Document:

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                       KEYPORT FERRY OPERATION AGREEMENT

     THIS AGREEMENT made this 1st day of October, 2001, by and between
LIGHTHOUSE FAST FERRY, INC., a New Jersey corporation, doing business as New
York Fast Ferry, and having its principal offices at 195 Fairfield Avenue, Suite
3C, West Caldwell, New Jersey 07006 (the "Ferry Operator") and KEYPORT FAST
FERRY, LLC, a New Jersey limited liability company having its principal offices
at 16 Parkway, Monmouth Hills, New Jersey (the "Company");

                                  WITNESSETH:

     WHEREAS, the Borough of Keyport in the County of Monmouth has a one (1)
year Lease with Keyport Fast Ferry, LLC and special events ferry service between
the Borough of Keyport and the Borough of Manhattan, New York City upon premises
leased from the Borough of Keyport ("Keyport Waterfront"); and
     WHEREAS, the Company has secured property suitable for parking of motor
vehicles, consisting of not less than three hundred (300) parking spaces, for
the use of passengers embarking and debarking at the Keyport Waterfront and
utilizing the Fast Ferry Service (the "Parking Premises"); and
     WHEREAS, the Company has the facilities and the expertise necessary to
provide all land-side services needed for successful operation of the Fast Ferry
Service as more fully described below, including, but not limited to, parking,
bus/shuttle service, security and maintenance of the Parking Premises; and
     WHEREAS, the Ferry Operator is engaged in the business of fast ferry
commuter service between, among others, the States of New Jersey and New York;
and
     WHEREAS, the Ferry Operator has the facilities and the expertise necessary
to provide all water-side services in connection with the Fast Ferry Service as
more fully described below, including, but not limited to, high speed ferry
vessels, crew, operation of vessels and maintenance of vessels; and
     WHEREAS, the Company has a Lease with the Borough of Keyport; and
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     WHEREAS, the Company as the successful bidder will execute certain
agreements with the Borough of Keyport ("Ferry Service and Lease Agreement");
     NOW, THEREFORE, in consideration of the premises set forth above and the
promises and covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged;

IT IS AGREED AS FOLLOWS:

           ARTICLE ONE - MUTUAL AND EXCLUSIVE EFFORTS OF THE PARTIES

     1.01 The Company and the Ferry Operator shall fully cooperate with each
other to provide the Parking Premises, bus/shuttle, ticketing, security and
related services, vessels, crew and such other related operations to the end
that the Fast Ferry Service shall be provided by the Company and the Ferry
Operator in the Borough of Keyport pursuant to the terms of the bid proposal,
Ferry Service and Lease Agreement and other agreements with the Borough of
Keyport and the obligations set forth herein.
     1.02 Neither the Company, its principal owner, Michael J. Cummins, nor the
Ferry Operator shall be involved in a Fast Ferry Service in the Borough of
Keyport, in any capacity, with any other person or entity without the written
consent of the other during the term of the Ferry Service and Lease Agreement
with the Borough of Keyport, and any renewal or extension thereof, and for a
period of three years after the termination of the Ferry Service and Lease
Agreement and any renewal or extension thereof. It is the intention of the
parties to provide the Fast Ferry Service exclusively with each other. The
Company, its principal owner Michael J. Cummins, and the Ferry Operator each
agree, provided that no default has occurred by either party, that it shall not,
independently of the other, engage directly or indirectly, as owner, operator,
consultant, contractor, agent, shareholder, officer, director, partner, member,
lessor, lessee, service provider or in any capacity whatsoever in a Fast Ferry
Service in the Borough of Keyport during the term of the Ferry Service and Lease
Agreement with the Borough of Keyport, and any renewal or extension thereof, and
for a period of three years after the termination of the Ferry Service and Lease
Agreement and any renewal or extension thereof. Nothing contained herein shall
prohibit the Ferry Operator from providing passenger ferry service from Keyport
if the Company is no longer a successful bidder with the Borough of Keyport.
Moreover, nothing contained herein will prevent the Company from entering into
an agreement with another ferry operator in the event that Ferry Operator
provides written notice to the Company that the Ferry Operator no longer desires
to provide passenger ferry service from the Borough of Keyport. In

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the event the Company's financial obligations to the Borough increase, the
parties hereto will renegotiate the financial terms hereof.

                   ARTICLE TWO - OBLIGATIONS OF THE COMPANY

     2.01 The Company shall provide to the Ferry Operator and its passengers
full and complete access to and use of the Landing Site, the Pier and the
Parking Spaces as those terms are defined and shown as Schedules to the Ferry
Service and Lease Agreement. The Company shall comply with all of the
requirements of the Ferry Service and Lease Agreement and shall pay the rent
therein required to the Borough of Keyport.
     2.02 The Company shall, at its sole cost and expense, at all times during
the term of the Ferry Service and Lease Agreement with the Borough of Keyport,
and any renewal or extension thereof, provide and make available a paved, stoned
and/or gravel parking lot or lots consisting of not less than three hundred
(300) free parking spaces, inclusive of the thirty-nine (39) parking spaces
leased to it by the Borough of Keyport, for passengers embarking and debarking
at the Keyport Waterfront utilizing the Fast Ferry Service, weekdays between the
hours of 5:30 a.m. and 8:30 p.m., and weekends as needed for charter/special
event services. Passengers shall be permitted to utilize the Parking Premises
and park free of charge upon the Parking Premises during and between the hours
of 5:30 a.m. and 8:30 p.m. The Company shall use its best efforts to keep the
parking areas free of dust or mud by appropriate control methods.
     2.03 The Company shall, at its sole cost and expense, provide bus/shuttle
service to and from the Parking Premises to the Keyport Waterfront for
passengers utilizing the Fast Ferry Service, for any such portion of the Parking
Premises which is more than 250 yards from the Keyport Waterfront.
     2.04 The Company shall, at its sole cost and expense, provide all parking
attendants, parking security, parking maintenance, capital improvements and all
other land services, equipment, supplies, and materials, which are reasonably
required for the efficient operation, maintenance and improvement of the Parking
Premises.
     2.05 The Company shall, at its sole cost and expense, employ, discharge,
and supervise all employees or contractors required for the efficient operation,
maintenance and improvement of the Parking Premises. All such personnel, except
independent contractors and employees of independent contractors, shall be the
employee of the Company and shall be paid solely by the Company.
     2.06 The Company shall, at its sole cost and expense, cause the Parking
Premises to be operated, maintained, and repaired in accordance with sound
management policies and local

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codes, and in a condition acceptable to the Ferry Operator at all times,
including but not limited to prompt snow removal.
     2.07 The Company shall provide sufficient space to the Ferry Operator to
construct and operate a ticket booth located at the Keyport Waterfront, the
exact location of the ticket booth to be agreed upon by the parties. The Ferry
Operator shall be responsible for all costs for the ticket booth.
     2.08 The Company agrees to assign in writing its rights under the Ferry
Service and Lease Agreement to the Ferry Operator for use of the dock space and
to permit the ferry vessels to dock at the Keyport Waterfront. No overnight
docking or fueling is permitted.
     2.09 The Company shall, at its sole cost and expense, promptly comply with
all requirements of the Borough of Keyport as may be required under the Ferry
Service and Lease Agreement, the bid contract documents, or otherwise, and all
laws, ordinances, orders, rules, regulations, and requirements of federal, state
and municipal governments and appropriate departments, commissions, boards, and
officers of these governments ("Legal Requirements") throughout the term of this
agreement, regardless of whether said Legal Requirements are foreseen or
unforeseen, ordinary or extraordinary.
     2.10 The Company shall, at its sole cost and expense, maintain: (1) general
comprehensive broad-form general liability insurance in a minimum amount of Two
Million ($2,000,000) Dollars against claims and liability for personal injury,
death and property damage arising from the use, occupancy or condition of the
Parking Premises; (2) workers compensation insurance covering all employees of
the Company; and (3) such other insurance as the Borough of Keyport or the Ferry
Operator may reasonably require from time to time. The insurance shall be
carried by insurance companies authorized to transact business in New Jersey.
The Ferry Operator shall be an insured under all insurance policies.
     2.11 The Ferry Operator shall not be liable for any loss, damage, or injury
of any kind or character to any person or property arising from any use of the
Parking Premises, or caused by or arising from any act or omission of the
Company, or any of its agents, employees, licensees, or invitees, or by or from
any accident, fire, or other casualty on the Parking Premises, or occasioned by
the failure of the Company to maintain the Parking Premises in safe condition.
The Company waives all claims and demands on its behalf against the Ferry
Operator for any such loss, damage, or injury, and agrees to defend, indemnify
and hold the Ferry Operator harmless from all liability for any loss, damage or
injury to persons or property, and from all costs and expenses arising from any
such claims or demands of persons concerning any loss, damage, or injury.

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               ARTICLE THREE - OBLIGATIONS OF THE FERRY OPERATOR

     3.01 The Ferry Operator shall, at its sole cost and expense, at all times
during the term of the Ferry Service and Lease Agreement with the Borough of
Keyport, and any renewal or extension thereof, have available ferry vessels
which meet the criteria established by the Borough of Keyport as set forth in
the Ferry Service and Lease Agreement.
     3.02 The Ferry Operator shall, at its sole cost and expense, at all times
during the term of the Ferry Service and Lease Agreement with the Borough of
Keyport, and any renewal or extension thereof, maintain the vessels in good
condition and shall keep same in a clean, sightly, and healthy condition and in
compliance with all applicable legal requirements.
     3.03 The Ferry Operator shall, at its sole cost and expense, employ,
discharge and supervise all on- vessel employees or contractors required for the
operation and maintenance of the ticket office and the ferry boat vessels and
they shall be paid solely by the Ferry Operator.
     3.04 The Ferry Operator shall, at its sole cost and expense, provide ,
maintain and operate a ticket booth for the sale of tickets in connection with
the Ferry Boat Service. All ticket sales proceeds for all uses of the ferry
vessels shall be the property of the Ferry Operator.
     3.05 The Ferry Operator shall, at its sole cost and expense, promptly
comply with all requirements of the Borough of Keyport as may be required under
the Ferry Service and Lease Agreement, the bid contract documents, or otherwise,
and all laws, ordinances, orders, rules, regulations, and requirements of
federal, state and municipal governments and appropriate departments,
commissions, boards, and officers of these governments ("Legal Requirements")
throughout the term of this agreement, regardless of whether said Legal
Requirements are foreseen or unforeseen, ordinary or extraordinary.
     3.06 The Ferry Operator shall, at its sole cost and expense, maintain: (1)
general comprehensive broad-form general liability insurance in a minimum amount
of Five Million ($5,000,000) Dollars against claims and liability for personal
injury, death and property damage arising from the use, occupancy or operation
of the ferry vessels; (2) workers compensation insurance covering all employees
of the Ferry Operator; and (3) such other insurance as the Borough of Keyport or
the Company may reasonably require from time to time. The insurance shall be
carried by insurance companies authorized to transact business in New Jersey.
The Company shall be an insured under all insurance policies.
     3.07 The Company shall not be liable for any loss, damage, or injury of any
kind or character to any person or property arising from any use of the ferry
vessels, or caused by or arising from any act or omission of the Ferry Operator,
or any of its agents, employees, licensees, or invitees, or by or from any
accident, fire, or other casualty on the ferry vessels, or occasioned

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by the failure of the Ferry Operator to maintain the ferry vessels in safe
condition. The Ferry Operator waives all claims and demands on its behalf
against the Company for any such loss, damage, or injury, and agrees to defend,
indemnify and hold the Company harmless from all liability for any loss, damage
or injury to persons or property, and from all costs and expenses arising from
any such claims or demands of persons concerning any loss, damage, or injury.

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                         ARTICLE FOUR - CONSIDERATION

     4.01 In full consideration for the fulfillment of all of the Company's
obligations, the Ferry Operator shall pay to the Company on or before the first
(1/st/) and fifteenth (15/th/) days of each month, (if the 1/st/ or 15/th/ day
of a month falls on a weekend or holiday, payment shall be made on the next
business day) the following compensation:
       a. $1.50 for each one-way paid passenger trip for the first 620 paid
          passenger trips embarking or debarking at the Keyport Waterfront each
          day.
       b. $1.40 for each one-way paid passenger trip for each paid passenger
          trip over 620 and up to 820 embarking or debarking at the Keyport
          Waterfront each day.
       c. $1.30 for each one-way paid passenger trip for each paid passenger
          trip over 820 embarking or debarking at the Keyport Waterfront each
          day.  As an example, if there are 1,000 passenger trips, the Ferry
          Operator shall pay $1.50 for the first 620 passengers, $1.40 for the
          next 200 passengers, and $1.30 for the last 180 passengers.
       d. $1.00 per paid passenger on all charter/special event excursions
          originating from the Keyport Waterfront.
     4.02 The compensation schedule set forth above in 4.01 shall be good for
twelve (12) months.  In the event that the Borough of Keyport renews and/or
extends the Ferry Service and Lease Agreement with the Company, then the Company
shall be entitled to a three (3%) percent increase in the compensation schedule
upon the commencement of each such renewal and/or extension, but in not event
more frequently than every two years.
     4.03 As security for the Ferry Operator's obligation to pay to the Company,
the Ferry Operator shall deposit with the Company: (i) on or before October 15,
2001, a Twenty Thousand ($20,000) Dollar  performance bond or letter of credit
to the Company for passenger trips from the Keyport waterfront; and (ii) on or
before November 15, 2001, a Fifty Thousand ($50,000) Dollar  performance bond or
letter of credit to the Company for passenger trips from the Keyport waterfront.

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                       ARTICLE FIVE - EVENTS OF DEFAULT

     5.01 Any one or more of the events listed in subparagraphs (a) through (f)
below shall constitute a default under this agreement.
       a. The Company's failure to provide and make available at all times a
          paved, stoned and/or gravel parking lot or lots consisting of not less
          than three hundred (300) free parking spaces, inclusive of the thirty-
          nine (39) parking spaces leased to it by the Borough of Keyport, for
          passengers utilizing the Fast Ferry Service.
       b. The Ferry Operator's failure to pay the compensation set forth in
          Article 4.01 within ten (10) days after the compensation becomes due
          and payable in accordance with the terms of this agreement and after a
          failure to cure the default within five (5) days of written demand
          therefore.
       c. Either party's failure to observe or perform or cause to be observed
          or performed any other term under this agreement, or under the Ferry
          Service and Lease Agreement with the Borough of Keyport, and
          continuation of this failure for a period of fifteen (15) days after
          written notice to such party specifying the nature of the failure.
          However, a failure as described in this subparagraph shall not
          constitute a default if it is curable but cannot with reasonable
          diligence be cured by the failing party within a period of fifteen
          (15) days, and if the failing party proceeds to cure the failure with
          reasonable diligence and in good faith.
       d. The Company's abandonment of the Parking Premises.
       e. The filing of a petition in bankruptcy or insolvency, for
          reorganization or the appointment of a receiver or trustee of all or a
          portion of either the Company's or the Ferry Operator's property, by
          or against either the Company or the Ferry Operator, in any court
          pursuant to any statute either of the United States or of any state;
          and the failure to secure a dismissal of the petition within sixty
          (60) days after its filing.
       f. The Company renewing or extending the Ferry Service and Lease
          Agreement with the Borough of Keyport without the written consent of
          the Ferry Operator.
     5.02 Should the Company fail for any reason for any period of time to
provide a minimum of three hundred (300) free parking spaces, inclusive of the
thirty-nine (39) spaces leased to it by the Borough of Keyport, in accordance
with this agreement, the Ferry Operator shall be permitted to secure substitute
parking arrangements for said period of time and to take a credit for the cost
of same against the compensation set forth in Article 4.01, not to exceed Two

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Hundred Sixty ($260) Dollars per space per year.  In addition thereto, the Ferry
Operator shall provide notice of said default to the Company and the Company
shall have sixty (60) days within which to provide a minimum of three hundred
(300) free parking spaces.  If the Company is not able to provide a minimum of
three hundred (300) free parking spaces within the sixty (60) day period, the
Ferry Operator shall have the right to either (i) continue to secure substitute
parking arrangements and take a credit for the cost thereof against the
compensation set forth in Article 4.01, not to exceed Two Hundred Sixty ($260)
Dollars per space per year
     5.03  Subject to the requirements of the Ferry Service and Lease Agreement,
if any event creating default occurs and is not cured within the applicable time
period, the non-defaulting party may elect to terminate this agreement after
thirty (30) days from the date of service of notice of the election to
terminate.  If the notice of election to terminate is given, then at the
expiration of the thirty (30) days all rights, title, and interest of the
defaulting party shall terminate and the rights of such defaulting party in the
Ferry Service and Lease Agreement shall be assigned to the non-defaulting party.
In such event the non-defaulting party shall have the right to provide all of
the services pursuant to the Ferry Service and Lease Agreement.  In addition
thereto, the parties shall be entitled to pursue all remedies available at law
or equity.
     5.04  In the event that the Company is declared to be in default under
either the Ferry Service and Lease Agreement by the Borough of Keyport or any
third party agreement for the provision of the Parking Premises, or any portion
thereof, the Company shall provide notice of said default to the Ferry Operator
within forty-eight (48) hours of receiving said notice, and the Ferry Operator
shall have the right to cure any said default and to take a credit for the cost
of same against the compensation set forth in Article 4.01.
     5.05  In the event of a dispute, the parties agree to exercise their best
efforts to resolve the dispute between themselves.  Self-help remedies, such as
denying access to the Parking Premises or failure to provide a ferry boat, are
prohibited.  Any party harmed by any such action, shall be entitled to seek
injunctive relief in the Superior Court of New Jersey.

                       ARTICLE SIX - GENERAL PROVISIONS

     6.01 The failure of any party to seek redress for violation of, or to
insist on the strict performance of any covenant, agreement, term, provision, or
condition of this agreement shall not constitute a waiver of the covenant,
agreement, term, provision, or condition.
     6.02 No provision of this agreement shall be deemed to have been waived,
unless the waiver is in writing and signed by the party against whom enforcement
is sought.

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     6.03 This agreement contains the entire agreement between the Company and
the Ferry Operator, and any agreement made after the execution of this agreement
between the Company and the Ferry Operator shall be ineffective to change,
modify, waive, release, discharge, terminate, or effect a surrender or
abandonment of this agreement, in whole or in part, unless that agreement is in
writing and signed by the party against whom enforcement is sought.
     6.04 All notices and demands of any kind that either party may be required
or may desire to give to the other in connection with this agreement shall be in
writing and shall be given by registered or certified mail, return receipt
requested, with postage fully prepaid, and addressed to the party to be served
at the party's address as set forth above, or by a nationally recognized
overnight express mail company.  Any notice shall be deemed received on first
attempted delivery. Any party may change the address to which notices to such
party are to be directed by notice given in the manner provided in this
paragraph 6.04.
     6.05 If any term, covenant, or condition of this agreement shall be invalid
or unenforceable to any extent, the remainder of the terms, covenants, and
conditions of this agreement shall remain in full force and effect and shall in
no way be affected, impaired, or invalidated.
     6.06 This agreement shall inure to the benefit of and be binding on the
parties and their respective representatives, successors, and assigns except as
otherwise provided in this agreement.
     6.07 This agreement may not be assigned by either party without the other
parties' consent, which shall not be unreasonably withheld.

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     6.08  This agreement shall be governed by and interpreted in accordance
with the laws of the State of New Jersey. The parties agree that jurisdiction
and venue for any litigation shall lie exclusively in the Superior Court of New
Jersey, County of Monmouth or the United States District Court for the District
of New Jersey in Newark, New Jersey.
     6.09. The term of this Agreement is one (1) year.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the date
above first written.

Witness/Attest                      Lighthouse Fast Ferry, Inc.

/s/
__________________________

                                        By: /s/ Anthony Colasanti
                                            _____________________________

                                    ________

                                    Keyport Fast Ferry, LLC
/s/
__________________________

                                        By: /s/ Michael J. Cummins 9-28-01
                                            ______________________________

                                    ________

/s/                                 /s/ Michael J. Cummins 9-28-01
__________________________          ____________________________________
                                    Michael J. Cummins
                                    (Signing as to Article 1.02)

                                       11<PAGE>

                               LOAN AND SECURITY AGREEMENT
                               ---------------------------

     THIS LOAN AND SECURITY AGREEMENT dated as of October 1, 2001, by and among
LIGHTHOUSE FAST FERRY, INC., a New Jersey corporation, and FAST FERRY I CORP.
and FAST FERRY II CORP., New York corporations, with executive offices at 195
Fairfield Avenue, Suite 3C, West Caldwell, New Jersey 07006 (collectively,
together the "Borrowers"); and JAMES R. SOLAKIAN, 152 Mockingbird Court, Three
Bridges, New Jersey 08887 (together with his successors and assigns, the
"Lender").

     WHEREAS, the Borrowers and the Lender agree to enter into this Loan and
Security Agreement to provide for a term loan with the Lender (in the amount of
$350,000.00);

     NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Borrowers and the
Lender, each party in consideration that the other join herein, and agree as
follows:

                                   ARTICLE I
                                   ---------
                         AMOUNT AND TERMS OF TERM LOAN
                         -----------------------------

     Section 1.01.  Term Loan.   The Lender shall make a term loan to the
                    ---------
Borrowers in the original principal amount of THREE HUNDRED FIFTY THOUSAND
($350,000.00) dollars (the "Term Loan").

     Section 1.02.  Repayment of Term Loan Principal.  The principal of the Term
                    --------------------------------
Loan shall be paid in six (6) consecutive monthly payments, with such payments
commencing November__, 2001, and continuing on the same day of each consecutive
month thereafter until the Term Loan Maturity Date.  The amount of each such
principal payment shall be in such amounts as set forth and established in
Schedule A attached hereto and made a part hereof, said payments being amortized
over a six (6) month period.  The final payment, which shall be due and payable
on the Term Loan Maturity Date, shall be in an amount equal to any then
remaining unpaid principal balance outstanding on the Term Loan, together with
any accrued but unpaid interest thereon.

     Section 1.03   Payment of Term Loan Interest.   The Borrowers shall
                    -----------------------------
likewise pay the Lender, on the first (1/st/) day of each calendar month,
commencing on November 1, 2001, and continuing until the Term Loan Maturity
Date, interest in arrears on the unpaid principal balance of the Term Loan.
Prior to an Event of Default, interest on the outstanding principal balance of
the Term Loan shall accrue at an eighteen (18%) percent per annum rate. Interest
shall be calculated on the basis of a 360-day year for the actual number of days
elapsed.

     Notwithstanding the foregoing, to the extent permitted by law, upon the
occurrence of any Event of Default under this Agreement, the rate of interest on
the unpaid principal balance of the Term Loan shall, at the option of the
Lender, be increased to a twenty-four (24%) percent  per
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annum rate ("Term Loan Default Interest Rate"). The Borrowers acknowledge that
(a) the Term Loan Default Interest Rate is a material inducement to the Lender
to make the Term Note; (b) the Lender would not have made the Term Loan in the
absence of the agreement of the Borrowers to pay the Term Loan Default Interest
Rate upon the occurrence of any Event of Default; (c) such Term Loan Default
Interest Rate represents compensation to the Lender for the increased risk to
the Lender that the Term Loan will not be repaid by the Borrowers; and (d) the
Term Loan Default Interest Rate is not a penalty and represents a reasonable
estimate of (i) the cost to the Lender in allocating its resources (both
personnel and financial) to the ongoing review, monitoring, administration and
collection of the Term Loan and (ii) compensation to the Lender for losses
resulting from the Borrowers' Default that are difficult to ascertain.

     Section 1.04.  Fees.  In lieu of a commitment fee, Lighthouse Fast Ferry,
                    ----
Inc. shall issue a Stock Warrant to Lender enabling Lender to purchase One
Hundred Fifty Thousand (150,000) shares of the common stock of Lighthouse Fast
Ferry, Inc. over a five (5) year period from October 1, 2002 to October 1, 2007,
with an exercise price of One and 50/100 ($1.50) Dollars per share.

                                  ARTICLE II
                                  ----------
                          LOAN PROCEEDS AND PAYMENTS
                          --------------------------

     Section 2.01.  Use of Loan Proceeds.  The proceeds of the Term Loan shall
                    --------------------
be used by the Borrowers for working capital purposes.

     Section 2.02.  Payments.
                    --------
          (a) All payments of interest, principal and any other sum payable
     hereunder shall be made to the Lender, in immediately available funds,
     without counterclaim or setoff and free and clear of, and without any
     deduction or withholding for, any taxes or other payments, at the Lender's
     Address

     Section 2.03.  Borrowers' Loan Account.  The Borrowers shall create a loan
                    -----------------------
account into which Borrower shall either maintain a balance of Thirty Thousand
($30,000.00) Dollars or, commencing with the first (1/st/) days of each month,
deposit all of Borrowers' first week's ticket sales on all ferry routes until
the balance equals Thirty Thousand ($30,000.00) Dollars.  For the sixth (6/th/)
month (March, 2001), these deposit shall increase from Thirty Thousand
($30,000.00) Dollars to Two Hundred Thousand ($200,000.00) Dollars.  Said loan
account shall be an escrow account held by Kenneth J. McGuire, Esq. of Stein,
Bliablias, McGuire, Pantages & Gigl, LLP, as Escrow Agent.  In the event of an
Event of Default pursuant to Section 7.01, then, in addition to the remedies of
Section 7.02, the funds in such account up to $200,000.00 shall be immediately
paid by the Escrow Agent to the Lender upon receipt of notice from the Lender of
such default.  Such payment shall not cure any default but shall reduce the
amount owed to the Lender.  The Borrowers shall provide to the Lender copies of
all deposit slips and account
<PAGE>

statements when made and/or received. Failure to do so shall be deemed an Event
of Default. Borrowers shall have the right to use the loan account funds to make
the monthly principal payments.

          Lender and Borrowers agree to indemnify and hold the Escrow Agent
harmless from and against all claims, causes of action, loss, injury or damage
arising out of, or in any way relating to, the performance of Escrow Agent's
duties hereunder, except for those matters arising out of Escrow Agent's gross
negligence or willful misconduct.  Lender and Borrowers agree that, upon Escrow
Agent's payment of the loan account funds in accordance with the terms set forth
above, or upon deposit thereof with a court of competent jurisdiction, Escrow
Agent shall have no further obligation hereunder.

          Section 2.04.  Late Fee.   If the entire amount of any required
                         --------
principal and/or interest is not paid in full within ten (10) days after the
same is due, Borrowers shall pay to Lender a late fee equal to three (3%)
percent of the required payment.

     Section 2.05  Usury Limitation.  If, at any time, the rate of interest,
                   ----------------
together with all amounts which constitute interest and which are reserved,
charged or taken by Lender as compensation for fees, services or expenses
incidental to the making, negotiating or collection of the loan evidenced
hereby, shall be deemed by any competent court of law,  governmental agency or
tribunal to exceed the maximum rate of interest permitted to be charged by
Lender to Borrowers under applicable law, then, during such time as such rate of
interest would be deemed excessive, that portion of each sum paid attributable
to that portion of such interest rate that exceeds the maximum rate of interest
so permitted shall be deemed a voluntary prepayment of principal.  As used
herein, the term "applicable law" shall mean the law in effect as of the date
hereof; provided, however, that in the event there is a change in the law which
results in a higher permissible rate of interest, then this Agreement shall be
governed by such new law as of its effective date.

                                  ARTICLE III
                                  -----------
                                  CONDITIONS
                                  ----------

     Section 3.01.   Conditions Precedent to Loans.  Prior to the Lender making
                     -----------------------------
the Term Loan, the Borrowers shall deliver to the Lender a duly executed copy of
this Agreement, the Term Note, the Financing Statements, Pledge Agreement,
certified copies of the resolutions of the Board of Directors of each of the
Borrowers, evidencing approval of this Agreement and the other Loan Documents,
and any other Loan Documents.

                                  ARTICLE IV
                                  ----------
                          GRANT OF SECURITY INTERESTS
                          ---------------------------
<PAGE>

     Section 4.01.   Grant of Security Interests.  To secure payment and
                     ---------------------------
performance of the Term Loan, each of the Borrowers hereby grants to the Lender
a continuing security interest in, a lien upon the following property and
interests of such Borrower, whether now owned or hereafter acquired or existing
by such Borrower, whether now or hereafter existing, and wherever located
(collectively, the "Collateral"):

                    (a) A United States Flag mortgage on the vessels, "The
          Finest" and "The Bravest" and all equipment, machinery, furniture,
          fixtures, dies, tools and all other tangible personal property and all
          accessories and parts now or hereafter affixed thereto.  In the event
          of a default in this obligation, each party shall notify Debis
          Financial Services, Inc., 201 Merit Seven, Suite 700, Norwalk,
          Connecticut 08651;

                    (b) Three Hundred Fifty Thousand (350,000) shares of common
          stock of Lighthouse Fast Ferry, Inc. owned by Cappaze Associates, LP,
          Anthony Cappaze, sole General Partner and the Chief Executive Officer
          of Borrowers, which stock shall be held in escrow by Daniel Knee Esq.,
          79 Main Street, Flemington, New Jersey 08822, Escrow Agent.

                                   ARTICLE V
                                   ---------
                        REPRESENTATIONS AND WARRANTIES
                        ------------------------------

     Section 5.01.   Representations and Warranties.  As an inducement to the
                     ------------------------------
Lender to execute this Agreement and to make Loans and issue Letters of Credit
hereunder, the Borrowers hereby represent and warrant to the Lender as follows:

                    (a) Each Borrower is a corporation duly organized, validly
          existing and in good standing under the laws of its state of
          incorporation.  Each Borrower has the corporate power and authority to
          enter into and perform this Agreement and the other Loan  Documents,
          to enter into and perform all of the obligations required of the
          Borrowers by all other instruments and other documents referred to
          herein to which it is a party, to fulfill its obligations set forth
          herein and therein, and to carry out the transactions contemplated
          hereby and thereby.

                    (b) The execution, delivery and performance of this
          Agreement, the other Loan Documents and the other documents required
          to be executed by any Borrower pursuant hereto have been duly
          authorized by all necessary corporate action.

                                  ARTICLE VI
                          COVENANTS OF THE BORROWERS
<PAGE>

     Section 6.01.   Affirmative Covenants.  Without limiting any other
                     ---------------------
covenants and provisions hereof, the Borrowers covenant and agree, jointly and
severally, that so long as the Term Loan is in effect or any Loan is
outstanding:

                    (a) (Payment of Loans) The Borrowers will pay the principal
                        ------------------
          of and interest on the Loans hereunder at the times and place and in
          the manner provided herein, and will promptly pay when due any and all
          other amounts owing to the Lender under this Agreement or any of the
          other Loan Documents, in respect of fees, reimbursement of expenses or
          otherwise.
                    (b) (Legal Existence and Qualification) Each Borrower will
                        -----------------------------------
          preserve and maintain its corporate existence, rights, franchises,
          licenses and privileges and remain in good standing in the
          jurisdiction of its incorporation.

                    (c)  (Compliance with Laws) Each Borrower will comply with
                         ---------------------
          the requirements of all applicable laws, rules, regulations and the
          orders of any court or other tribunal or governmental or
          administrative authority or agency applicable to it or to its
          business, property or assets, all to the extent that failure to comply
          with any such laws, rules, regulations or orders could, singly or in
          the aggregate with all other such failures, have a material adverse
          effect on the business, prospects, condition or operations of any
          Borrower.  Each Borrower will obtain and maintain all licenses,
          permits and permissions relating to its properties or business,
          failure to obtain or maintain which could, singly or in the aggregate
          with all other such failures, have a material adverse effect on the
          business, prospects, condition or operations of any Borrower.

                    (d)  Closing Costs.  The Borrowers shall pay all closing
                         -------------
          costs, including but not limited to legal, filing, and any other
          expense, with regard to the underlying transactions for the Loans.

                                  ARTICLE VII
                                  -----------
                             DEFAULT AND REMEDIES
                             --------------------

     Section 7.01.  Events of Default.  The occurrence of any of the following
                    -----------------
events shall constitute an Event of Default under this Agreement:

                (a) The Borrowers shall fail to make any payment of principal or
          interest on the Term Loan on the date when due, and such default shall
          continue unremedied for ten (10) days after written notice thereof
          shall have been given to the Borrowers; or

                (b) Any Borrower shall default in the performance of any term,
          covenant or agreement contained in this Agreement or any Borrower
          shall default
<PAGE>

          in the performance of any term, covenant or agreement contained in any
          of the other Loan Documents, and such default shall continue
          unremedied for thirty (30) days after written notice thereof shall
          have been given to the Borrowers; or

                (c) (i) Any Borrower shall be dissolved or shall become bankrupt
          or shall cease paying its debts generally as they mature or shall make
          an assignment for the benefit of creditors; (ii) a trustee, receiver
          or liquidator shall be appointed for any Borrower or for a substantial
          part of the property of any Borrower or any Guarantor; (iii)
          bankruptcy, reorganization, arrangement, insolvency or similar
          proceedings shall be instituted by or against any Borrower under the
          laws of any jurisdiction (other than any involuntary proceedings which
          are instituted against any Borrower  without their acquiescence, and
          which are dismissed of record within forty-five (45) days following
          the institution thereof); (iv) any Borrower shall convene or hold a
          meeting with its creditors to compromise or make similar arrangements
          with respect to its Indebtedness to such creditors; or (v) any
          Borrower or any Guarantor or their respective directors, stockholders,
          officers or agents shall take any action to effect or commence any of
          the foregoing or with respect to any of the foregoing.

     Section 7.02.   Rights and Remedies Upon Default.  Upon the occurrence of
                     --------------------------------
any Event of Default and at any time thereafter, in addition to any other rights
and remedies available to the Lender hereunder or otherwise, the Lender may
exercise any one or more of the following rights and remedies (all of which
shall be cumulative):

          (a) Declare the entire unpaid principal amount of the Loan then
     outstanding, all interest accrued and unpaid with respect to any and all of
     the foregoing, and all other amounts payable under or with respect to this
     Agreement to be forthwith due and payable, whereupon the same shall become
     forthwith due and payable, without presentment, demand, protest or notice
     of any kind, all of which are hereby expressly waived by the Borrowers.

          (b) Enforce the provisions of this Agreement by legal proceedings for
     the specific performance of any covenant or agreement contained herein or
     for the enforcement of any other appropriate legal or equitable remedy, and
     the Lender may recover damages caused by any breach by any Borrower of the
     provisions of this Agreement, including court costs, reasonable attorneys'
     fees and other costs and expenses incurred in the enforcement of the
     obligations of the Borrowers hereunder.
<PAGE>

          (c) Exercise all rights and remedies under this Agreement, the Pledge
     Agreement, other Loan Documents, and any other agreement with any Borrower,
     and exercise all other rights and remedies which the Lender may have under
     applicable law.

          (d) Exercise all rights and remedies provided in this Agreement, the
     other Loan Documents, the Uniform Commercial Code and other applicable law,
     all of which rights and remedies may be exercised without notice to or
     consent by any Borrower, except as such notice or consent is expressly
     provided for hereunder or required by applicable law.

                                 ARTICLE VIII
                                 ------------
                                 MISCELLANEOUS
                                 -------------

          Section 8.01.  No Waiver-Cumulative Remedies.  No failure or delay on
                         -----------------------------
     the part of the Lender in exercising any right, power or remedy hereunder
     shall operate as a waiver thereof, nor shall any single or partial exercise
     of any such right, power or remedy preclude any other or further exercise
     thereof or the exercise of any other right, power or remedy hereunder.  The
     remedies herein provided are cumulative and not exclusive of any remedies
     provided by law or otherwise available to the Lender.  Such remedies may be
     exercised without resort or regard to any other source of satisfaction of
     any liabilities of the Borrowers to the Lender.

          Section 8.02.  Amendments, Waivers and Consents.  Neither this
                         --------------------------------
     Agreement nor any provision hereof may be amended, waived, discharged or
     terminated orally.  No amendment or waiver of any provision of this
     Agreement, nor any consent to any departure by the Borrowers therefrom,
     shall be effective unless the same shall be signed by the Borrowers and the
     Lender.  Any waiver or consent may be given subject to satisfaction of
     conditions stated therein and any waiver or consent shall be effective only
     in the specific instance and for the specific purpose for which given.  In
     no event will any amendment, waiver or consent be deemed effective if the
     result of same is to decrease in any manner the compensation of the Lender
     or to increase in any manner the Lender's expenses, duties or
     responsibilities unless the Lender has, in each case, expressly assented
     thereto in writing.

          Section 8.03.  Addresses for Notices, etc.  Except as otherwise
                         --------------------------
     expressly provided in this Agreement, all notices, requests, demands and
     other communications provided for hereunder shall be in writing and shall
     be mailed or delivered to the applicable party at the address indicated
     below:
     If to all or any of the Borrowers:
                    Lighthouse Fast Ferry, Inc.
                    Fast Ferry I Corp.
          Fast Ferry II Corp.
<PAGE>

                    195 Fairfield Avenue, Suite 3C
                    West Caldwell, New Jersey 07006
          Attn.: Anthony T. Colasanti, Esq.

               and

          Kenneth J. McGuire, Esq.
          Stein, Bliablias, McGuire, Pantages & Gigl, LLP
          354 Eisenhower Parkway
          Livingston, New Jersey 07039

     If to the Lender:

          James R. Solakian
          152 Mockingbird Court
          Three Bridges, New Jersey 08887

                  and

               Daniel E. Knee, Esq.
               79 Main Street, P.O. Box 985
               Flemington, New Jersey 08822

or, as to each of the foregoing, to such other address as shall be designated by
such Person in a written notice to the other parties, complying as to delivery
with the provisions of this Section.  Except as otherwise provided herein, all
such notices, requests, demands and other communications shall be deemed
sufficiently given when delivered or two (2) Business Days after the date when
mailed by registered or certified mail, return receipt requested, postage and
registration or certification charges prepaid, addressed as aforesaid.

     Section 8.04.  Binding Effect; Assignment.  This Agreement shall be binding
                    --------------------------
upon each of the Borrowers and their respective successors and assigns, and
shall inure to the benefit of the Borrowers, the Lender, and their permitted
successors and assigns.  No Borrower may assign this Agreement or any rights
hereunder without the express written consent of the Lender.  The Lender may, in
accordance with applicable law, sell to one or more Persons, banks or other
entities participating in all or a portion of the Lender's rights and
obligations under this Agreement.

     Section 8.05.  Consent to Jurisdiction.  Borrowers agree that any suit
                    -----------------------
for the enforcement of this agreement or any of the other loan documents may be
brought in the courts of the state of new jersey or any federal court sitting
therein and consents to the nonexclusive jurisdiction of such court and service
of process in any such suit being made upon borrower by mail at the address set
forth in this agreement.  Borrowers hereby waive any objection that they
<PAGE>

may now or hereafter have to the venue of any such suit or any such court or
that such suit is brought in an inconvenient forum.

     Section 8.06.  Governing Law. This Agreement shall be governed by, and
                    -------------
construed and enforced in accordance with, the laws of the State of New Jersey,
without regard to principles relating to conflicts or choice of laws.

     Section 8.07.  Severability.  In the event that any provision of this
                    ------------
Agreement or the application thereof to any Person, property or circumstances
shall be held to any extent to be invalid or unenforceable, the remainder of
this Agreement and the application of such provision to Persons, properties or
circumstances other than those as to which it has been held invalid or
unenforceable shall not be affected thereby, and each provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by law.

     Section 8.08.  Headings.  Article and Section headings in this Agreement
                    --------
and any table of contents are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.

     Section 8.09.  Integration.  This Agreement is intended by the parties as
                    -----------
the final, complete and exclusive statement of the transactions evidenced by
this Agreement.  All prior or contemporaneous promises, agreements and
understandings, whether oral or written, are deemed to be superceded by this
Agreement, and no party is relying on any promise, agreement or understanding
not set forth in this Agreement.  This Agreement may not be amended or modified
except by a written instrument describing such amendment or modification
executed by Borrowers and Lender.
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed, as an instrument under seal, by their respective officers thereunto
duly authorized, as of the date first above written.

                                   BORROWERS:
Attest:                            LIGHTHOUSE FAST FERRY, INC.

/s/ Anthony T. Colasanti              /s/ Anthony Cappaze
_______________________________    By:__________________________________
Anthony T. Colasanti, Secretary          Anthony Cappaze, President

                                   FAST FERRY I CORP.

/s/ Anthony T. Colasanti              /s/ Anthony Cappaze
_______________________________    By:__________________________________
Anthony T. Colasanti, Secretary          Anthony Cappaze, Chairman

                                   FAST FERRY II CORP.

/s/ Anthony T. Colasanti              /s/ Anthony Cappaze
_______________________________    By:__________________________________
Anthony T. Colasanti, Secretary          Anthony Cappaze, Chairman

                                   LENDER:
Attest:

/s/                                /s/ James R. Solakian
_______________________________    _____________________________________
                                   JAMES R. SOLAKIAN

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