Document:

EXHIBIT 10.3

                          CROWN CRUISES OF PANAMA, INC.

                                     - and -

                                 MERITA BANK PLC

                         ------------------------------
                              FIRST NAVAL MORTGAGE
                                   - on the -
                              m.v. "CROWN DYNASTY"
                         ------------------------------

                           Sinclair Roche & Temperley
                                   Royex House
                              5 Aldermanbury Square
                                 London EC2V 7LE
                               Tel: 0171 452 4000
                               Fax: 0171 452 4001
                                 Ref: GFS/242921

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                               INDEX OF CONTENTS

CLAUSE          HEADING                                                 PAGE NO.
------          -------                                                 --------

1.   Definitions..............................................................2

2.   Owner's Covenant to Pay..................................................5

3.   Mortgage.................................................................6

4.   Owner's Covenants as to Insurance........................................7

5.   Owner's Covenants as to Operation & Maintenance.........................12

6.   Expenses................................................................17

7.   Protection and Maintenance of Security..................................18

8.   Events of Default.......................................................19

9.   Enforcement of Rights...................................................19

10.  Application of Moneys...................................................22

11.  No Waiver...............................................................22

12.  Power of Delegation.....................................................22

13.  Power of Attorney.......................................................23

14.  Further Assurance.......................................................23

15.  Benefit.................................................................23

16.  Amount Secured by Mortgage..............................................23

17.  Notices.................................................................24

18.  Governing Law, Severability, Etc. ......................................24

19.  Miscellaneous...........................................................25

20.  Recording of This Mortgage..............................................25

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THIS FIRST NAVAL MORTGAGE is made the day 28th of January, 2000 by CROWN CRUISES
OF PANAMA, INC. a company incorporated under the laws of Panama with its
registered office at c/o Galindo Arias & Lopez, Scotia Plaza No. 18, Avenida
Federico Boyd & Calle No. 51, Piso 9, 10 & 11, Panama, Republic of Panama ("the
Owner") in favour of MERITA BANK PLC a company incorporated under the laws of
Finland acting through its London branch having its principal place of business
at 19 Thomas More Street, London E1W 1YF ("the Trustee" which expression shall
include its successors and permitted assigns) as trustee for the Beneficiaries.

WHEREAS:-

(A)      The Owner is the sole owner of the whole of the motor vessel named
         "CROWN DYNASTY" built in Valencia, Spain at Union Naval de Levante duly
         documented in the name of the Owner under the laws and flag of the
         Republic of Panama under Provisional Patente of Navigation Number
         22465-PEXT-5 having radio call letters in the international Code of
         Signals 3FJX3 with a gross capacity in tons of 19,089 net capacity
         in tons of 8,103 length of 140.08 meters breadth of 22.50 meters and
         depth of 7.20 meters number of masts            number of bridges
                    number of main decks         and number of funnels       .

(B)      By a loan agreement dated the 24th day of January 2000 made between (1)
         the Lenders (as therein defined), (2) Merita Bank Plc ("the Agent") as
         agent for the Lenders, (3) the Owner and (4) the Trustee (hereinafter
         as the same may from time to time be amended, varied or supplemented
         called "the Loan Agreement") the Lenders have agreed to make available
         to the Owner a revolving credit facility of up to forty five million
         United States Dollars (USD45,000,000) at any one time ("the Loan" which
         expression shall also mean where the context so requires the amount
         thereof from time to time outstanding) on the terms and conditions
         therein set forth. The Owner is as at the date hereof justly indebted
         to the Lenders in the amount of the Loan repayable with interest
         thereon on the terms and conditions hereinafter set out. A copy of the
         form of the Loan Agreement in the form executed is attached hereto and
         forms an integral part hereof.

(C)      Pursuant to the terms and conditions of the Loan Agreement, the Owner
         has drawn the maximum amount of the Loan.

(D)      The Lenders agreed to advance the Loan on condition that the Owner
         should execute

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                                      - 2 -

         and deliver to the Trustee such a first priority mortgage of the Vessel
         as hereinafter appears.

(E)      In fulfilment of the said condition and in order to secure the payment
         to the Trustee and the Beneficiaries of the Outstanding Indebtedness
         (as hereinafter defined) and the performance and observance of and
         compliance with all the covenants terms and conditions in this Mortgage
         contained expressed or implied the Owner has duly authorised the
         execution and delivery of this Mortgage and is duly permitted to give
         as security for the payment of the Outstanding Indebtedness and the
         performance and observance of and compliance with all the said
         covenants terms and conditions a first preferred mortgage on the Vessel
         under and pursuant to the laws of the Republic of Panama.

(F)      By a deed of agency and trust dated January 28, 2000 made between (1)
         the Agent, (2) the Trustee and (3) the Lenders it has been agreed that
         the benefit of this Mortgage shall be held by the Trustee on trust for
         itself, the Agent and the Lenders and its and their respective
         successors, assignees and transferees (together "the Beneficiaries").

NOW THIS MORTGAGE WITNESSETH AND IT IS HEREBY AGREED as follows:-

1.       DEFINITIONS

1.1      In this Mortgage unless the context otherwise requires any term defined
         in the preamble or recitals hereto has the meaning ascribed to it
         therein and:-

         "DEFAULT RATE"
         means interest at the rate calculated in accordance with clause 4.3 of
         the Loan Agreement;

         "EVENT OF DEFAULT"
         means any of the events set out in clause 8 hereof;

         "INSURANCES"
         means all policies and contracts of insurance (which expression
         includes all entries of
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         the Vessel in a protection and indemnity or war risks association)
         which are from time to time taken out or entered into in respect of the
         Vessel and her earnings or otherwise howsoever in connection with the
         Vessel with the exception of mortgagees interest insurances;

         "OUTSTANDING INDEBTEDNESS"
         means the aggregate of all sums of money whatsoever now or in the
         future actually or contingently due or owing to the Trustee and the
         Beneficiaries under the Security Documents or any of them;

         "PERSON"
         includes any body of persons;

         "REQUISITION COMPENSATION"
         means all moneys or other compensation whatsoever payable by reason of
         the requisition for title or other compulsory acquisition of the Vessel
         (otherwise than by requisition for hire) or the capture, seizure,
         arrest, detention or confiscation of the Vessel by any government or by
         persons acting or purporting to act on behalf of any government;

         "SECURITY DOCUMENTS"
         means the Loan Agreement, this Mortgage and any other document as may
         have been or may hereafter be executed to secure the Loan;

         "SECURITY PERIOD"
         means the period commencing on the date hereof and terminating upon
         discharge of the security created by the Security Documents by
         irrevocable payment in full of the Outstanding Indebtedness;

         "TOTAL LOSS"
         means:-
         (i)      actual or constructive or compromised or agreed or arranged
                  total loss of the Vessel; or

         (ii)     requisition for title or other compulsory acquisition of the
                  Vessel otherwise than by requisition for hire; or

         (iii)    capture, seizure, arrest, detention or confiscation of the
                  Vessel by any

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                                      - 4 -

                  government or by persons acting or purporting to act on behalf
                  of any government unless the Vessel is released and restored
                  to the Owner from such capture, seizure, arrest or detention
                  within thirty (30) days after the occurrence thereof; and

         "VESSEL"
         means the vessel described in Recital (A) hereto and includes her
         engines, machinery, boats, tackle, outfit, spare gear, fuel, consumable
         or other stores, belongings and appurtenances whether on board or
         ashore and whether now owned or hereafter acquired.

1.2      In clause 4.1(A) hereof:-

         "EXCESS RISKS"
         means the proportion of claims for general average and salvage charges
         and under the ordinary running down clause not recoverable in
         consequence of the value at which a vessel is assessed for the purpose
         of such claims exceeding her insured value;

         "PROTECTION AND INDEMNITY RISKS"
         means the usual risks covered by associations that are members of the
         International Group of P. & I. Associations including without
         limitation pollution risks (whether relating to oil or otherwise
         howsoever) and the proportion not recoverable in case of collision
         under the ordinary running down clause; and

         "WAR RISKS"
         includes the risks of mines and all risks excluded from the standard
         form of English marine policy by the free of capture and seizure
         clause.

1.3      This Mortgage shall be read together with the Loan Agreement.

1.4      Clause headings are inserted for convenience of reference only and
         shall be ignored in the interpretation of this Mortgage.

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                                      - 5 -
2.       OWNER'S COVENANT TO PAY

2.1      In consideration of the premises the Owner covenants with the Trustee
         as follows:-

         (A)      to repay each Drawing at the time and in the manner specified
                  in clause 5 of the Loan Agreement;

         (B)      to pay interest on the Loan at the rate at the times and in
                  the manner specified in clause 4 of the Loan Agreement;

         (C)      to pay interest at the Default Rate (both before and after any
                  judgment) on any sum or sums payable under the Security
                  Documents which is not paid on the due date;

         (D)      to pay each and every other sum of money that may be or become
                  owing to the Beneficiaries or any of them under the terms of
                  the Security Documents or any of them at the times and in the
                  manner specified therein;

         (E)      to pay to and/or indemnify the Beneficiaries or any of them
                  for such additional amounts as may be necessary in order that
                  all payments under this Mortgage after deduction or
                  withholding for or on account of all present or future taxes
                  (other than corporate taxes on the overall net income of the
                  Beneficiaries or any of them) imposed by any competent
                  authority in any jurisdiction relative to the Owner shall be
                  no less than such payments would have been had there been no
                  such taxes; and

         (F)      to perform observe and comply with the obligations, covenants,
                  terms and conditions set out in this Mortgage.

2.2      Notwithstanding anything to the contrary contained in this clause 2 the
         Outstanding Indebtedness shall become immediately payable on demand
         upon the happening of any Event of Default.

3.       MORTGAGE

3.1      In consideration of the premises and in order to secure by this
         Mortgage the repayment of each Drawing plus interest at the rate set
         forth in the Loan Agreement
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         and the payment of all such other sums as may hereafter from time to
         time and at any other time form part of the Outstanding Indebtedness
         and to secure the performance and observance of and compliance with the
         covenants terms and conditions herein contained, the Owner in
         accordance with the provisions of Chapter V Title IV of Book Second of
         the Code of Commerce of the Republic of Panama and of the pertinent
         provisions of the Civil Code and other legislation of the Republic of
         Panama hereby executes and constitutes a First Preferred Naval Mortgage
         on the whole of the Vessel in favour of the Trustee (as trustee for the
         Beneficiaries) to have and to hold the same unto the Trustee its
         successors and assigns forever upon the terms herein set forth,
         Provided Only and the condition of these presents is such that if the
         Owner its successors and assigns shall pay or cause to be paid to the
         Beneficiaries the Outstanding Indebtedness as and when the same shall
         become due and payable in accordance with the terms of the Loan
         Agreement and this Mortgage and shall observe and comply with the
         covenants, terms and conditions in the Loan Agreement and this Mortgage
         contained expressed or implied to be performed, observed or complied
         with by and on the part of the Owner then these presents and the rights
         hereunder shall cease determine and be void and the Trustee will, at
         the request and cost of the Owner, execute a release in such form as
         the Owner may reasonably require, of the security created by this
         Mortgage.

3.2      It is declared and agreed that the security created by this Mortgage
         shall be held by the Trustee as a continuing security for the payment
         of the Outstanding Indebtedness and the performance and observance of
         and compliance with all of the covenants terms and conditions contained
         in the Security Documents and that the security so created shall not be
         satisfied by any intermediate payment or satisfaction of any part of
         the amount hereby and thereby secured and that the security so created
         shall be in addition to and shall not in any way be prejudiced or
         affected by any collateral or other security now or hereafter held by
         the Trustee for all or any part of the moneys hereby and thereby
         secured and that every power and remedy given to the Trustee hereunder
         shall be an addition to and not a limitation of any and every other
         power or remedy vested in the Trustee under any of the other Security
         Documents or at law and that all the powers so vested in the Trustee
         may be exercised from time to time and as often as the Trustee may deem
         expedient.

4.       OWNER'S COVENANTS AS TO INSURANCE

4.1      The Owner covenants with the Trustee and undertakes throughout the
         Security Period:-

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                                      - 7 -

         (A)      at the Owner's expense to insure and keep the Vessel insured
                  in United States Dollars (or such other currency as the
                  Trustee may approve in writing) against (a) fire and usual
                  marine risks (including excess risks), (b) war risks, (c)
                  protection and indemnity risks, (d) oil pollution liability
                  risks in excess of the limit of cover for oil pollution
                  liability included within the protection and indemnity risks,
                  (e) loss of hire and (f) any other risks which the Trustee may
                  from time to time require;

         (B)      to effect the Insurances (a) generally in such amounts and
                  upon such terms as shall from time to time be approved in
                  writing by the Trustee, through such brokers (hereinafter
                  called "the approved brokers") and with such insurance
                  companies underwriters war risks and protection and indemnity
                  associations as shall from time to time be approved in writing
                  by the Trustee, and (b) in particular 01. (in respect of all
                  risks within the protection and indemnity insurances other
                  than oil pollution risks) in an unlimited amount, or (if
                  unlimited cover ceases to be available) in the maximum amount
                  available to the Owner for the Vessel in the market from time
                  to time; 02. (in respect of oil pollution liability risks
                  included within the protection and indemnity insurances) in
                  the maximum amount available to the Owner for the Vessel in
                  the market from time to time; and 03. (in respect of oil
                  pollution liability risks in excess of the limit of cover
                  included in the protection and indemnity insurances) in such
                  amount and upon such terms as the Trustee may from time to
                  time require;

         (C)      to renew the Insurances at least fourteen (l4) days before the
                  relevant policies or contracts expire and to procure that the
                  approved brokers shall promptly confirm in writing to the
                  Trustee as and when each such renewal is effected;

         (D)      punctually to pay premiums calls contributions or other sums
                  payable in respect of all the Insurances and to produce all
                  relevant receipts when so required by the Trustee;

         (E)      to arrange for the execution of such guarantees as may from
                  time to time be required by a protection and indemnity or war
                  risks association;

         (F)      to procure that the interests of the Trustee and the
                  Beneficiaries shall be duly endorsed upon all slips cover
                  notes policies certificates of entry or other

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                                      - 8 -

                  instruments of insurance issued or to be issued in connection
                  with the Insurances and in particular, but without limitation,
                  if so required by the Trustee, (but without liability as
                  between the Owner and the Trustee for premiums or calls) to
                  procure that the Trustee be named as co-assured;

         (G)      to procure that all such instruments of insurance as are
                  referred to in sub-clause (F) above shall be deposited with
                  the Trustee (or with such other person as the Trustee may from
                  time to time direct) and that the approved brokers furnish the
                  Trustee with a letter or letters of undertaking in such form
                  as may be required by the Trustee;

         (H)      to procure that the protection and indemnity and/or war risks
                  associations wherein the Vessel is entered shall (if so
                  required by the Trustee) furnish the Trustee with a letter or
                  letters of undertaking in such form as may be required by the
                  Trustee;

         (I)      to operate and manage the Vessel or procure that the Vessel is
                  operated and managed strictly in conformity with the terms of
                  the instruments of insurance referred to in sub-clause (F)
                  above (including any warranties express or implied therein)
                  and in particular:

                  (i)      to ensure that the Vessel's classification,
                           structure, operation and management are maintained
                           strictly in conformity with any warranty as to class,
                           structure, operation or management or any other
                           provision as to class, structure, operation or
                           management contained in the Insurances and to this
                           end to submit the Vessel or cause the Vessel to be
                           submitted to such periodical or other surveys as may
                           be required by the Vessel's classification society,
                           salvage association or otherwise howsoever not less
                           than fourteen (14) days before the date upon which
                           such surveys fall due;

                  (ii)     promptly and fully to implement any and all
                           requirements or recommendations contained in any
                           report issued upon or following any of the surveys
                           referred to in sub-clause (i) above and promptly
                           after such surveys have been carried out to provide
                           evidence satisfactory to
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                           the Trustee that this has been done together with
                           confirmation from the relevant approved brokers that
                           the Vessel complies with such of the Insurances to
                           which such surveys are relevant;

                  (iii)    (without prejudice to clauses 4.1(G) and (H) hereof)
                           to procure that the approved brokers furnish the
                           Trustee with a letter of undertaking in terms
                           satisfactory to the Trustee in which the approved
                           brokers undertake (inter alia) to give the Trustee
                           notice of any failure by the Owner to comply with any
                           warranty as to the Vessel's class or structure;

                  (iv)     to comply strictly with the requirements of any
                           legislation relating to pollution or protection of
                           the environment which may from time to time be
                           applicable to the Vessel in any jurisdiction in which
                           the Vessel shall trade and in particular (if the
                           Vessel is to trade in the United States of America
                           and Exclusive Economic Zone (as defined in the Act))
                           to comply strictly with the requirements of the
                           United States Oil Pollution Act 1990 ("the Act") and
                           before any such trade is commenced and during the
                           entire period during which such trade is carried on:-

                           (a)      to pay any additional premiums required to
                                    maintain protection and indemnity cover for
                                    oil pollution up to the limit available to
                                    the Owner for the Vessel in the market;

                           (b)      to make all such quarterly or other voyage
                                    declarations as may from time to time be
                                    required by the Vessel's protection and
                                    indemnity association in order to maintain
                                    such cover, and promptly to deliver to the
                                    Trustee copies of such declarations;

                           (c)      to submit the Vessel to such additional
                                    periodic, classification, structural or
                                    other surveys which may be required by the
                                    Vessel's protection and indemnity insurers
                                    to maintain cover for such trade and
                                    promptly to deliver to the Trustee copies of
                                    reports made in respect of such surveys;

                           (d)      to implement any recommendations contained
                                    in the reports issued following the surveys
                                    referred to in sub-clause (c) above

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                                    within the time limit specified therein, and
                                    provide evidence satisfactory to the Trustee
                                    that the protection and indemnity insurers
                                    are satisfied that this has been done; and

                           (e)      in addition to the foregoing (if such trade
                                    is in the United States of America and
                                    Exclusive Economic Zone):

                                    (01)    to obtain and retain a certificate
                                            of financial responsibility under
                                            the Act in form and substance
                                            satisfactory to the United States
                                            Coast Guard and to provide the
                                            Trustee with a copy thereof;

                                    (02)    to procure that the protection and
                                            indemnity insurances do not contain
                                            a US Trading Exclusion Clause or any
                                            other provision analogous thereto
                                            and to provide the Trustee with
                                            evidence that this is so; and

                                    (03)    strictly to comply with any
                                            operational or structural
                                            regulations issued from time to time
                                            by any relevant authorities under
                                            the Act so that at all times the
                                            Vessel falls within the provisions
                                            which limit strict liability under
                                            the Act for oil pollution;

                  (v)      before allowing the Vessel to enter or trade to any
                           zone which is declared a war zone or which is
                           rendered dangerous by reason of hostility in any part
                           of the world (whether war be declared or not) to
                           effect such special insurance cover as the Trustee
                           may require; and

                  (vi)     to notify the Trustee forthwith by letter or in case
                           of urgency by telex of any requirement or
                           recommendation made by any insurer or classification
                           society which has not been complied with prior to
                           fourteen (14) days before the date by which it is
                           required to be complied with;

         (J)      to apply all sums receivable in respect of the Insurances as
                  are paid to the

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                  Owner for the purpose of making good the loss and fully
                  repairing all damage in respect whereof the insurance moneys
                  shall have been received;

         (K)      not to make any alteration which would or could reasonably be
                  expected to have a material adverse effect on the rights or
                  interest of the Trustee and/or the Beneficiaries to any of the
                  terms in any of the instruments of insurance referred to in
                  sub-clause (F) above which have been approved by the Trustee
                  and not to make, do, consent or agree to any act or omission
                  which would or might render any such instrument of insurance
                  invalid, void, voidable or unenforceable or render any sum
                  payable thereunder repayable in whole or in part;

         (L)      not without the prior approval of the Trustee to settle,
                  compromise or abandon any claim under the Insurances for Total
                  Loss or for a major casualty; and

         (M)      to indemnify the Trustee and the Beneficiaries fully forthwith
                  upon demand for any and all costs and expenses incurred by the
                  Trustee and/or the Beneficiaries from time to time:

                  (i)      in effecting for the benefit of the Trustee and/or
                           the Beneficiaries in such amount, upon such terms,
                           through such insurance brokers and with such
                           insurance company or underwriter as the Trustee shall
                           in its sole discretion elect (i) a mortgagee's
                           interest insurance policy on the Vessel and (ii) an
                           insurance policy against the possible consequences of
                           pollution involving the Vessel, including without
                           limitation, the risk of expropriation or
                           sequestration of the Vessel, the imposition of a lien
                           or encumbrance of any kind having priority over this
                           Mortgage or a claim against the Vessel exceeding the
                           amount receivable in respect of pollution under the
                           Vessel's protection and indemnity insurances; and

                  (ii)     in obtaining from time to time a report or reports on
                           the adequacy of the Insurances from an insurance
                           adviser appointed by the Trustee.

4.2      The Trustee shall be entitled from time to time to review the terms of
         clause 4.1 hereof in order to provide for changes occurring after the
         date of this Mortgage in

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         legislation or circumstances affecting the Owner, the Vessel, the
         Insurances, the laws of any jurisdiction or any other matters which the
         Trustee deems relevant, and to modify its requirements in respect of
         the Insurances in the light of such changes. Any such modification,
         once notified in writing by the Trustee to the Owner shall be binding
         on the Owner and take effect as an amendment to clause 4.1 hereof.

5.       OWNER'S COVENANTS AS TO OPERATION & MAINTENANCE

5.1      The Owner covenants with the Trustee and undertakes throughout the
         Security Period:-

         (A)      to keep the Vessel registered as a Panamanian ship and not to
                  do or suffer to be done anything whereby such registration may
                  be forfeited or imperilled;

         (B)      not (without the previous consent in writing of the Trustee)
                  to make any modification to the Vessel which would result in
                  any substantial change in the structure type or speed of the
                  Vessel;

         (C)      at all times to maintain and preserve the Vessel in good
                  working order and repair so as to maintain the highest class
                  available to vessels of her type and so that the Vessel is in
                  every respect seaworthy and in good operating condition and to
                  maintain and preserve the Vessel in such good working order
                  and condition as to comply with the requirements of the
                  Vessel's insurers and of the laws, regulations and
                  requirements (statutory or otherwise) from time to time
                  applicable to vessels registered under the laws and flag of
                  the Republic of Panama and if so required with the
                  requirements of the laws and government of any State colony
                  country province or dependency where the Vessel may trade and
                  to renew and replace all parts and appurtenances thereof when
                  and as they shall be worn out damaged lost or destroyed by
                  others of a similar nature and of at least equal quality;

         (D)      to permit the Trustee or to procure that the Trustee be
                  permitted by surveyors or other persons appointed by it in
                  that behalf to board the Vessel at all reasonable times for
                  the purpose of inspecting her condition and her class or other
                  records or for the purpose of satisfying themselves in regard
                  to proposed or executed repairs and to afford all proper
                  facilities for such inspections;

         (E)      to pay and discharge or to cause to be paid and discharged all
                  debts damages

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                                     - 13 -

                  and liabilities whatsoever which have given or may give rise
                  to maritime or possessory liens on or claims enforceable
                  against the Vessel and in event of arrest of the Vessel
                  pursuant to legal process or in event of her detention in
                  exercise or purported exercise of any such lien as aforesaid
                  to procure the release of the Vessel from such arrest or
                  detention forthwith upon receiving notice thereof by providing
                  bail or otherwise as the circumstances may require;

         (F)      not to employ the Vessel or suffer her employment in any trade
                  or business which is forbidden by international law or is
                  otherwise illicit or in carrying illicit or prohibited goods
                  or in any manner whatsoever which renders her liable to
                  condemnation in a Prize Court or to destruction seizure or
                  confiscation and in event of hostilities in any part of the
                  world (whether war be declared or not) not to employ the
                  Vessel or suffer her employment in carrying goods which are or
                  may be declared contraband or to enter or trade to any zone
                  which is declared a war zone or which is rendered dangerous by
                  reason of such hostilities unless the Trustee shall have first
                  given its consent in writing;

         (G)      to take all reasonable precautions to prevent any
                  infringements of any anti drug legislation in any jurisdiction
                  in which the Vessel shall trade and in particular (if the
                  Vessel is to trade in the United States of America) to take
                  all reasonable precautions to prevent any infringements of the
                  Anti-Drug Abuse Act of 1986 of the United States of America
                  (as the same may be amended and/or re-enacted from time to
                  time hereafter) and for this purpose to enter into a "Carrier
                  Initiative Agreement" with the United States' Customs Service
                  and to procure that the same or a similar agreement is
                  maintained in full force and effect and that the Owner's
                  obligations thereunder are performed in respect of the Vessel;

         (H)      to comply with all laws, regulations, conventions and
                  agreements whatsoever applicable to the Vessel in any
                  jurisdiction in which the Vessel shall trade relating to
                  pollution or protection of the environment howsoever;

         (I)      promptly to furnish to the Trustee all such information as it
                  may from time to time reasonably require regarding the Vessel
                  her employment position and

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                                     - 14 -

                  engagements particulars of all towages and salvages and copies
                  of all charters and other contracts for her employment or
                  otherwise howsoever concerning her;

         (J)      to notify the Trustee forthwith by letter or in case of
                  urgency by telex of:-

                  (i)      any accident to the Vessel involving repairs the cost
                           whereof will or is likely to exceed one million five
                           hundred thousand United States Dollars (USD1,500,000)
                           (or the equivalent in any other currency);

                  (ii)     any occurrence in consequence whereof the Vessel has
                           become or is likely to become a Total Loss;

                  (iii)    any requirement or recommendation made by any
                           competent authority which has not been complied with
                           prior to fourteen (14) days before the date by which
                           it is required to be complied with; and

                  (iv)     any arrest of the Vessel or the exercise or purported
                           exercise of any lien on the Vessel or her earnings;

         (K)      promptly to pay all tolls dues and other outgoings whatsoever
                  in respect of the Vessel and as and when the Trustee may so
                  require to furnish satisfactory evidence that the wages and
                  allotments and insurance and pension contributions of the
                  Master and crew are being regularly paid and that all
                  deductions from crew's wages in respect of any tax liability
                  are being properly accounted for and that the Master has no
                  claim for disbursements other than those incurred by him in
                  the ordinary course of trading on the voyage then in progress;

         (L)      not without the previous consent of the Trustee in writing
                  (which the Trustee shall have full liberty to withhold) to let
                  the Vessel:-

                  (i)      on demise charter for any period;

                  (ii)     by any time or consecutive voyage charter for a term
                           which exceeds or which by virtue of any optional
                           extensions therein contained is likely to exceed
                           Thirteen (l3) months' duration;

<PAGE>

                                     - 15 -

                  (iii)    on terms whereby more than Two (2) months' hire (or
                           the equivalent) is payable in advance; or

                  (iv)     below the market rate prevailing at the time when the
                           Vessel is fixed;

         (M)      not without the previous consent in writing of the Trustee
                  (and then only subject to such terms as the Trustee may
                  impose) to mortgage charge or otherwise assign the Vessel or
                  any share therein or to suffer the creation of any such
                  mortgage charge or assignment to or in favour of any person
                  other than the Trustee;

         (N)      not without the previous consent in writing of the Trustee to
                  sell or agree to sell or otherwise dispose of the Vessel or
                  any share therein or change the flag of the Vessel;

         (O)      not to put the Vessel into the possession of any person for
                  the purpose of work being done upon her in an amount exceeding
                  or likely to exceed one million five hundred thousand United
                  States Dollars (USD1,500,000) (or the equivalent in any other
                  currency) unless:-

                  (i)      in the case of damage repairs to the Vessel, the
                           Trustee is satisfied that the cost of such repairs
                           (other than any deductible) is covered by the
                           Insurances; or

                  (ii)     in the case of a scheduled drydocking the Trustee is
                           satisfied that adequate financial provision has been
                           made for payment in respect thereof; or

                  (iii)    the Trustee is satisfied that the person into whose
                           possession the Vessel is to be delivered has agreed
                           to waive any repairer's or similar possessory lien
                           for work carried out to the Vessel by such person;

         (P)      to keep proper books of account in respect of the Vessel and
                  her earnings and as and when required by the Trustee to make
                  such books available for inspection on behalf of the Trustee;

<PAGE>

                                     - 16 -

         (Q)      to comply with all the requirements and formalities under any
                  applicable legislation of the Republic of Panama necessary to
                  perfect this Mortgage as a valid and enforceable first
                  preferred mortgage upon the Vessel and to furnish to the
                  Trustee from time to time such evidence as the Trustee may
                  reasonably request to satisfy itself with respect to the
                  Owner's compliance with the provisions of this sub-clause;

         (R)      to place and retain a copy of this Mortgage certified by the
                  appropriate Panamanian authorities with the Vessel's papers on
                  board the Vessel and any other certificates or other documents
                  required by law and to cause each such certified copy and such
                  papers to be brought to the attention of the master for the
                  time being of the Vessel and to be exhibited on demand to any
                  persons having business with the Vessel or to any
                  representative of the Trustee;

         (S)      to comply, or procure that the operator of the Vessel will
                  comply, with the International Management Code for the Safe
                  Operation of Ships and for Pollution Prevention adopted by the
                  International Maritime Organisation (as the same may be
                  amended from time to time) ("the ISM Code") or any replacement
                  of the ISM Code and in particular, without prejudice to the
                  generality of the foregoing, as and when required to do so by
                  the ISM Code and at all times thereafter, (i) to hold, or
                  procure that the operator of the Vessel holds, a valid
                  Document of Compliance (being a document issued to a vessel
                  operator as evidence of its compliance with the requirements
                  of the ISM Code) duly issued to the Owner or the operator (as
                  the case may be) pursuant to the ISM Code and a valid Safety
                  Management Certificate (being a document issued to a vessel as
                  evidence that the vessel operator and its shipboard management
                  operate in accordance with an approved structured and
                  documented system enabling the personnel of that vessel
                  operator to implement effectively the safety and environmental
                  protection policy of that vessel operator) duly issued to the
                  Vessel pursuant to the ISM Code, (ii) to provide the Trustee
                  with copies of any such Document of Compliance and Safety
                  Management Certificate as soon as the same are issued and
                  (iii) to keep, or procure that there be kept, on board the
                  Vessel a copy of any such Document of Compliance and the
                  original of any such Safety Management Certificate; and

         (T)      to procure that the Vessel (including, without limitation, all
                  computer systems,

<PAGE>

                                     - 17 -

                  all systems and equipment containing embedded microchips
                  (including leased systems and equipment) and any other
                  systems, equipment or parts of the Vessel whatsoever whose
                  proper functioning or operation is capable of being affected
                  by the incorrect processing, storing, calculation or
                  recognition of dates, together with all software and data in
                  connection with any of the foregoing) shall at all times
                  comply with the requirements of Year 2000 Conformity as
                  defined in "A DEFINITION OF YEAR 2000 CONFORMITY REQUIREMENTS"
                  issued by the British Standards Institution (BSI DISC
                  PD2000-1:1998) or such later reviewed, revised or amended
                  version thereof as may be published by the British Standards
                  Institution from time to time (in which case the later version
                  shall be the relevant one for the purposes of this clause).

6.       EXPENSES

6.1      The Owner undertakes to pay to the Trustee on demand all moneys
         whatsoever which the Trustee and/or the Beneficiaries shall or may
         expend be put to or become liable for in or about the protection
         maintenance or enforcement of the security created by this Deed and the
         other Security Documents or in or about the exercise by the Trustee
         and/or the Beneficiaries of any of the powers vested in it or them
         under this Deed or under any of the other Security Documents and to pay
         interest thereon at the Default Rate from the date of demand until the
         date of actual receipt (whether before or after any relevant judgment).

6.2      The Owner undertakes to pay on demand to the Trustee (or as it may
         direct) the amount of all investigation and legal expenses of any kind
         whatsoever stamp duties (if any) registration fees and any other
         charges incurred by the Trustee and/or the Beneficiaries in connection
         with the preparation completion and registration of the Security
         Documents or otherwise in connection with the Outstanding Indebtedness
         and the security therefor.

7.       PROTECTION AND MAINTENANCE OF SECURITY

7.1      The Trustee shall without prejudice to its other rights and powers
         hereunder be entitled (but not bound) at any time and as often as may
         be necessary to take any such

<PAGE>

                                     - 18 -

         action as it may in its absolute discretion think fit for the purpose
         of protecting the security created by this Deed and the other Security
         Documents and each and every expense or liability so incurred by the
         Trustee and/or the Beneficiaries in or about the protection of the
         security shall be repayable to the Trustee by the Owner on demand
         together with interest thereon at the Default Rate from the date of
         demand until the date of actual receipt whether before or after any
         relevant judgment.

7.2      Without prejudice to the generality of the foregoing:-

         (A)      if the provisions of clause 4.1 hereof or any of them are not
                  complied with the Trustee shall be at liberty to effect and
                  thereafter to maintain all such insurances upon the Vessel as
                  in its discretion it may think fit;

         (B)      if the provisions of clause 5.1(C) and 5.1(D) hereof or any of
                  them are not complied with the Trustee shall be at liberty to
                  arrange for the carrying out of such repairs and/or surveys as
                  it deems expedient or necessary; and

         (C)      if the provisions of clause 5.1(E) hereof or any of them are
                  not complied with the Trustee shall be at liberty to pay and
                  discharge all such debts, damages and
                  liabilities as are therein mentioned and/or to take any such
                  measures as it deems expedient or necessary for the purpose of
                  securing the release of the Vessel,

         and each and every expense or liability so incurred by the Trustee
         and/or the Beneficiaries shall be recoverable from the Owner as
         provided in clause 7.1 hereof together with interest thereon at the
         Default Rate.

8.       EVENTS OF DEFAULT

8.1      Upon the happening of any of the following events the Lenders shall
         cease to be under any further obligation to make the Loan available and
         the Outstanding Indebtedness shall immediately become payable on
         demand:-

         (A)      the happening of any of the events of default specified in
                  clause 11.1 of the Loan Agreement; or

         (B)      anything is done or suffered or omitted to be done by the
                  Owner which in the reasonable opinion of the Trustee has
                  imperilled or is likely to imperil the
<PAGE>

                                     - 19 -

                  security created by the Security Documents.

9.       ENFORCEMENT OF RIGHTS

9.1      Upon demand being made for payment of the Outstanding Indebtedness
         under clause 8 hereof interest shall accrue thereon at the Default Rate
         from the date of demand until the date of payment (as well after as
         before judgment) and the security created by this Mortgage shall be
         enforceable so that the Trustee shall be entitled as and when it may
         see fit to put into force and exercise all the powers possessed by it
         as mortgagee of the Vessel and in particular:-

         (A)      to exercise all rights and remedies in foreclosure and
                  otherwise given to mortgagees by the provisions of Article
                  1527 of the Code of Commerce and any other legislation or code
                  affecting the same;

         (B)      to bring suit at law in equity or in admiralty as it may be
                  advised to recover judgment for any and all amounts due
                  hereunder and collect the same out of any and all property of
                  the Owner whether covered by this Mortgage or otherwise;

         (C)      to take and enter into possession of the Vessel wherever the
                  same may be without legal process and (if it has acted in good
                  faith) without being responsible for loss or damage and the
                  Owner or other person in possession forthwith upon demand of
                  the Trustee shall surrender to the Trustee possession of the
                  Vessel and the Trustee, without being responsible for loss or
                  damage where it has acted in good faith may hold lay up lease
                  charter operate or otherwise use the Vessel for such time and
                  upon such terms as it may deem to be for its best advantage
                  and for that purpose may employ such agents managers masters
                  officers crews surveyors and servants as it shall think fit
                  and may repair and reclass the Vessel accounting only for the
                  net profits if any arising from such use and charging upon all
                  receipts from such use or from the sale of the Vessel by court
                  proceeds or pursuant to sub-clause (G) below all costs
                  expenses charges damages or losses by reason of such use and
                  if at any time the Trustee shall avail itself of the right
                  herein given it to take the Vessel and shall take her the
                  Trustee shall have the right to dock the Vessel for a

<PAGE>

                                     - 20 -

                  reasonable time at any place at the cost and expense of the
                  Owner;

         (D)      to require that all policies contracts and other records
                  relating to the Insurances (including details of and
                  correspondence concerning outstanding claims) be forthwith
                  delivered to such adjusters and/or brokers and/or other
                  insurers as the Trustee may nominate;

         (E)      to collect recover compromise and give a good discharge for
                  all claims then outstanding or thereafter arising under the
                  Insurances or any of them and to take over or institute (if
                  necessary using the name of the Owner) all such proceedings in
                  connection therewith as the Trustee in its absolute discretion
                  thinks fit and to permit any brokers through whom collection
                  or recovery is effected to charge the usual brokerage
                  therefor;

         (F)      to discharge compound release or compromise liens and/or
                  claims in respect of the Vessel which have given or may give
                  rise to any charge or lien on the Vessel or which are or may
                  be enforceable by proceedings against the Vessel;

         (G)      without being responsible for loss or damage (if it has acted
                  in good faith) sell the Vessel at any place and at such time
                  as the Trustee may specify and in such manner and on such
                  terms and conditions as the Trustee may deem advisable free
                  from any claim by the Owner in admiralty in equity at law or
                  by statute except that notice of sale will be given by
                  publication in a newspaper of general circulation in the city
                  of Panama, Republic of Panama, not less than twenty (20)
                  calendar days in advance of the sale to satisfy the
                  requirement of notice of sale to the Owner and the other
                  registered mortgagees, if any, contained in Article 1527 of
                  the Panama Code of Commerce. Such notice shall be necessary
                  only in respect of the initial date of sale and should an
                  adjournment of the sale be deemed necessary, a new date, time
                  and place for the sale may be set by the Trustee at the time
                  of the adjournment without need for any further notice. In the
                  event that the Vessel is sold under any power contained herein
                  the Owner will if and when required by the Trustee execute
                  such form of conveyance of the Vessel as the Trustee may
                  direct or approve; and

         (H)      to manage insure maintain and repair the Vessel and to employ
                  sail or lay up the Vessel in such manner and for such period
                  as the Trustee in its discretion deems expedient and for the
                  purposes aforesaid the Trustee shall be entitled to

<PAGE>

                                     - 21 -

                  do all acts and things incidental or conducive thereto and
                  in particular to enter into such arrangements respecting the
                  Vessel her insurance management maintenance repair
                  classification and employment in all respects as if the
                  Trustee were the owner of the Vessel and without being
                  responsible for any loss thereby incurred in the absence of
                  gross negligence or wilful default on the part of the Trustee,

         Provided always that upon any sale of the Vessel or any share therein
         by the Trustee pursuant to sub-clause (G) above the purchaser shall not
         be bound to see or enquire whether the Trustee's power of sale has
         arisen in the manner herein provided and the sale shall be deemed to be
         within the power of the Trustee and the receipt of the Trustee for the
         purchase money shall effectively discharge the purchaser who shall not
         be concerned with the manner of application of the proceeds of sale or
         be answerable therefor in any way.

10.      APPLICATION OF MONEYS

10.1     All moneys received by the Trustee in respect of a sale of the Vessel
         or any share therein or otherwise pursuant to the provisions of this
         Mortgage and all moneys received and retained by the Trustee in respect
         of the Insurances and Requisition Compensation pursuant to this
         Mortgage shall be applied by the Trustee in accordance with the
         relevant provisions of clause 10 of the Loan Agreement.

11.      NO WAIVER

11.1     No delay or omission of the Trustee or the Beneficiaries to exercise
         any right or power vested in it or them under the Security Documents or
         any of them shall impair such right or power or be construed as a
         waiver of or an acquiescence in any default by the Owner and no express
         waiver given by the Trustee and/or the Beneficiaries in relation to any
         default by the Owner or breach by the Owner of any of its obligations
         under this Mortgage shall prejudice the right of the Trustee under this
         Mortgage arising from any subsequent default or breach (whether or not
         such subsequent default or breach is of a nature different from the
         previous default or breach) nor shall the giving by the Trustee and/or
         the Beneficiaries of any consent to the doing of any act which by the
         terms of this Mortgage requires the consent of the Trustee prejudice
         the

<PAGE>

                                     - 22 -

         right of the Trustee to give or withhold as it sees fit is consent to
         the doing of any other similar act.

12.      POWER OF DELEGATION

12.1     The Trustee shall be entitled at any time and as often as may be
         expedient to delegate all or any of the powers and discretions vested
         in it by the Security Documents or any of them (including the power
         vested in it by virtue of clause 13 hereof) in such manner upon such
         terms and to such persons as the Trustee in its absolute discretion may
         think fit.

13.      POWER OF ATTORNEY

13.1     The Owner irrevocably appoints the Trustee as its attorney for the
         duration of the Security Period for the purpose of doing in its name
         all acts which the Owner itself could do in relation to the Vessel,
         Provided However that such power shall not be exercisable by or on
         behalf of the Trustee unless the security created by this Mortgage has
         become enforceable pursuant to clause 9 hereof.

13.2     The exercise of such power by or on behalf of the Trustee shall not put
         any person dealing with the Trustee upon any enquiry as to whether the
         security created by this Mortgage has become enforceable pursuant to
         clause 9 hereof nor shall such person be in any way affected by notice
         that the security has not become enforceable and the exercise by the
         Trustee of such power shall be conclusive evidence of its right to
         exercise the same.

14.      FURTHER ASSURANCE

14.1     The Owner further undertakes at its own expense to execute sign perfect
         do and (if required) register every such further assurance document act
         or thing as in the opinion of the Trustee may be necessary or desirable
         for the purpose of more effectually mortgaging and charging the Vessel
         or perfecting the security constituted by this Mortgage or contemplated
         by the other Security Documents.

15.      BENEFIT

15.1     The Owner hereby acknowledges and agrees that the benefit of this
         Mortgage shall be held by the Trustee on trust for the Beneficiaries
         and the Owner hereby covenants that

<PAGE>

                                     - 23 -

         this Mortgage shall remain in full force and effect and shall fully
         secure all the Beneficiaries.

16.      AMOUNT SECURED BY MORTGAGE

16.1     A certificate submitted by the Trustee to the Public Registry Office in
         Panama or to any court of law or public authority as to the amount due
         or to become due from the Owner under this Mortgage shall in the
         absence of manifest error be conclusive and binding on the Owner for
         all purposes.

17.      NOTICES

17.1     The provisions of clause 18 of the Loan Agreement shall apply mutatis
         mutandis in respect of any certificate, notice or demand given or made
         under this Mortgage.

18.      GOVERNING LAW, SEVERABILITY, ETC.

18.1     This Mortgage shall be construed and enforceable in accordance with the
         laws of the Republic of Panama.

18.2     The Owner agrees that the Trustee shall have liberty but shall not be
         obliged to take any proceedings in the courts of any country to protect
         or enforce the security hereby constituted or to enforce any provisions
         of the Security Documents or to recover payment of the Outstanding
         Indebtedness and for the purpose of any proceeding for the enforcement
         of the security created by this Mortgage and/or the other Security
         Documents the Owner hereby submits to the jurisdiction of the courts of
         any country of the choice of the Trustee.

18.3     If any provision in this Mortgage or any other of the Security
         Documents is or becomes invalid or unenforceable under any applicable
         law the provisions thereof shall in all other respects remain in full
         force and effect and the provision in question shall be ineffective to
         the extent (but only to the extent) of its nonconformity with the
         requirement of the applicable law and if it is competent to the parties
         to waive any requirements which would otherwise operate as aforesaid
         those requirements are hereby waived to the extent permitted by such
         law to the end that the Mortgage and the other Security Documents shall
         be valid binding and enforceable in accordance

<PAGE>

                                     - 24 -

         with their respective terms.

18.4     Each and every power and remedy herein given to the Trustee shall be
         cumulative and shall be in addition to every other power and remedy
         herein given or now or hereafter existing at law in equity admiralty or
         by statute and each and every power and remedy whether herein given or
         otherwise existing may be exercised from time to time and as

         often and in such order as may be deemed expedient by the Trustee and
         the exercise or the beginning of the exercise of any power or remedy
         shall not be construed to be a waiver of the right to exercise at the
         same time or thereafter any other power or remedy.

19.      MISCELLANEOUS

19.1     This Mortgage may be executed in any number of counterparts each of
         which shall be an original but such counterparts shall together
         constitute but one and the same instrument.

19.2     The English text of this Mortgage is the authentic text and in the
         event of any differences arising on translation recourse shall be had
         to the English text.

20.      RECORDING OF THIS MORTGAGE

20.1     The parties hereby confer a special power of attorney on the firm of
         lawyers named Quijano & Associates of the City of Panama in the
         Republic of Panama empowering such firm of lawyers to take all
         necessary steps to record this instrument of mortgage and the
         prohibitions contained in clauses 5.1(M) and (N) hereof and a
         certificate pursuant to clause 15 hereof in the appropriate registries
         in the City of Panama in accordance with the laws of the Republic of
         Panama with full power of substitution in respect of the special power
         of attorney herein granted.

IN WITNESS whereof this Mortgage has been executed the day and year first above
written.

SIGNED SEALED and DELIVERED            )
as a DEED                              )
by  CROWN CRUISES OF PANAMA, INC.      )
acting by                              )
/s/ Jeffrey I. Binder                  )
---------------------------------------
its duly appointed                     )
                                       )
in the presence of:-                   )

<PAGE>

                                     - 25 -

                             ACCEPTANCE OF MORTGAGE

The Undersigned mortgagee MERITA BANK PLC a corporation organised and subsisting
under the laws of Finland Does Hereby Accept the foregoing Mortgage executed in
its favour by CROWN CRUISES OF PANAMA, INC. a corporation incorporated according
to the laws of Panama on the 29th day of October, 1999 covering the Panamanian
flag Vessel m.v. "CROWN DYNASTY" and does hereby accept the said Mortgage in all
respects and agrees to all terms and conditions of the said Mortgage

Dated the 28th day of January Two thousand.

SIGNED SEALED and DELIVERED            )
as a DEED                              )
by MERITA BANK PLC                     )
acting by                              )
/s/ Kirsten Kaarre Jensen              )
---------------------------------------
its duly appointed                     )
Attorney                               )
in the presence of:-                   )EXHIBIT 10.4

                           COMMODORE HOLDINGS LIMITED

                                      -and-

                                 MERITA BANK PLC

                         ------------------------------
                             GUARANTEE AND INDEMNITY
                           relating to obligations of
                          Crown Cruises of Panama, Inc.
                       re USD45,000,000 revolving facility
                         ------------------------------

                           Sinclair Roche & Temperley
                                   Royex House
                              5 Aldermanbury Square
                                 London EC2V 7LE
                               Tel: 0171 452 4000
                               Fax: 0171 452 4001
                                 Ref: GFS/242921

<PAGE>

                               INDEX OF CONTENTS

CLAUSE NO.        HEADING                                               PAGE NO.
----------        -------                                               --------

1.   Definitions and Construction.............................................2

2.   Representations and Warranties...........................................3

3.   Guarantee and Indemnity..................................................4

4.   Expenses.................................................................4

5.   Continuing Guarantee.....................................................5

6.   Undertakings.............................................................6

7.   Enforcement.............................................................12

8.   Currency Indemnity......................................................14

9.   Benefit.................................................................15

10.  Miscellaneous...........................................................15

11.  Notices.................................................................16

12.  Governing Law and Jurisdiction..........................................17

Schedule A :  Financial Figures, Ratios and Percentages......................18

Form of Compliance Certificate...............................................20

<PAGE>

THIS GUARANTEE AND INDEMNITY is given the 24th day of January, 2000

BY:-

(1)      COMMODORE HOLDINGS LIMITED, a company incorporated and registered under
         the laws of Bermuda whose registered office is at c/o Francis & Forest,
         Corner House, 20 Parliament Street, Hamilton HM12, Bermuda (the
         "Guarantor" which expression shall include the successors and permitted
         assigns of the Guarantor) in favour of:-

(2)      MERITA BANK PLC, a company incorporated under the laws of Finland
         acting through its London branch having its principal place of business
         at 19 Thomas More Street, London E1W 1YF (the "Trustee" which
         expression shall include its successors and assigns) as trustee for the
         Beneficiaries.

WHEREAS:

(A)      By a loan agreement dated January 24, 2000 made between (1) the Lenders
         (as therein defined), (2) Merita Bank Plc (the "Agent") as agent for
         the Lenders, (3) Crown Cruises of Panama, Inc. (the "Borrower") and (4)
         the Trustee the Lenders agreed to make available to the Borrower a
         revolving loan facility of up to forty five million United States
         Dollars (USD45,000,000) at any one time pursuant to and subject to the
         terms and conditions therein contained.

(B)      In order to induce the Lenders to enter into the Agreement and to
         advance the Loan to be advanced thereunder and as a condition precedent
         thereto the Guarantor has agreed to give the guarantee and indemnity
         herein contained.

(C)      By a deed of agency and trust dated January 28, 2000 made between (1)
         the Agent, (2) the Trustee and (3) the Lenders it has been agreed that
         the benefit of this Guarantee and Indemnity shall be held by the
         Trustee on trust for itself, the Agent and the Lenders and its and
         their respective successors, assignees and transferees (together "the
         Beneficiaries" and individually "Beneficiary").

NOW THIS DEED WITNESSETH as follows:-

1.       DEFINITIONS AND CONSTRUCTION

<PAGE>

                                      - 2 -

1.1      In this Guarantee and Indemnity unless the context otherwise requires:-

         "AGREEMENT"
         means the loan agreement referred to in Recital (A) above as
         supplemented by any amendment or supplement thereto which may from time
         to time be agreed to by the Trustee, the Beneficiaries and the
         Borrower;

         "DEFAULT RATE"
         means the rate of interest calculated in accordance with clause 4.3 of
         the Agreement;

         "INDEBTEDNESS"
         means the Loan together with all interest accrued thereon and all other
         moneys, costs, fees and expenses whatsoever which from time to time may
         be or become owing or due and payable to the Trustee or any one or more
         of the Beneficiaries pursuant to the Agreement or any of the Security
         Documents;

         "LOSS"
         means any and all losses, costs, expenses, damages, claims, demands,
         rights of set-off and/or counterclaim incurred by the Trustee or any
         one or more of the Beneficiaries in respect of or in connection with
         the Agreement and/or the Security Documents or any liability arising
         therefrom;

         "SECURED OBLIGATIONS"
         means all covenants, agreements, warranties, conditions and provisions
         expressed or implied on the part of the Borrower to be performed,
         observed or complied with under the Agreement including, without
         limitation, the due and punctual payment of the principal sum and all
         interest and other moneys expressed to be payable by the Borrower in
         accordance with the terms of the Agreement;

         "THIS GUARANTEE"
         means this Guarantee and Indemnity.

1.2      Unless otherwise defined herein or the context otherwise requires,
         words and expressions defined in the Agreement shall have the same
         meanings herein. Clause headings are inserted for convenience only and
         shall be ignored in the interpretation

<PAGE>

                                      - 3 -

         of this Guarantee.

2.       REPRESENTATIONS AND WARRANTIES

2.1      The Guarantor hereby represents and warrants to the Trustee that as of
         the date hereof and (save in respect of sub-paragraph (B)(ii) below) as
         continuing warranties until all of the Indebtedness shall have been
         paid and discharged in full:-

         (A)      The Guarantor has full power and authority to make and perform
                  this Guarantee and the same constitutes the legal, valid and
                  binding obligations of the Guarantor enforceable in accordance
                  with its terms;

         (B)      The making and performance by the Guarantor of this Guarantee
                  will in no way exceed the powers granted to the Guarantor by,
                  or violate in any respect any provision of (i) any mortgage,
                  charge, deed, contract or other undertaking or instrument to
                  which the Guarantor is a party or which is binding on the
                  Guarantor or any of the assets of the Guarantor; or (ii) any
                  law or regulation or any order or decree of any governmental
                  authority, agency or court; or (iii) the Memorandum and/or
                  Articles of Association (or equivalent corporate documents) of
                  the Guarantor;

         (C)      All consents, licences, approvals or authorisations which are
                  required in connection with the execution, validity,
                  performance or enforceability of this Guarantee have been
                  obtained and are and will continue to be valid and subsisting;

         (D)      Save as disclosed to the Trustee in writing, the Guarantor is
                  not in default under any agreement to which the Guarantor is a
                  party or by which the Guarantor may be bound, nor in respect
                  of any financial commitment or obligation;

         (E)      The Guarantor is not engaged in litigation or arbitration
                  before any court or before any tribunal which might if
                  determined against the Guarantor have a material adverse
                  effect on the financial condition of the Guarantor and there
                  is no claim against the Guarantor which, with the passage of
                  time might result in any such litigation or arbitration; and

         (F)      The Guarantor has received a copy of the Agreement and
                  approves of and
<PAGE>

                                      - 4 -

                  agrees to the terms and conditions thereof.

3.       GUARANTEE AND INDEMNITY

3.1      The Guarantor hereby unconditionally and irrevocably:-

         (A)      guarantees the due and punctual performance and observance of
                  and compliance with the Secured Obligations by the Borrower in
                  accordance with the terms of the Agreement and the Guarantor
                  hereby covenants that, if any amount of principal or interest
                  or other moneys payable by the Borrower under the Agreement
                  shall not be paid when the same shall be due and payable,
                  whether on maturity or otherwise, the Guarantor will,
                  forthwith on demand, make such payment, or cause such payment
                  to be made, to the Trustee (as trustee for the Beneficiaries)
                  in the manner specified by the Trustee together with all
                  interest expressed to accrue on any such amount pursuant to
                  the Agreement until the date of receipt by the Trustee; and

         (B)      without prejudice to (A) above and as a separate and
                  independent obligation thereto indemnifies and agrees to
                  indemnify the Trustee and the Beneficiaries upon the written
                  demand of the Trustee in respect of any Loss which the Trustee
                  or any one or more of the Beneficiaries may suffer or incur in
                  good faith directly or indirectly as a result of or in
                  connection with any failure by the Borrower fully and
                  effectually to perform, observe and/or comply with the Secured
                  Obligations.

4.       EXPENSES

4.1      The Guarantor further agrees to pay to the Trustee on demand on a full
         indemnity basis all commissions, charges, costs and expenses of
         whatsoever nature incurred by the Trustee and/or the Beneficiaries in
         the administration, preservation and enforcement of any of the
         Trustee's rights hereunder together with interest thereon (both before
         and after judgment) at the Default Rate from the date of demand until
         the date of receipt by the Trustee compounded on such days in the year
         as the Trustee reasonably may select.

<PAGE>

                                      - 5 -

5.       CONTINUING GUARANTEE

5.1      This Guarantee shall:-

         (A)      be a continuing security and shall be construed and take
                  effect as security for all of the Secured Obligations until
                  they shall have been satisfied and discharged in full and the
                  Guarantor hereby waives any right of set-off or counter-claim
                  which the Guarantor may otherwise have had against the Trustee
                  or any one or more of the Beneficiaries;

         (B)      be in addition to any other guarantee, indemnity or other
                  security which the Trustee and/or the Beneficiaries may now or
                  hereafter hold in respect of all or any of the Secured
                  Obligations whether from the Guarantor or otherwise, and shall
                  be binding on the Guarantor notwithstanding that any other
                  Security Party shall fail to give the security to be provided
                  by it or shall be released from any such security or such
                  security shall be varied;

         (C)      not be discharged by the granting to any Security Party of
                  time or any other indulgence or by compounding with any
                  Security Party or by any variation whatsoever of any of the
                  Secured Obligations or by any actual or alleged invalidity,
                  irregularity or unenforceability of or defect in any of the
                  Secured Obligations or in any of the provisions of the
                  Agreement or any one or more of the Security Documents or by
                  the absence of any action to enforce any of the rights of the
                  Trustee and/or the Beneficiaries thereunder or by any act or
                  circumstance whatsoever whereby this Guarantee would or might
                  otherwise but for the provisions of this Clause have been so
                  discharged;

         (D)      remain in full force and effect notwithstanding any change in
                  the name, constitution or otherwise of any Security Party or
                  the Trustee or any of the Beneficiaries or their respective
                  successors and assigns or the absorption or amalgamation of
                  any thereof by or with any other corporate entity.

6.       UNDERTAKINGS

6.1      The Guarantor agrees with represents and undertakes to the Trustee
         that:-

         (A)      If the Guarantor becomes liable to make any payment pursuant
                  to Clause 3 hereof, then the Guarantor will not thereafter
                  make demand for payment of any moneys for the time being due
                  to the Guarantor from any Security Party or
<PAGE>

                                      - 6 -

                  exercise any other right or remedy to which the Guarantor is
                  entitled in respect of such moneys unless and until all moneys
                  whatsoever owing by all Security Parties to the Trustee and
                  the Beneficiaries have been irrevocably paid in full;

         (B)      If any Security Party shall become insolvent or shall be wound
                  up or liquidated, the Guarantor shall not (unless so required
                  by the Trustee and then only on condition that the Guarantor
                  holds the benefit of any claim in such insolvency or
                  liquidation upon trust to pay any amounts recovered thereunder
                  to the Trustee) prove in such insolvency, winding-up or
                  liquidation until all moneys whatsoever owing by all Security
                  Parties to the Trustee and the Beneficiaries have been
                  irrevocably paid in full;

         (C)      The Guarantor has not taken and will not take from any
                  Security Party any security whatsoever for the moneys hereby
                  secured and, notwithstanding the foregoing, any such security
                  now or hereafter held by the Guarantor shall be held in trust
                  for the Trustee and the Beneficiaries and for their benefit in
                  respect of the obligations of the Guarantor hereunder;

         (D)      The Guarantor will not exercise any right to which the
                  Guarantor may be entitled as a surety until all moneys
                  whatsoever owing or due and payable by all Security Parties to
                  the Trustee and the Beneficiaries have been irrevocably paid
                  in full;

         (E)      The Guarantor hereby waives any right to require the Trustee
                  and/or the Beneficiaries to proceed first against any Security
                  Party and/or to give notice to or demand on any Security Party
                  whatsoever;

         (F)      All payments to be made hereunder shall be made in immediately
                  available funds without set-off or counter-claim and free and
                  clear of and without deduction for or on account of any
                  present or future taxes of any nature now or hereafter
                  imposed, levied, collected, withheld, deducted or assessed by
                  any taxing and/or governmental authority whatsoever or
                  wheresoever unless the Guarantor is compelled by law to deduct
                  such taxes. In that event all such taxes shall be borne by the
                  Guarantor or, if under the provisions of any applicable law
                  this stipulation cannot be applied, then the Guarantor shall

<PAGE>

                                      - 7 -

                  increase the payments to the Trustee so that the net amounts
                  received by the Trustee shall be equal to the full amounts
                  which the Trustee would have received had payment not been
                  made subject to such taxes; provided that taxes payable by the
                  Trustee or any Beneficiary on its profits arising by virtue of
                  the transaction herein described in the countries in which it
                  carries on business shall not be included in the foregoing. As
                  used in this sub-clause the term "taxes" includes all levies,
                  imposts, duties, charges, fees, deductions and withholdings
                  whatsoever and any restriction or condition resulting in a
                  charge.

                  If the Guarantor is required to deduct taxes, the Guarantor
                  will promptly thereafter deliver all receipts and other
                  documents relating thereto to the Trustee.

                  If and when the Trustee or any Beneficiary shall receive (in
                  its reasonable opinion) a credit in respect of any taxes
                  deducted by the Guarantor and to which this sub-clause refers,
                  it shall allow the Guarantor a credit against amounts due or
                  to become due under the Agreement or any one or more of the
                  Security Documents (the "Guarantor's Credit") of such amount
                  as shall be fair and reasonable in the opinion of the Trustee
                  or that Beneficiary in respect of any such credit as is
                  received by the Trustee or that Beneficiary or, if all of the
                  Indebtedness shall have been repaid in full, shall make a
                  payment to the Guarantor equal to the amount of the
                  Guarantor's Credit. Neither the Trustee nor any Beneficiary
                  shall be under any obligation to discuss or reveal its tax
                  affairs with the Guarantor;

         (G)      The Guarantor shall give to the Trustee all such information
                  as the Trustee may request with regard to the performance by
                  the Security Parties of their respective obligations under the
                  Agreement and the Security Documents;

         (H)      The Guarantor shall not without the prior written consent of
                  the Trustee (such consent not to be unreasonably withheld)
                  sell, convey, transfer or otherwise dispose (whether by a
                  single transaction or in a series of transactions, related or
                  not) of any assets;

         (I)      All the authorised and issued share capital of the Borrower is
                  and will remain wholly owned and controlled by the Guarantor;

<PAGE>

                                      - 8 -

         (J)      The Guarantor shall prepare or cause to be prepared, in
                  accordance with GAAP and deliver to the Trustee annual audited
                  financial statements of the Guarantor within ninety five (95)
                  days of the end of the annual accounting periods of the
                  Guarantor and quarterly unaudited accounts of the Guarantor
                  within fifty (50) days of the end of each quarter together
                  with copies of all notices sent to shareholders or any class
                  of shareholders and such financial and other information
                  concerning the Guarantor as the Trustee shall reasonably
                  require;

         (K)      The Guarantor shall not make any single acquisition or
                  investment costing more than one million United States Dollars
                  (USD1,000,000) without the prior written consent of the
                  Trustee (such consent not to be unreasonably withheld);

         (L)      The Guarantor shall not incur any liability in respect of
                  Borrowed Money or guarantee endorse or otherwise become or
                  remain liable in respect of the obligations of any person firm
                  or corporation without the prior written consent of the
                  Trustee (such consent not to be unreasonably withheld);

         (M)      The Guarantor shall not pay any dividend for any shares except
                  preferred shares on the following terms:-

                  (i)      no covenant or undertaking binding upon the Guarantor
                           is or would be breached by the payment of such
                           dividend; and

                  (ii)     the aggregate amount of any such dividends paid in
                           any one period of twelve (12) months does not exceed
                           four hundred thousand United States Dollars
                           (USD 400,000),

                  Provided That, in respect of any preferred share issued by the
                  Guarantor prior to the date of the Agreement, the Guarantor
                  (subject only to (i) above) shall be entitled to pay dividends
                  in the maximum amount of twelve per cent (12%) per annum of
                  the price at which the relevant preferred share was issued;

         (N)      The Guarantor shall procure that it has cash which is freely
                  available, which is not subject to any Encumbrance and which
                  amounts to not less than the amount specified in item 1 in
                  schedule A hereto on the first Drawdown Date and not less than
                  the amount specified in item 2 in schedule A hereto at all
                  times thereafter Provided that all sums standing to the credit
                  of the Earnings

<PAGE>

                                      - 9 -

                  Account after all the applications have been made in
                  accordance with clause 10.2 of the Agreement shall be deemed
                  for the purposes of this clause to be cash which is freely
                  available to the Guarantor and not subject to any Encumbrance;

         (O)      The Guarantor shall procure that its Debt Service Coverage
                  Ratio (calculated at three (3) monthly intervals as set out
                  below) shall not be less than the ratio specified in item 3 in
                  schedule A hereto (for the period from the first Drawdown Date
                  to 30 September 2002) and the ratio specified in item 4 in
                  schedule A hereto (for any period after 30 September 2002) and
                  for this purpose the Debt Service Coverage Ratio shall be
                  calculated on a consolidated basis in accordance with the
                  following formula:-

                                     EBITDA

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

                               Financial Expenses

                  where

                  "EBITDA" means, for the previous period of twelve (12) months,
                  the aggregate of:

                  (i)      Net Income (but excluding gains and losses from the
                           sale of assets or reserves relating thereto and items
                           classified as extraordinary or non-recurring) from
                           the Guarantor's operations for such period and for
                           this purpose Net Income means the consolidated net
                           income of the Guarantor as determined in accordance
                           with GAAP; and

                  (ii)     the aggregate amounts deducted in determining Net
                           Income for such period in respect of depreciation,
                           amortisation, taxes, deferred income and interest
                           expense of the Guarantor; and

                  "Financial Expenses" means, for the previous period of twelve
                  (12) months, the sum of:

<PAGE>

                                     - 10 -

                  (i)      the aggregate principal payable or paid during such
                           period on any Borrowed Money of the Guarantor (other
                           than the scheduled principal repayment in respect of
                           the Bridge Loan Facility and principal repayments
                           under the Agreement to the extent that they were
                           redrawn during the same period);

                  (ii)     aggregate interest expense (including, without
                           limitation, capitalised interest accrued during such
                           period) of the Guarantor for such period; and

                  (iii)    all rent and any capital lease obligations or
                           operating lease obligations by which the Guarantor is
                           bound which are payable or paid during such period as
                           calculated in accordance with GAAP and derived from
                           the then latest accounts of the Guarantor;

         (P)      The Guarantor shall procure that its Capital (Solvency) Ratio
                  (calculated as set out below) shall not be less than the
                  percentage specified in item 5 in schedule A hereto (for the
                  period from the first Drawdown Date to 30 September 2001), the
                  percentage specified in item 6 in schedule A hereto (for the
                  period from 1 October 2001 to 30 September 2002) and the
                  percentage specified in item 7 in schedule A hereto (for any
                  period after 30 September 2002) and for this purpose the
                  Capital (Solvency) Ratio shall be calculated on a consolidated
                  basis in accordance with the following formula:-

                                        x
                                        -
                                        y

                  where

                  "x"
                  means the Guarantor's Book Tangible Net Worth (calculated in
                  accordance with clause 6.1(Q) hereof); and

                  "y"
                  means the book value of all the assets of the Guarantor
                  (calculated in accordance with GAAP);
<PAGE>

                                     - 11 -

         (Q)      The Guarantor shall procure that its Book Tangible Net Worth
                  (calculated as set out below) shall not be less than the
                  amount specified in item 8 in schedule A hereto (during the
                  period from the first Drawdown Date to 30 September 2000) and
                  the amount specified in item 9 in schedule A hereto (after 30
                  September 2000) and for this purpose the Book Tangible Net
                  Worth shall be the book value of all assets calculated in
                  accordance with GAAP (excluding goodwill but including all
                  proceeds from any interest only loans which have been approved
                  in advance by the Agent as at the date of this Guarantee and
                  the proceeds of any preferred share issue made prior to the
                  date of this Guarantee) less total liabilities calculated in
                  accordance with GAAP (including without limitation the net
                  present value of financial lease commitments, estimated
                  compensation to third parties in the event of termination of
                  contracts, contingent tax liabilities and guarantee
                  obligations for the benefit of third parties but excluding any
                  debt of the Guarantor existing as at the date of this
                  Guarantee and subordinated by its terms to the Secured
                  Obligations);

         (R)      The Guarantor shall provide the Trustee with compliance
                  certificates in relation to the relevant financial covenants
                  contained in this Guarantee in the form attached hereto on or
                  before the first Drawdown Date and at three (3) monthly
                  intervals after the first Drawdown Date.

7.       ENFORCEMENT

7.1      The Guarantor agrees, acknowledges and declares that:-

         (A)      In order to give effect to this Guarantee the Trustee and the
                  Beneficiaries shall be at liberty to act as though the
                  Guarantor were the principal debtor and obligor in respect of
                  the Secured Obligations and in the event of the winding-up,
                  dissolution, reconstruction or amalgamation in which or as a
                  consequence of which any Security Party loses its separate
                  corporate identity the Guarantor shall become liable to the
                  Trustee and the Beneficiaries for the payment of all moneys
                  expressed to be payable by the Security Parties to the Trustee
                  and/or the Beneficiaries pursuant to the Agreement and the
                  Security Documents and the performance and observance of and
                  compliance with all the Secured

<PAGE>

                                     - 12 -

                  Obligations;

         (B)      Any release, settlement or discharge in relation to the
                  obligations of the Guarantor hereunder shall be conditional
                  upon no security, disposition or payment to the Trustee or the
                  Beneficiaries in respect of any of the Indebtedness being
                  avoided or reduced by virtue of any provisions or enactments
                  relating to bankruptcy, insolvency or liquidation and if any
                  such security, disposition or payment be avoided or reduced as
                  aforesaid, this Guarantee shall continue to apply in respect
                  of the amount of such security, disposition or payment and the
                  Guarantor shall indemnify the Trustee and the Beneficiaries in
                  respect thereof;

         (C)      The Trustee and the Beneficiaries may take such action as the
                  Trustee and the Beneficiaries in their own discretion may
                  consider appropriate against any other Security Party or
                  Parties to recover moneys due and payable in respect of the
                  Secured Obligations, the Guarantor, however, remaining liable
                  under this Guarantee for payment and discharge of all moneys
                  payable in respect thereof;

         (D)      The Trustee and each of the Beneficiaries shall be entitled
                  (after a demand for payment has been made hereunder but
                  without further notice) to procure the setting-off of any
                  liability of the Guarantor hereunder against any moneys
                  standing to the credit of any account or accounts which the
                  Guarantor may now or hereafter have with the Trustee or any of
                  the Beneficiaries at any of their respective offices or with
                  any subsidiary or parent company of any one of them (whether
                  or not those moneys are then due to the Guarantor) and, for
                  this purpose, to combine any and all such accounts and to use
                  all or part of those moneys to buy such other currency or
                  currencies as may be required to enable the Trustee or any of
                  the Beneficiaries to effect that setting-off. The Trustee and
                  the Beneficiaries shall also be entitled to retain as security
                  for the discharge of the liability of the Guarantor hereunder
                  all securities or other property of the Guarantor held by the
                  Trustee or any one or more of the Beneficiaries at any of
                  their respective offices and/or by any subsidiary or parent
                  company of any one of them (whether for safe custody or
                  otherwise);

         (E)      Notwithstanding that the Secured Obligations and any moneys
                  due from the

<PAGE>

                                     - 13 -

                  Guarantor hereunder shall have been complied with, paid or
                  discharged, the Trustee shall be entitled to retain this
                  Guarantee and refrain from releasing the Guarantor from this
                  Guarantee for such period thereafter as the Trustee may
                  determine and in the event of bankruptcy, winding-up or any
                  similar proceedings being commenced in respect of any Security
                  Party or any other person as may have performed, paid or
                  discharged any of the Secured Obligations within such period
                  as aforesaid, the Trustee shall be at liberty to retain this
                  Guarantee and any security held for the obligations of the
                  Guarantor hereunder and refrain from releasing the Guarantor
                  from this Guarantee and may retain such security for and
                  during such period as the Trustee may determine;

         (F)      For the purpose of enabling the Trustee and/or the
                  Beneficiaries to sue any other Security Party or to prove in
                  its winding-up, liquidation or bankruptcy or in any similar
                  proceedings for any moneys due and unpaid by the Borrower, the
                  Trustee may at any time place and keep for such time as it may
                  think fit any moneys received hereunder to the credit of an
                  interest bearing suspense account without any obligation on
                  the part of the Trustee to apply the same or any part thereof
                  in or towards the discharge of the Indebtedness;

         (G)      The certificate of the Trustee as to the sum of money owed by
                  any Security Party shall, in the absence of manifest error, be
                  conclusive for any purpose and binding on the Guarantor.

8.       CURRENCY INDEMNITY

8.1      Any amount received by the Trustee or any Beneficiary in connection
         herewith in a currency (the "Relevant Currency") other than the
         currency in which the same should be received pursuant to the terms
         hereof (the "Agreed Currency") whether pursuant to a judgment or order
         of a court or tribunal of any jurisdiction or any enforcement
         proceedings or otherwise howsoever in connection herewith or otherwise
         shall only constitute a discharge to the Guarantor to the extent of the
         amount of the Agreed Currency which the Trustee or the relevant
         Beneficiary is able, promptly on receipt, to purchase in such foreign
         exchange market as the Trustee or the relevant Beneficiary may select
         with the amount of the Relevant Currency so received.

         If:-

         (A)      the amount of the Agreed Currency which the Trustee or the
                  relevant

<PAGE>

                                     - 14 -

                  Beneficiary is so able to purchase is less than the amount of
                  the Agreed Currency due to the Trustee or the relevant
                  Beneficiary hereunder; and/or

         (B)      any condition imposed in relation to the conversion of any
                  amount paid in the Relevant Currency into the Agreed Currency
                  including, without limitation, any condition imposed by any
                  exchange control authority, reduces the amount in the Agreed
                  Currency which the Trustee or the relevant Beneficiary
                  actually receives for the amount of such payment in the
                  Relevant Currency below that amount which it would have
                  received had such condition not been imposed;

         the Guarantor will indemnify and hold the Trustee or the relevant
         Beneficiary harmless against any loss, damage, costs and/or expenses
         arising as a result.

8.2      The above indemnity shall constitute a separate and independent
         obligation from the other obligations contained herein shall give rise
         to a separate and independent cause of action and shall continue in
         full force and effect notwithstanding any judgment or order for amounts
         due hereunder.

9.       BENEFIT

9.1      The Guarantor hereby acknowledges and agrees that the benefit of this
         Guarantee and Indemnity shall be held by the Trustee on trust for the
         Beneficiaries and the Guarantor hereby covenants that this Guarantee
         and Indemnity shall remain in full force and effect and shall fully
         secure all the Beneficiaries. The Guarantor may not assign or transfer
         rights or obligations hereunder without the prior written consent of
         the Trustee (which may be withheld).

10.      MISCELLANEOUS

10.1     The Guarantor hereby agrees that at any time and from time to time,
         upon the request of the Trustee, the Guarantor will promptly and duly
         execute and deliver and/or procure the execution and delivery of any
         and all such further instruments and documents as may be deemed
         desirable by the Trustee for the purpose of obtaining for the Trustee
         and the Beneficiaries the full benefits hereof and of the rights and
         powers herein granted.

10.2     Any provisions contained herein prohibited by or unlawful or
         unenforceable under any applicable law shall, to the extent required by
         such law, be ineffective without

<PAGE>

                                     - 15 -

         modifying the remaining provisions hereof. Where however the provisions
         of any such applicable law may be waived, they are hereby waived by the
         Guarantor to the fullest extent permitted by such law with the intent
         that this Guarantee shall be valid, binding and enforceable in
         accordance with its terms.

10.3     Time is of the essence of this Guarantee but no failure or delay by the
         Trustee or the Beneficiaries in exercising any right, power or
         privilege hereunder and no course of dealing between any Security Party
         and the Trustee or the Beneficiaries shall operate as a waiver thereof,
         nor shall any single or partial exercise thereof preclude any other or
         further exercise thereof or the exercise of any other right, power or
         privilege. The rights and remedies herein are cumulative and not
         exclusive of any rights or remedies which the Trustee and/or the
         Beneficiaries would otherwise have. No notice to or demand on the
         Guarantor shall entitle the Guarantor to any other or further notice or
         demand in similar or other circumstances or constitute a waiver of the
         rights of the Trustee or the

         Beneficiaries to any other or further action in any circumstances
         without notice or demand.

11.      NOTICES

11.1     Any demand or notice to be given hereunder shall be in writing and sent
         by prepaid first class or airmail letter post or telex or facsimile or
         delivered by hand addressed to the Guarantor as follows:-

         Commodore Holdings Limited
         4000 Hollywood Boulevard
         Suite 385-S
         Hollywood
         Fl 33021
         USA

         Attention Chief Financial Officer
         Facsimile No: + 954 921 2147)

         with a copy to:-

         Kathleen L Deutsch, P.A.
         Broad and Cassel
         Miami Center - Suite 3000
         201 S. Biscayne Boulevard

<PAGE>

                                     - 16 -

         Miami
         Fl 33131
         USA

         Facsimile no. + 305 373 9443

         or to such other person or address as the Guarantor may notify in
         writing to the other party hereto.

11.2     Any such notice shall be deemed to have been validly given and received
         on the date of despatch if sent by telex and five (5) days after having
         been posted if sent by post.

12.      GOVERNING LAW AND JURISDICTION

12.1     This Guarantee and all agreements entered into pursuant or supplemental
         hereto shall be governed by and construed in accordance with English
         law.

12.2     The Guarantor hereby Submits for the exclusive benefit of the Trustee
         and the Beneficiaries to the jurisdiction of the English Courts and
         appoints Consult Marine whose registered office is for the time being
         at 58 London Fruit Exchange, Brushfield Street, London E1 6EP or such
         other person as the Guarantor may with the prior written approval of
         the Trustee from time to time appoint to be the attorney of the
         Guarantor for the purpose of accepting service on behalf of the
         Guarantor of any writ, notice, order, judgment or other legal process
         with respect hereto or any matter arising hereout and agrees that
         failure by any such process agent to give notice of such service of
         process to the Guarantor shall not impair or affect the validity of
         such service or of any judgment based thereon. The aforesaid submission
         shall not limit the right of the Trustee and the Beneficiaries to
         commence proceedings against the Guarantor in any jurisdiction they may
         think fit or in two or more jurisdictions.

<PAGE>

                                     - 17 -

IN WITNESS whereof this Guarantee has been executed as a deed the day and year
first before written.

SIGNED SEALED and DELIVERED            )
as a Deed by                           )
COMMODORE HOLDINGS LIMITED             )
acting by                              )
/s/ Jeffrey I. Binder                  )
---------------------------------------
its duly appointed                     )
Chairman of the Board                  )
                                       )
in the presence of:-                   )

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