review on its
          behalf the financial condition, creditworthiness,  condition, affairs,
          status or nature of any of the Security Parties.

6    Execution  of  this   certificate   by  the  Transferee   constitutes   its
     representation  to the  Transferor  and to all  other  parties  to the Loan
     Agreement  that it has the power to become a party to the Loan Agreement as
     a Bank on the  terms of the  Loan  Agreement  and has  taken  all  steps to
     authorise execution and delivery of this certificate.

7    The Transferee undertakes with the Transferor and each of the other parties
     to the Loan Agreement  that it will perform in accordance  with their terms
     all  those  obligations  which by the terms of the Loan  Agreement  will be
     assumed  by it after  delivery  of this  certificate  to the  Agent and the
     satisfaction  of any  conditions  subject  to  which  this  certificate  is
     expressed to take effect.

8    The  Transferor  makes  no   representation  or  warranty  and  assumes  no
     responsibility  with  respect  to the  legality,  validity,  effectiveness,
     adequacy or enforceability of any of the Security Documents or any document
     relating to any of the Security  Documents,  and assumes no  responsibility
     for the  financial  condition  of any of the  Security  Parties  or for the
     performance  and  observance  by the  Security  Parties  of  any  of  their
     obligations under any of the Security Documents or any document relating to
     any of the Security  Documents and any conditions and warranties implied by
     law are expressly excluded.

9    The Transferee acknowledges that nothing in this certificate or in the Loan
     Agreement shall oblige the Transferor to:-

     9.1  accept a re-transfer  from the  Transferee of the whole or any part of
          the rights,  benefits and/or obligations  transferred pursuant to this
          certificate; or

     9.2  support any losses directly or indirectly sustained or incurred by the
          Transferee  for  any  reason  including,   without   limitation,   the
          non-performance  by any party to any of the Security  Documents of any
          obligations under any of the Security Documents.

10   The address  and fax number of the  Transferee  for the  purposes of clause
     10.20 of the Loan Agreement are set out in the Schedule.

11   This  certificate  may be  executed in any number of  counterparts  each of
     which  shall be  original  but which  shall  together  constitute  the same
     instrument.

12   This  certificate  shall be governed by and  interpreted in accordance with
     English law.

<PAGE>

                                  THE SCHEDULE

1    Transferor:

2    Transferee:

3    Transfer  Date (not earlier  that the fifth  Business Day after the date of
     delivery of the Transfer Certificate to the Agent):

4    Transferor's Commitment:

5    Amount transferred:

6    Transferee's address and fax number for the purposes of clause 10.20 of the
     Loan Agreement:

[name of Transferor]                        [name of Transferee]

By:                                         By:

Date:                                       Date:

FORTIS BANK N.V./S.A., ATHENS BRANCH as Agent

for and on behalf of itself,  the Borrower and each of the Banks (other than the
Transferor)

By:

Date:

SK 02558 0002 700697EXHIBIT 10.13

                               Date 30 August 2006

                             PROSPERO MARITIME INC.
                                   as Borrower

                                      -and-

                                     CALYON
                                    as Lender

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

                                 LOAN AGREEMENT

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

                      relating to a US$15,500,000 facility
                   to finance part of the acquisition cost of
                     m.v. "TORM TEKLA" (tbn ARISTIDES N.P.)

                            WATSON, FARLEY & WILLIAMS
                                     Piraeus

<PAGE>

                                      INDEX

CLAUSE                                                                     PAGE

1          INTERPRETATION                                                  1

2          FACILITY                                                       12

3          DRAWDOWN                                                       12

4          INTEREST                                                       12

5          INTEREST PERIODS                                               13

6          DEFAULT INTEREST                                               14

7          REPAYMENT AND PREPAYMENT                                       14

8          CONDITIONS PRECEDENT                                           15

9          REPRESENTATIONS AND WARRANTIES                                 16

10         GENERAL UNDERTAKINGS                                           18

11         CORPORATE UNDERTAKINGS                                         21

12         INSURANCE                                                      22

13         SHIP COVENANTS                                                 26

14         SECURITY COVER                                                 29

15         PAYMENTS AND CALCULATIONS                                      30

16         APPLICATION OF RECEIPTS                                        31

17         APPLICATION OF EARNINGS                                        32

18         EVENTS OF DEFAULT                                              33

19         FEES AND EXPENSES                                              37

20         INDEMNITIES                                                    38

21         NO SET-OFF OR TAX DEDUCTION                                    39

22         ILLEGALITY, ETC                                                40

23         INCREASED COSTS                                                40

24         SET-OFF                                                        41

25         TRANSFERS AND CHANGES IN LENDING OFFICE                        42

26         VARIATIONS AND WAIVERS                                         43

27         NOTICES                                                        43

28         SUPPLEMENTAL                                                   44

29         LAW AND JURISDICTION                                           45

SCHEDULE 1  DRAWDOWN NOTICE                                               46

SCHEDULE 2  CONDITION PRECEDENT DOCUMENTS                                 47

EXECUTION PAGE                                                            49

<PAGE>

LOAN AGREEMENT made on                     August 2006

BETWEEN

(1)  PROSPERO  MARITIME  INC.,  a  corporation  incorporated  in the Republic of
     Marshall Islands and having its registered office at Trust Company Complex,
     Ajeltake Road, Ajeltake Island, Majuro,  Marshall Islands (the "Borrower");
     and

(2)  CALYON, acting through its office at 9 Quai du President Paul Doumer, 92400
     Courbevoie, La Defense, Paris, France (the "Lender").

WHEREAS the Lender has agreed to make  available to the Borrower a loan facility
of the lesser of (a)  US$15,500,000,  (b) 66 per cent. of the purchase  price of
m.v. "TORM TEKLA" (tbn ARISTIDES  N.P.) (the "Ship") and (c) 66 per cent. of the
market value of the Ship on the Drawdown  Date  (determined  by the valuation of
the Ship  referred  to at  paragraph 7 of Schedule 2, Part A) for the purpose of
financing part of the acquisition cost of the Ship.

IT IS AGREED as follows:

1      INTERPRETATION

1.1    Definitions. Subject to Clause 1.5, in this Agreement:

       "Accounting  Information"  means  the  annual  audited  accounts  of  the
       Borrower referred to in Clause 10.6(a),  the annual audited  consolidated
       accounts  of the Group  referred  to in Clause  10.6(b) or the  quarterly
       unaudited  accounts of each of the Borrower and the Group  referred to in
       Clause 10.6(c) (as the context may require);

       "Accounts  Pledge"  means a deed  creating  security  in  respect  of the
       Operating  Account and the  Retention  Account in such form as the Lender
       may approve or require;

       "Approved Manager" means, Eurobulk S.A. a corporation incorporated in the
       Republic of Liberia and having a place of business at Aethrion Center, 40
       Ag.  Konstantinou  Street,  Maroussi 151 24, Athens,  Greece or any other
       company  which the Lender may approve from time to time as the manager of
       the Ship;

       "Asset Cover Ratio" means,  on each Margin  Calculation  Date,  the ratio
       (expressed as an  percentage) of (i) the Market Value of the Ship to (ii)
       the Loan (after  deducting any repayment  instalment  paid on that Margin
       Calculation Date);

       "Availability  Period"  means the period  commencing  on the date of this
       Agreement and ending on:

       (a)    30 September 2006 (or such later date as the Lender may agree with
              the Borrower); or

       (b)    if  earlier,  the date on which the Loan is fully  borrowed or the
              Lender's   obligation   to  advance  the  Loan  is   cancelled  or
              terminated;

       "Borrower"  means Prospero  Maritime Inc., a corporation  incorporated in
       the Republic  Marshall Islands and having its registered  office at Trust
       Company  Complex,   Ajeltake  Road,  Ajeltake  Island,  Majuro,  Marshall
       Islands;

       "Business  Day"  means a day on which  banks are open in London and Paris
       and,  in respect of a day on which a payment is required to be made under
       a Finance Document, also in New York City;

       "Charter"  means any charter in respect of the ship which exceeds,  or is
       capable of exceeding 12 months in duration;

       "Charter  Assignment" means in relation to any Charter,  an assignment of
       the rights of the Borrower  under that Charter in such form as the Lender
       may approve or require;

       "Contractual Currency" has the meaning given in Clause 20.5;

       "Corporate  Guarantee" means the guarantee by the Corporate  Guarantor of
       the  obligations  of the Borrower  under this  Agreement  and the Finance
       Documents in such form as the Lender may approve or require;

       "Corporate  Guarantor" means Euroseas Ltd. a corporation  incorporated in
       the Republic of the Marshall Islands and having its registered  office at
       Trust Company Complex,  Ajeltake Road, Ajeltake Island, Majuro,  Marshall
       Islands in its capacity as Corporate Guarantor;

       "Dollars"  and "$" means the  lawful  currency  for the time being of the
       United States of America;

       "Drawdown  Date" means the date requested by the Borrower for the Loan to
       be advanced,  or (as the context  requires) the date on which the Loan is
       actually advanced;

       "Drawdown Notice" means a notice in the form set out in Schedule 1 (or in
       any other form which the Lender approves or reasonably requires);

       "Earnings"  means all moneys  whatsoever  which are now, or later become,
       payable (actually or contingently) to the Borrower and which arise out of
       the use or operation of the Ship, including (but not limited to):

       (a)    all freight, hire and passage moneys,  compensation payable to the
              Borrower  in the  event  of  requisition  of the  Ship  for  hire,
              remuneration  for  salvage  and  towage  services,  demurrage  and
              detention moneys and damages for breach (or payments for variation
              or  termination)  of any  charterparty  or other  contract for the
              employment of the Ship;

       (c)    all  moneys  which are at any time  payable  under  Insurances  in
              respect of loss of earnings; and

       (d)    if and whenever  the Ship is employed on terms  whereby any moneys
              falling  within  paragraphs  (a) or (c) above are pooled or shared
              with any other person,  that proportion of the net receipts of the
              relevant pooling or sharing  arrangement  which is attributable to
              the Ship;

       "Environmental Claim" means:

       (a)    any claim by any  governmental,  judicial or regulatory  authority
              which arises out of an Environmental Law;

       (b)    any claim by any other  person which  relates to an  Environmental
              Incident or to an alleged Environmental Incident,

              and  "claim"  means  a claim  for  damages,  compensation,  fines,
              penalties or any other payment of any kind, whether or not similar
              to the  foregoing;  an order or direction to take, or not to take,
              certain action or to desist from or suspend  certain  action;  and
              any form of enforcement or regulatory action, including the arrest
              or attachment of any asset;

       "Environmental Incident" means:

       (a)    any release of  Environmentally  Sensitive Material from the Ship;
              or

       (b)    any  incident  in  which  Environmentally  Sensitive  Material  is
              released  from a vessel  other than the Ship and which  involves a
              collision  between  the Ship and such  other  vessel or some other
              incident of navigation or operation, in either case, in connection
              with  which  the Ship is  actually  or  potentially  liable  to be
              arrested,  attached,  detained or injuncted and/or the Ship or the
              Borrower  and/or any  operator or manager is at fault or allegedly
              at fault  or  otherwise  liable  to any  legal  or  administrative
              action; or

       (c)    any other incident in which Environmentally  Sensitive Material is
              released otherwise than from the Ship and in connection with which
              the Ship is actually or potentially  liable to be arrested  and/or
              where the  Borrower  and/or any operator or manager of the Ship is
              at fault or allegedly at fault or otherwise liable to any legal or
              administrative action;

       "Environmental  Law" means any law relating to pollution or protection of
       the environment, to the carriage of Environmentally Sensitive Material or
       to actual or threatened releases of Environmentally Sensitive Material;

       "Environmentally  Sensitive  Material"  means oil,  oil  products and any
       other  substance  (including  any  chemical,  gas or other  hazardous  or
       noxious  substance)  which  is (or  is  capable  of  being  or  becoming)
       polluting, toxic or hazardous;

       "Event of Default" means any of the events or circumstances  described in
       Clause 18.1;

       "Finance Documents" means:

       (a)    this Agreement;

       (b)    the Corporate Guarantee;

       (c)    the General Assignment;

       (d)    any Charter Assignment;

       (e)    the Mortgage;

       (f)    the Master Agreement;

       (g)    the Master Agreement Assignment;

       (h)    the Accounts Pledge;

       (i)    the Negative Pledge;

       (j)    the Manager's Undertaking; and

       (k)    any other document  (whether  creating a Security Interest or not)
              which is executed at any time by the  Borrower or any other person
              as security  for, or to  establish  any form of  subordination  or
              priorities  arrangement  in relation to, any amount payable to the
              Lender under this Agreement or any of the documents referred to in
              this definition;

       "Financial Indebtedness" means, in relation to a person (the "debtor"), a
       liability of the debtor:

       (a)    for principal, interest or any other sum payable in respect of any
              moneys borrowed or raised by the debtor;

       (b)    under any loan stock,  bond,  note or other security issued by the
              debtor;

       (c)    under  any  acceptance  credit,  guarantee  or  letter  of  credit
              facility made available to the debtor;

       (d)    under  a  financial  lease,  a  deferred  purchase   consideration
              arrangement or any other agreement having the commercial effect of
              a borrowing or raising of money by the debtor;

       (e)    under  any  interest  or  currency  swap  or  any  other  kind  of
              derivative  transaction  entered  into by the  debtor  or,  if the
              agreement  under  which  any  such  transaction  is  entered  into
              requires  netting  of mutual  liabilities,  the  liability  of the
              debtor for the net amount; or

       (f)    under a guarantee, indemnity or similar obligation entered into by
              the debtor in respect of a liability of another person which would
              fall within (a) to (e) if the references to the debtor referred to
              the other person;

       "Financial  Year"  means,  in  relation to each of the  Borrower  and the
       Group,  each period of 1 year commencing on 1 January in respect of which
       its audited Accounting Information is or ought to be prepared;

       "General  Assignment"  means a general  assignment of the  Earnings,  the
       Insurances and any  Requisition  Compensation  in such form as the Lender
       may approve or require;

       "Group" means the Borrower,  the Corporate Guarantor and all subsidiaries
       of the Corporate  Guarantor from time to time during the Security  Period
       and "member of the Group" shall be construed accordingly;

       "Insurances" means:

       (a)    all policies and contracts of insurance,  including entries of the
              Ship in any  protection  and  indemnity or war risks  association,
              which are  effected  in  respect  of the  Ship,  its  Earnings  or
              otherwise in relation to the Ship; and

       (b)    all rights and other assets  relating to, or derived from,  any of
              the foregoing, including any rights to a return of a premium;

       "Interest Period" means a period determined in accordance with Clause 5;

       "ISM Code" means in  relation to its  application  to the  Borrower,  the
       Approved Manager, the Ship and its operation:

       (a)    'The International Management Code for the Safe Operation of Ships
              and for Pollution  Prevention',  currently known or referred to as
              the 'ISM  Code',  adopted  by the  Assembly  of the  International
              Maritime  Organisation by Resolution  A.741(18) on 4 November 1993
              and   incorporated   on  19  May  1994  into  chapter  IX  of  the
              International Convention for the Safety of Life at Sea 1974 (SOLAS
              1974); and

       (b)    all further resolutions, circulars, codes, guidelines, regulations
              and recommendations which are now or in the future issued by or on
              behalf of the  International  Maritime  Organisation  or any other
              entity  with   responsibility   for  implementing  the  ISM  Code,
              including without limitation, the 'Guidelines on implementation or
              administering of the International Safety Management (ISM) Code by
              Administrations'    produced   by   the   International   Maritime
              Organisation  pursuant  to  Resolution  A.788(19)  adopted  on  25
              November 1995,

       as the same may be amended, supplemented or replaced from time to time;

       "ISM Code Documentation" includes, in relation to the Ship:

       (a)    the document of compliance (DOC) and safety management certificate
              (SMC)  issued  pursuant  to the ISM Code in  relation  to the Ship
              within the periods specified by the ISM Code; and

       (b)    all other documents and data which are relevant to the ISM SMS and
              its  implementation and verification which the Lender may require;
              and

       (c)    any other  documents  which are  prepared  or which are  otherwise
              relevant to establish  and maintain the Ship's  compliance  or the
              compliance  of the Borrower with the ISM Code which the Lender may
              require;

       "ISM SMS" means,  in relation to the Ship, the safety  management  system
       which is required to be  developed,  implemented  and  maintained  by the
       Borrower under the ISM Code;

       "ISPS Code" means the International  Ship and Port Facility Security Code
       constituted  pursuant  to  resolution  A.924  (22)  of the  International
       Maritime  Organisation ("IMO") adopted by a Diplomatic  conference of the
       IMO on Maritime  Security on 13 December  2002 and now set out in Chapter
       XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as amended) to
       take effect on 1 July 2004;

       "ISPS Code Documentation" includes:

       (a)    the International Ship Security Certificate issued pursuant to the
              ISPS Code in relation to the Ship within the period  specified  in
              the ISPS Code; and

       (e)    all other  documents  and data which are relevant to the ISPS Code
              and its  implementation  and  verification  which the  Lender  may
              require;

       "Lender" means:

       (a)    Calyon,  acting  through  its branch at 9 Quai du  President  Paul
              Doumer,  92400 Courbevoie,  La Defense,  Paris, France (or through
              another  branch  notified to the Lender  under Clause 25.6) or its
              direct or indirect successor;

       (b)    a  direct  or  indirect   assignee  of  such  bank  or   financial
              institution or of a successor of it; or

       (c)    a direct or indirect successor of an assignee such as is mentioned
              in (b),  unless any of the  foregoing has assigned all its rights,
              and novated all its obligations and liabilities, under the Finance
              Documents;

       "LIBOR" means, for an Interest  Period,  the rate per annum determined by
       the Lender to be the rate at which deposits in Dollars are offered to the
       Lender by leading  banks in the London  Interbank  Market at the Lender's
       request at or about 11.00 a.m.  (London time) on the second  Business Day
       prior to the  commencement  of that Interest Period for a period equal to
       that Interest Period and for delivery on the first Business Day of it;

       "Loan" means the principal  amount of the borrowing by the Borrower under
       this Agreement being in an amount of up to $15,500,000 or, as the context
       may require,  the principal amount for the time being  outstanding  under
       this Agreement;

       "Major  Casualty" means, any casualty to the Ship in respect of which the
       claim  or the  aggregate  of the  claims  against  all  insurers,  before
       adjustment for any relevant franchise or deductible,  exceeds $350,000 or
       the equivalent in any other currency;

       "Management  Agreement"  means the  agreement (a  certified  true copy of
       which has been delivered to the Lender) made between the Approved Manager
       and the Borrower in respect of the management of the Ship;

       "Manager's  Undertaking"  means the undertaking  referred to in paragraph
       3(a) of Part B of  Schedule 2 in such form as the  Lender may  approve or
       require;

       "Margin" means:

       (a)    (i) at all times until the first Margin  Calculation  Date (ii) at
              all times after the first Margin  Calculation  Date when the Asset
              Cover  Ratio is equal to or higher  than 150 per  cent.,  0.90 per
              cent. per annum; and

       (b)    at all  times  when the  Asset  Cover  Ratio is less  than 150 per
              cent., 1.10 per cent. per annum;

       "Margin  Calculation  Date" has the meaning  given to that term in Clause
       4.7;

       "Market Value" means the market value of the Ship at any date  determined
       in accordance with Clause 14.5;

       "Master   Agreement"  means  the  master  agreement  (on  the  1992  ISDA
       (Multicurrency  -  Crossborder)  form)  made  or to be made  between  the
       Borrower and the Lender and includes all  Transactions  from time to time
       entered into and Confirmations from time to time exchanged thereunder;

       "Master  Agreement   Assignment"  means  the  assignment  of  the  Master
       Agreement  by the  Borrower  in such form as the  Lender  may  approve or
       require;

       "Master  Agreement   Liabilities"   means,  at  any  relevant  time,  all
       liabilities  actual or contingent,  present or future, of the Borrower to
       the Lender under the Master Agreement;

       "MOA"  means a  memorandum  of  agreement  dated  21 July  2006  (and any
       amendments  or  supplements  thereto) and entered into between the Seller
       and the  Borrower  in respect of the sale and  purchase of the Ship for a
       purchase price of $23,460,000;

       "Mortgage"  means the first preferred  Marshall  Islands ship mortgage in
       respect of the Ship in such form as the Lender may approve or require;

       "Negative  Pledge"  means the negative  pledge in respect of the whole of
       the issued  share  capital of the Borrower in such form as the Lender may
       approve or require;

       "Net Income"  means,  in relation to each Financial Year of the Borrower,
       the  aggregate  income  of  the  Borrower  appearing  in  the  Accounting
       Information  of the Borrower for that  Financial  Year as  determined  in
       accordance with US GAAP consistently applied;

       "Operating Account" means an account in the name of the Borrower with the
       Lender  designated  "Prospero  Maritime Inc. - Operating  Account" or any
       other  account  (with  that or  another  office of the  Lender)  which is
       designated  by the Lender as the  Operating  Account for the  purposes of
       this Agreement;

       "Payment Currency" has the meaning given in Clause 20.5;

       "Pertinent Jurisdiction", in relation to a company, means:

       (a)    England and Wales;

       (b)    the country under the laws of which the company is incorporated or
              formed;

       (c)    a country in which the company's central management and control is
              or has recently been exercised;

       (d)    a country  in which the  overall  net  income  of the  company  is
              subject to corporation tax, income tax or any similar tax;

       (e)    a country in which  assets of the company  (other than  securities
              issued by, or loans to,  related  companies)  having a substantial
              value are  situated,  in which the  company  maintains a permanent
              place of business,  or in which a Security Interest created by the
              company  must or  should  be  registered  in order to  ensure  its
              validity or priority; and

       (f)    a country the courts of which have  jurisdiction to make a winding
              up,  administration or similar order in relation to the company or
              which  would  have  such  jurisdiction  if their  assistance  were
              requested by the courts of a country referred to in paragraphs (b)
              or (c) above;

       "Potential Event of Default" means an event or circumstance  which,  with
       the  giving of any  notice,  the lapse of time,  a  determination  of the
       Lender and/or the satisfaction of any other  condition,  would constitute
       an Event of Default;

       "Relevant Person" has the meaning given in Clause 18.8;

       "Repayment Date" means a date on which a repayment is required to be made
       under Clause 7;

       "Requisition  Compensation"  includes  all  compensation  or other moneys
       payable by reason of any act or event such as is referred to in paragraph
       (b) of the definition of "Total Loss";

       "Retention Account" means an account in the name of the Borrower with the
       Lender in Paris designated  "Prospero  Maritime Inc. - Retention Account"
       or any other account (with that or another office of the Lender) which is
       designated  by the Lender as the  Retention  Account for the  purposes of
       this Agreement;

       "Secured  Liabilities"  means all  liabilities  which the  Borrower,  the
       Security Parties or any of them have, at the date of this Agreement or at
       any later time or times,  under or by virtue of the Finance  Documents or
       any judgment  relating to the Finance  Documents;  and for this  purpose,
       there  shall be  disregarded  any  total or  partial  discharge  of these
       liabilities,  or variation  of their  terms,  which is effected by, or in
       connection  with,  any  bankruptcy,  liquidation,  arrangement  or  other
       procedure under the insolvency laws of any country;

       "Security Interest" means:

       (a)    a mortgage,  charge  (whether  fixed or floating)  or pledge,  any
              maritime or other lien or any other security interest of any kind;

       (b)    the  rights of the  plaintiff  under an action in rem in which the
              vessel  concerned  has been  arrested or a writ has been issued or
              similar step taken; and

       (c)    any  arrangement  entered into by a person (A) the effect of which
              is to place another person (B) in a position which is similar,  in
              economic  terms, to the position in which B would have been had he
              held a  security  interest  over an  asset  of A; but (c) does not
              apply to a right of set off or combination  of accounts  conferred
              by  the  standard  terms  of  business  of  a  bank  or  financial
              institution;

       "Security Party" means the Approved Manager,  the Corporate Guarantor and
       any other person (except the Lender) who, as a surety or mortgagor,  as a
       party to any subordination or priorities  arrangement,  or in any similar
       capacity,  executes a document  falling within the final paragraph of the
       definition of "Finance Documents";

       "Security  Period"  means  the  period  commencing  on the  date  of this
       Agreement  and  ending  on the  date on which  the  Lender  notifies  the
       Borrower and the Security Parties that:

       (a)    all amounts  which have become due for payment by the  Borrower or
              any Security Party under the Finance Documents have been paid;

       (b)    no amount is owing or has accrued  (without yet having  become due
              for payment) under any Finance Document;

       (c)    neither  the  Borrower  nor any  Security  Party has any future or
              contingent  liability under Clause 19, 20 or 21 below or any other
              provision of this Agreement or another Finance Document; and

       (d)    the Lender,  in its reasonable  judgement,  does not consider that
              there is a significant risk that any payment or transaction  under
              a  Finance  Document  would  be set  aside,  or  would  have to be
              reversed or adjusted, in any present or possible future bankruptcy
              of the Borrower or a Security  Party or in any present or possible
              future  proceeding  relating  to a Finance  Document  or any asset
              covered (or previously  covered) by a Security Interest created by
              a Finance Document;

       "Seller" means A/S  Dampskibsselskabet  TORM a company incorporated under
       the laws of Denmark;

       "Ship" means the  1993-built  fully cellular  container  vessel of 69,268
       metric tons  deadweight  presently  registered  in the  ownership  of the
       Seller under NIS flag with the name "TORM TEKLA" which to be purchased by
       the Borrower  pursuant to the MOA and  registered in its ownership  under
       Marshall Islands flag with the name ARISTIDES N.P.;

       "Swap  Exposure"  means, as at any relevant date the aggregate net amount
       in Dollars  which would be payable by the  Borrower  to the Lender  under
       (and  calculated  in  accordance  with)  section 6(e)  (Payments on Early
       Termination)  of the Master  Agreement if an Early  Termination  Date had
       occurred on the relevant date in relation to all continuing  Transactions
       entered into between the Borrowers and the Lender;

       "Total Loss" means:

       (a)    actual, constructive,  compromised,  agreed or arranged total loss
              of the Ship;

       (b)    any expropriation, confiscation, requisition or acquisition of the
              Ship,  whether for full  consideration,  a consideration less than
              the Ship's proper value,  a nominal  consideration  or without any
              consideration,  which is  effected by any  government  or official
              authority  or  by  any  person  or  persons  claiming  to be or to
              represent  a  government  or  official   authority,   excluding  a
              requisition  for hire for a fixed  period not  exceeding  one year
              without any right to an extension;

       (c)    any  condemnation  of the Ship by any tribunal or by any person or
              person claiming to be a tribunal; and

       (d)    any arrest,  capture,  seizure or detention of the Ship (including
              any hijacking or theft)  unless she is within 45 days  redelivered
              to the full control of the Borrower;

       "Total Loss Date" means:

       (a)    in the case of an actual  loss of the  Ship,  the date on which it
              occurred  or, if that is unknown,  the date when the Ship was last
              heard of;

       (b)    in the case of a  constructive,  compromised,  agreed or  arranged
              total loss of the Ship, the earliest of:

              (i)    the date on which a notice of  abandonment  is given to the
                     insurers; and

              (ii)   the date of any  compromise,  arrangement or agreement made
                     by or on behalf of the Borrower with the Ship's insurers in
                     which the insurers agree to treat the Ship as a total loss;
                     and

       (c)    in the case of any other type of total  loss,  on the date (or the
              most likely date) on which it appears to the Lender that the event
              constituting the total loss occurred; and

       "US GAAP" means generally accepted accounting  principles as from time to
       time in effect in the United States of America.

1.2    Construction of certain terms. In this Agreement:

       "approved"  means,  for the purposes of Clause 12, approved in writing by
       the Lender;

       "asset"  includes  every  kind of  property,  asset,  interest  or right,
       including  any  present,  future or  contingent  right to any revenues or
       other payment;

       "company"  includes any  partnership,  joint  venture and  unincorporated
       association;

       "consent"  includes  an  authorisation,  consent,  approval,  resolution,
       licence, exemption, filing, registration, notarisation and legalisation;

       "contingent  liability"  means a liability  which is not certain to arise
       and/or the amount of which remains unascertained;

       "document" includes a deed; also a letter or fax;

       "excess  risks" means,  in relation to the Ship, the proportion of claims
       for general  average,  salvage and salvage charges not recoverable  under
       the hull and machinery  policies in respect of the Ship in consequence of
       its insured value being less than the value at which the Ship is assessed
       for the purpose of such claims;

       "expense" means any kind of cost, charge or expense  (including all legal
       costs, charges and expenses) and any applicable value added or other tax;

       "law"  includes any form of delegated  legislation,  any order or decree,
       any treaty or  international  convention and any regulation or resolution
       of the Council of the European Union, the European Commission, the United
       Nations or its Security Council;

       "legal  or   administrative   action"  means  any  legal   proceeding  or
       arbitration and any administrative or regulatory action or investigation;

       "liability"  includes every kind of debt or liability (present or future,
       certain  or  contingent),  whether  incurred  as  principal  or surety or
       otherwise;

       "months" shall be construed in accordance with Clause 1.3;

       "obligatory  insurances"  means,  in relation to the Ship, all insurances
       effected,  or which the  Borrower is obliged to effect,  under  Clause 12
       below  or any  other  provision  of this  Agreement  or  another  Finance
       Document;

       "parent company" has the meaning given in Clause 1.4;

       "person"  includes any company;  any state,  political  sub-division of a
       state  and  local  or   municipal   authority;   and  any   international
       organisation;

       "policy",  in relation  to any  insurance,  includes a slip,  cover note,
       certificate  of  entry or  other  document  evidencing  the  contract  of
       insurance or its terms;

       "protection  and  indemnity  risks"  means the usual  risks  covered by a
       protection  and  indemnity  association  managed  in  London,   including
       pollution  risks and the  proportion  (if any) of any sums payable to any
       other  person or persons in case of collision  which are not  recoverable
       under the hull and  machinery  policies  by  reason of the  incorporation
       therein of clause 1 of the  Institute  Time Clauses  (Hulls)(1/10/83)  or
       clause  8  of  the  Institute  Time  Clauses  (Hulls)(1/11/1995)  or  the
       Institute  Amended  Running  Down  Clause  (1/10/71)  or  any  equivalent
       provision;

       "regulation" includes any regulation,  rule, official directive,  request
       or guideline  whether or not having the force of law of any governmental,
       intergovernmental   or   supranational   body,   agency,   department  or
       regulatory, self-regulatory or other authority or organisation;

       "subsidiary" has the meaning given in Clause 1.4;

       "successor" includes any person who is entitled (by assignment, novation,
       merger or otherwise) to any other person's rights under this Agreement or
       any other  Finance  Document (or any interest in those rights) or who, as
       administrator,  liquidator  or otherwise,  is entitled to exercise  those
       rights;  and in particular  references to a successor include a person to
       whom those rights (or any interest in those  rights) are  transferred  or
       pass  as  a  result  of  a  merger,  division,  reconstruction  or  other
       reorganisation of it or any other person;

       "tax" includes any present or future tax, duty, impost, levy or charge of
       any kind which is imposed by any state,  any political  sub-division of a
       state or any local or municipal authority  (including any such imposed in
       connection with exchange controls),  and any connected penalty,  interest
       or fine; and

       "war risks"  includes the risk of mines and all risks  excluded by clause
       23 of the  Institute  Time Clauses  (Hulls)(1/10/83)  or clause 24 of the
       Institute Time Clauses (Hulls)(1/11/1995).

1.3    Meaning of "month".  A period of one or more  "months" ends on the day in
       the relevant calendar month  numerically  corresponding to the day of the
       calendar   month  on  which  the   period   started   ("the   numerically
       corresponding day"), but:

(a)    on the Business Day following the  numerically  corresponding  day if the
       numerically  corresponding  day is not a Business  Day or, if there is no
       later  Business  Day in the same  calendar  month,  on the  Business  Day
       preceding the numerically corresponding day; or

(b)    on the last Business Day in the relevant  calendar  month,  if the period
       started  on the  last  Business  Day in a  calendar  month or if the last
       calendar month of the period has no numerically corresponding day,

       and "month" and "monthly" shall be construed accordingly.

1.4    Meaning of "subsidiary". A company (S) is a subsidiary of another company
       (P) if:

(a)    a majority of the issued  shares in S (or a majority of the issued shares
       in S which carry  unlimited  rights to capital and income  distributions)
       are directly owned by P or are indirectly attributable to P; or

(b)    P has direct or indirect  control  over a majority  of the voting  rights
       attaching to the issued shares of S; or

(c)    P has the direct or indirect power to appoint or remove a majority of the
       directors of S; or

(d)    P otherwise  has the direct or indirect  power to ensure that the affairs
       of S are conducted in accordance with the wishes of P,

       and any company of which S is a subsidiary is a parent company of S.

1.5    General Interpretation.

(a)    In this Agreement:

       (i)    references  to, or to a  provision  of, a Finance  Document or any
              other  document are  references to it as amended or  supplemented,
              whether before the date of this Agreement or otherwise;

       (ii)   references  to,  or  to  a  provision  of,  any  law  include  any
              amendment,  extension,  re-enactment or replacement,  whether made
              before the date of this Agreement or otherwise; and

       (iii)  words  denoting the singular  number shall  include the plural and
              vice versa;

(b)    Clauses 1.1 to 1.4 and  paragraph (a) of this Clause 1.5 apply unless the
       contrary intention appears; and

(c)    The  clause  headings  shall  not  affect  the   interpretation  of  this
       Agreement.

2      FACILITY

2.1    Amount of facility.  Subject to the other  provisions of this  Agreement,
       the Lender shall make  available to the Borrower a loan facility of up to
       the lesser of (a) $15,500,000,  (b) 66 per cent. of the purchase price of
       the Ship payable  pursuant to the MOA and (c) 66 per cent.  of the Market
       Value of the Ship (determined by the valuation of the Ship referred to at
       paragraph 7 of Schedule 2, Part A) to be drawn in a single advance.

2.2    Purpose of the Loan. The Borrower  undertakes  with the Lender to use the
       Loan only for the purpose stated in the preamble to this Agreement.

3      DRAWDOWN

3.1    Request for the Loan. The Borrower may request the Loan to be advanced by
       ensuring that the Lender receives the completed Drawdown Notice not later
       than  11.00 a.m.  (London  time) 2  Business  Days prior to the  intended
       Drawdown  Date subject to the  Drawdown  Date being a Business Day during
       the Availability Period.

3.2    Drawdown  Notice  irrevocable.  A  Drawdown  Notice  must be  signed by a
       director or a duly authorised  attorney-in-fact of the Borrower; and once
       served,  a Drawdown Notice cannot be revoked without the prior consent of
       the Lender.

3.3    Disbursement  of the Loan.  Subject to the provisions of this  Agreement,
       the Lender shall on the Drawdown  Date advance the Loan to the  Borrower;
       and  payment to the  Borrower  shall be made to the account of the Seller
       nominated by the Borrower in accordance  with the MOA but subject to such
       conditions or restrictions as the Lender my impose.

3.4    Disbursement of the Loan to third party.  The payment by the Lender under
       Clause 3.3 to the account of the Seller shall constitute the advancing of
       the Loan and the Borrower shall thereupon become  indebted,  as principal
       and direct obligor, to the Lender in an amount equal to the Loan.

4      INTEREST

4.1    Payment of normal interest.  Subject to the provisions of this Agreement,
       interest on the Loan in respect of each Interest  Period shall be paid by
       the Borrower on the last day of that Interest Period.

4.2    Normal rate of interest. Subject to the provisions of this Agreement, the
       rate of interest on the Loan in respect of an  Interest  Period  shall be
       the  aggregate  of the  applicable  Margin  and LIBOR  for that  Interest
       Period.

4.3    Payment of accrued  interest.  In the case of an Interest  Period  longer
       than 3 months,  accrued interest shall be paid every 3 months during that
       Interest Period and on the last day of that Interest Period.

4.4    Notification of market  disruption.  The Lender shall promptly notify the
       Borrower if for any reason the Lender is unable to obtain  Dollars in the
       London  Interbank  Market  in  order to fund the Loan (or any part of it)
       during any Interest Period,  stating the circumstances  which have caused
       such notice to be given.

4.5    Suspension of drawdown. If the Lender's notice under Clause 4.4 is served
       before the Loan is  advanced,  the Lender's  obligation  to make the Loan
       available shall be suspended while the  circumstances  referred to in the
       Lender's notice continue.

4.6    Alternative rate of interest.  If, after the Loan has been advanced,  the
       Lender is unable to obtain Dollars in the London Interbank Market to fund
       the Loan (or any part of it) during any  Interest  Period or adequate and
       fair means do not exist for ascertaining the rate of interest, the Lender
       shall set an interest rate representing the cost of funding of the Lender
       in Dollars or in any available currency of the Loan plus the Margin.

4.7    Calculation  of Asset Cover Ratio.  The Lender shall  calculate the Asset
       Cover  Ratio on each  anniversary  of the  Drawdown  Date (each a "Margin
       Calculation  Date") for the purposes of calculating  the Margin and shall
       advise the  Borrower in writing,  within 10 Business  Days of each Margin
       Calculation  Date, of the Margin which will apply for the 12-month period
       commencing  on the relevant  Margin  Calculation  Date  Provided  that in
       respect of each  Margin  Calculation  Date  other  than the first  Margin
       Calculation Date, the Lender shall only be obliged to advise the Borrower
       of the Margin which will apply for the 12-month period  commencing on the
       relevant Margin  Calculation Date if that Margin will be different to the
       Margin which applied immediately prior to that Margin Calculation Date.

       For the purposes of  calculating  the Asset Cover Ratio  pursuant to this
       Clause 4.7, the Market Value of the Ship shall be determined no more than
       30 days prior to the relevant Margin Calculation Date.

5      INTEREST PERIODS

5.1    Commencement of Interest Periods. The first Interest Period applicable to
       the Loan shall commence on the Drawdown Date and each subsequent Interest
       Period shall commence on the expiry of the preceding Interest Period.

5.2    Duration of normal Interest Periods. Subject to Clauses 5.3 and 5.4, each
       Interest Period shall be:

(a)    3, 6 or 12 months as  notified  by the  Borrower  to the Lender not later
       than 11.00 a.m.  (London time) 3 Business Days before the commencement of
       the Interest Period; or

(b)    3  months,  if the  Borrower  fails  to  notify  the  Lender  by the time
       specified in paragraph (a) above; or

(c)    such other period as the Lender may agree with the Borrower.

5.3    Duration of Interest Periods for repayment instalments.  In respect of an
       amount due to be repaid under Clause 7 on a particular Repayment Date, an
       Interest Period shall end on that Repayment Date.

5.4    Non-availability  of matching deposits for Interest Period selected.  If,
       after the Borrower has selected an Interest  Period longer than 6 months,
       the Lender notifies the Borrower by 11.00 a.m. (London time) on the third
       Business Day before the  commencement  of the Interest  Period that it is
       not satisfied that deposits in Dollars for a period equal to the Interest
       Period will be  available to it in the London  Interbank  Market when the
       Interest Period commences, the Interest Period shall be of 6 months.

6      DEFAULT INTEREST

6.1    Payment of default  interest on overdue  amounts.  The Borrower shall pay
       interest in accordance with the following  provisions of this Clause 6 on
       any amount payable by the Borrower  under any Finance  Document which the
       Lender does not receive on or before the relevant date, that is:

(a)    the date on which the Finance  Documents  provide that such amount is due
       for payment; or

(b)    if a Finance Document provides that such amount is payable on demand, the
       date on which the demand is served; or

(c)    if such amount has become  immediately due and payable under Clause 18.5,
       the date on which it became immediately due and payable.

6.2    Default rate of interest. Interest shall accrue on an overdue amount from
       (and  including)  the relevant date until the date of actual  payment (as
       well after as before  judgment) at the rate per annum  determined  by the
       Lender to be 1 per cent. above the Margin plus LIBOR at which deposits in
       an  amount  equal  to such  overdue  amount  are  offered  on call or for
       successive  periods of any duration of up to 3 months,  as the Lender may
       determine from time to time.

6.3    Notification  of interest  periods and default  rates.  The Lender  shall
       promptly notify the Borrower of each interest rate determined by it under
       Clause 6.2 and of each  period  selected  by it for the  purposes of that
       Clause;  but this shall not be taken to imply that the Borrower is liable
       to pay such  interest  only  with  effect  from the date of the  Lender's
       notification.

6.4    Payment of accrued default  interest.  Subject to the other provisions of
       this  Agreement,  any interest due under this Clause shall be paid on the
       last day of the period by reference to which it was determined.

6.5    Compounding of default  interest.  Any such interest which is not paid at
       the end of the period by  reference to which it was  determined  shall be
       compounded every 3 months.

7      REPAYMENT AND PREPAYMENT

7.1    Amount of repayment instalments.  The Borrower shall repay the Loan by 14
       consecutive  six-monthly  instalments of (a) in the case of the first and
       second instalments (inclusive),  in the amount of $1,200,000 each, (b) in
       the case of the third instalment,  in the amount of $1,000,000 and (c) in
       the case of the  fourth to  fourteenth  instalments  (inclusive),  in the
       amount of $825,000  each  together  with a balloon  payment of $3,025,000
       (the "Balloon").

7.2    Repayment  Dates.  The first repayment  instalment shall be repaid on the
       date falling 6 months after the Drawdown Date, each subsequent  repayment
       instalment shall be paid at six-monthly intervals thereafter and the last
       instalment,  together  with  the  Balloon,  shall be  repaid  on the date
       falling on the earlier of (a) the date falling on the seventh anniversary
       of the Drawdown Date and (b) 30 September 2013.

7.3    Final  Repayment  Date. On the final  Repayment  Date, the Borrower shall
       additionally pay to the Lender all other sums then accrued or owing under
       any Finance Document.

7.4    Voluntary prepayment.  Subject to the following conditions,  the Borrower
       may  prepay  the  whole  or any  part of the  Loan on the  last day of an
       Interest Period.

7.5    Conditions for voluntary prepayment. The conditions referred to in Clause
       7.4 are:

(a)    that a partial  prepayment  shall be  $250,000  or an  integral  multiple
       thereof;

(b)    that the Lender has  received  from the  Borrower at least 10 days' prior
       written notice  specifying the amount to be prepaid and the date on which
       the prepayment is to be made;

(c)    that the Borrower has provided  evidence  satisfactory to the Lender that
       any consent  required by the Borrower or any Security Party in connection
       with the prepayment has been obtained and remains in force,  and that any
       regulation  relevant to this Agreement  which affects the Borrower or any
       Security Party has been complied with.

7.6    Effect of notice of prepayment.  A prepayment notice may not be withdrawn
       or amended without the consent of the Lender and the amount  specified in
       the prepayment notice shall become due and payable by the Borrower on the
       date for prepayment specified in the prepayment notice.

7.7    Mandatory  prepayment.  Without prejudice to the provisions of Clause 14,
       the Borrower shall be obliged to prepay the whole of the Loan if the Ship
       is sold or becomes a Total Loss:

(a)    in the  case of a sale,  on or  before  the  date on  which  the  sale is
       completed; or

(b)    in the case of Total Loss,  on the  earlier of the date  falling 150 days
       after the Total  Loss Date and the date of  receipt  by the Lender of the
       proceeds of insurance relating to such Total Loss.

7.8    Shareholding and senior executive management of Borrower.  If at any time
       Mr. John Pittas and members of the Pittas family (either  directly and/or
       through companies  beneficially  owned by the Pittas family and/or trusts
       or foundations of which the Pittas family are  beneficiaries)  (i) do not
       own  the  necessary  shareholding  to  exercise  executive  power  of the
       Corporate  Guarantor or (ii) are not represented in the senior  executive
       management of the Corporate Guarantor, the Borrower shall promptly advise
       the Lender of the  occurrence  of the  circumstances  referred to in this
       Clause 7.8.  If the Lender  does not  approve  (in its sole and  absolute
       discretion)  the change in  circumstances  which has  occurred,  the Loan
       shall be prepaid in full  subject to the Lender  giving the  Borrower and
       the Corporate Guarantor 60 days prior written notice.

7.9    Amounts payable on prepayment.  A prepayment  shall be made together with
       accrued  interest (and any other amount  payable under Clause 20 below or
       otherwise) in respect of the amount prepaid and, if the prepayment is not
       made on the last day of an Interest Period together with any sums payable
       under Clause 20.1(b) but without premium or penalty.

7.10   Application  of partial  prepayment.  Each  partial  prepayment  shall be
       applied in reducing pro rata each of the repayment  instalments specified
       in Clause 7.1 and the Balloon.

7.11   No reborrowing. No amount prepaid may be reborrowed.

8      CONDITIONS PRECEDENT

8.1    Documents,  fees and no default.  The Lender's  obligation to advance the
       Loan is subject to the following conditions precedent:

(a)    that,  on or before  the  service  of the  Drawdown  Notice,  the  Lender
       receives  the  documents  described  in Part A of  Schedule 2 in form and
       substance satisfactory to it and its lawyers;

(b)    that, on the Drawdown  Date but prior to the  advancing of the Loan,  the
       Lender  receives the documents  described in Part B of Schedule 2 in form
       and substance satisfactory to it and its lawyers;

(c)    that the Lender has  received  the  management  fee referred to in Clause
       19.1 and has received payment of the expenses referred to in Clause 19.2;

(d)    that both at the date of the Drawdown Notice and at the Drawdown Date:

       (i)    no Event of Default or Potential Event of Default has occurred and
              is continuing or would result from the borrowing of the Loan;

       (ii)   the  representations and warranties in Clause 9.1 and those of the
              Borrower  or any  Security  Party  which  are set out in the other
              Finance  Documents would be true and not misleading if repeated on
              each of those  dates  with  reference  to the  circumstances  then
              existing; and

       (iii)  none of the circumstances  contemplated by Clause 4.4 has occurred
              and is continuing;

(e)    that,  if the  ratio  set out in Clause  14.1  were  applied  immediately
       following the advancing of the Loan,  the Lender would not be entitled to
       oblige the Borrower to provide additional  security or prepay part of the
       Loan under that Clause; and

(f)    that the  Lender  has  received,  and found to be  acceptable  to it, any
       further opinions,  consents,  agreements and documents in connection with
       the Finance  Documents which the Lender may reasonably  request by notice
       to the Borrower prior to the Drawdown Date.

8.2    Waivers  of  conditions  precedent.  If the  Lender,  at its  discretion,
       permits the Loan to be borrowed before certain of the conditions referred
       to in Clause 8.1 are  satisfied,  the  Borrower  shall  ensure that those
       conditions  are satisfied  within 5 Business Days after the Drawdown Date
       (or such longer period as the Lender may specify).

9      REPRESENTATIONS AND WARRANTIES

9.1    General. The Borrower represents and warrants to the Lender as follows.

9.2    Status.  The Borrower is duly  incorporated  and validly  existing and in
       good standing under the laws of the Republic of the Marshall Islands.

9.3    Share capital and ownership. The Borrower has an authorised share capital
       of 500 bearer and/or registered shares of no par value each, all of which
       shares  have  been  issued  in  bearer  form,  and the  legal  title  and
       beneficial  ownership of all the shares of the Borrower is held,  free of
       any Security Interest or other claim, by the Corporate Guarantor.

9.4    Corporate power. The Borrower has the corporate  capacity,  and has taken
       all corporate action and obtained all consents necessary for it:

(a)    to execute the MOA,  to  purchase  and pay for the Ship under the MOA and
       register the Ship in its name under Marshall Islands flag;

(b)    to execute the Finance Documents to which it is a party; and

(c)    to borrow under this Agreement and to make all the payments  contemplated
       by, and to comply with, this Agreement and the other Finance Documents to
       which it is a party. 9.5 Consents in force. All the consents  referred to
       in Clause 9.4 remain in force and nothing has occurred which makes any of
       them liable to revocation.

9.6    Legal validity;  effective Security  Interests.  The Finance Documents to
       which the Borrower is a party do now or, as the case may be,  will,  upon
       execution and delivery (and, where  applicable,  registration as provided
       for in the Finance Documents):

(a)    constitute  the   Borrower's   legal,   valid  and  binding   obligations
       enforceable  against the  Borrower in  accordance  with their  respective
       terms; and

(b)    create  legal,  valid  and  binding  Security  Interests  enforceable  in
       accordance with their respective terms over all the assets to which they,
       by their terms, relate,

       subject to any  relevant  insolvency  laws  affecting  creditors'  rights
       generally.

9.7    No third party  Security  Interests.  Without  limiting the generality of
       Clause 9.6, at the time of the  execution  and  delivery of each  Finance
       Document:

(a)    the  Borrower  will have the right to create all the  Security  Interests
       which that Finance Document purports to create; and

(b)    no third party will have any  Security  Interest  or any other  interest,
       right or claim  over,  in or in  relation  to any asset to which any such
       Security Interest, by its terms, relates.

9.8    No conflicts.  The execution by the Borrower of the Finance Documents and
       the borrowing of the Loan, and its compliance with each Finance  Document
       will not involve or lead to a contravention of:

(a)    any law or regulation; or

(b)    the constitutional documents of the Borrower; or

(c)    any  contractual or other  obligation or restriction  which is binding on
       the Borrower or any of its assets.

9.9    No withholding  taxes.  All payments which the Borrower is liable to make
       under the Finance  Documents may be made without deduction or withholding
       for or on  account  of any tax  payable  under  any law of any  Pertinent
       Jurisdiction.

9.10   No  default.  No Event of  Default  or  Potential  Event of  Default  has
       occurred and is continuing.

9.11   Information.  All information which has been provided in writing by or on
       behalf of the Borrower or any Security  Party to the Lender in connection
       with any Finance Document  satisfied the requirements of Clause 10.5; all
       audited and unaudited  accounts which have been so provided satisfied the
       requirements  of Clause  10.7;  and there  has been no  material  adverse
       change in the financial position or state of affairs of the Borrower from
       that disclosed in the latest of those accounts.

9.12   No litigation.  No legal or administrative  action involving the Borrower
       (including  action  relating to any  alleged or actual  breach of the ISM
       Code and the ISPS Code) has been commenced or taken or, to the Borrower's
       knowledge,  is likely to be  commenced  or taken  which,  in either case,
       would be  likely to have a  material  adverse  effect  on the  Borrower's
       financial position or profitability.

9.13   No rebates etc.  There is no agreement or  understanding  to allow or pay
       any rebate,  premium,  commission,  discount or other  benefit or payment
       (howsoever  described  to the  Borrower,  the Seller or a third  party in
       connection  with the  purchase by the  Borrower of the Ship other than as
       disclosed  to the  Lender  in  writing  on or  prior  to the date of this
       Agreement.

9.14   Validity and completeness of the MOA.

(a)    the  copy of the MOA  delivered  to the  Lender  before  the date of this
       Agreement is a true and complete copy thereof;

(b)    the MOA constitutes  valid,  binding and  enforceable  obligations of the
       parties thereto in accordance with its terms; and

(c)    no  amendments or additions to the MOA have been agreed nor has any party
       thereto waived any of its respective rights thereunder.

9.15   Compliance with certain undertakings.  At the date of this Agreement, the
       Borrower is in compliance with Clauses 10.2, 10.4, 10.9 and 10.12.

9.16   Taxes paid. The Borrower has paid all taxes  applicable to, or imposed on
       or in relation to itself, its business or the Ship.

9.17   ISM Code and ISPS Code  compliance.  All requirements of the ISM Code and
       the ISPS Code as they relate to the  Borrower,  the Approved  Manager and
       the Ship will on or prior to the date on which the Ship is  delivered  to
       the Borrower pursuant to the MOA be complied with.

10     GENERAL UNDERTAKINGS

10.1   General.  The  Borrower  undertakes  with the  Lender to comply  with the
       following  provisions  of this Clause 10 at all times during the Security
       Period, except as the Lender may otherwise permit.

10.2   Title; negative pledge. The Borrower will:

(a)    hold the legal  title to, and own the entire  beneficial  interest in the
       Ship, its Insurances and Earnings,  free from all Security  Interests and
       other interests and rights of every kind, except for those created by the
       Finance Documents and the effect of assignments  contained in the Finance
       Documents; and

(b)    not create or permit to arise any Security Interest over any other asset,
       present or future.

10.3   No disposal of assets. The Borrower will not transfer, lease or otherwise
       dispose of:

(a)    all or a substantial part of its assets,  whether by one transaction or a
       number of transactions, whether related or not; or

(b)    any debt payable to it or any other right (present,  future or contingent
       right)  to  receive  a  payment,   including  any  right  to  damages  or
       compensation.

10.4   No other liabilities or obligations to be incurred. The Borrower will not
       incur any  liability or obligation  except  liabilities  and  obligations
       under the MOA and the Finance  Documents and  liabilities  or obligations
       reasonably  incurred in the ordinary  course of operating and  chartering
       the Ship.

10.5   Information provided to be accurate.  All financial and other information
       which is provided in writing by or on behalf of the Borrower  under or in
       connection with any Finance Document will be true and not, misleading and
       will not omit any material fact or consideration.

10.6   Provision of financial statements. The Borrower will send to the Lender:

(a)    as soon as possible,  but in no event later than 90 days after the end of
       each Financial Year of the Borrower,  the audited Accounting  Information
       of the Borrower;

(b)    as soon as possible,  but in no event later than 90 days after the end of
       each Financial Year of the Corporate  Guarantor,  the audited  Accounting
       Information of the Group;

(c)    as soon as  possible,  but in no event later than 50 days after the ed of
       each financial quarter in each Financial Year of each of the Borrower and
       the Corporate Guarantor:

       (i)    the unaudited Accounting Information of the Borrower; and

       (ii)   the unaudited  Accounting  Information of the Group, in each case,
              certified as to its correctness by the chief financial  officer of
              the Corporate Guarantor; and

(d)    promptly,  when requested,  such other financial information and accounts
       relating to the business,  undertaking,  assets,  liabilities,  revenues,
       financial  condition  or  affairs  of any  Security  Party and such other
       further general information  relating to any Security Party as the Lender
       from time to time may reasonably require including  (without  limitation)
       in relation  to the Ship,  its  Earnings,  the  Approved  Manager and the
       Corporate Guarantor. .

10.7   Form of financial statements.  All Accounting Information delivered under
       Clause 10.6 will:

(a)    be  prepared  in  accordance   with  all  applicable  laws  and  US  GAAP
       consistently  applied and, in the case of audited  financial  statements,
       certified as to its correctness by auditors acceptable to the Lender;

(b)    give a true and fair view of the state of affairs of the  Borrower or the
       Group (as the case may be) at the date of that Accounting Information and
       of the profit of the  Borrower  or, as the case may be, the Group for the
       period to which that Accounting Information relates; and

(c)    fully disclose or provide for all significant liabilities of the Borrower
       or, as the case may be, of the Group.

10.8   Creditor notices.  The Borrower will send the Lender, at the same time as
       they are despatched, copies of all communications which are despatched to
       all the Borrower's creditors or any class of them.

10.9   Consents.  The Borrower  will  maintain in force and  promptly  obtain or
       renew,  and will  promptly  send  certified  copies to the Lender of, all
       consents required:

(a)    to perform its obligations under any Finance Document;

(b)    for the validity or enforceability of any Finance Document to which it is
       a party;

(c)    for the Borrower to continue to own and operate the Ship,

       and the Borrower will comply with the terms of all such consents.

10.10  Maintenance of Security Interests. The Borrower will:

(a)    at its own cost, do all that it reasonably can to ensure that any Finance
       Document validly creates the obligations and the Security Interests which
       it purports to create; and

(b)    without  limiting the generality of paragraph (a) above, at its own cost,
       promptly  register,  file,  record or enrol any Finance Document with any
       court  or  authority  in all  Pertinent  Jurisdictions,  pay  any  stamp,
       registration or similar tax in all Pertinent  Jurisdictions in respect of
       any Finance Document, give any notice or take any other step which may be
       or has become  necessary  or  desirable  for any  Finance  Document to be
       valid,  enforceable or admissible in evidence or to ensure or protect the
       priority of any Security Interest which it creates.

10.11  Notification  of  litigation.  The Borrower  will provide the Lender with
       details of any legal or administrative action involving the Borrower, any
       Security Party,  either Approved  Manager,  the Ship, the Earnings or the
       Insurances as soon as such action is instituted or it becomes apparent to
       the Borrower that it is likely to be instituted,  unless it is clear that
       the legal or administrative  action cannot be considered  material in the
       context of any Finance Document.

10.12  No  amendment to MOA.  The  Borrower  will not agree to any  amendment or
       supplement  to,  or  waive  or  fail  to  enforce  the  MOA or any of its
       provisions without the prior written consent of the Lender.

10.13  Principal  place of  business.  The Borrower  will  maintain its place of
       business,  and keep its corporate  documents and records,  at the address
       [referred to in Clause 27.2(a)];  and will not establish,  or do anything
       as a result of which it would be deemed to have,  a place of  business in
       the United Kingdom or the United States of America.

10.14  Confirmation  of no default.  The Borrower  will,  within 2 Business Days
       after service by the Lender of a written  request,  serve on the Lender a
       notice which is signed by 2 directors of the Borrower and which:

(a)    states  that no Event of  Default  or  Potential  Event  of  Default  has
       occurred; or

(b)    states  that no Event of  Default  or  Potential  Event  of  Default  has
       occurred,  except for a specified event or matter,  of which all material
       details are given.

10.15  Notification  of default.  The Borrower will notify the Lender as soon as
       the Borrower becomes aware of:

(a)    the occurrence of an Event of Default or a Potential Event of Default; or

(b)    any matter which  indicates that an Event of Default or a Potential Event
       of Default may have occurred,

       and  will   thereafter   keep  the  Lender  fully   up-to-date  with  all
       developments.

10.16  Provision  of  further  information.   The  Borrower  will,  as  soon  as
       practicable  after  receiving  the  request,  provide the Lender with any
       additional financial or other information relating:

(a)    to the Borrower, the Ship, the Approved Manager, the Corporate Guarantor,
       the Insurances, the Earnings; or

(b)    to any  other  matter  relevant  to,  or to any  provision  of, a Finance
       Document,

       which may be reasonably requested by the Lender at any time.

10.17  Minimum liquidity.  At all times during the Security Period, the Borrower
       will ensure  that an amount of not less than  $300,000 is standing to the
       credit of the Operating Account.

11     CORPORATE UNDERTAKINGS

11.1   General.  The Borrower also undertakes with the Lender to comply with the
       following  provisions  of this Clause 11 at all times during the Security
       Period except as the Lender may otherwise permit.

11.2   Maintenance of status.  The Borrower will maintain its separate corporate
       existence and remain in good  standing  under the laws of the Republic of
       Marshall Islands.

11.3   Negative undertakings. The Borrower will not:

(a)    carry on any business other than the ownership,  chartering and operation
       of the Ship; or

(b)    pay any  dividend  or make any other form of  distribution  or effect any
       form of redemption, purchase or return of share capital Provided that (i)
       the Borrower may pay in any Financial Year (no more  frequently than on a
       quarterly  basis during that  Financial  Year)  dividends in an aggregate
       amount not  exceeding  60 per cent.  of the Net Income in that  Financial
       Year if at the  relevant  time no Event of  Default  has  occurred  or is
       continuing  or would  result from the payment of such  dividend  and (ii)
       with the prior written consent of the Lender ( to be given or withheld in
       its sole and absolute discretion),  the Borrower may pay dividends in any
       Financial Year in excess of the amount referred to in sub-paragraph (i);

(c)    repay any  shareholder  loans or any other  loans  advanced  to it by any
       person (or, in either case, any interest thereon),  nor make nay loans or
       advances to any person; or

(d)    provide any form of credit or financial assistance to:

       (i)    a  person  who  is  directly  or  indirectly   interested  in  the
              Borrower's share or loan capital; or

       (ii)   any  company  in or  with  which  such a  person  is  directly  or
              indirectly interested or connected,

       or enter into any transaction  with or involving such a person or company
       on terms which are, in any respect,  less favourable to the Borrower than
       those which it could obtain in a bargain made at arms' length; or

(e)    open or  maintain  any  account  with any bank or  financial  institution
       except the  Operating  Account  and the  Retention  Account and any other
       account  opened or to be opened  with the Lender for the  purposes of the
       Finance Documents; or

(f)    issue,  allot or grant any person a right to any shares in its capital or
       repurchase or reduce its issued share capital; or

(g)    acquire any shares or other securities other than US or UK Treasury bills
       and  certificates  of deposit  issued by major North American or European
       banks, or enter into any transaction in a derivative; or

(h)    enter into any form of  amalgamation,  merger or de-merger or any form of
       reconstruction or reorganisation.

12     INSURANCE

12.1   General.  The Borrower also undertakes with the Lender to comply with the
       following  provisions  of this Clause 12 at all times during the Security
       Period except as the Lender may otherwise permit.

12.2   Maintenance  of obligatory  insurances.  The Borrower shall keep the Ship
       insured at the expense of the Borrower against:

(a)    fire and usual  marine risks  (including  hull and  machinery  and excess
       risks);

(b)    war risks;

(c)    protection and indemnity risks (all classes); and

(d)    any other risks  against  which the Lender  considers,  having  regard to
       practices and other  circumstances  prevailing  at the relevant  time, it
       would in the  opinion of the Lender be  reasonable  for the  Borrower  to
       insure and which are specified by the Lender by notice to the Borrower.

12.3   Terms  of  obligatory   insurances.   The  Borrower   shall  effect  such
       insurances:

(a)    in Dollars;

(b)    in the case of fire and usual marine risks and war risks, in an amount on
       an agreed value basis at least the greater of (i) the Market Value of the
       Ship and (ii) 125 per  cent.  of the  aggregate  of the Loan and the Swap
       Exposure  and upon such terms as shall from time to time be  approved  in
       writing by the Lender;

(c)    in the case of oil pollution  liability  risks,  for an aggregate  amount
       equal to the  highest  level of cover from time to time  available  under
       basic  protection and indemnity club entry and the  international  marine
       insurance market for vessels of the same type and age as the Ship;

(d)    in relation to  protection  and indemnity  risks,  in respect of the full
       tonnage of the Ship;

(e)    on approved terms; and

(f)    through  approved  brokers and with approved  insurance  companies and/or
       underwriters  or, in the case of war risks and  protection  and indemnity
       risks,   in  approved  war  risks  and  protection  and  indemnity  risks
       associations.

12.4   Further  protections for the Lender.  In addition to the terms set out in
       Clause 12.3, the Borrower  shall procure that the  obligatory  insurances
       shall:

(a)    whenever the Lender  requires  name (or be amended to name) the Lender as
       additional  named  assured  for its rights and  interests,  warranted  no
       operational  interest  and with full  waiver  of  rights  of  subrogation
       against the Lender,  but without the Lender  thereby  being liable to pay
       (but having the right to pay)  premiums,  calls or other  assessments  in
       respect of such insurance;

(b)    name the Lender as sole loss payee with such  directions  for  payment as
       the Lender may specify;

(c)    provide  that all  payments  by or on  behalf of the  insurers  under the
       obligatory  insurances  to the  Lender  shall  be made  without  set-off,
       counterclaim or deductions or condition whatsoever;

(d)    provide that the insurers shall waive, to the fullest extent permitted by
       English law, their entitlement (if any) (whether by statute,  common law,
       equity,  or otherwise) to be subrogated to the rights and remedies of the
       Lender in respect of any rights or interests  (secured or not) held by or
       available to the Lender in respect of the Secured Liabilities,  until the
       Secured  Liabilities shall have been fully repaid and discharged,  except
       that the insurers  shall not be restricted by the terms of this paragraph
       (d) from making  personal  claims against persons (other than the Lender,
       the  Borrower or any other  Security  Party) in  circumstances  where the
       insurers have fully  discharged their  liabilities and obligations  under
       the relevant obligatory insurances;

(e)    provide that such obligatory insurances shall be primary without right of
       contribution from other insurances which may be carried by the Lender;

(f)    provide that the Lender may make proof of loss if the Borrower fail to do
       so; and

(g)    provide  that  if  any  obligatory  insurance  is  cancelled,  or if  any
       substantial  change is made in the coverage which  adversely  affects the
       interest  of the Lender,  or if any  obligatory  insurance  is allowed to
       lapse for  non-payment  of premium,  such  cancellation,  charge or lapse
       shall not be effective  with respect to the Lender for 30 days (or 7 days
       in the case of war risks)  after  receipt by the Lender of prior  written
       notice from the insurers of such cancellation, change or lapse.

12.5   Renewal of obligatory insurances. The Borrower shall:

(a)    at least 14 days before the expiry of any obligatory  insurance  effected
       by it:

       (i)    notify  the  Lender of the  brokers  (or other  insurers)  and any
              protection and indemnity or war risks association  through or with
              whom the  Borrower  proposes  to renew that  insurance  and of the
              proposed terms of renewal; and

       (ii)   obtain  the  Lender's  approval  to  the  matters  referred  to in
              paragraph (i) above;

(b)    at least 7days before the expiry of any obligatory  insurance effected by
       it, renew the insurance in accordance with the Lender's approval pursuant
       to paragraph (a) above; and

(c)    procure that the approved brokers and/or the war risks and protection and
       indemnity  associations  with  which  such a renewal  is  effected  shall
       promptly  after the renewal notify the Lender in writing of the terms and
       conditions of the renewal.

12.6   Copies of policies;  letters of  undertaking.  The Borrower  shall ensure
       that all approved brokers provide the Lender with pro forma copies of all
       policies  relating to the obligatory  insurances which they are to effect
       or renew and of a letter or letters of  undertaking in a form required by
       the Lender and including undertakings by the approved brokers that:

(a)    they will have endorsed on each policy,  immediately  upon issue,  a loss
       payable  clause and a notice of assignment  complying with the provisions
       of Clause 12.4;

(b)    they will hold such policies, and the benefit of such insurances,  to the
       order of the Lender in accordance with the said loss payable clause;

(c)    they will advise the Lender  immediately  of any  material  change to the
       terms of the obligatory insurances;

(d)    they will notify the  Lender,  not less than 14 days before the expiry of
       the  obligatory  insurances,  in the event of their not  having  received
       notice of renewal  instructions  from the  Borrower or its agents and, in
       the event of their receiving  instructions  to renew,  they will promptly
       notify the Lender of the terms of the instructions; and

(e)    they will not set off against any sum  recoverable  in respect of a claim
       relating to the Ship under such  obligatory  insurances  any  premiums or
       other  amounts due to them or any other person  whether in respect of the
       Ship or  otherwise,  they  waive any lien on the  policies  or,  any sums
       received under them, which they might have in respect of such premiums or
       other  amounts,  and they will not cancel such  obligatory  insurances by
       reason of non-payment of such premiums or other amounts, and will arrange
       for a separate  policy to be issued in respect of the Ship forthwith upon
       being so requested by the Lender.

12.7   Copies of  certificates  of entry.  The  Borrower  shall  ensure that any
       protection and indemnity and/or war risks  associations in which the Ship
       is entered provides the Lender with:

(a)    a certified copy of the certificate of entry for the Ship;

(b)    a letter or letters of undertaking in such form as may be required by the
       Lender; and

(c)    where  required  to be  issued  under  the  terms of  insurance/indemnity
       provided  by the  Borrower's  protection  and  indemnity  association,  a
       certified  copy  of  each  United  States  of  America  voyage  quarterly
       declaration (or other similar document or documents) made by the Borrower
       in  relation  to the Ship in  accordance  with the  requirements  of such
       protection and indemnity association; and

(d)    a certified  copy of each  certificate  of financial  responsibility  for
       pollution by oil or other  Environmentally  Sensitive  Material issued by
       the relevant certifying authority in relation to the Ship.

12.8   Deposit of original policies. The Borrower shall ensure that all policies
       relating to obligatory  insurances  effected by it are deposited with the
       approved brokers through which the insurances are effected or renewed.

12.9   Payment of premiums.  The Borrower  shall  punctually pay all premiums or
       other sums payable in respect of the obligatory insurances effected by it
       and produce all relevant receipts when so required by the Lender.

12.10  Guarantees.  The Borrower shall ensure that any guarantees  required by a
       protection and indemnity or war risks association are promptly issued and
       remain in full force and effect.

12.11  Restrictions  on employment.  The Borrower shall not employ the Ship, nor
       permit  the  Ship to be  employed,  outside  the  cover  provided  by any
       obligatory insurances.

12.12  Compliance  with terms of insurances.  The Borrower shall not do nor omit
       to do (nor  permit to be done or not to be done)  any act or thing  which
       would or might render any obligatory insurance invalid, void, voidable or
       unenforceable or render any sum payable thereunder  repayable in whole or
       in part; and, in particular:

(a)    the  Borrower  shall  take  all  necessary  action  and  comply  with all
       requirements  which may from time to time be applicable to the obligatory
       insurances,  and  (without  limiting the  obligation  contained in Clause
       12.7(c) above) ensure that the obligatory insurances are not made subject
       to any exclusions or qualifications to which the Lender has not given its
       prior approval;

(b)    the Borrower shall not make any changes relating to the classification or
       classification society or manager or operator of the Ship unless approved
       by the underwriters of the obligatory insurances;

(c)    the Borrower shall make (and promptly supply copies to the Lender of) all
       quarterly  or other  voyage  declarations  which may be  required  by the
       protection and indemnity  risks  association in which the Ship is entered
       to  maintain  cover for  trading  to the  United  States of  America  and
       Exclusive  Economic  Zone (as defined in the United  States Oil Pollution
       Act 1990 or any other applicable legislation); and

(d)    the  Borrower  shall not  employ the Ship,  nor allow it to be  employed,
       otherwise  than in  conformity  with  the  terms  and  conditions  of the
       obligatory  insurances,  without  first  obtaining  the  consent  of  the
       insurers and  complying  with any  requirements  (as to extra  premium or
       otherwise) which the insurers specify.

12.13  Alteration  to terms of  insurances.  The Borrower  shall neither make or
       agree to any alteration to theterms of any obligatory insurance nor waive
       any right relating to any obligatory insurance.

12.14  Settlement  of claims.  The  Borrower  shall not  settle,  compromise  or
       abandon any claim under any obligatory  insurance for Total Loss or for a
       Major  Casualty,  and  shall do all  things  necessary  and  provide  all
       documents,  evidence and  information  to enable the Lender to collect or
       recover  any moneys  which at any time  become  payable in respect of the
       obligatory insurances.

12.15  Provision of copies of  communications.  The Borrower  shall  provide the
       Lender,  at the time of each  such  communication,  copies  of all  major
       written communications between itself and:

(a)    the approved brokers; and

(b)    the approved protection and indemnity and/or war risks associations; and

(c)    the  approved  insurance  companies  and/or  underwriters,  which  relate
       directly or indirectly to:

       (i)    the Borrower's  obligations relating to the obligatory  insurances
              including,  without  limitation,  all requisite  declarations  and
              payments of additional premiums or calls; and

       (ii)   any credit  arrangements  made between the Borrower and any of the
              persons referred to in paragraphs (a) or (b) above relating wholly
              or  partly  to the  effecting  or  maintenance  of the  obligatory
              insurances.

12.16  Provision of  information.  In  addition,  the  Borrower  shall  promptly
       provide  the  Lender (or any  persons  which it may  designate)  with any
       information which the Lender (or any such designated person) requests for
       the purpose of:

(a)    obtaining or preparing any report from an  independent  marine  insurance
       broker  as to the  adequacy  of the  obligatory  insurances  effected  or
       proposed to be effected; and/or

(b)    effecting, maintaining or renewing any such insurances as are referred to
       in Clause 12.17 below or dealing with or considering any matters relating
       to any such insurances,

       and the Borrower  shall,  forthwith upon demand,  indemnify the Lender in
       respect of all fees and other expenses  incurred by or for the account of
       the  Lender  in  connection  with any such  report as is  referred  to in
       paragraph (a) above.

12.17  Mortgagee's  interest and additional perils insurances.  The Lender shall
       be entitled from time to time to effect, maintain and renew a mortgagee's
       interest  insurance  policy  and,  at  the  discretion  of  the  Lender,a
       mortgagee's  interest  additional  perils  policy in respect of the Ship,
       each in such amount and  otherwise on such terms,  through such  insurers
       and generally in such manner as the Lender may from time to time consider
       appropriate and the Borrower shall upon demand fully indemnify the Lender
       in respect of all  premiums  and other  expenses  which are  incurred  in
       connection with or with a view to effecting, maintaining or renewing such
       insurance or dealing with, or considering, any matter arising out of such
       insurance.

12.18  Review of insurance requirements.  The Lender shall be entitled to review
       the  requirements  of this  Clause  12 from time to time in order to take
       account of any changes in circumstances  after the date of this Agreement
       which are,  in the  opinion of the  Lender,  significant  and  capable of
       affecting the Borrower or the Ship and its insurance (including,  without
       limitation, changes in the availability or the cost of insurance coverage
       or the risks to which  the  Borrower  may be  subject.)  and may  appoint
       insurance  consultants  in  relation  to this  review  at the cost of the
       Borrower.

12.19  Modification  of  insurance  requirements.  The Lender  shall  notify the
       Borrower  of  any  proposed   modification  under  Clause  12.18  to  the
       requirements of this Clause 12 which the Lender considers  appropriate in
       the  circumstances,  and such modification  shall take effect on and from
       the date it is notified in writing to the  Borrower  as an  amendment  to
       this Clause 12 and shall bind the Borrower accordingly.

12.20  Compliance with  mortgagee's  instructions.  The Lender shall be entitled
       (without prejudice to or limitation of any other rights which it may have
       or acquire  under any Finance  Document) to require the Ship to remain at
       any safe port or to proceed to and remain at any safe port  designated by
       the Lender until the Borrower  implements  any amendments to the terms of
       the  obligatory  insurances  and any  operational  changes  required as a
       result of a notice served under Clause 12.19.

13     SHIP COVENANTS

13.1   General.  The Borrower also undertakes with the Lender to comply with the
       following  provisions  of this Clause 13 at all times during the Security
       Period except as the Lender may otherwise permit.

13.2   Ship's name and registration. The Borrower shall keep the Ship registered
       in its name as a Marshall Islands flag ship at the port of Majuro;  shall
       not  do  or  allow  to  be  done  anything  as a  result  of  which  such
       registration  might be cancelled or imperilled;  and shall not change the
       name or port of registry of the Ship.

13.3   Repair and classification. The Borrower shall keep the Ship in a good and
       safe condition and state of repair:

(a)    consistent with first-class ship ownership and management practice;

(b)    so as to maintain the Ship's  present  class  (namely,  the highest class
       available for vessels of the same type, age and specification as the Ship
       with Bureau  Veritas)  (or the  equivalent  with  another  classification
       society  which  is  a  member  of  the   International   Association   of
       Classification  Societies  acceptable  to the Lender) free of all overdue
       recommendations and conditions affecting the Ship's class; and

(c)    so as to  comply  with all laws and  regulations  applicable  to  vessels
       registered at ports in the Marshall  Islands or to vessels trading to any
       jurisdiction to which the Ship may trade from time to time, including but
       not limited to the ISM Code and the ISPS Code.

13.4   Modification. The Borrower shall not make any modification or repairs to,
       or  replacement  of, the Ship or  equipment  installed  on the Ship which
       would  or might  materially  alter  its  structure,  type or  performance
       characteristics or materially reduce the Ship's value.

13.5   Removal of parts.  The Borrower shall not remove any material part of the
       Ship,  or any item of equipment  installed on it, unless the part or item
       so removed is forthwith  replaced by a suitable  part or item which is in
       the same condition as or better  condition than the part or item removed,
       is free from any  Security  Interest or any right in favour of any person
       other  than  the  Lender  and  becomes  on  installation  on the Ship the
       property of the Borrower and subject to the security  constituted  by the
       Mortgage  Provided  that the  Borrower may install  equipment  owned by a
       third party if the equipment can be removed without any risk of damage to
       the Ship.

13.6   Surveys.  The Borrower  shall submit the Ship regularly to all periodical
       or other surveys which may be required for  classification  purposes and,
       if so  required  by the Lender  provide  the  Lender,  with copies of all
       survey reports.

13.7   Inspection.  The Borrower  shall permit the Lender (by surveyors or other
       persons  appointed by it for that purpose at the  Borrower's  expense) to
       board the Ship at all  reasonable  times to inspect its  condition  or to
       satisfy  themselves  about proposed or executed  repairs and shall afford
       all proper facilities for such inspections.

13.8   Prevention  of and release  from  arrest.  The  Borrower  shall  promptly
       discharge:

(a)    all  liabilities  which give or may give rise to maritime  or  possessory
       liens on or claims  enforceable  against  the Ship,  the  Earnings or the
       Insurances;

(b)    all taxes,  dues and other  amounts  charged in respect of the Ship,  the
       Earnings or the Insurances; and

(c)    all other  outgoings  whatsoever in respect of the Ship,  the Earnings or
       the Insurances,

       and, forthwith upon receiving notice of the arrest of the Ship, or of its
       detention  in exercise or  purported  exercise of any lien or claim,  the
       Borrower  shall procure the Ship's release by providing bail or otherwise
       as the circumstances may require.

13.9   Compliance with laws etc. The Borrower shall:

(a)    comply,  or procure  compliance  with the ISM Code,  the ISPS  Code,  all
       Environmental  Laws and all other  laws or  regulations  relating  to the
       Ship, its  ownership,  operation and management or to the business of the
       Borrower;

(b)    not employ the Ship nor allow its  employment  in any manner  contrary to
       any law or  regulation  in any relevant  jurisdiction  including  but not
       limited to the ISM Code and the ISPS Code; and

(c)    in the  event of  hostilities  in any part of the world  (whether  war is
       declared  or not),  not cause or permit the Ship to enter or trade to any
       zone which is declared a war zone by any  government or by the Ship's war
       risks  insurers  unless the prior written  consent of the Lender has been
       given  and the  Borrower  has  (at its  expense)  effected  any  special,
       additional or modified insurance cover which the Lender may require.

13.10  Provision of information.  The Borrower shall promptly provide the Lender
       with any information which it requests regarding:

(a)    the Ship, its employment, position and engagements;

(b)    the  Earnings  and payments and amounts due to the master and crew of the
       Ship;

(c)    any expenses incurred,  or likely to be incurred,  in connection with the
       operation,  maintenance  or repair of the Ship and any  payments  made in
       respect of the Ship;

(d)    any towages and salvages;

(e)    its compliance,  the Approved  Manager's  compliance or the compliance of
       the Ship with the ISM Code and the ISPS Code,

       and, upon the Lender's  request,  provide  copies of any current  charter
       relating to the Ship,  of any current  charter  guarantee  and of the ISM
       Code  Documentation  and the ISPS Code  Documentation  in relation to the
       Ship.

13.11  Notification of certain events. The Borrower shall immediately notify the
       Lender by fax, confirmed forthwith by letter of:

(a)    any casualty which is or is likely to be or to become a Major Casualty;

(b)    any  occurrence  as a result of which  the Ship has  become or is, by the
       passing of time or otherwise, likely to become a Total Loss;

(c)    any requirement or  recommendation  made by any insurer or classification
       society or by any competent  authority which is not immediately  complied
       with;

(d)    any arrest or detention of the Ship,  any exercise or purported  exercise
       of any lien on the Ship or its  Earnings or any  requisition  of the Ship
       for hire;

(e)    any intended dry docking of the Ship;

(f)    any  Environmental  Claim made against the Borrower or in connection with
       the Ship, or any Environmental Incident;

(g)    any claim for breach of the ISM Code or the ISPS Code being made  against
       the Borrower,  either of the Approved Managers or otherwise in connection
       with the Ship; or

(h)    any other matter, event or incident, actual or threatened,  the effect of
       which  will or  could  lead to the ISM Code or the  ISPS  Code not  being
       complied with,

       and the  Borrower  shall keep the Lender  advised in writing on a regular
       basis and in such detail as the Lender  shall  require of the  Borrower's
       and the Approved Managers' or any other person's response to any of those
       events or matters.

13.12  Restrictions  on  chartering,  appointment  of managers etc. The Borrower
       shall not:

(a)    let the Ship on demise charter for any period;

(b)    enter into any time or consecutive  voyage charter in respect of the Ship
       for a term which exceeds,  or which by virtue of any optional  extensions
       may exceed, 13 months;

(c)    enter into any  charter in  relation  to the Ship under which more than 2
       months' hire (or the equivalent) is payable in advance;

(d)    charter the Ship  otherwise  than on bona fide arm's  length terms at the
       time when the Ship is fixed;

(e)    appoint a manager of the Ship other than the Approved  Manager's or agree
       to any  alteration  to the  terms  of  each  of  the  Approved  Managers'
       respective appointments;

(f)    de-activate or lay up that Ship; or

(g)    put the Ship into the  possession  of any person for the  purpose of work
       being  done  upon the Ship in an  amount  exceeding  or  likely to exceed
       $350,000 (or the equivalent in any other currency) unless that person has
       first  given to the  Lender  and in terms  satisfactory  to it a  written
       undertaking  not to exercise any lien on the Ship or its Earnings for the
       cost of such work or any other reason.

13.13  Notice of  Mortgage.  The  Borrower  shall keep the  Mortgage  registered
       against the Ship as a valid first priority  mortgage,  carry on board the
       Ship a  certified  copy of the  Mortgage  and  place  and  maintain  in a
       conspicuous  place in the navigation  room and the Master's cabin of that
       Ship a framed  printed  notice  stating that the Ship is mortgaged by the
       Borrower to the Lender.

13.14  Time Charter Assignment. If the Borrower enters into any Charter (subject
       to (if applicable) obtaining the consent of the Lender in accordance with
       Clause  13.12(b)),  the  Borrower  shall,  at the  request of the Lender,
       execute in favour of the Lender a Charter  Assignment in relation to such
       Charter,  and shall deliver to the Lender such other documents equivalent
       to those  referred to at paragraphs 3, 4 and 5 of Part A of Schedule 2 as
       the Lender may require.

14     SECURITY COVER

14.1   Minimum  required  security  cover.  Clause  14.2  applies  if the Lender
       notifies the Borrower that:

(a)    the Market Value of the Ship; plus

(b)    the net realisable value of any additional  security  previously provided
       under this Clause 14,

       is below 125 per cent. of the aggregate of the Loan and the Swap Exposure
       less any  monies  at any  relevant  time  standing  to the  credit of the
       Retention Account which have been transferred to that account pursuant to
       Clause 17.2(a).

14.2   Provision of additional security cover;  prepayment of Loan. The Borrower
       undertakes with the Lender that, if the Lender notifies the Borrower that
       the aggregate of:

(a)    the Market Value; plus

(b)    the net realisable value of any additional  security  previously provided
       under this Clause 14,

       is below 125 per cent. of the aggregate of the Loan and the Swap Exposure
       less any  monies  at any  relevant  time  standing  to the  credit of the
       Retention Account which have been transferred to that account pursuant to
       Clause 17.2(a), the Borrower will, within 1 month after the date on which
       the Lender's notice is served, either:

       (i)    provide,  or  ensure  that  a  third  party  provides,  additional
              security which, in the opinion of the Lender, has a net realisable
              value at least equal to the shortfall and which, if it consists of
              or includes a Security  Interest,  covers such asset or assets and
              is  documented in such terms as the Lender may approve or require;
              or

       (ii)   prepay in  accordance  with  Clause 7 such part (at  least) of the
              Loan as will eliminate the shortfall.

14.3   Meaning  of  additional  security.  In  Clause  14.2  "security"  means a
       Security   Interest  over  an  asset  or  assets  (whether  securing  the
       Borrower's  liabilities  under the Finance  Documents  or a guarantee  in
       respect of those liabilities),  or a guarantee, letter of credit or other
       security  in  respect of the  Borrower's  liabilities  under the  Finance
       Documents.

14.4   Requirement for additional documents. The Borrower shall not be deemed to
       have  complied  with  sub-paragraph  (i) of Clause  14.2 above  until the
       Lender has received in connection with the additional  security certified
       copies of documents of the kinds  referred to in paragraphs 3, 4 and 5 of
       Schedule 2, Part A below and such legal  opinions in terms  acceptable to
       the Lender from such lawyers as it may select.

14.5   Valuation of Ship. The Market Value of the Ship at any date is that shown
       by the valuation prepared:

(a)    as at a date not more than 14 days previously;

(b)    by one  independent  sale and  purchase  shipbroker  which the Lender has
       approved or appointed for the purpose;

(c)    with or  without  physical  inspection  of the  Ship (as the  Lender  may
       require);

(d)    on the  basis of a sale for  prompt  delivery  for cash on  normal  arm's
       length  commercial  terms as between a willing seller and a willing buyer
       (after taking  account of any charter or any other contract of employment
       in  respect  of the Ship the  unexpired  term of which is  longer  than 6
       months); and

(e)    after deducting the estimated amount of the usual and reasonable expenses
       which would be incurred in connection with the sale.

14.6   Valuation  of  additional  security.  The  net  realisable  value  of any
       additional  security  which is  provided  under  Clause  14.2  and  which
       consists of a Security  Interest  over a vessel  shall be that shown by a
       valuation complying with the requirements of Clause 14.5.

14.7   Valuations  binding.  Any valuation under Clause 14.2, 14.5 or 14.6 shall
       be binding  and  conclusive  as  regards  the  Borrower,  as shall be any
       valuation  which the Lender makes of a security which does not consist of
       or include a Security Interest.

14.8   Provision of information.  The Borrower shall promptly provide the Lender
       and any  shipbroker  or expert  acting under Clause 14.5 or 14.6 with any
       information  which the Lender or the shipbroker or expert may request for
       the purposes of the valuation;  and, if the Borrower fails to provide the
       information  by the date  specified in the request,  the valuation may be
       made on any basis and assumptions  which the shipbroker or the Lender (or
       the expert appointed by it) consider prudent.

14.9   Payment of valuation expenses. Without prejudice to the generality of the
       Borrower's  obligations  under Clauses 19.3 and 20.3, the Borrower shall,
       on demand,  pay the Lender  the  amount of the fees and  expenses  of any
       shipbroker  or expert  instructed by the Lender under this Clause and all
       legal and other  expenses  incurred by the Lender in connection  with any
       matter arising out of this Clause.

14.10  Application  of  prepayment.  Clause  7 shall  apply in  relation  to any
       prepayment pursuant to Clause 14.2(b).

15     PAYMENTS AND CALCULATIONS

15.1   Currency and method of payments.  All payments to be made by the Borrower
       to the Lender under a Finance Document shall be made to the Lender:

(a)    by not later than 11.00 a.m. (London time) on the due date;

(b)    in same day Dollar  funds  settled  through the New York  Clearing  House
       Interbank  Payments  System (or in such other Dollar funds and/or settled
       in such other  manner as the Lender shall  specify as being  customary at
       the time for the  settlement of  international  transactions  of the type
       contemplated by this Agreement); and

(c)    to the account of the Lender at Calyon  Americas New York,  Building 130,
       Avenue of the  Americas,  NY 1019,  New York  (Account No  0100383000100;
       Swift Code CRLYUS33) or to such other account with such other bank as the
       Lender may from time to time notify to the Borrower.

15.2   Payment on  non-Business  Day.  If any  payment by the  Borrower  under a
       Finance  Document  would  otherwise  fall  due  on a day  which  is not a
       Business Day:

(a)    the due date shall be extended to the next succeeding Business Day; or

(b)    if the next succeeding Business Day falls in the next calendar month, the
       due date shall be brought forward to the immediately  preceding  Business
       Day,

       and interest shall be payable during any extension under paragraph (a) at
       the rate payable on the original due date.

15.3   Basis for  calculation of periodic  payments.  All interest and any other
       payments  under any Finance  Document  which are of an annual or periodic
       nature shall accrue from day to day and shall be  calculated on the basis
       of the actual number of days elapsed and a 360 day year.

15.4   Lender accounts. The Lender shall maintain an account showing the amounts
       advanced  by the Lender  and all other sums owing to the Lender  from the
       Borrower  and each  Security  Party under the Finance  Documents  and all
       payments  in  respect  of  those  amounts  made by the  Borrower  and any
       Security Party.

15.5   Accounts prima facie evidence.  If the account  maintained  under Clauses
       15.4 shows an amount to be owing by the  Borrower or a Security  Party to
       the Lender,  that account shall be prima facie  evidence that that amount
       is owing to the Lender.

16     APPLICATION OF RECEIPTS

16.1   Normal order of application. Except as any Finance Document may otherwise
       provide,  any sums which are received or recovered by the Lender under or
       by virtue of any Finance Document shall be applied:

       FIRST:  in or towards  satisfaction  of any amounts  then due and payable
       under the Finance  Documents (or any of them) in the  following  order of
       application and/or proportions:

(a)    first,  in or towards  satisfaction  pro rata of all amounts then due and
       payable  to the  Lender  under the  Finance  Documents  other  than those
       amounts  referred  to at  (b)  and  (c)  below  (including,  but  without
       limitation,  all amounts  payable by the Borrower under Clause 19, 20 and
       21 of this Agreement or by the Borrower or any other Security Party under
       any corresponding or similar provision in any other Finance Document);

(b)    secondly,  in or towards  satisfaction pro rata of any and all amounts of
       interest  or default  interest  payable to the Lender  under the  Finance
       Documents; and

(c)    thirdly, in or towards satisfaction of the Loan;

       SECONDLY: (if at the relevant time an Event of Default or Potential Event
       of Default has  occurred)  in  retention of an amount equal to any amount
       not then due and payable under any Finance Document but which the Lender,
       by notice to the Borrower and the Security Parties, states in its opinion
       will or may become due and payable in the future and,  upon those amounts
       becoming  due  and  payable,  in  or  towards  satisfaction  of  them  in
       accordance with the foregoing provisions of this Clause; and

       THIRDLY: any surplus shall be paid to the Borrower or to any other person
       appearing to be entitled to it.

16.2   Variation  of order of  application.  The  Lender  may,  by notice to the
       Borrower  and the  Security  Parties,  provide for a different  manner of
       application  from  that  set out in  Clause  16.1  either  as  regards  a
       specified  sum or sums or as  regards  sums in a  specified  category  or
       categories.

16.3   Notice of variation of order of application.  The Lender may give notices
       under  Clause 16.2 from time to time;  and such a notice may be stated to
       apply not only to sums which may be received or  recovered in the future,
       but also to any sum which has been  received or recovered on or after the
       third Business Day before the date on which the notice is served.

16.4   Appropriation rights overridden.  This Clause 16 and any notice which the
       Lender gives under Clause 16.2 shall override any right of  appropriation
       possessed,  and any  appropriation  made, by the Borrower or any Security
       Party.

17     APPLICATION OF EARNINGS

17.1   Payment of Earnings.  The Borrower  undertakes  with the Lender to ensure
       that,  throughout the Security  Period (subject only to the provisions of
       this Agreement and the General  Assignment)  all the Earnings of the Ship
       are paid to the Operating Account.

17.2   Monthly  retentions.  The Borrower  undertakes  with the Lender to ensure
       that,  in each calendar  month of the Security  Period after the Drawdown
       Notice  is  served,  on such  dates as the  Lender  may from time to time
       specify,  there  is  transferred  to  the  Retention  Account  out of the
       Earnings received in the Operating Account during the preceding  calendar
       month:

(a)    one-sixth  of the amount of the  repayment  instalment  falling due under
       Clause 7 on the next Repayment Date; and

(b)    the  relevant  fraction of the  aggregate  amount of interest on the Loan
       which is payable on the next due date for payment of interest  under this
       Agreement.

       The  "relevant  fraction" is a fraction of which the numerator is one and
       the  denominator  the  number of  months  comprised  in the then  current
       Interest  Period (or, if the current  Interest Period ends after the next
       date for payment of interest under this  Agreement,  the number of months
       from the later of the commencement of the current Interest Period and the
       last due date for  payment of  interest  to the next date for  payment of
       interest under this Agreement).

17.3   Shortfall  in  Earnings.  If  the  aggregate  Earnings  received  in  the
       Operating  Account are  insufficient in any month for the required amount
       to be  transferred  to the  Retention  Account  under  Clause  17.2,  the
       Borrower shall make up the amount of the insufficiency on demand from the
       Lender;  but, without thereby prejudicing the Lender's right to make such
       demand at any time,  the Lender may permit the Borrower to make up all or
       part of the  insufficiency by increasing the amount of any transfer under
       Clause 17.2 from the Earnings received in the next or subsequent months.

17.4   Application of retentions. Until an Event of Default or a Potential Event
       of Default  occurs,  the Lender shall on each  Repayment Date and on each
       due date for the  payment  of  interest  under  this  Agreement  apply in
       accordance  with  Clause  15.1 so much of the  balance  on the  Retention
       Account as equals:

(a)    the repayment instalment due on that Repayment Date; or

(b)    the amount of interest payable on that interest payment date,

       in discharge of the Borrower's liability for that repayment instalment or
       that interest.

17.5   Interest accrued on the Operating Account and the Retention Account.  Any
       credit  balance on both the Operating  Account and the Retention  Account
       shall bear  interest at the rate from time to time  offered by the Lender
       to its customers for Dollar  deposits of similar  amounts and for periods
       similar to those for which such  balances  appear to the Lender likely to
       remain on the Operating Account and the Retention Account.

17.6   Release of accrued interest. Interest accruing under Clause 17.5 shall be
       released  to the  Borrower  on each  Repayment  Date  unless  an Event of
       Default or a Potential  Event of Default has  occurred or the then credit
       balance  on the  Retention  Account is less than what would have been the
       balance had the full amount  required by Clause 17.2 (and Clause 17.3, if
       applicable) been transferred in that and each previous month.

17.7   Location of accounts. The Borrower shall promptly:

(a)    comply  with  any  requirement  of  the  Lender  as to  the  location  or
       re-location of the Operating Account and the Retention Account (or either
       of them); and

(b)    execute any documents which the Lender specifies to create or maintain in
       favour of the Lender a Security  Interest over (and/or rights of set-off,
       consolidation  or other rights in relation to) the Operating  Account and
       the Retention Account.

17.8   Debits for expenses  etc. The Lender shall be entitled  (but not obliged)
       from time to time to debit the Operating  Account without prior notice in
       order to discharge any amount due and payable to it under Clause 19 or 20
       or payment of which it has become  entitled to demand  under Clause 19 or
       20.

17.9   Borrower's obligations  unaffected.  The provisions of this Clause 17 (as
       distinct from a distribution effected under Clause 17.4) do not affect:

(a)    the  liability of the Borrower to make payments of principal and interest
       on the due dates; or

(b)    any other  liability or obligation of the Borrower or any Security  Party
       under any Finance Document.

18     EVENTS OF DEFAULT

18.1   Events of Default. An Event of Default occurs if:

(a)    the  Borrower  or any  Security  Party  fails  to pay  when due or (if so
       payable) on demand any sum payable under a Finance  Document or under any
       document relating to a Finance Document; or

(b)    any breach occurs of Clause 8.2, 10.2, 10.3,  10.16,  11.2, 11.3 or 14.1;
       or

(c)    any breach by the Borrower or any Security  Party occurs of any provision
       of a Finance  Document  (other than a breach  covered by paragraph (a) or
       (b) above) if, in the opinion of the Lender,  such  default is capable of
       remedy and such default continues unremedied 10 days after written notice
       from the Lender requesting action to remedy the same; or

(d)    (subject  to  any  applicable  grace  period  specified  in  any  Finance
       Document) any breach by the Borrower or any Security  Party occurs of any
       provision of a Finance  Document (other than a breach caused by paragraph
       (a), (b) or (c) above); or

(e)    any  representation,  warranty or statement made by, or by an officer of,
       the Borrower or a Security Party in a Finance Document or in the Drawdown
       Notice or any other notice or document  relating to a Finance Document is
       untrue or misleading when it is made; or

(f)    any of the following occurs in relation to any Financial  Indebtedness of
       a Relevant Person:

       (i)    any Financial  Indebtedness  of a Relevant Person is not paid when
              due or, if so payable, on demand; or

       (ii)   any Financial  Indebtedness  of a Relevant  Person becomes due and
              payable or capable of being  declared due and payable prior to its
              stated maturity date as a consequence of any event of default; or

       (iii)  a lease, hire purchase agreement or charter creating any Financial
              Indebtedness  of a Relevant  Person is terminated by the lessor or
              owner or becomes  capable of being  terminated as a consequence of
              any termination event; or

       (iv)   any overdraft,  loan, note issuance,  acceptance credit, letter of
              credit, guarantee, foreign exchange or other facility, or any swap
              or other  derivative  contract  or  transaction,  relating  to any
              Financial Indebtedness of a Relevant Person ceases to be available
              or becomes capable of being terminated as a result of any event of
              default,  or cash cover is required,  or becomes  capable of being
              required,  in respect of such a facility  as a result of any event
              of default; or

       (v)    any Security  Interest  securing any Financial  Indebtedness  of a
              Relevant Person becomes enforceable; or

(g)    any of the following occurs in relation to a Relevant Person:

       (i)    a Relevant Person becomes, in the opinion of the Lender, unable to
              pay its debts as they fall due; or

       (ii)   any  assets  of a  Relevant  Person  are  subject  to any  form of
              execution,   attachment,  arrest,  sequestration  or  distress  in
              respect of a sum of, or sums aggregating,  $500,000 or more or the
              equivalent in another currency; or

       (iii)  any  administrative  or other receiver is appointed over any asset
              of a Relevant Person; or

       (iv)   a Relevant  Person makes any formal  declaration  of bankruptcy or
              any formal  statement to the effect that it is insolvent or likely
              to become insolvent,  or a winding up or  administration  order is
              made in relation to a Relevant Person, or the members or directors
              of a Relevant  Person  pass a  resolution  to the  effect  that it
              should be wound up, placed in  administration or cease to carry on
              business,  save  that  this  paragraph  does not  apply to a fully
              solvent  winding up of a Relevant  Person  other than the Borrower
              which  is,  or  is  to  be,   effected  for  the  purposes  of  an
              amalgamation or reconstruction  previously  approved by the Lender
              and effected not later than 3 months after the commencement of the
              winding up; or

       (v)    a petition is  presented  in any  Pertinent  Jurisdiction  for the
              winding up or administration,  or the appointment of a provisional
              liquidator,  of a Relevant  Person  unless the  petition  is being
              contested  in  good  faith  and  on  substantial  grounds  and  is
              dismissed or withdrawn  within 30 days of the  presentation of the
              petition; or

       (vi)   a Relevant Person petitions a court, or presents any proposal for,
              any form of judicial  or  non-judicial  suspension  or deferral of
              payments,  reorganisation  of its debt (or certain of its debt) or
              arrangement  with all or a  substantial  proportion  (by number or
              value)  of its  creditors  or of any  class  of them  or any  such
              suspension or deferral of payments,  reorganisation or arrangement
              is effected by court order, contract or otherwise; or

       (vii)  any meeting of the members or  directors  of a Relevant  Person is
              summoned for the purpose of  considering  a resolution or proposal
              to authorise or take any action of a type  described in paragraphs
              (iii), (iv), (v) or (vi) above; or

       (viii) in a Pertinent  Jurisdiction other than England,  any event occurs
              or any procedure is commenced which, in the opinion of the Lender,
              is similar to any of the foregoing; or

(h)    the Borrower ceases or suspends carrying on its business or a part of its
       business which, in the opinion of the Lender,  is material in the context
       of this Agreement; or

(i)    it becomes unlawful in any Pertinent Jurisdiction or impossible:

       (i)    for the Borrower or any Security  Party to discharge any liability
              under a Finance  Document or to comply  with any other  obligation
              which the Lender considers material under a Finance Document; or

       (ii)   for the Lender to  exercise  or  enforce  any right  under,  or to
              enforce any Security Interest created by, a Finance Document; or

(j)    any consent  necessary to enable the Borrower to own,  operate or charter
       the Ship or to enable the Borrower or any  Security  Party to comply with
       any provision which the Lender  considers  material of a Finance Document
       or the MOA is not granted,  expires without being renewed,  is revoked or
       becomes  liable to  revocation  or any condition of such a consent is not
       fulfilled; or

(k)    it appears to the Lender that,  without its prior  consent,  a change has
       occurred or probably has occurred after the date of this Agreement in the
       ultimate beneficial ownership of any of the shares in the Borrower or the
       Approved  Manager  or in  the  ultimate  control  of  the  voting  rights
       attaching to any of those shares; or

(l)    any provision which the Lender  considers  material of a Finance Document
       proves to have been or becomes  invalid or  unenforceable,  or a Security
       Interest  created  by a Finance  Document  proves to have been or becomes
       invalid  or  unenforceable  or such a  Security  Interest  proves to have
       ranked after, or loses its priority to, another Security  Interest or any
       other third party claim or interest; or

(m)    the security  constituted by a Finance  Document is in any way imperilled
       or in jeopardy; or

(n)    the Ship ceases to be managed by the Approved Manager on the terms of the
       Management  Agreement,  unless prior to such cessation,  the Borrower has
       appointed a substitute  manager or managers  acceptable  to the Lender in
       all respects; or

(o)    an Event of Default  (as  defined in Section 14 of the Master  Agreement)
       occurs;

(p)    the Master Agreement is terminated,  cancelled,  suspended,  rescinded or
       revoked  or  otherwise  ceases to remain in full force and effect for any
       reason except with the consent of the Lender; or

(q)    any  other  event  occurs  or any other  circumstances  arise or  develop
       including, without limitation:

       (i)    a change in the financial position,  state of affairs or prospects
              of the Borrower,  the Approved Manager or the Corporate Guarantor;
              or

       (ii)   any accident or other event  involving the Ship or another  vessel
              owned, chartered or operated by a Relevant Person,

       in the light of which the  Lender  reasonably  considers  that there is a
       significant  risk that any of the Borrower,  the Approved  Manager or the
       Corporate  Guarantor  is, or will later  become,  unable to discharge its
       liabilities under the Finance Documents as they fall due.

18.2   Actions  following  an Event of Default.  On, or at any time  after,  the
       occurrence of an Event of Default the Lender may:

(a)    serve on the Borrower a notice stating that all obligations of the Lender
       to the Borrower under this Agreement are terminated; and/or

(b)    serve  on the  Borrower  a notice  stating  that the  Loan,  all  accrued
       interest and all other amounts  accrued or owing under this Agreement are
       immediately due and payable or are due and payable on demand; and/or

(c)    take any other action  which,  as a result of the Event of Default or any
       notice served under  paragraph (i) or (ii) above,  the Lender is entitled
       to take under any Finance Document or any applicable law.

18.3   Existing rights  unaffected.  The Lender shall not be obliged to exercise
       any of its rights under  Clause  18.2;  and those rights shall be without
       prejudice  and in  addition  to any  other  right or  remedy to which the
       Lender is entitled (whether under the general law or any document).

18.4   Termination  of Loan.  On the service of a notice under  paragraph (a) of
       Clause 18.2 all other  obligations  of the Lender to the  Borrower  under
       this Agreement, shall terminate.

18.5   Acceleration  of Loan. On the service of a notice under  paragraph (b) of
       Clause 18.2, the Loan, all accrued interest and all other amounts accrued
       or owing from the Borrower or any Security Party under this Agreement and
       every other Finance Document shall become immediately due and payable or,
       as the case may be, payable on demand.

18.6   Multiple  notices;  action without  notice.  The Lender may serve notices
       under  paragraphs  (a)  and  (b)  of  Clause  18.2  simultaneously  or on
       different  dates and it may take any action referred to in that Clause if
       no such notice is served or simultaneously  with or at any time after the
       service of both or either of such notices.

18.7   Exclusion  of Lender  liability.  Neither the Lender nor any  receiver or
       manager appointed by the Lender, shall have any liability to the Borrower
       or a Security Party:

(a)    for any loss caused by an exercise of rights under,  or  enforcement of a
       Security  Interest  created  by, a Finance  Document or by any failure or
       delay to exercise such a right or to enforce such a Security Interest; or

(b)    as  mortgagee in  possession  or  otherwise,  for any income or principal
       amount  which  might have been  produced  by or  realised  from any asset
       comprised  in such a  Security  Interest  or for any  reduction  (however
       caused) in the value of such an asset,

       except that this does not exempt the Lender or a receiver or manager from
       liability  for losses shown to have been by the gross  negligence  or the
       wilful  misconduct  of the Lender's own officers and employees or (as the
       case may be) such receiver's or manager's own partners or employees.

18.8   Relevant  Persons.  In this  Clause  18 "a  Relevant  Person"  means  the
       Borrower and the Corporate Guarantor.

18.9   Interpretation.  In Clause 18.1(f) references to an event of default or a
       termination  event  include  any  event,  howsoever  described,  which is
       similar to an event of default in a facility  agreement or a  termination
       event in a finance lease;  and in Clause 18.1(g)  "petition"  includes an
       application.

19     FEES AND EXPENSES

19.1   Management  fee.  The Borrower  shall pay to the Lender a  non-refundable
       management  fee of $60,000 on the  earlier of (i) the  Drawdown  Date and
       (ii) the last day of the Availability Period.

19.2   Costs of  negotiation,  preparation  etc. The  Borrower  shall pay to the
       Lender on its demand the amount of all expenses incurred by the Lender in
       connection with the negotiation,  preparation,  execution or registration
       of any Finance  Document or any related  document or with any transaction
       contemplated by a Finance Document or a related document.

19.3   Costs of variations,  amendments, enforcement etc. The Borrower shall pay
       to the  Lender,  on the  Lender's  demand,  the  amount  of all  expenses
       incurred by the Lender in connection with:

(a)    any amendment or supplement  to a Finance  Document,  or any proposal for
       such an amendment to be made;

(b)    any consent or waiver by the Lender concerned under or in connection with
       a Finance Document, or any request for such a consent or waiver;

(c)    the valuation of any security  provided or offered under Clause 14 or any
       other matter relating to such security; or

(d)    any step taken by the Lender with a view to the  protection,  exercise or
       enforcement  of any  right or  Security  Interest  created  by a  Finance
       Document or for any similar purpose.

       There shall be  recoverable  under  paragraph  (d) the full amount of all
       legal  expenses,  whether or not such as would be allowed  under rules of
       court or any taxation or other procedure carried out under such rules.

19.4   Documentary  taxes. The Borrower shall promptly pay any tax payable on or
       by reference to any Finance Document,  and shall, on the Lender's demand,
       fully indemnify the Lender against any liabilities and expenses resulting
       from any failure or delay by the Borrower to pay such a tax.

19.5   Certification of amounts. A notice which is signed by two officers of the
       Lender, which states that a specified amount, or aggregate amount, is due
       to  the  Lender  under  this  Clause  19  and  which  indicates  (without
       necessarily  specifying a detailed  breakdown)  the matters in respect of
       which the  amount,  or  aggregate  amount,  is due  shall be prima  facie
       evidence that the amount, or aggregate amount, is due.

20     INDEMNITIES

20.1   Indemnities regarding borrowing and repayment of Loan. The Borrower shall
       fully  indemnify  the Lender on its  demand in  respect of all  expenses,
       liabilities  and losses  which are  incurred by the Lender,  or which the
       Lender reasonably and with due diligence estimates that it will incur, as
       a result of or in connection with:

(a)    the Loan not being borrowed on the date specified in the Drawdown  Notice
       for any reason other than a default by the Lender;

(b)    the  receipt or recovery of all or any part of the Loan or an overdue sum
       otherwise  than on the last day of an Interest  Period or other  relevant
       period;

(c)    any failure (for whatever  reason) by the Borrower to make payment of any
       amount due under a Finance Document on the due date or, if so payable, on
       demand (after giving credit for any default interest paid by the Borrower
       on the amount concerned under Clause 6);

(d)    the occurrence  and/or  continuance of an Event of Default or a Potential
       Event of Default and/or the  acceleration  of repayment of the Loan under
       Clause 18,

       and in respect of any tax (other  than tax on its overall net income) for
       which the Lender is liable in connection  with any amount paid or payable
       to the  Lender  (whether  for its own  account  or  otherwise)  under any
       Finance Document.

20.2   Breakage costs.  Without limiting its generality,  Clause 20.1 covers any
       liability, expense or loss, incurred by the Lender:

(a)    in  liquidating  or employing  deposits  from third  parties  acquired or
       arranged  to fund or  maintain  all or any  part of the Loan  and/or  any
       overdue  amount (or an aggregate  amount  which  includes the Loan or any
       overdue amount); and

(b)    in  terminating,  or otherwise in connection  with,  any interest  and/or
       currency swap or any other transaction entered into (whether with another
       legal entity or with another office or department of the Lender) to hedge
       any exposure  arising under this Agreement or a number of transactions of
       which this Agreement is one.

20.3   Miscellaneous indemnities.  The Borrower shall fully indemnify the Lender
       on  its  demand  in  respect  of  all   claims,   demands,   proceedings,
       liabilities, taxes, losses and expenses of every kind ("liability items")
       which may be made or brought against,  or incurred by, the Lender, in any
       country, in relation to:

(a)    any  action  taken,  or  omitted or  neglected  to be taken,  under or in
       connection  with any Finance  Document  by the Lender or by any  receiver
       appointed under a Finance Document; and

(b)    any other  event,  matter or question  which occurs or arises at any time
       during the  Security  Period and which has any  connection  with,  or any
       bearing  on, any  Finance  Document,  any  payment  or other  transaction
       relating  to a Finance  Document  or any  asset  covered  (or  previously
       covered) by a Security  Interest created (or intended to be created) by a
       Finance Document,

       other than  liability  items  which are shown to have been  caused by the
       gross and culpable  negligence  or the wilful  misconduct of the Lender's
       own officers or employees.

20.4   Environmental indemnity. Without prejudice to its generality, Clause 20.3
       covers any  liability  items which arise,  or are  asserted,  under or in
       connection  with any law  relating to safety at sea,  the ISM Code or any
       Environmental Law.

20.5   Currency  indemnity.  If any sum due from the  Borrower  or any  Security
       Party to the  Lender  under a  Finance  Document  or under  any  order or
       judgment  relating to a Finance  Document  has to be  converted  from the
       currency in which the Finance  Document  provided  for the sum to be paid
       (the   "Contractual   Currency")  into  another  currency  (the  "Payment
       Currency") for the purpose of:

(a)    making or lodging any claim or proof against the Borrower or any Security
       Party,  whether  in its  liquidation,  any  arrangement  involving  it or
       otherwise; or

(b)    obtaining an order or judgment from any court or other tribunal; or

(c)    enforcing any such order or judgment,

       the Borrower shall indemnify the Lender against the loss arising when the
       amount of the payment actually received by the Lender is converted at the
       available rate of exchange into the Contractual Currency.

       In this Clause 20.5, the "available  rate of exchange"  means the rate at
       which the Lender is able at the opening of business  (London time) on the
       Business  Day  after  it  receives  the sum  concerned  to  purchase  the
       Contractual Currency with the Payment Currency.

       This Clause 20.5 creates a separate  liability  of the Borrower  which is
       distinct  from their other  liabilities  under the Finance  Documents and
       which  shall not be merged in any  judgment  or order  relating  to those
       other liabilities.

20.6   Certification  of amounts.  A notice which is signed by 2 officers of the
       Lender, which states that a specified amount, or aggregate amount, is due
       to  the  Lender  under  this  Clause  20  and  which  indicates  (without
       necessarily  specifying a detailed  breakdown)  the matters in respect of
       which the  amount,  or  aggregate  amount,  is due  shall be prima  facie
       evidence that the amount, or aggregate amount, is due.

21     NO SET-OFF OR TAX DEDUCTION

21.1   No deductions. All amounts due from the Borrower under a Finance Document
       shall be paid:

(a)    without any form of set-off, cross-claim or condition; and

(b)    free and  clear of any tax  deduction  except a tax  deduction  which the
       Borrower is required by law to make.

21.2   Grossing-up  for taxes.  If the Borrower is required by law to make a tax
       deduction from any payment:

(a)    the Borrower  shall notify the Lender as soon as it becomes  aware of the
       requirement;

(b)    the  Borrower  shall pay the tax  deducted  to the  appropriate  taxation
       authority  promptly,  and in any event before any fine or penalty arises;
       and

(c)    the amount due in respect of the payment shall be increased by the amount
       necessary to ensure that the Lender  receives and retains  (free from any
       liability  relating to the tax  deduction) a net amount which,  after the
       tax deduction,  is equal to the full amount which it would otherwise have
       received.

21.3   Evidence  of payment  of taxes.  Within  one month  after  making any tax
       deduction,  the Borrower shall deliver to the Lender documentary evidence
       satisfactory  to the Lender that the tax had been paid to the appropriate
       taxation authority.

21.4   Exclusion of tax on overall net income. In this Clause 21 "tax deduction"
       means any  deduction or  withholding  for or on account of any present or
       future tax except tax on the Lender's overall net income.

22     ILLEGALITY, ETC

22.1   Illegality.  This Clause 22 applies if the Lender  notifies  the Borrower
       that it has become, or will with effect from a specified date, become:

(a)    unlawful or prohibited as a result of the  introduction  of a new law, an
       amendment  to an  existing  law or a  change  in the  manner  in which an
       existing law is or will be interpreted or applied; or

(b)    contrary to, or inconsistent with, any regulation,

       for the Lender to maintain or give effect to any of its obligations under
       this Agreement in the manner contemplated by this Agreement.

22.2   Notification  and  effect of  illegality.  On the  Lender  notifying  the
       Borrower  under Clause 22.1,  the  Lender's  obligation  to make the Loan
       available  shall  terminate;  and  thereupon  or, if  later,  on the date
       specified in the  Lender's  notice under Clause 22.1 as the date on which
       the notified  event would become  effective the Borrower shall prepay the
       Loan in full in accordance with Clause 7.

22.3   Mitigation.  If circumstances  arise which would result in a notification
       under  Clause 22.1 then,  without in any way  limiting  the rights of the
       Lender under Clause 22.3, the Lender shall use  reasonable  endeavours to
       transfer its obligations, liabilities and rights under this Agreement and
       the Finance  Documents  to another  office or financial  institution  not
       affected  by the  circumstances  but the  Lender  shall  not be under any
       obligation  to take any such  action if, in its  opinion,  to do would or
       might:

(a)    have  an  adverse  effect  on  its  business,   operations  or  financial
       condition; or

(b)    involve  it in any  activity  which  is  unlawful  or  prohibited  or any
       activity that is contrary to, or inconsistent with, any regulation; or

(c)    involve it in any expense (unless indemnified to its satisfaction) or tax
       disadvantage.

23     INCREASED COSTS

23.1   Increased  costs.  This  Clause 23  applies if the  Lender  notifies  the
       Borrower that it considers that as a result of:

(a)    the  introduction or alteration after the date of this Agreement of a law
       or an alteration  after the date of this Agreement in the manner in which
       a law is interpreted or applied (disregarding any effect which relates to
       the application to payments under this Agreement of a tax on the Lender's
       overall net income); or

(b)    complying  with any  regulation  (including  any which relates to capital
       adequacy or liquidity  controls or which  affects the manner in which the
       Lender  allocates   capital  resources  to  its  obligations  under  this
       Agreement)  which is introduced,  or altered,  or the  interpretation  or
       application of which is altered, after the date of this Agreement,

       is that the Lender (or a parent company of it) has incurred or will incur
       an "increased cost", that is to say:

       (i)    an  additional  or increased  cost  incurred as a result of, or in
              connection  with, the Lender having entered into, or being a party
              to, this  Agreement or having taken an  assignment of rights under
              this  Agreement,  of funding or maintaining the Loan or performing
              its obligations under this Agreement, or of having outstanding all
              or any part of the Loan or other unpaid sums; or

       (ii)   a reduction  in the amount of any payment to the Lender under this
              Agreement  or  in  the  effective  return  which  such  a  payment
              represents to the Lender or on its capital; or

       (iii)  an additional or increased cost of funding all or maintaining  all
              or any of the advances  comprised in a class of advances formed by
              or including the Loan or (as the case may require) the  proportion
              of that cost attributable to the Loan; or

       (iv)   a  liability  to make a payment,  or a return  foregone,  which is
              calculated  by reference to any amounts  received or receivable by
              the Lender under this Agreement,

       but  not an  item  attributable  to a  change  in the  rate of tax on the
       overall  net income of the Lender (or a parent  company of it) or an item
       covered by the indemnity for tax in Clause 20.1 or by Clause 21.

       For the  purposes  of this  Clause  23.1  the  Lender  may in good  faith
       allocate or spread costs and/or  losses among its assets and  liabilities
       (or any class thereof) on such basis as it considers appropriate.

23.2   Payment of increased costs. The Borrower shall pay to the Lender,  on its
       demand,  the  amounts  which the Lender  from time to time  notifies  the
       Borrower  that it has  specified to be necessary to compensate it for the
       increased cost.

23.3   Notice of  prepayment.  If the  Borrower  is not  willing to  continue to
       compensate  the Lender for the  increased  cost under  Clause  23.2,  the
       Borrower  may give the  Lender  not less  than 14 days'  notice  of their
       intention to prepay the Loan at the end of an Interest Period.

23.4   Prepayment.  A notice under Clause 23.3 shall be irrevocable;  and on the
       date specified in the Borrower's notice of intended prepayment,  the Loan
       shall  terminate  and the  Borrower  shall  prepay  (without  premium  or
       penalty)  the  Loan,  together  with  accrued  interest  thereon  at  the
       applicable rate plus the Margin.

23.5   Application  of  prepayment.  Clause  7 shall  apply in  relation  to the
       prepayment.

24     SET-OFF

24.1   Application of credit balances. The Lender may without prior notice:

(a)    apply any  balance  (whether or not then due) which at any time stands to
       the credit of any  account in the name of the  Borrower  at any office in
       any country of the Lender in or towards  satisfaction of any sum then due
       from the Borrower to the Lender under any of the Finance Documents; and

(b)    for that purpose:

       (i)    break,  or alter the  maturity of, all or any part of a deposit of
              the Borrower;

       (ii)   convert or translate  all or any part of a deposit or other credit
              balance into Dollars; and

       (iii)  enter into any other  transaction or make any entry with regard to
              the credit balance which the Lender considers appropriate.

24.2   Existing rights  unaffected.  The Lender shall not be obliged to exercise
       any of its rights under  Clause  24.1;  and those rights shall be without
       prejudice  and in  addition  to any  right  of  set-off,  combination  of
       accounts,  charge,  lien or other  right or remedy to which the Lender is
       entitled (whether under the general law or any document).

24.3   No Security Interest.  This Clause 24 give the Lender a contractual right
       of  set-off  only,  and does not  create  any  equitable  charge or other
       Security Interest over any credit balance of the Borrower.

25     TRANSFERS AND CHANGES IN LENDING OFFICE

25.1   Transfer by Borrower.  The  Borrower may not,  without the consent of the
       Lender:

(a)    transfer any of its rights or obligations under any Finance Document; or

(b)    enter into any merger,  de-merger or other  reorganisation,  or carry out
       any other  act,  as a result of which  any of its  rights or  liabilities
       would vest in, or pass to, another person.

25.2   Assignment by Lender.  The Lender may assign all or any of the rights and
       interests  which  it has  under or by  virtue  of the  Finance  Documents
       without the consent of the Borrower.

25.3   Rights of assignee. In respect of any breach of a warranty,  undertaking,
       condition   or  other   provision   of  a   Finance   Document,   or  any
       misrepresentation  made in or in connection  with a Finance  Document,  a
       direct or indirect  assignee of any of the  Lender's  rights or interests
       under or by virtue of the Finance  Documents shall be entitled to recover
       damages by reference to the loss incurred by that assignee as a result of
       the breach or misrepresentation  irrespective of whether the Lender would
       have incurred a loss of that kind or amount.

25.4   Sub-participation; subrogation assignment. The Lender may sub-participate
       all or any part of its rights and/or  obligations  under or in connection
       with the Finance  Documents without the consent of, or any notice to, the
       Borrower;  and the Lender may assign,  in any manner and terms  agreed by
       it,  all or any part of those  rights to an  insurer  or  surety  who has
       become subrogated to them.

25.5   Disclosure  of  information.  The  Lender  may  disclose  to a  potential
       assignee or sub-participant any information which the Lender has received
       in relation to the Borrower, any Security Party or their affairs under or
       in  connection  with any  Finance  Document,  unless the  information  is
       clearly of a confidential nature.

25.6   Change of lending  office.  The Lender may change its  lending  office by
       giving  notice to the Borrower  and the change shall become  effective on
       the later of:

(a)    the date on which the Borrower receives the notice; and

(b)    the date, if any, specified in the notice as the date on which the change
       will come into effect.

26     VARIATIONS AND WAIVERS

26.1   Variations,  waivers  etc. by Lender.  A document  shall be  effective to
       vary, waive, suspend or limit any provision of a Finance Document, or the
       Lender's  rights or remedies  under such a provision  or the general law,
       only if the document is signed,  or specifically  agreed to by fax by the
       Borrower  and the  Lender  and,  if the  document  relates  to a  Finance
       Document to which a Security Party is party, by that Security Party.

26.2   Exclusion  of other or implied  variations.  Except for a document  which
       satisfies  the  requirements  of Clause 26.1,  no  document,  and no act,
       course of conduct,  failure or neglect to act, delay or  acquiescence  on
       the part of the Lender (or any person  acting on its behalf) shall result
       in the Lender (or any person  acting on its  behalf)  being taken to have
       varied, waived,  suspended or limited, or being precluded (permanently or
       temporarily) from enforcing, relying on or exercising:

(a)    a provision of this Agreement or another Finance Document; or

(b)    an Event of Default; or

(c)    a breach by the  Borrower or a Security  Party of an  obligation  under a
       Finance Document or the general law; or

(d)    any right or remedy  conferred by any Finance  Document or by the general
       law,

       and there  shall not be implied  into any  Finance  Document  any term or
       condition  requiring any such provision to be enforced,  or such right or
       remedy to be exercised, within a certain or reasonable time.

27     NOTICES

27.1   General.  Unless otherwise  specifically provided, any notice under or in
       connection with any Finance Document shall be given by letter or fax; and
       references  in the  Finance  Documents  to  written  notices,  notices in
       writing and  notices  signed by  particular  persons  shall be  construed
       accordingly.

       27.2   Addresses for communications. A notice shall be sent:

       (a)    to the Borrower:            Eurobulk S.A.
                                          Aethrion Center
                                          40, Ag. Konstantinou Street
                                          Maroussi
                                          Athens 151 24
                                          Greece

                                          Fax No: +30 210 610 5111

       (b)    to the Lender:              9 Quai du President Paul Doumer
                                          92400 Courbevoie
                                          La Defense, Paris
                                          France

                                          Fax No: +331 4189 2987
                                          Attn: Shipping Department

       or to such other address as the relevant party may notify the other.

27.3   Effective date of notices. Subject to Clauses 27.4 and 27.5:

(a)    a notice  which is delivered  personally  or posted shall be deemed to be
       served, and shall take effect, at the time when it is delivered; and

(b)    a notice  which is sent by fax shall be deemed  to be  served,  and shall
       take effect, 2 hours after its transmission is completed.

27.4   Service outside  business hours.  However,  if under Clause 27.3 a notice
       would be deemed to be served:

(a)    on a day which is not a business day in the place of receipt; or

(b)    on such a business day, but after 5 p.m. local time,

       the notice  shall  (subject to Clause  27.5) be deemed to be served,  and
       shall  take  effect,  at 9 a.m.  on the next day which is such a business
       day.

27.5   Illegible notices. Clauses 27.3 and 27.4 do not apply if the recipient of
       a notice  notifies the sender within one hour after the time at which the
       notice  would  otherwise  be deemed to be served that the notice has been
       received in a form which is illegible in a material respect.

27.6   English  language.  Any  notice  under or in  connection  with a  Finance
       Document shall be in English.

27.7   Valid notices.  A notice under or in connection  with a Finance  Document
       shall not be invalid by reason that its contents or the manner of serving
       it do not  comply  with the  requirements  of this  Agreement  or,  where
       appropriate, any other Finance Document under which it is served if:

(a)    the  failure  to serve it in  accordance  with the  requirements  of this
       Agreement or other Finance  Document,  as the case may be, has not caused
       any party to suffer any significant loss or prejudice; or

(b)    in the case of incorrect and/or incomplete contents,  it should have been
       reasonably  clear to the party on which the notice  was  served  what the
       correct or missing particulars should have been.

27.8   Meaning  of  "notice".  In this  Clause  "notice"  includes  any  demand,
       consent,   authorisation,   approval,   instruction,   waiver   or  other
       communication.

28     SUPPLEMENTAL

28.1   Rights  cumulative,  non-exclusive.  The  rights and  remedies  which the
       Finance Documents give to the Lender are:

(a)    cumulative;

(b)    may be exercised as often as appears expedient; and

(c)    shall not, unless a Finance Document  explicitly and specifically  states
       so, be taken to  exclude  or limit any right or remedy  conferred  by any
       law.

28.2   Severability of provisions.  If any provision of a Finance Document is or
       subsequently  becomes  void,  unenforceable  or  illegal,  that shall not
       affect the validity,  enforceability  or legality of the other provisions
       of that  Finance  Document  or of the  provisions  of any  other  Finance
       Document.

28.3   Counterparts.  A  Finance  Document  may be  executed  in any  number  of
       counterparts.

28.4   Third party rights.  A person who is not a party to this Agreement has no
       right under the Contracts  (Rights of Third  Parties) Act 1999 to enforce
       or to enjoy the benefit of any term of this Agreement.

29     LAW AND JURISDICTION

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

29.2   Exclusive  English  jurisdiction.  Subject to Clause 29.3,  the courts of
       England shall have  exclusive  jurisdiction  to settle any disputes which
       may arise out of or in connection with this Agreement.

29.3   Choice of forum for the exclusive  benefit of the Lender.  Clause 29.2 is
       for the exclusive benefit of the Lender, which reserves the rights:

(a)    to commence  proceedings in relation to any matter which arises out of or
       in connection with this Agreement in the courts of any country other than
       England and which have or claim jurisdiction to that matter; and

(b)    to  commence  such  proceedings  in the  courts  of any such  country  or
       countries  concurrently  with or in addition to proceedings in England or
       without  commencing  proceedings  in  England.  The  Borrower  shall  not
       commence any proceedings in any country other than England in relation to
       a matter which arises out of or in connection with this Agreement.

29.4   Process agent. The Borrower  irrevocably appoints HTD Services Limited at
       their  office for the time being,  presently  at Irongate  House,  Duke's
       Place,  London  EC3A 7LP,  England,  to act as its agent to  receive  and
       accept on its  behalf  any  process  or other  document  relating  to any
       proceedings   in  the  English  courts  which  are  connected  with  this
       Agreement.

29.5   Lender's  rights  unaffected.  Nothing in this Clause 29 shall exclude or
       limit any right which the Lender may have  (whether  under the law of any
       country,  an  international  convention or otherwise)  with regard to the
       bringing  of  proceedings,  the service of process,  the  recognition  or
       enforcement  of a  judgment  or any  similar  or  related  matter  in any
       jurisdiction.

29.6   Meaning  of  "proceedings".   In  this  Clause  29,  "proceedings"  means
       proceedings of any kind,  including an  application  for a provisional or
       protective measure.

AS WITNESS the hands of the duly authorised officers or attorneys of the parties
the day and year first before written.

<PAGE>

                                   SCHEDULE 1

                                 DRAWDOWN NOTICE

To:    Calyon
       9 Quai du President Paul Doumer
       92400 Courbevoie
       La Defense
       Paris
       France

Attention: Shipping Department                                      August 2006

                                 DRAWDOWN NOTICE

1      We refer to the loan agreement (the "Loan  Agreement")  dated August 2006
       and made between us, as Borrower,  and you, as Lender, in connection with
       a facility of up to  US$15,500,000.  Terms defined in the Loan  Agreement
       have their defined meanings when used in this Drawdown Notice.

2      We request to borrow as follows:

(a)    Amount: US$[o];

(b)    Drawdown Date: [ ] August 2006;

(c)    Duration of the first Interest Period shall be [ ] months;

(d)    Payment instructions : account in our name and numbered [ ] with [ ] of
       [ ].

3      We represent and warrant that:

(a)    the  representations  and  warranties  in Clause 9 of the Loan  Agreement
       would  remain  true and not  misleading  if  repeated on the date of this
       notice with reference to the circumstances now existing;

(b)    no Event of Default or  Potential  Event of Default has  occurred or will
       result from the borrowing of the Loan.

4      This notice cannot be revoked without the prior consent of the Lender.

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

                                    Director
                              for and on behalf of
                             PROSPERO MARITIME INC.

<PAGE>

                                   SCHEDULE 2

                          CONDITION PRECEDENT DOCUMENTS

                                     Part A

The following are the documents referred to in Clause 8.1(a).

1      A duly executed  original of each Finance  Document (and of each document
       required  to be  delivered  by each  Finance  Document)  other than those
       referred to in Part B.

2      Copies of the certificate of incorporation and  constitutional  documents
       of each of the Borrower and the Corporate Guarantor.

3      Copies of resolutions of the  shareholders  and directors of the Borrower
       and the  Corporate  Guarantor  authorising  the  execution of each of the
       Finance  Documents to which the Borrower or the Corporate  Guarantor is a
       party and, in the case of the  Borrower,  authorising  named  officers or
       attorneys-in-fact  to give the Drawdown  Notice and other  notices  under
       this Agreement and ratifying the execution of the MOA.

4      The original of any power of attorney under which any Finance Document is
       executed on behalf of the Borrower or the Corporate Guarantor.

5      Copies of all consents  which the Borrower or any Security Party requires
       to enter into, or make any payment  under,  any Finance  Document and the
       MOA.

6      The originals of any mandates or other  documents  required in connection
       with the opening or operation of the Operating  Account and the Retention
       Account.

7      A valuation of the Ship,  addressed  to the Lender,  stated to be for the
       purposes of this  Agreement and dated not earlier than 30 days before the
       Drawdown Date,  from an independent  London sale and purchase  shipbroker
       selected by the Lender.

8      A copy of the MOA (and any  addenda  thereto)  duly signed by the parties
       thereto in such form satisfactory to the Lender.

9      Such  documentation  evidence  as the Lender and its legal  advisers  may
       require in relation to the due  authorisation and execution by the Seller
       of the MOA and all the  documents to be delivered by the Seller  pursuant
       to the MOA.

10     Documentary  evidence  that the agent for  service  of  process  named in
       Clause 29 has accepted its appointment.

11     Favourable  legal  opinions from lawyers  appointed by the Lender on such
       matters  concerning the laws of the Republic of Marshall Islands and such
       other relevant jurisdictions as the Lender may require.

12     If the Lender so requires, in respect of any of the documents referred to
       above, a certified English translation  prepared by a translator approved
       by the Lender.

                                     PART B

The following are the documents referred to in Clause 8.1(b).

1      A duly executed original of the Mortgage,  the General Assignment and the
       Charter  Assignment  in  respect  of the  Charter  (and of each  document
       required to be delivered under each such Finance Document).

2      Documentary evidence that:

(a)    the  Ship  has been  unconditionally  delivered  by the  Seller  to,  and
       accepted by, the  Borrower  under the MOA,  and the full  purchase  price
       payable  under the MOA (in  addition  to the part to be  financed  by the
       Loan) has been duly paid;

(b)    the Ship is definitively  and  permanently  registered in the name of the
       Borrower under Marshall Islands flag;

(c)    the Ship is in the  absolute and  unencumbered  ownership of the Borrower
       save as contemplated by the Finance Documents;

(d)    the Ship  maintains the highest  classification  available for vessels of
       the same  age,  type and  specification  as the Ship with [o] free of all
       recommendations and conditions of such  classification  society affecting
       class;

(e)    the Mortgage has been duly  registered  against the Ship as a valid first
       preferred  Marshall  Islands ship mortgage in accordance with the laws of
       the Republic of the Marshall Islands; and

(f)    the Ship is insured in accordance  with the  provisions of this Agreement
       and all requirements  therein in respect of insurances have been complied
       with.

3      Documents  establishing that the Ship will, as from the Drawdown Date, be
       managed  by the  Approved  Manager  on terms  acceptable  to the  Lender,
       together with:

(a)    the Manager's Undertaking;

(b)    a copy of the Management Agreement;

(c)    copies of the Approved  Manager's  Document of Compliance  and the Safety
       Management Certificate for the Ship; and

(d)    copies of the ISPS Code Documentation in respect of the Ship.

4      A favourable opinion from an independent  insurance consultant acceptable
       to the Lender on such matters  relating to the insurances for the Ship as
       the Lender may require.

       Each copy document  delivered under this Schedule shall be certified as a
       true and up to date copy by a director or the  secretary  (or  equivalent
       officer) of the Borrower and the Approved Managers where relevant.

<PAGE>

                                 EXECUTION PAGE

THE BORROWER

SIGNED by                                 )
                                          )
for and on behalf of                      )
PROSPERO MARITIME INC.                    )
in the presence of:                       )

THE LENDER

SIGNED by                                 )
                                          )
attorney-in-fact                          )
for and on behalf of                      )
CALYON                                    )
in the presence of:                       )

SK 02558 0002 700665

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