Document:

Ex 10.1

    [Missing
      Graphic Reference]

    

    EXCLUSIVE
      DISTRIBUTION AGREEMENT

    

    This
      Exclusive Distribution Agreement is made and entered into this 18th day
      of
      July,
      2003, by
      and between International Food Products Group, Inc. ("IFPG") at 170 Newport
      Center Drive, Suite 260, Newport Beach, CA 92660 and Silverado Corporation
      K.K.
      Ltd of Minato-Ku, Tokyo Japan. 

    

    Whereas
      Manufacturer desires Distributor to act as its sole and exclusive independent
      sales agent for sales of the Manufacturer’s IQF and Coffee Products (as defined)
      to Japanese Club Stores, and Supermarket Retailers to act as Manufacturer’s sole
      independent sales agent for sales of the Products within Japan. 

    

    Now
      Therefore,
      in
      consideration of the mutual promises and covenants set forth herein, and
      intending to be legally bound, the Parties agree as follows: 

    

    

    1. Grant
      of Exclusive Rights.

    

    1.1
       Manufacturer
      hereby appoints Distributor as its exclusive sales agent for the Manufacturer’s
      IQF and Coffee Products (as hereafter defined) within the Country of Japan.
      Manufacturer shall permit Distributor to use Manufacturer’s Products' name for
      promotion and advertisement in the sale of the Products. While this Agreement
      remains in effect, Manufacturer will not, directly or indirectly, sell or
      otherwise exploit the Products within the Territory and will not permit anyone
      else, either directly or indirectly, to sell or otherwise exploit the Products
      within the Territory. The Distributor will not represent, promote, market,
      distribute similar products in Japan.

    

    1.2 Distributor
      will comply with all applicable laws, rules and regulations in selling and
      otherwise exploiting the Products and in otherwise dealing with the
      Products.

    

    

    

    2. Duties
      and Responsibilities of Manufacturer.

    

    2.1
       Manufacturer
      shall provide training to Distributor, including its agents or independent
      contractors, regarding the sale, promotion and use of the Products.

    

    2.2 Manufacturer
      shall provide literature and/or advertising and promotional materials, displays,
      and samples to Broker to assist Distributor in its distribution of the Products.
      Manufacturer shall further provide consultation, on a commercially reasonable
      basis, covering specific field problems encountered by Distributor in relation
      to the Products.

    

    2.3 Upon
      receipt of a customer order from Distributor, Manufacturer will ship Products
      directly to the customer site designated in the order.  

    

    3. Duties
      and Responsibilities of Distributor.

    

    3.1
       Distributor
      shall use its best efforts, in a commercially reasonable manner, to sell
      Manufacturer’s Products to existing and prospective customers within the
      Territory. 

    

    3.2
       Distributor
      will limit its claims and representations regarding the Products to those made
      by Manufacturer in its published literature or promotional materials, or as
      otherwise authorized by Manufacturer. 

    

    3.3 Distributor
      will maintain adequate support staff, whether as employees of Distributor or
      independent contractors or sub-distributors of Distributor, necessary to perform
      its obligations under this Agreement.

    

    3.4 Distributor
      will guarantee a minimum of $2.5 Million in sales by 4th
      Qtr.
      2006 as a condition of retaining the exclusive rights and increases of 20%
      annually for each year after.

    

    4. Compensation.

    

    4.1 Distributor
      will receive a commission of three percent (3%) of the gross sales price for
      all
      Products sold by Distributor within the Territory. For purposes of this section,
      “gross sales price” shall mean the invoice price of the Products to the customer
      after any discounts or rebates. The Distributor will arrange for all products
      to
      be purchased by the Importer under an irrevocable letter of credit payable
      at
      sight and payable to IFPG.

     

    

    

    

    4.2 Distributor’s
      commission will be payable by Manufacturer to Distributor, seven (7) days after
      Manufacturer receives payment under the letter of credit. Distributor shall
      have
      the right to inspect and audit, upon three (30) days written notice,
      Manufacturer’s books and records related to customer orders, shipment, invoicing
      and payments for the Products sold within the Territory pursuant to this
      Agreement. 

    

    4.3 Distributor
      agrees to cooperate with Manufacturer in making certain letter of credit is
      opened based on terms outlined by IFPG.

    

    4.4 Distributor’s
      right to compensation will continue and will survive termination of this
      agreement as set forth in section 7 below.

    

    

    5. Manufacturer’s
      Warranty and Indemnity.

    

    5.1 Manufacturer
      warrants to Distributor that (i) the Products and the packaging are and will
      be
      safe, the units of the Products sold to customers under this Agreement will
      be
      properly, adequately and safely packaged and labeled, and the Products and
      any
      supplemental materials comply and will comply with all applicable laws, rules
      and regulations as required in Japan, (ii) there is not any and there will
      not
      be any defect in the design of the Products or in any units of the Products
      sold
      to customers under this Agreement, (iii) the Products do not and will not
      violate any patent, copyright, trademark, service mark or other right and do
      not
      and will not contain any item, part or material which Manufacturer is not
      authorized to use.

    

    5.2
       Manufacturer
      will maintain product liability insurance in commercially reasonable amounts
      and
      will include Distributor as an additional insured on its policy. 

    

    5.3. Manufacturer
      will indemnify Distributor against any liability and will hold Distributor
      harmless from any loss, damage, cost and expense (including, without
      limitations, legal fees and expenses) which Distributor incurs arising out
      of or
      in connection with any claim alleging facts that would constitute a breach
      by
      Manufacturer of any of its warranties under Section 5.1 or because of a breach
      by Manufacturer of any of such warranties. It will not be a defense to any
      of
      the provisions of this Section 5 that Distributor is familiar with the Product.
      

    

    5.4. Distributor
      will notify Manufacturer of any claim described in Section 5.2 which is asserted
      against Distributor. Manufacturer may, at its expense, defend and settle any
      such claim; and if Manufacturer assumes such defense, it will notify Distributor
      thereof and thereafter Manufacturer will not except as provided in the next
      sentence, be obligated to pay any expenses of Distributor in connection with
      such claim. Distributor will cooperate in the defense of any such claim, and
      Manufacturer will pay any costs incurred by Distributor in connection therewith.
      

    

    

    6. Term
      and Termination.

    

    6.1 This
      Agreement shall continue until terminated by either Party upon thirty (30)
      days
      notice to the other Party.  

    

    6.2 If
      any
      amount owing under this Agreement is not paid when due, such amount will bear
      interest at the rate of 18% per annum. The provisions of this Section will
      survive termination of this Agreement.

    

    6.3 This
      Agreement will terminate upon the filing of a petition in bankruptcy, whether
      voluntary or involuntary, by either Party.   

    

    

    7. Rights
      following Termination of Agreement.

    

    7.1 Termination
      of this Agreement for any reason will be without prejudice to the rights and
      obligations accrued to the date of termination.

    

    7.2 For
      all
      customer accounts introduced by Distributor to Manufacturer, Broker will
      continue to be paid at the commission rate stated in this Agreement as long
      as
      Manufacturer is making sales of Products to that customer. By way of example,
      and not limitation, if Broker successfully introduces the Products to
Carefour
      Japan
      Club
      Stores, then as long as the Manufacturer makes sales to Carefour, regardless
      of
      whether this Agreement is still in effect, Distributor will be paid the stated
      commission rate on each sale. For purposes of this section, Manufacturer will
      not be considered to be “making sales” to a customer if the customer has not
      ordered any Products from the Manufacturer for a period of 12 consecutive
      months.

    

     

    8. General
      Provisions.

    

    8.1 Invalid
      or unenforceable provisions. If
      any
      provision of this Agreement, or its application to any person or circumstance,
      is invalid or unenforceable, then the remainder of this Agreement or the
      application of those provisions to other persons or circumstances shall not
      be
      affected thereby. 

     

    8.2 Notices.
      All
      notices hereunder shall be sent by hand delivery, facsimile (with original
      sent
      regular mail), overnight receipted delivery, or by registered or certified
      mail
      to Parties as follows: 

    

    Manufacturer:

    

    

    International
      Food Product Group, Inc.

    170
      Newport Center Drive, Suite 260

    Newport
      Beach, CA 92660

    Fax:
      949-759-5490

    

    

    Distributor:

    

    Isao
      Kashimura

    3-2-1
      Maurnochi, Minato-ku, Tokyo Japan

    011-81-3-576-1850

    

    Either
      Party may change the address and/or fax number above by written notice to the
      other Party. Any time periods under this Agreement will run from the date of
      actual delivery of the notice. If any notice is sent under this Agreement by
      certified mail, the notice will be presumed delivered three days from the date
      of mailing. 

    

    8.3 Applicable
      law.
      This
      Agreement shall be governed in all respects and aspects by the laws of the
      State
      of California, and the Parties hereby agree that any legal action concerning
      this Agreement shall be brought in a court of competent jurisdiction, in the
      County of Orange in California.

    

    8.4 Terminology.
      All
      terms
      and words used in this Agreement, regardless of the number and gender in which
      they are used, shall be deemed and construed to include any other number,
      singular or plural, and any other gender, masculine, feminine or neuter, as
      the
      context or sense of this Agreement or any section, paragraph or clause in this
      Agreement may require, as if the work had been fully and properly written in
      the
      appropriate number and gender.

    

    8.5
       Amendment
      and assignment of Agreement.
      This
      Agreement shall not be modified or amended except by written agreement executed
      by both Parties. This Agreement is assignable by Distributor with the consent
      of
      the Manufacturer, such consent to not be unreasonably withheld. Manufacturer
      may
      transfer and assign its rights and obligations under this Agreement to any
      entity which succeeds to all or substantially all of Manufacturer’s business and
      assets. 

    

    8.6
       Costs
      and Expenses of enforcement.
      The
      prevailing Party shall recover the reasonable costs and expenses, including
      reasonable attorney's fees, incurred by that Party in connection with any legal
      proceeding involving the enforcement of any of the provisions of this
      Agreement.

    

    8.7
       Headings.
      The
      paragraph headings throughout this Agreement are for convenience and reference
      only, and the words contained therein shall not be held to expand, modify,
      amplify or aid in the interpretation, construction or meaning of this
      Agreement.

    

    8.8
       Entire
      Agreement.
      No
      representation, promise, guarantee or warranty was made to induce the execution
      hereof or in connection herewith which is not expressly contained in this
      Agreement. Distributor recognizes that neither the Manufacturer nor any other
      person can guarantee Distributor success in the business. By the Execution
      and
      acceptance of this Agreement, the Parties acknowledge that they have read the
      same and understand each provision hereof. 

    

    8.9
       Date
      of Effectiveness.
      This
      Agreement shall be effective as of the date set forth below.

    

    9. Territory.

    

    The
      Country of Japan.

    

    10. Products.

    

    The
      Products included in this Agreement consist of the following: Coffee, Tea,
      and
      IQF Products.

    

    Additionally,
      all Products developed by Manufacturer in the future that are similar to the
      existing Products shall be considered Products subject to this
      Agreement.

    IN
      WITNESS WHEREOF, the Parties have duly executed this Agreement.

     

    Dated:
      07/27/03

    Broker:

    Silverado
      K.K. Ltd.

    /s/
      Isao Kashimura

    By:
      _______________________________

    Isao
      Kashimura

     

    Its:
      __President_____________________ 

    

    Manufacturer:

    IFPG
      170
      Newport Center Drive, Suite 260, Newport Beach, CA 92660

    /s/
      Richard Damion

    By:
      _______________________________

    

    Printed
      Name___Richard Damion____________________

     

    Its:
      _President______________________________<PAGE>

                                                                   EXHIBIT 10.11

                             Date December 28, 2005

                            SALINA SHIPHOLDING CORP.
                                   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. "ARTEMIS" (ex "SEA ARROW")

                            WATSON, FARLEY & WILLIAMS
                                     PIRAEUS

<PAGE>

                                      INDEX

<TABLE>
<CAPTION>
CLAUSE                                                                PAGE
<S>      <C>                                                          <C>
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                                         20

12       INSURANCE                                                      21

13       SHIP COVENANTS                                                 26

14       SECURITY COVER                                                 28

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                                                    37

21       NO SET-OFF OR TAX DEDUCTION                                    39

22       ILLEGALITY, ETC                                                39

23       INCREASED COSTS                                                40

24       SET-OFF                                                        41

25       TRANSFERS AND CHANGES IN LENDING OFFICE                        42
</TABLE>

<PAGE>

<TABLE>
<S>      <C>                                                            <C>
26       VARIATIONS AND WAIVERS                                         42

27       NOTICES                                                        43

28       SUPPLEMENTAL                                                   44

29       LAW AND JURISDICTION                                           44

SCHEDULE 1  DRAWDOWN NOTICE                                             46

SCHEDULE 2  CONDITION PRECEDENT DOCUMENTS                               47

EXECUTION PAGE                                                          49
</TABLE>

<PAGE>

LOAN AGREEMENT made on December 28, 2005

BETWEEN

(1)      SALINA SHIPHOLDING CORP., 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) 75 per cent. of the purchase price of
m.v. "ARTEMIS" (ex "SEA ARROW") (the "SHIP") and (c) 75 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)      31 January 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 Salina Shipholding Corp., 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;

<PAGE>

         "CHARTER ASSIGNMENT" means, in relation to the Initial Charter and any
         Future Charter, a specific assignment of the rights of the Borrower
         under that charter in such form as the Lender may approve or require;

         "CHARTERER" means" means Lloyd Triestino di Navigazione SPA, a company
         organised and existing under the laws of Italy with its principal place
         of business at Palazzo Della Marinaria Passegio S.
         Andrea, 4 34123 Triale, Italy;

         "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

                                       2

<PAGE>

                  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

                                       3

<PAGE>

                  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;

         "FUTURE CHARTER" means any charter in respect of the Ship (other than
         the Initial Charter) which exceeds, or is capable of exceeding, 12
         months in duration;

         "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;

         "INITIAL CHARTER" means a time charter in respect of the Ship for a
         period of 3 years at a daily charterhire rate of $19,000 (less brokers'
         commission of 3.75 per cent.) dated 24 October 2005 and made between
         Sea Arrow Navigation Company Limited as original owner and the
         Charterer as novated to Rosellen Shipping Co. as former owner (the
         "FORMER OWNER") pursuant to a novation agreement dated 31 October 2005
         and as further novated to the Borrower as new owner pursuant to the
         terms of a novation agreement dated 7 November 2005 and entered into
         between the Former Owner, the Borrower and the Charterer;

         "INSURANCES"  means:

                                       4

<PAGE>

         (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:

                                       5

<PAGE>

         (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 and
                  (ii) at all other times when the Asset Cove Ratio is less than
                  150 per cent., 1.10 per cent. per annum; and

         (b)      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;

         "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

                                       6

<PAGE>

         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;

         "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 "Salina Shipholding Corp. - 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;

                                       7

<PAGE>

         "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 "Salina Shipholding Corp. - 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

                                       8

<PAGE>

                  proceeding relating to a Finance Document or any asset covered
                  (or previously covered) by a Security Interest created by a
                  Finance Document;

         "SHIP" means the 1987-built fully cellular container vessel of 2,098
         teu presently registered in the ownership of the Borrower under
         Marshall Islands flag with the name "ARTEMIS";

         "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:

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<PAGE>

         "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;

                                       10

<PAGE>

         "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;

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<PAGE>

         (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) 75 per cent. of the purchase
         price of the Ship (as certified by the Borrower to the satisfaction of
         the Lender) and (c) 75 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 which the
         Borrower specifies in the Drawdown Notice.

3.4      DISBURSEMENT OF THE LOAN TO THIRD PARTY. The payment by the Lender
         under Clause 3.3 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.

                                       12

<PAGE>

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
         Borrowers 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

                                       13

<PAGE>

         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
         10 consecutive six-monthly instalments of (a) in the case of the first
         to sixth instalments (inclusive) in the amount of $1,750,000 each and
         (b) in the case of the seventh to tenth instalments (inclusive), in the
         amount of $650,000 each together with a balloon payment of $2,400,000
         (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 fifth
         anniversary of the Drawdown Date and (b) 31 January 2011.

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.

                                       14

<PAGE>

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:

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(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 Finance Documents to which it is a party; and

(b)      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.

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<PAGE>

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     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.

                                       17

<PAGE>

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

9.15     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 have been 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 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 end
         of each financial quarter in each Financial Year of each of the
         Borrower and the Corporate Gaurantor:

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

         (ii)     the unaudited Account Information of the Group ,

         in each case, certified as to its correctness by the chief financial
         officer of the Corporate Guarantor; and

                                       18

<PAGE>

(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.

                                       19

<PAGE>

10.12    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.

10.13    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.

10.14    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.

10.15    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.

10.16    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

                                       20

<PAGE>

         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;

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<PAGE>

(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:

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<PAGE>

(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 7 days 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

                                       23

<PAGE>

(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 the terms 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:

                                       24

<PAGE>

(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

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<PAGE>

         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;

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<PAGE>

(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;

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<PAGE>

(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 (other than the
         Initial 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 Future 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 Future 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:

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<PAGE>

(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 the Relevant Percentage 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).

         In this Clause 14.1 and in Clause 14.2 "RELEVANT PERCENTAGE" means:

         (i)      if the Ship is operating under a charter (including, without
                  limitation, the Initial Charter) or any other contract of
                  employment the unexpired term of which is longer than 6
                  months, 110 per cent.; and

         (ii)     at all other times, 125 per cent.

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 the Relevant Percentage 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;

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<PAGE>

(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 (including, without limitation,
         the Initial Charter) or any other contract of employment in respect of
         the Shipthe 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

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<PAGE>

(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

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<PAGE>

         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.

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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

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<PAGE>

         (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

                                       34

<PAGE>

         (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
         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

                                       35

<PAGE>

         (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.

                                       36

<PAGE>

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 $50,000 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;

                                       37

<PAGE>

(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

                                       38

<PAGE>

(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:

                                       39

<PAGE>

(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

                                       40

<PAGE>

         (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).

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<PAGE>

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:

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<PAGE>

(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,

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<PAGE>

         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.

                                       44

<PAGE>

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.

                                       45

<PAGE>

                                   SCHEDULE 1

                                 DRAWDOWN NOTICE

To:      Calyon
         9 Quai du President Paul Doumer
         92400 Courbevoie
         La Defense
         Paris
         France

Attention: Shipping Department                                   December 2005

                                 DRAWDOWN NOTICE

1        We refer to the loan agreement (the "LOAN AGREEMENT") dated December
         2005 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$15,500,000;

(b)      Drawdown Date:  [           ] December 2005;

(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
                            SALINA SHIPHOLDING CORP.

                                       46

<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.

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.

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 Initial Charter (and any addenda thereto) duly signed by
         the parties thereto.

9        Documentary evidence that the agent for service of process named in
         Clause 29 has accepted its appointment.

10       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.

11       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).

5        A duly executed original of the Mortgage, the General Assignment and
         the Charter Assignment in respect of the Initial Charter (and of each
         document required to be delivered under each such Finance Document).

                                       47

<PAGE>

6        Documentary evidence that:

(a)      the Ship is definitively and permanently registered in the name of the
         Borrower under Marshall Islands flag;

(b)      the Ship is in the absolute and unencumbered ownership of the Borrower
         save as contemplated by the Finance Documents;

(c)      the Ship maintains the highest classification available for vessels of
         the same age, type and specification as the Ship with Bureau Veritas
         free of all recommendations and conditions of such classification
         society affecting class;

(d)      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

(e)      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.

                                       48

<PAGE>

                                 EXECUTION PAGE

THE BORROWER

SIGNED by                    )
Stephania Karmiri            )        /s/ Stephania Karmir
for and on behalf of         )
SALINA SHIPHOLDING CORP.     )
in the presence of:          )

THE LENDER

SIGNED by                    )
V. Georgopoulos              )        /s/ V. Georgopoulos
attorney-in-fact             )
for and on behalf of         )
CALYON                       )
in the presence of:          )

                                       49

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