Document:

EXHIBIT 10.5

                                 MERITA BANK PLC
                       CHRISTIANIA BANK OG KREDITKASSE ASA
                     SKANDINAVISKA ENSKILDA BANKEN AB (PUBL)
                                  (as lenders)

                                     - and -

                                 MERITA BANK PLC
                                   (as agent)

                                     - and -

                          CROWN CRUISES OF PANAMA, INC.
                                  (as borrower)

                                     - and -

                                 MERITA BANK PLC
                                  (as trustee)

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

                                 LOAN AGREEMENT
                           RE USD6,720,000 BRIDGE LOAN

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

                           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            SUBJECT                                                   PAGE
------            -------                                                   ----

1.            PURPOSE AND DEFINITIONS..........................................1

2.            THE LENDERS' COMMITMENT..........................................8

3.            AVAILABILITY.....................................................9

4.            INTEREST.........................................................9

5.            REPAYMENT.......................................................11

6.            COMPULSORY AND VOLUNTARY PREPAYMENT.............................11

7.            ARRANGEMENT FEE.................................................14

8.            INDEMNITY.......................................................14

9.            PAYMENTS........................................................17

10.           APPLICATION OF MONEYS...........................................19

11.           DEFAULT.........................................................21

12.           SECURITY........................................................24

13.           REPRESENTATIONS AND WARRANTIES..................................25

14.           COVENANTS.......................................................27

15.           SET-OFF AND SHARING OF PAYMENTS.................................32

16.           ASSIGNMENT AND PARTICIPATION....................................33

17.           MISCELLANEOUS...................................................35

18.           NOTICES.........................................................35

19.           PROPER LAW AND JURISDICTION.....................................36

SCHEDULE A :  CONDITIONS PRECEDENT............................................37

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SCHEDULE B :  FINANCIAL RATIOS ...............................................41

APPENDIX I :  FORM OF UTILIZATION NOTICE......................................44

APPENDIX II : FORM OF COMPLIANCE CERTIFICATE..................................45

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THIS AGREEMENT is made the 24th day of January, 2000
BETWEEN:-

(1)      THE LENDERS (as hereinafter defined);

(2)      THE AGENT (as hereinafter defined);

(3)      THE BORROWER (as hereinafter defined); and

(4)      THE TRUSTEE (as hereinafter defined).

IT IS HEREBY AGREED as follows:-

1.       PURPOSE AND DEFINITIONS

1.1      This agreement contains the terms and conditions upon which the
         Lenders, with the Agent acting as their agent, will make available to
         the Borrower a secured bridge loan of six million seven hundred and
         twenty thousand United States Dollars (USD6,720,000).

1.2      In this agreement the following words and expressions shall have the
         following meanings:-

         "AGENT"
         means 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 in its capacity as agent for
         the Lenders pursuant to the Deed of Agency and Trust;

         "BORROWED MONEY"

         means Indebtedness incurred in respect of (i) money borrowed or raised,
         (ii) any bond, note, loan stock, debenture or similar instrument, (iii)
         acceptance or documentary credit facilities, (iv) deferred payments for
         assets or services acquired other than for provisions, bunkers, spare
         parts or services acquired in the ordinary course of, and incidental
         to, the operation of the Vessel, (v) rental payments under and any
         amounts payable on termination of leases (whether in respect of ships,
         land, machinery,

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         equipment or otherwise) entered into primarily as a method of raising
         finance or of financing the acquisition of the asset leased, (vi)
         guarantees, bonds, stand-by letters of credit or other instruments
         issued in connection with the performance of contracts and (vii)
         guarantees or other assurances against financial loss in respect of
         Indebtedness of any person, firm or company falling within any of (i)
         to (vi) above;

         "BORROWER"
         means 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;

         "BUSINESS DAY"
         means any day on which banks and foreign exchange markets in Helsinki,
         Oslo, London and New York are open for the transaction of business of
         the nature contemplated in this agreement;

         "CHARTER"
         means the space charter in respect of the Vessel made or to be made
         between the Borrower as owner and the Charterer as charterer;

         "CHARTERER"
         means Crown Cruises Limited, a company incorporated under the laws of
         Bermuda with its registered office at c/o Francis & Forest, Corner
         House, 20 Parliament Street, Hamilton HM12, Bermuda;

         "CONTRIBUTIONS"
         means the proportions of the Loan (and, where the context so requires,
         any relevant part thereof) set out opposite the names of the Lenders on
         the signature pages of this agreement and "Contribution" means any one
         of them;

         "DEED OF AGENCY AND TRUST"
         means the deed of even date herewith made between the Agent, the
         Trustee and the Lenders whereby the Agent is appointed agent for the
         Lenders in respect of this

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         agreement and the Trustee declares a trust in respect of the other
         Security Documents;

         "DRAWDOWN DATE"
         means the date on which the Loan is advanced pursuant to clause 3
         hereof;

         "EARNINGS ACCOUNT"
         means the account in the name of the Borrower at the Agent's New York
         office at 437 Madison Avenue, New York, N.Y. 10022;

         "EARNINGS ASSIGNMENT"
         means the assignment executed pursuant to clause 12.1(C) hereof;

         "ENCUMBRANCE"
         means any mortgage, charge, pledge, lien, assignment, hypothecation,
         title retention, preferential right or trust arrangement and any other
         security agreement or arrangement;

         "ESL" means EFF-Shipping Limited, a company incorporated under the laws
         of the Cayman Islands with its registered office at the offices of
         Huntlaw Corporate Services Ltd, The Huntlaw Building, P.O. Box 1350,
         George Town, Grand Cayman, Cayman Islands;

         "EVENT OF DEFAULT"
         means any of the events or circumstances specified in clause 11.1
         hereof;

         "GAAP"
         means accounting principles generally accepted in the United States of
         America and consistently applied;

         "GUARANTOR"
         means Commodore Holdings Limited, a company incorporated under the laws
         of Bermuda with its registered office at c/o Francis & Forest, Corner
         House, 20 Parliament Street, Hamilton HM12, Bermuda;

         "INDEBTEDNESS"
         means any obligation for the payment or repayment of money, whether as
         principal or as surety and whether present or future, actual or
         contingent;

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         "INSURANCE ASSIGNMENT"
         means the assignment executed pursuant to clause 12.1(B) hereof;

         "INTEREST PERIOD"
         means any period determined in accordance with the provisions of clause
         4.1 hereof for the calculation of interest on the Loan or any relevant
         part thereof;

         "LENDERS"
         means the banks and financial institutions whose names and lending
         offices appear under and who have signed under the heading "The
         Lenders" on the signature pages of this agreement and "Lender" means
         any one of them;

         "LOAN"
         means six million seven hundred and twenty thousand United States
         Dollars (USD6,720,000) or, where the context so requires, the aggregate
         amount thereof from time to time outstanding;

         "MANAGEMENT AGREEMENT"
         means the agreement for the management of the Vessel made or to be made
         between the Borrower and the Manager;

         "MANAGER"
         means New Commodore Cruise Lines Limited, a company incorporated under
         the laws of Bermuda with its registered office at c/o Francis & Forest,
         Corner House, 20 Parliament Street, Hamilton HM12, Bermuda;

         "MARGIN"
         means two per cent (2%) per annum (during the period of twelve (12)
         months after the Drawdown Date), two and a half per cent (2.5%) per
         annum (during the next following period of six (6) months) and three
         per cent (3%) per annum (thereafter);

         "MOA"
         means the agreement for the sale and purchase of the Vessel made or to
         be made between the Seller and the Borrower;

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         "MORTGAGE"
         means the second Panamanian naval mortgage over the Vessel executed
         pursuant to clause 12.1(A) hereof;

         "PERMITTED LIENS"
         means liens for current crews' wages and salvage and liens incurred in
         the ordinary course of trading the Vessel up to an aggregate amount at
         any time not exceeding five per cent (5%) of the charter-free sale
         value of the Vessel (such market value to be conclusively determined as
         the average of the latest three (3) valuations obtained by the Agent as
         provided in clause 8.2 hereof);

         "REFERENCE BANKS"
         means the Lenders;

         "REVOLVING LOAN FACILITY"
         means the revolving loan facility of up to but not exceeding forty five
         million United States Dollars (USD45,000,000) at any one time made
         available by the Lenders to the Borrower under the Revolving Loan
         Facility Agreement;

         "REVOLVING LOAN FACILITY AGREEMENT"
         means the agreement of even date herewith made between the parties
         hereto in respect of the Revolving Loan Facility;

         "REVOLVING LOAN SECURITIES"
         means the securities provided or to be provided to the Agent pursuant
         to the Revolving Loan Facility Agreement as security for the Revolving
         Loan Facility;

         "SECURITY DOCUMENTS"
         means the Deed of Agency and Trust and the documents executed pursuant
         to clause 12.1 hereof and any other document or documents from time to
         time providing and/or evidencing and/or constituting security in
         respect of the Loan;

         "SECURITY PARTIES"
         means the Borrower, the Guarantor and the Manager and any other party
         to any of the Security Documents from time to time (other than the
         Seller, ESL, the Lenders, the Agent and the Trustee) and "Security
         Party" means any one of them;

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         "SELLER"
         means Crown Dynasty Inc., a company incorporated under the laws of
         Panama with its registered office at Vallarino, Vallarino & Garcia -
         Maritano, 20th Floor, Banco Continental Building, Calle 50 y Aquilino
         De La Guardia, Panama City, Panama;

         "SELLER'S CREDIT"
         means the seller's credit in the sum of twenty four million four
         hundred and eighty thousand United States Dollars (USD24,480,000)
         procured by the Seller for the Borrower from ESL pursuant to the MOA
         and made available to the Borrower by ESL under the Seller's Credit
         Agreement;

         "SELLER'S CREDIT AGREEMENT"
         means the agreement made or to be made between ESL and the Borrower in
         respect of the Seller's Credit;

         "SELLER'S CREDIT SECURITIES"
         means the securities provided or to be provided to ESL pursuant to the
         Seller's Credit Agreement as security for the Seller's Credit;

         "SUB-CHARTER"
         means the space sub-charter of the Vessel made or to be made between
         the Charterer as disponent owner and the Sub-Charterer as charterer on
         back to back terms with the Charter;

         "SUB-CHARTERER"
         means Atkinson and Mullen, Inc. doing business as Apple Vacations, a
         company incorporated under the laws of Pennsylvania with its registered
         office at 7 Campus Boulevard, Newtown Square, Pennsylvania 19073,
         U.S.A.;

         "SUBJECT DOCUMENTS"
         means this agreement, the Security Documents, the MOA, the Charter, the
         Sub-Charter, the Management Agreement, the Revolving Loan Facility
         Agreement, the Revolving Loan Securities, the Seller's Credit
         Agreement, the Seller's Credit Securities and any and all documents
         executed pursuant to any one or more of these documents;

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

         "TRUSTEE"
         means 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 in its capacity as trustee
         pursuant to the Deed of Agency and Trust;

         "UNITED STATES DOLLARS" and "USD"
         mean the lawful currency of the United States of America; and

         "VESSEL"
         means the motor vessel named "CROWN DYNASTY" now registered under
         Panamanian flag in the ownership of the Seller which is to remain
         registered under Panamanian flag in the ownership of the Borrower
         pursuant to the MOA.

1.3      References to any document shall be construed to mean that document as
         amended and/or varied and/or supplemented from time to time with the
         agreement of the relevant parties and (where such consent is required
         by the terms of this agreement or the relevant document) with the
         consent of the Agent and/or the Lenders and/or the Trustee.

1.4      Clause headings are inserted for convenience of reference only and
         shall be ignored in

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         the interpretation of this agreement.

2.       THE LENDERS' COMMITMENT

2.1      In reliance upon the representations and warranties contained in clause
         13 hereof and in the Security Documents and subject to the terms and
         conditions of this agreement the Lenders will make the Loan available
         to the Borrower for the purpose of financing (in part) the purchase of
         the Vessel by the Borrower pursuant to the MOA.

2.2      Each of the Lenders shall advance its Contribution to the Loan or any
         relevant part thereof.

2.3      The liability of each of the Lenders hereunder is several and none of
         the Lenders shall be responsible for any failure by any other Lender to
         meet its obligations hereunder nor shall any such failure relieve the
         Borrower or any other Lender of all or any of its respective
         obligations hereunder. If any Lender shall fail to advance its
         Contribution in circumstances where the Agent has already advanced the
         Loan or any relevant part thereof to the Borrower then the Borrower
         shall forthwith upon the demand of the Agent repay to the Agent an
         amount equal to any such Contribution together with any interest
         accrued thereon. The Agent shall not be obliged to advance the Loan or
         any part thereof to the Borrower other than such Contribution(s) as the
         Agent has received from the Lenders.

3.       AVAILABILITY

3.1      The Loan shall be advanced in one amount and applied in accordance with
         clause 2.1 hereof provided that:-

         (A)      all items specified in schedule A hereto have been received by
                  the Agent and are in form and substance satisfactory to the
                  Agent;

         (B)      no Event of Default and no event which with the giving of
                  notice and/or lapse of time would constitute an Event of
                  Default has occurred;

         (C)      not less than four (4) Business Days prior to the date upon
                  which the Borrower

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                  requires the Loan to be advanced the Agent has received a
                  written notice from the Borrower in the form set out in
                  appendix I hereto; and

         (D)      the obligation of the Lenders to make the Loan available to
                  the Borrower shall expire on 31 January 2000 if the Loan is
                  not advanced on or before that date.

3.2      The Lenders may in their absolute discretion allow the Loan to be
         advanced notwithstanding that the Agent has not received all the items
         specified in schedule A hereto and in this event the Borrower hereby
         covenants to procure the delivery of all the missing items to the Agent
         within thirty (30) days after the Drawdown Date.

4.       INTEREST

4.1      The Borrower shall pay interest on the Loan from the Drawdown Date for
         each successive Interest Period which shall, subject to clauses 4.3 and
         6.2 hereof, be either one (1), three (3) or six (6) months at the
         option of the Borrower provided always that:-

         (A)      the Borrower shall exercise the said option by notice in
                  writing to the Agent not later than three (3) Business Days
                  prior to the commencement of each Interest Period failing
                  which the Borrower shall be deemed to have opted for an
                  Interest Period of six (6) months;

         (B)      if the relevant funds are not available to the Lenders for an
                  Interest Period of the length opted for (or deemed to be opted
                  for) by the Borrower the Agent shall be entitled to determine
                  conclusively the length of that Interest Period;

         (C)      if an Interest Period will expire after the due date for
                  repayment of the Loan that Interest Period shall be shortened
                  to expire on that due date; and

         (D)      if an Interest Period would otherwise expire on a day which is
                  not a Business Day that Interest Period shall be extended to
                  expire on the next succeeding Business Day unless that next
                  succeeding Business Day falls within a fresh month in which
                  event that Interest Period shall be shortened to expire on the
                  immediately preceding Business Day. In this event the next
                  succeeding Interest Period shall in the absolute discretion of
                  the Agent (and subject always to this clause 4.1 (D)) expire
                  the relevant number of months after either (i) that next
                  succeeding or immediately preceding Business Day (as the case

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                  may be) or (ii) the day on which the preceding Interest Period
                  would have expired if it had not been so extended or shortened
                  (as the case may be) or (iii) the day on which the preceding
                  Interest Period would have expired if no Interest Period had
                  ever been so extended or shortened.

4.2      Subject to clauses 4.3 and 6.2 hereof the Borrower shall pay interest
         on the Loan or any relevant part thereof for each Interest Period at
         the rate certified conclusively (save for manifest error) by the Agent
         to be the aggregate of the relevant Margin and the rate per cent per
         annum for that Interest Period quoted by Telerate Screen 3750 (rounded
         up to the nearest one sixteenth of one per cent)(or, if the Telerate
         system is not working, by Reuters Page ISDA (rounded up to the nearest
         one sixteenth of one per cent) or, if neither the Telerate system nor
         the Reuters system is working, the average rate per cent per annum
         (rounded up to the nearest one sixteenth of one per cent) at which
         deposits of amounts of United States Dollars equivalent to or
         comparable with the Loan or relevant part thereof are offered to the
         Reference Banks (or two of them if one is unable to quote a rate) for
         that Interest Period in the London Inter-bank Market at or about 11.00
         a.m. (London time) two (2) Business Days (in London only) prior to the
         commencement of that Interest Period. Such interest shall accrue and be
         payable on the actual number of days elapsed, shall be calculated on
         the basis of a year of three hundred and sixty (360) days and shall be
         paid on the final day of that Interest Period and (if that Interest
         Period is longer than one (1) month) at one (1) monthly intervals.

4.3      In the event of default by the Borrower in the payment of any sum
         whatsoever due under this agreement (including interest) the Borrower
         shall pay interest on that sum from the due date until payment (after
         as well as before judgement) at a rate certified conclusively (save for
         manifest error) by the Agent to be five per cent (5%) per annum over
         the average cost to the Lenders (rounded up to the nearest one
         sixteenth of one per cent) of funding their respective Contributions to
         that sum for such periods as the Agent in its absolute discretion may
         think fit on the Business Day succeeding that on which it became aware
         of the default and for so long as that sum remains unpaid that rate
         shall be re-calculated on the same basis. Such interest shall accrue
         and be payable on each day elapsing, shall be calculated on the basis
         of a year of three hundred and sixty (360) days and shall be paid on
         the demand of the Agent. In default of payment such interest shall be
         compounded.

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4.4      The Agent shall as soon as reasonably practicable notify the Borrower
         of each rate of interest payable on the Loan or any relevant part
         thereof under this clause 4.

5.       REPAYMENT

5.1      Subject to clauses 6 and 11.1 hereof the Borrower shall repay the Loan
         in one amount on the date falling twenty four (24) months after the
         Drawdown Date.

6.       COMPULSORY AND VOLUNTARY PREPAYMENT

6.1      If for any reason whatsoever beyond the control of any one or more of
         the Lenders it shall become unlawful or impossible for such one or more
         of the Lenders to maintain or give effect to all or part of its or
         their obligations as contemplated by this agreement and evidence
         substantiating that unlawfulness or impossibility has been produced by
         such one or more of the Lenders to the Agent then:-

         (A)      the obligation of such one or more of the Lenders to advance
                  funds under clause 2.2 hereof and to participate in the Loan
                  or the relevant part thereof shall cease;

         (B)      the Borrower shall forthwith upon the demand of the Agent
                  repay to the Agent for the benefit of such one or more of the
                  Lenders the amount of its or their Contribution(s) to the Loan
                  or the relevant part thereof together with interest accrued
                  thereon and any sums due to such one or more of the Lenders by
                  virtue of that repayment under clause 8.5 hereof; and

         (C)      the Loan or the relevant part thereof shall be reduced by the
                  amount of the Contribution(s) of such one or more of the
                  Lenders thereto.

6.2      If the Agent shall:-

         (A)      determine in good faith that by reason of circumstances
                  affecting the London Inter-Bank Market generally adequate and
                  reasonable means do not exist for ascertaining the rate of
                  interest payable on the Loan or any relevant part thereof for
                  any Interest Period in accordance with clause 4.2 hereof; or

         (B)      receive notice from any one or more of the Lenders that it
                  would not be

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                  practicable or possible for such one or more of the Lenders to
                  fund or continue to fund its or their Contribution(s) to the
                  Loan or any relevant part thereof in the London Inter-Bank
                  Market,

         then the Agent shall inform the Borrower in writing to that effect and
         unless the Lenders and the Borrower shall agree acceptable alterations
         to the terms of this agreement (on the basis of an alternative source
         of funds available to the relevant Lenders) then:-

                  (i)      the obligation of the relevant Lenders to advance
                           funds under clause 2.2 hereof and to participate in
                           the Loan or the relevant part thereof shall cease;

                  (ii)    the Agent shall give notice to the Borrower
                          terminating the participation of the relevant Lenders
                          in the Loan or the relevant part thereof whereafter
                          the amount of its or their Contribution(s) to the Loan
                          or the relevant part thereof together with interest
                          accrued thereon shall become repayable by the Borrower
                          in full on the final day of the then current Interest
                          Period; and

                  (iii)   the Loan or the relevant part thereof shall be reduced
                          by the amount of the Contribution(s) of the relevant
                          Lenders thereto.

6.3      The Borrower shall be obliged to prepay the whole of the Loan (together
         with accrued interest thereon and any sum due to any one or more of the
         Lenders by virtue of that prepayment under clause 8.5 hereof) upon the
         successful completion of any new rights issue by the Guarantor.

6.4      If the Borrower makes any repayment or prepayment of principal in
         respect of the Seller's Credit the Borrower shall be obliged
         simultaneously to pay to the Agent an equivalent amount in or towards
         prepayment of the Loan (together with accrued interest thereon and any
         sum due to any one or more of the Lenders by virtue of that prepayment
         under clause 8.5 hereof).

6.5      The Borrower may prepay the whole or part of the Loan together with
         interest accrued thereon on the final day of any Interest Period in
         respect of the Loan provided that:-

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         (A)      the Borrower shall simultaneously pay to the Agent any sums
                  due to any one or more of the Lenders by virtue of that
                  prepayment under clause 8.5 hereof;

         (B)      any part prepayment of the Loan shall amount to a whole
                  multiple of one hundred thousand United States Dollars
                  (USD100,000);

         (C)      the Borrower shall have given the Agent not less than thirty
                  (30) days written notice of its intention to make such
                  prepayment (which once given shall be irrevocable) specifying
                  such day and the amount of intended prepayment and accompanied
                  by such evidence as the Agent may require that any
                  governmental or other consents for such prepayment have been
                  obtained or will be forthcoming; and

         (D)      no sums prepaid hereunder may be reborrowed under this
                  agreement.

7.       ARRANGEMENT FEE

7.1      The Borrower shall pay to the Agent for the benefit of the Lenders on
         the date hereof an arrangement fee of one hundred and thirty four
         thousand four hundred United States Dollars (USD134,400), which fee the
         Borrower hereby accepts has been fully earned on the date hereof.

8.       INDEMNITY

8.1      If any change in law or regulation or in the interpretation thereof or
         if compliance by any one or more of the Lenders with any direction
         request or requirement (whether or not having the force of law) of any
         central bank or other authority shall:-

         (A)      subject any one or more of the Lenders to any tax with respect
                  to the Loan or any part thereof (other than tax on overall net
                  income);

         (B)      change the basis of taxation to any one or more of the Lenders
                  of payments of principal or interest or any other payment due
                  or to become due hereunder;

         (C)      impose or modify any reserve, liquidity or capital adequacy
                  requirements or require the making of any special deposits
                  affecting any one or more of the Lenders; or

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         (D)      impose on any one or more of the Lenders any other condition
                  affecting the Loan or any part thereof whether or not the Loan
                  has been advanced

         and the result is either to increase the cost to any one or more of the
         Lenders of making or maintaining or committing to make its or their
         Contribution(s) to the Loan or any part thereof or to reduce the amount
         of any payment received by any one or more of the Lenders hereunder or
         to reduce the rate of return which any one or more of the Lenders would
         have been able to obtain on its or their overall capital but for
         entering into and/or performing this agreement and evidence
         substantiating the situation has been produced by such one or more of
         the Lenders to the Agent then:-

                  (i)      the Agent shall use its best efforts promptly to
                           notify the Borrower in writing of the situation;

                  (ii)     the Borrower shall pay to the Agent forthwith upon
                           the demand of the Agent such amount as will
                           compensate such one or more of the Lenders for such
                           additional cost or such reduction and a certificate
                           of the additional amount or amounts so required
                           submitted by the Agent to the Borrower shall save for
                           manifest error be conclusive evidence thereof; and

                  (iii)    any such demand may be made by the Agent at any time
                           before or after repayment of the Loan.

8.2      All legal fees and other reasonable costs and expenses whatsoever
         (including without limitation the costs of obtaining, not more than
         twice in each period of twelve (12) months after the date hereof,
         valuations of the Vessel from three (3) independent shipbrokers
         acceptable to the Agent) incurred by the Agent and/or the Trustee
         and/or any one or more of the Lenders in connection with any one or
         more of this agreement, the Security Documents and any other documents
         executed pursuant hereto or thereto shall be paid by the Borrower
         forthwith upon demand by the Agent on a full indemnity basis whether or
         not the Loan is advanced.

8.3      The Borrower shall pay forthwith upon demand by the Agent all stamp,
         registration

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         and other duties (including any such duties payable by the Agent and/or
         the Trustee and/or any one or more of the Lenders) imposed by any
         authority in respect of any one or more of this agreement, the Security
         Documents and any other documents executed pursuant hereto or thereto
         or otherwise in connection with the Loan.

8.4      Without prejudice to the rights of the Agent and/or the Trustee and/or
         the Lenders under or pursuant to clause 11 hereof the Borrower shall
         indemnify the Agent and/or the Trustee and/or any one or more of the
         Lenders fully forthwith upon demand by the Agent for any and all losses
         damages and/or expenses whatsoever incurred by the Agent and/or the
         Trustee and/or such one or more of the Lenders:-

         (A)      as a result of the Loan not being advanced for any reason
                  whatsoever in accordance with a notice given pursuant to
                  clause 3.1(C) hereof (provided that no Lender whose default
                  has caused the Loan not to be advanced may claim any indemnity
                  under this clause 8.4(A));

         (B)      as a result of an Event of Default;

         (C)      in perfecting, protecting the value of or enforcing any of its
                  or their rights or securities under any one or more of this
                  agreement, the Security Documents and any other documents
                  executed pursuant hereto or thereto or in attempting so to do;
                  or

         (D)      as a result of any payment hereunder, whether pursuant to a
                  judgment or otherwise, being made, obtained or enforced in a
                  currency other than United States Dollars.

8.5      In the event that the whole or part of the Loan is repaid or prepaid
         otherwise than on the final day of an Interest Period in respect
         thereof the Borrower shall (A) indemnify any one or more of the Lenders
         fully forthwith upon demand by the Agent for any and all losses damages
         and/or expenses incurred by such one or more of the Lenders in
         liquidating or reemploying fixed deposits acquired from third parties
         to maintain its or their Contribution(s) to the Loan or the relevant
         part thereof (as the case may be) until the expiry of the then current
         Interest Period in respect thereof and (B) pay to any one or more of
         the Lenders forthwith on demand any sums due to such one or more of the
         Lenders as a result of that repayment or prepayment under clause 8.6
         hereof.

8.6      The Borrower shall indemnify any one or more of the Lenders fully
         forthwith upon

<PAGE>
                                     - 19 -

         demand by the Agent for all losses, premiums, penalties, costs and
         expenses whatsoever incurred by such one or more of the Lenders in
         connection howsoever with any interest rate "swap", "cap" or other
         transaction entered into or to be entered into or arranged by such one
         or more of the Lenders at the request or on behalf of the Borrower at
         any time and from time to time with any counterparty a direct or
         indirect commercial purpose of which is to limit or offset the exposure
         of the Borrower to future increases of floating interest rates in
         connection howsoever with this agreement.

8.7      The indemnities contained in this clause 8 shall apply irrespective of
         any indulgence granted to the Borrower or any other party from time to
         time and shall continue in full force and effect notwithstanding any
         payment in favour of the Agent and/or the Trustee and/or any one or
         more of the Lenders and any amount due from the Borrower under this
         clause 8 will be due as a separate debt and shall not be affected by
         judgment being obtained for any other sums due under any one or more of
         this agreement, the Security Documents and any other documents executed
         pursuant hereto or thereto.

9.       PAYMENTS

9.1      All payments by the Borrower hereunder shall be made to the Agent's
         account with such bank or banks as the Agent shall nominate from time
         to time.

9.2      Subject to the sub-clauses of this clause 9.2 all payments by the
         Borrower hereunder shall be made in full without set-off or
         counterclaim and free and clear of and without deduction or withholding
         for or on account of any tax of any jurisdiction.

         (A)      If the Borrower is required by law to make any deduction or
                  withholding from any payment hereunder for or on account of
                  tax, it shall do so and the sum due from the Borrower in
                  respect of such payment shall be increased to the extent
                  necessary to ensure that, after the making of such deduction
                  or withholding, the Agent receives and each relevant party
                  retains (free of any liability in respect of any such
                  deduction or withholding) a net sum equal to the sum it would
                  have received and retained had no deduction or withholding
                  been required to be made.

<PAGE>
                                     - 20 -

         (B)      If at any time the Borrower is required by law to make any
                  deduction or withholding from any sum payable by it hereunder
                  (or if thereafter there is any change in the rates at which or
                  the manner in which such deductions or withholdings are
                  calculated) the Borrower shall promptly and fully notify the
                  Agent accordingly.

         (C)      If the Borrower makes any payment hereunder in respect of
                  which it is required by law to make any deduction or
                  withholding it shall pay the full amount to be deducted or
                  withheld to the relevant taxation or other authority within
                  the time allowed for such payment under applicable law and
                  shall deliver to the Agent within thirty (30) days after it
                  has made such payment to the applicable authority the
                  appropriate receipt or certificate issued by such authority or
                  the Borrower as the case may be evidencing the payment to such
                  authority of all amounts so required to be deducted or
                  withheld from such payment.

9.3      If any sum becomes due for payment hereunder on a day which is not a
         Business Day the due date for payment shall be extended to the next
         succeeding Business Day unless that next succeeding Business Day falls
         within a fresh month in which event the due date for payment shall be
         brought forward to the immediately preceding Business Day. Any interest
         payable shall be adjusted accordingly.

9.4      All payments hereunder shall be made in United States Dollars not later
         than 11.00 a.m. (New York time) on the due dates therefor in such funds
         as may be customary for the same day settlement of international
         banking transactions in United States Dollars in New York City provided
         that payments in respect of costs and expenses shall be made in the
         currencies in which the same are incurred.

9.5      The Agent shall open and maintain on its books a control account in the
         name of the Borrower showing the advance of the Loan and the
         computation and payment of interest and all other sums due hereunder.
         The Borrower's obligations to repay the Loan and to pay interest
         thereon and to pay all other sums due hereunder shall be evidenced by
         the entries from time to time made in the control account opened and
         maintained under this clause 9.5 which entries will be conclusive and
         binding in the absence of manifest error.

10.      APPLICATION OF MONEYS

<PAGE>
                                     - 21 -

10.1     All moneys assigned to the Agent and/or the Trustee and/or the Lenders
         under the Earnings Assignment shall be paid to the Earnings Account.

10.2     Subject to the relevant provisions of the Revolving Loan Facility
         Agreement and to clause 10.4 hereof all moneys paid to the Earnings
         Account shall be applied by the Agent as follows:-

         (A)      first in payment of any and all sums whatsoever due and
                  payable to the Agent and/or the Trustee and/or any one or more
                  of the Lenders hereunder (such sums to be paid in such order
                  as the Agent may in its sole discretion elect);

         (B)      second in retention in the Earnings Account of amounts
                  equivalent in aggregate to the amount of interest next falling
                  due to be paid hereunder; and

         (C)      third in retention of any credit balance in the Earnings
                  Account

         Provided That:-

                  (i)     sums retained in the Earnings Account pursuant to
                          clauses 10.2(B) and (C) hereof shall be held on
                          deposit at rates of interest normally paid by the
                          Agent to customers for deposits of like amount and
                          maturity and any interest accruing thereon shall be
                          credited to the Earnings Account at monthly intervals;

                  (ii)    sums retained in the Earnings Account pursuant to
                          clause 10.2(B) hereof shall be applied by the Agent in
                          or towards payment of interest due hereunder on the
                          due dates for payment thereof; and

                  (iii)   nothing herein contained shall be deemed to affect the
                          absolute obligation of the Borrower to pay interest on
                          and to repay the Loan as provided in clauses 4 and 5
                          hereof.

10.3     Subject to the relevant provisions of the Revolving Loan Facility
         Agreement and to clause 10.4 hereof all moneys payable to the Agent
         and/or the Trustee and/or the Lenders under the Insurance Assignment
         and any other moneys payable to the Agent and/or the Trustee and/or the
         Lenders by any one or more of the Security Parties under any one or
         more of this agreement, the Security Documents and any other

<PAGE>
                                     - 22 -

         documents executed pursuant hereto or thereto the application of which
         is not specifically provided for by another clause hereof shall be paid
         to the Agent's account with such bank or banks as the Agent may
         nominate from time to time and shall be applied by the Agent as
         follows:-

         (A)      all moneys received from a Total Loss or sale of the Vessel
                  shall be applied as follows:-

                  (i)     first in accordance with clause 10.2(A) hereof;

                  (ii)    second in repayment of the Loan, in payment of accrued
                          interest thereon and in payment of any sums due to any
                          one or more of the Lenders by virtue of that repayment
                          under clause 8.5 hereof; and

                  (iii)    third in payment of any credit balance to the
                           Borrower or to whomsoever may be entitled thereto;
                           and

         (B)      all moneys not covered by clause 10.3(A) hereof shall be
                  applied as follows:-

                  (i)     first in accordance with clause 10.2(A) hereof;

                  (ii)    second (in respect only of moneys received by virtue
                          of the Insurance Assignment) in reimbursement to the
                          Borrower for such of the costs (if any) incurred by
                          the Borrower in effecting the repair of the damage in
                          respect of which those moneys are received as the
                          Agent shall approve (such approval not to be
                          unreasonably withheld) and in payment to the Earnings
                          Account of all moneys received in respect of loss of
                          hire insurances (if any);

                  (iii)   third in repayment of the Loan, in payment of accrued
                          interest thereon and in payment of any sums due to any
                          one or more of the Lenders by virtue of that repayment
                          under clause 8.5 hereof; and

                  (iv)     fourth in payment of any credit balance to the
                           Borrower or to whomsoever may be entitled thereto.

<PAGE>
                                     - 23 -

10.4     Subject to the relevant provisions of the Revolving Loan Facility
         Agreement, from and after the giving of notice by the Agent to the
         Borrower pursuant to clause 11.1 hereof all moneys whatsoever received
         or recovered by the Agent or the Trustee or any one or more of the
         Lenders from any one or more of the Security Parties under any one or
         more of this agreement, the Security Documents and any other documents
         executed pursuant hereto or thereto or from any other party under any
         one or more of the Mortgage, the Earnings Assignment and the Insurance
         Assignment and all moneys from time to time standing to the credit of
         the Earnings Account shall be paid to the Agent's account with such
         bank or banks as the Agent may nominate from time to time and shall be
         applied by the Agent as follows:-

         (A)      first in accordance with clause 10.2(A) hereof, subject to any
                  right the Agent or the Trustee or any one or more of the
                  Lenders may have to delay any such application in order to
                  maximise its or their claim; and

         (B)      second in payment of any credit balance to the Borrower or to
                  whomsoever may be entitled thereto.

11.      DEFAULT

11.1     The Agent may by notice in writing to the Borrower declare the Loan to
         be immediately repayable with accrued interest thereon (plus any sums
         due to any one or more of the Lenders by virtue of that repayment under
         clause 8.5 hereof) and any security held by the Agent or the Trustee or
         any one or more of the Lenders shall become immediately enforceable if
         any of the following events occurs:-

         (A)      failure by the Borrower to pay promptly on the due date
                  therefor any sum whatsoever due for payment by it under this
                  agreement;

         (B)      any one or more of the Security Parties and ESL making default
                  in the observance or performance of any other obligation
                  covenant or undertaking contained in any one or more of this
                  agreement, the Security Documents and any other documents
                  executed pursuant hereto or thereto and (if the same is in the
                  opinion of the Agent capable of remedy) the continuation of
                  that default unremedied for a period of fifteen (15) days;

         (C)      any of the representations and warranties made or deemed to
                  have been made

<PAGE>
                                     - 24 -

                  in any one or more of this agreement, the Security Documents
                  and any other documents executed pursuant hereto or thereto
                  being inaccurate or misleading when made or becoming
                  inaccurate or misleading at any time hereafter were the same
                  to be repeated in relation to the facts subsisting at that
                  time (whether or not any such repetition actually occurs);

         (D)      any event of default occurring under any one or more of the
                  Security Documents;

         (E)      the fulfilment of any one or more of the obligations covenants
                  and undertakings contained in any one or more of this
                  agreement, the Security Documents and any other documents
                  executed pursuant hereto or thereto or the exercise of any of
                  the rights vested in the Agent and/or the Trustee and/or any
                  one or more of the Lenders hereunder or thereunder becoming
                  either unlawful under any applicable law or unauthorised by
                  any authority having jurisdiction or otherwise impossible;

         (F)      a bona fide petition being presented or an order being made or
                  an effective resolution being passed for the commencement of
                  any proceedings for the liquidation winding-up or
                  re-organisation of any one or more of the Security Parties
                  except for the purpose of and followed by an amalgamation or
                  reconstruction the terms of which shall have been previously
                  approved in writing by the Agent;

         (G)      a distress or execution being levied or enforced upon or sued
                  out against any part of the assets of any one or more of the
                  Security Parties which in the Agent's opinion would have a
                  material adverse effect on any one or more of the Security
                  Parties and not being satisfied removed or discharged within
                  fourteen (14) days;

         (H)      the holder of any Encumbrance taking possession of or a
                  liquidator, administrator, receiver, administrative receiver,
                  trustee or similar officer being appointed in respect of the
                  whole or a substantial part of the assets of any one or more
                  of the Security Parties;

<PAGE>
                                     - 25 -

         (I)      any one or more of the Security Parties being unable or
                  admitting its inability to pay its or their lawful debts as
                  they mature or convening a meeting of or preparing to enter
                  into any arrangement or composition with or making a general
                  assignment for the benefit of its or their creditors or being
                  adjudicated bankrupt or insolvent;

         (J)      any other Borrowed Money of any one or more of the Security
                  Parties becoming due or becoming capable of being declared due
                  prior to its stated date of maturity by reason of default on
                  the part of any one or more of the Security Parties;

         (K)      any one or more of the Security Parties ceasing to carry on or
                  suspending or threatening to cease to carry on or to suspend
                  its or their business or a substantial part of the assets or
                  business of any one or more of the Security Parties being
                  seized confiscated or expropriated;

         (L)      the market value of the Vessel (such market value to be
                  conclusively determined as the average of the latest three (3)
                  valuations obtained by the Agent as provided in clause 8.2
                  hereof) at any time falling below one hundred and thirty five
                  per cent (135%) of the aggregate amount of the Loan and the
                  Revolving Loan Facility then outstanding and the Borrower
                  failing either to prepay the relevant part of the Loan and/or
                  the Revolving Loan Facility or to provide additional security
                  acceptable to the Agent within fourteen (14) days after
                  receiving written notice from the Agent to that effect;

         (M)      a Total Loss occurring and either (i) the Agent not being
                  satisfied at any time in its absolute discretion that the
                  Total Loss is adequately covered by insurance and that the
                  relevant insurance proceeds will be paid to the Agent or (ii)
                  any insurance claim in respect thereof being rejected by the
                  underwriters at any time or (iii) the Agent failing to receive
                  the insurance proceeds in respect thereof within one hundred
                  and eighty (180) days thereafter;

         (N)      any one or more of the Subject Documents being repudiated or
                  terminated without the prior written consent of the Agent;

         (O)      a material adverse change occurring in the business, assets or
                  financial condition of any one or more of the Security Parties
                  which may reasonably be considered to affect its or their
                  ability to comply with all or any of its or their

<PAGE>
                                     - 26 -

                  respective obligations under any one or more of the Subject
                  Documents; or

         (P)      an event of default occurring under the Revolving Loan
                  Facility Agreement or the Seller's Credit Agreement.

12.      SECURITY

12.1     As security for the Loan, interest thereon and all other sums due and
         to become due hereunder the Borrower shall provide the Agent with the
         following documents in form and substance satisfactory to the Agent
         which documents shall be executed in favour of the Trustee and be held
         by the Trustee on trust for the Agent, the Trustee and the Lenders and
         their respective successors, assignees and transferees on the terms of
         the Deed of Agency and Trust:-

         (A)      duly registered second Panamanian naval mortgage over the
                  Vessel duly executed by the Borrower;

         (B)      second priority assignment duly executed by the Borrower of
                  all insurances whatsoever in respect of the Vessel and loss of
                  its earnings and all compensation in respect of the
                  requisition for title or other compulsory acquisition of the
                  Vessel (with the exception of requisition hire);

         (C)      second priority assignment duly executed by the Borrower of
                  the benefit of all earnings whatsoever of the Vessel
                  (including requisition hire);

         (D)      guarantee and indemnity duly executed by the Guarantor;

         (E)      second priority charge over all the authorised and issued
                  shares in the Borrower duly executed by the Guarantor;

         (F)      tripartite agreement duly executed by (i) the Agent, the
                  Trustee and the Lenders, (ii) Neptun Maritime Oyj and ESL and
                  (iii) the Borrower and the Guarantor coordinating the
                  interests of ESL under the Seller's Credit Agreement and the
                  Seller's Credit Securities with those of the Agent and/or the
                  Trustee and/or the Lenders under this agreement and the other
                  Security Documents; and

<PAGE>
                                     - 27 -

         (G)      letter of subordination duly executed by the Manager
                  subordinating its interests under the Management Agreement to
                  those of the Agent and/or the Trustee and/or the Lenders under
                  this agreement.

13.      REPRESENTATIONS AND WARRANTIES

13.1     The Borrower hereby represents and warrants that:-

         (A)      each of the Security Parties is a duly incorporated company
                  validly existing and in good standing under the laws of its
                  country of incorporation and all the shares in the Borrower
                  are beneficially owned by the Guarantor;

         (B)      each of the Security Parties has full power and authority to
                  execute deliver and perform such of the Subject Documents to
                  which it is a party;

         (C)      each of the Security Parties has taken all necessary corporate
                  or other action required to authorise the execution delivery
                  and performance of such of the Subject Documents to which it
                  is a party;

         (D)      all consents licences approvals or authorisations whatsoever
                  required to make the Subject Documents legal valid enforceable
                  and admissible in evidence have been obtained and are in full
                  force and effect;

         (E)      from and after execution and delivery thereof each of the
                  Subject Documents will constitute legal valid and binding
                  obligations of the parties thereto (other than the Agent, the
                  Trustee and the Lenders) enforceable in accordance with its
                  terms and will not contravene any applicable law or regulation
                  or any contractual constitutional or other restriction binding
                  on any of the parties thereto (other than the Agent, the
                  Trustee and the Lenders);

         (F)      as at the date hereof no material litigation or administrative
                  proceedings of or before any board of arbitration, Court or
                  Governmental authority or agency is pending or (to the
                  Borrower's knowledge) threatened the result of which would or
                  might be to have a material adverse effect on the business
                  assets or financial condition of any one or more of the
                  Security Parties;

         (G)      the copies of any of the Subject Documents delivered or to be
                  delivered to the

<PAGE>
                                     - 28 -

                  Agent hereunder constitute the full agreement between the
                  parties thereto with respect to the subject matter thereof and
                  none of the parties thereto is in default thereunder;

         (H)      all historic financial information and other documentation
                  submitted to the Agent by or on behalf of the Borrower in
                  connection herewith is accurate and correct in all material
                  respects and not misleading;

         (I)      the claims of the Agent and/or the Trustee and/or the Lenders
                  against the Borrower under this agreement will rank at least
                  pari passu with the claims of all unsecured creditors of the
                  Borrower other than claims of such creditors to the extent
                  that they are statutorily preferred;

         (J)      each Security Party and its business and assets (including,
                  without limitation, all computer systems, all systems and
                  equipment containing embedded microchips (including leased
                  systems and equipment) and any other systems, equipment or
                  parts of the business or assets whatsoever of that Security
                  Party 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);
                  and

         (K)      no Event of Default has occurred or is continuing and no event
                  which with the giving of notice and/or lapse of time would
                  constitute an Event of Default has occurred or is continuing.

14.      COVENANTS

14.1     The Borrower hereby covenants that from the date hereof until the
         Borrower has no remaining obligations, actual or contingent, under this
         agreement:-

<PAGE>
                                     - 29 -

         (A)      the Borrower will file all requisite tax returns and will pay
                  all tax as shown to be due and payable on such returns or any
                  of the assessments made against it (other than those being
                  contested in good faith);

         (B)      the Borrower will carry on and conduct its business in a
                  proper and efficient manner and will duly pay all outgoings as
                  and when they fall due and in particular without limiting the
                  generality of the foregoing will duly observe and perform all
                  the terms and conditions of any contract of employment of the
                  Vessel to be observed and performed by it;

         (C)      the Borrower will prepare or cause to be prepared, in
                  accordance with GAAP, annual audited accounts for the Borrower
                  and unaudited quarterly accounts for the Borrower; the
                  Borrower will furnish the Agent with copies of the audited
                  annual accounts no later than ninety five (95) days after the
                  end of each financial year and copies of the unaudited
                  quarterly accounts no later than fifty (50) days after the end
                  of each financial quarter; the audited annual accounts shall
                  include profit and loss accounts and balance sheets certified
                  and audited by an accountant acceptable to the Agent which
                  shall include Grant Thornton L.L.P.;

         (D)      the Borrower will provide the Agent in a form acceptable to
                  the Agent no later than ten (10) days after the end of each
                  month monthly management information (including traffic
                  statistics, cash flows, booking reports and outstanding trade
                  debt) in respect of the Borrower;

         (E)      the Borrower shall procure that the Earnings Account is opened
                  and maintained at the bank specified in the definition thereof
                  in clause 1.2 hereof and shall not keep any accounts with any
                  bank other than the Agent unless otherwise agreed specifically
                  with the Agent;

         (F)      the Borrower shall promptly furnish to the Agent all such
                  accounts and financial information concerning any one or more
                  of the Security Parties and the Vessel as the Agent may from
                  time to time reasonably require including without limiting the
                  generality of the foregoing cash flow analyses, budgets and
                  details of the operating costs of the Vessel;

         (G)      the Vessel, its earnings and the interests of the Agent and/or
                  the Trustee and/or

<PAGE>
                                     - 30 -

                  the Lenders as mortgagees of the Vessel shall be insured with
                  such underwriters insurance offices and clubs for such amounts
                  for such risks in such form and upon such conditions as are
                  satisfactory to the Agent from time to time provided that the
                  amount of each of the marine and war risks insurances shall
                  not in any event be less than the greater from time to time of
                  (i) the market value of the Vessel and (ii) one hundred and
                  twenty per cent (120%) of the aggregate amount of the Loan,
                  the Revolving Loan Facility and the Seller's Credit then
                  outstanding;

         (H)      the Borrower will not without the prior written consent of the
                  Agent:-

                  (i)     create or allow to subsist any Encumbrance over any of
                          its assets or any part thereof save for Permitted
                          Liens and those created by any of the Security
                          Documents or the Revolving Loan Securities;

                  (ii)    incur any liability in respect of Borrowed Money
                          except for the Revolving Loan Facility and unsecured
                          Borrowed Money subordinated to the Loan hereunder;

                  (iii)   make loans or advances to others (except for loans or
                          advances made in the ordinary course of business in
                          connection with the chartering and/or operation and/or
                          repair of the Vessel);

                  (iv)    except in connection with the chartering and/or
                          operation and/or repair of the Vessel incur any other
                          liability to a third party which in the opinion of the
                          Agent is of a substantial nature;

                  (v)      consolidate with any other company or merge into any
                           company;

                  (vi)     engage in any business other than the ownership
                           operation chartering and management of the Vessel;

                  (vii)    guarantee endorse or otherwise become or remain
                           liable in respect of the obligations of any person
                           firm or corporation;

                  (viii)   pay any dividends or other distributions or issue any
                           new shares or

<PAGE>
                                     - 31 -

                           transfer any shares;

                  (ix)     sell or otherwise dispose of the Vessel or any share
                           therein or any other asset (the Agent's consent not
                           to be unreasonably withheld);

                  (x)      make or allow any alteration to or waiver of the
                           terms of any one or more of the Subject Documents;

                  (xi)     appoint any manager of the Vessel other than the
                           Manager;

                  (xii)    change the class, flag or employment of the Vessel as
                           a passenger cruise ship; or

                  (xiii)   make any acquisitions or investments other than the
                           regular dry-docking and maintenance of the Vessel
                           (the Agent's consent not to be unreasonably
                           withheld);

         (I)      the Borrower will procure that the amount standing to the
                  credit of the Earnings Account shall not at any time fall
                  below two million United States Dollars (USD2,000,000);

         (J)      the Borrower shall not make any repayment of principal in
                  respect of the Seller's Credit prior to the full repayment of
                  the Loan unless:-

                  (i)      the Borrower and the Guarantor evidence full
                           compliance with this agreement and the Revolving
                           Credit Facility Agreement for the previous and the
                           ensuing periods of twelve (12) months by way of cash
                           flow projections and budgets to the satisfaction of
                           the Agent; and

                  (ii)     an equivalent amount is paid to the Agent by way of
                           prepayment of the Loan pursuant to clause 6.5 hereof;

         (K)      from and after the occurrence of an Event of Default the
                  Borrower shall not, after receiving written notice from the
                  Agent to that effect, make any payment of principal or
                  interest in respect of the Seller's Credit for so long as that
                  Event of Default is continuing;

         (L)      the Borrower shall procure that its Debt Service Coverage
                  Ratio (calculated as

<PAGE>
                                     - 32 -

                  set out below, with the first such calculation being made
                  twelve (12) months after the Drawdown Date and the subsequent
                  calculations being made at three (3) monthly intervals
                  thereafter) shall not be less than the ratio specified in item
                  1 in schedule B hereto (for the period of twelve (12) months
                  after the Drawdown Date) and the ratio specified in item 2 in
                  schedule B hereto (for any period thereafter) and for this
                  purpose the Debt Service Coverage Ratio shall be calculated 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
                          Borrower's operations for such period and for this
                          purpose Net Income means the consolidated net income
                          of the Borrower 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 Borrower; and

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

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

<PAGE>
                                     - 33 -

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

                  (iii)   all rent and any capital lease obligations or
                          operating lease obligations by which the Borrower 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 Borrower;

         (M)      not later than six (6) months prior to the due date for full
                  repayment of the Loan the Borrower shall demonstrate to the
                  Lenders' satisfaction that sufficient cash or committed
                  facilities are available to enable the Borrower to repay the
                  Loan in full on the due date therefor;

         (N)      the Borrower shall provide the Agent with compliance
                  certificates in relation to the relevant financial covenants
                  contained in this agreement in the form set out in appendix II
                  hereto on or before the Drawdown Date and at three (3) monthly
                  intervals after the Drawdown Date and, for the avoidance of
                  doubt, the covenant in clause 14.1(L) hereof shall not be
                  deemed to be a 'relevant financial covenant' for the purposes
                  of this clause 14.1(N) until the date falling twelve (12)
                  months after the Drawdown Date;

         (O)      the Borrower will promptly inform the Agent if any Event of
                  Default or any event which with the giving of notice and/or
                  lapse of time would constitute an Event of Default occurs or
                  if any event occurs which may materially adversely affect its
                  ability to perform any of its obligations under any one or
                  more of this agreement, the Security Documents and any other
                  documents executed pursuant hereto or thereto; and

         (P)      the Borrower will from time to time at the request of the
                  Agent execute and deliver to the Agent or procure the
                  execution and delivery to the Agent of all such documents as
                  the Agent shall deem desirable in its absolute discretion for
                  giving full effect to this agreement and for perfecting,
                  protecting the value of or enforcing any rights or securities
                  granted to the Agent and/or the Trustee and/or the Lenders
                  under any one or more of this agreement, the Security

<PAGE>
                                     - 34 -

                  Documents and any other documents executed pursuant hereto or
                  thereto.

15.      SET-OFF AND SHARING OF PAYMENTS

15.1     The Agent, the Trustee and each of the Lenders are hereby authorised to
         combine any and all accounts held by the Borrower with any of them at
         any of their respective offices and to apply (without any prior notice)
         any credit balance to which the Borrower is then beneficially entitled
         on any such account (whether or not that credit balance is then due to
         the Borrower) in or towards satisfaction of any sums then due and
         payable by the Borrower hereunder. For that purpose the Agent, the
         Trustee and each of the Lenders are hereby authorised to use all or
         part of that credit balance to buy such other currency or currencies as
         may be required to enable any of them to effect that application. The
         Agent, the Trustee and the Lenders shall not be obliged to exercise any
         of their rights under this clause, which shall be without prejudice and
         in addition to any right of set off, combination of accounts, lien or
         other rights to which any of them at any time otherwise is entitled
         (whether by operation of law, contract or otherwise).

15.2     If pursuant to clause 15.1 hereof or otherwise any Lender shall at any
         time receive appropriate or otherwise obtain from any one or more of
         the Security Parties any payment on account of principal interest or
         other sums due from the Borrower hereunder (which are not due solely to
         that Lender under the terms of this agreement) in a greater proportion
         than its Contribution then that Lender shall remit via the Agent to
         such of the other Lenders as have received a smaller proportion of that
         payment than their Contributions such sums as shall ensure that each
         Lender receives a proportion of that payment corresponding to its
         Contribution and each such remittance shall be treated for the purposes
         of this agreement as having been made to the receiving Lender by the
         Borrower instead of the Lender by whom such remittance was made
         Provided Always That if at any time thereafter that payment is required
         by a court of competent jurisdiction to be returned to the Borrower or
         any third party each of the Lenders shall return the relevant
         percentage thereof.

16.      ASSIGNMENT AND PARTICIPATION

16.1     This agreement shall be binding upon and inure to the benefit of the
         Agent, the Trustee, the Lenders and each of them and the Borrower and
         their respective successors and assigns.

<PAGE>
                                     - 35 -

16.2     The Borrower may not assign its rights or obligations hereunder without
         the prior written consent of the Agent.

16.3     Each of the Lenders may at any time with the prior written consent of
         the Agent and the Borrower (such consents not to be unreasonably
         withheld and no such consent to be required at all from the Borrower if
         an Event of Default has occurred and is subsisting) assign transfer or
         grant participations in all or part of its Contribution to the Loan or
         any part thereof and its rights and obligations hereunder to any other
         bank or financial institution and for this purpose:-

         (A)      no such consents shall be required from the Agent or the
                  Borrower if the other bank or financial institution is either
                  another of the Lenders or a subsidiary company, holding
                  company or sister company of the relevant Lender;

         (B)      the Agent, the Trustee and the relevant Lender shall be at
                  liberty to disclose on a confidential basis to any such
                  assignee transferee or grantee (or to any potential such
                  assignee transferee or grantee) all such information
                  concerning any one or more of the Security Parties, the Vessel
                  and the Subject Documents as the Agent, the Trustee and the
                  relevant Lender may deem appropriate; and

         (C)      the Borrower shall upon demand by the Agent and at the expense
                  of the relevant Lender execute and deliver to the Agent all
                  such documents and do all such acts and things as the Agent
                  may deem necessary or desirable in its absolute discretion for
                  giving full effect to any such assignment transfer or
                  participation.

16.4     The Agent and/or the Trustee may at any time signify its or their
         intention to resign by giving written notice to the Borrower and the
         Lenders provided that such resignation shall not take effect until a
         successor Agent and/or Trustee (as the case may be) has been appointed
         and has accepted that appointment. After the giving of such notice, a
         successor Agent and/or Trustee shall be appointed in accordance with
         the relevant provisions of the Deed of Agency and Trust and the Lenders
         shall procure that the successor Agent and/or Trustee shall give to the
         Borrower written notice of its acceptance of appointment. Upon its
         appointment as Agent and/or Trustee, such successor Agent and/or
         Trustee shall succeed to and become vested with all the rights

<PAGE>
                                     - 36 -

         powers and privileges and duties of the retiring Agent and/or Trustee,
         and the retiring Agent and/or Trustee shall be discharged from its
         duties and obligations under this agreement.

17.      MISCELLANEOUS

17.1     Time shall be of the essence of this agreement but no failure or delay
         on the part of the Agent or the Trustee or any one or more of the
         Lenders to exercise any power or right hereunder shall operate as a
         waiver of such power or right nor shall any single or partial exercise
         of any power or right hereunder preclude any other or further exercise
         thereof or the exercise of any other power or right hereunder. The
         powers and rights provided to the Agent or the Trustee or any one or
         more of the Lenders in this agreement are cumulative and shall not
         exclude any powers or rights provided to the Agent or the Trustee or
         any one or more of the Lenders by law.

17.2     In the event of any of the provisions contained in any one or more of
         this agreement, the Security Documents and any other documents executed
         pursuant hereto or thereto being invalid, illegal or unenforceable in
         any respect under any law, the validity, legality and enforceability of
         the remaining provisions herein or therein contained shall not in any
         way be affected or impaired thereby.

17.3     Neither the Agent nor the Trustee nor any of the Lenders shall be
         liable for any failure to meet its obligations hereunder resulting from
         any cause whatsoever beyond its control.

18.      NOTICES

18.1     Any notice or other correspondence in connection herewith required to
         be sent or given by the Borrower to the Agent or the Trustee or any one
         or more of the Lenders shall be sent to the Agent in the English
         language at 19 Thomas More Street, London E1 9YW (telex no. 290562
         facsimile no. +44 171 709 7001) or to such other address or addresses
         as may from time to time be notified by the Agent to the Borrower for
         such purpose.

18.2     Any notice or other correspondence in connection herewith required to
         be sent or given by the Agent or the Trustee or any one or more of the
         Lenders to the Borrower shall be sent to the Borrower in the English
         language at c/o Commodore Holdings Limited, 4000 Hollywood Boulevard,
         Suite 385-S, Hollywood, Fl 33021, U.S.A.,

<PAGE>
                                     - 37 -

         Attention: Chief Financial Officer (facsimile no. +954 921 2147) with
         copies to Kathleen L Deutsch, P.A., Broad and Cassel, Miami Center -
         Suite 3000, 201 S. Biscayne Boulevard, Miami, Fl 33131, U.S.A.
         (facsimile no. +305 373 9443) or to such other address or addresses as
         the Borrower may from time to time notify to the Agent in writing and
         shall be deemed to have been validly given and received on the date of
         dispatch if sent by telex and five (5) days after having been posted if
         sent by prepaid first class or airmail post.

19.      PROPER LAW AND JURISDICTION

19.1     This agreement shall be governed by and construed in accordance with
         the Laws of England and for the exclusive benefit of the Agent, the
         Trustee and the Lenders the Borrower hereby irrevocably submits to the
         jurisdiction of the High Courts of Justice in England. Such submission
         shall not limit the right of the Agent, the Trustee and the Lenders to
         commence any proceedings relating to this agreement (in addition or
         alternatively) in any other jurisdiction which the Agent deems fit. The
         Borrower hereby irrevocably authorises and appoints Consult Marine of
         58 London Fruit Exchange, Brushfield Street, London E1 6EP as its agent
         in England for the acceptance of service of legal proceedings on it
         hereunder.

<PAGE>
                                     - 38 -

IN WITNESS whereof the parties hereto have executed this agreement the day and
year first above written.

THE LENDERS
MERITA BANK PLC *

Lending Office:-
         19 Thomas More Street
         London E1W 1YF

By: /s/ Kirsten Kaarre Jensen
   -------------------------------------

CHRISTIANIA BANK OG KREDITKASSE ASA *

Lending Office:-
         Middelthunsgate 17
         0368 Oslo
         Norway

By: /s/ Ulv E. Aasland
   -------------------------------------

SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) *

Lending Office:-
         2 Cannon Street
         London EC4M 6XX

By: /s/ Jonathan Pratt
   -------------------------------------

THE AGENT

MERITA BANK PLC

By: /s/ Kirsten Kaarre Jensen
   -------------------------------------

<PAGE>
                                     - 39 -

THE BORROWER

CROWN CRUISES OF PANAMA, INC.

By: /s/ Jeffrey I. Binder
   -------------------------------------

THE TRUSTEE

MERITA BANK PLC

By: /s/ Kirsten Kaarre Jensen
   -------------------------------------

All in the presence of:-EXHIBIT 10.6

                         CROWN CRUISES OF PANAMA, INC.

                                     - and -

                                 MERITA BANK PLC

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

                              SECOND 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

<PAGE>
                                     - 2 -

                                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...............................................................18

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.............................................24

17.    NOTICES................................................................24

18.    GOVERNING LAW, SEVERABILITY, ETC. .....................................24

19.    MISCELLANEOUS..........................................................25

20.    RECORDING OF THIS MORTGAGE.............................................25

<PAGE>
                                     - 3 -

THIS SECOND NAVAL MORTGAGE is made the 28th day 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 bridge loan of six million seven hundred and twenty
         thousand United States Dollars (USD6,720,000) ("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 whole of the Loan in a single amount.

<PAGE>
                                     - 4 -

(D)      The Lenders agreed to advance the Loan on condition that the Owner
         should execute and deliver to the Trustee such a second 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 second 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").

(G)      By a first preferred mortgage of even date herewith ("the Prior
         Mortgage") the Owner has mortgaged the Vessel in favour of Merita Bank
         Plc ("the Prior Mortgagee") as trustee for itself and others.

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;

<PAGE>
                                     - 5 -

         "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 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

<PAGE>
                                     - 6 -

         (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 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

<PAGE>
                                     - 7 -

         the interpretation of this Mortgage.

2.       OWNER'S COVENANT TO PAY

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

         (A)      to repay the Loan 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.

<PAGE>
                                     - 8 -

3.       MORTGAGE

3.1      In consideration of the premises and in order to secure by this
         Mortgage the repayment of the Loan plus interest at the rate set forth
         in the Loan Agreement 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
         Second Preferred Naval Mortgage on the whole of the Vessel in favour of
         the Trustee (as trustee for the Beneficiaries) subject to the rights of
         the Prior Mortgagee under the Prior Mortgage 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.

<PAGE>
                                     - 9 -

4.       OWNER'S COVENANTS AS TO INSURANCE

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

         (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;

<PAGE>
                                     - 10 -

         (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 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)      subject to the rights of the Prior Mortgagee under the Prior
                  Mortgage 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)      subject to the rights of the Prior Mortgagee under the Prior
                  Mortgage 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;

<PAGE>
                                     - 11 -

                  (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 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)
                           subject to the rights of the Prior Mortgagee under
                           the Prior Mortgage 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

<PAGE>
                                     - 12 -

                                    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 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

<PAGE>
                                     - 13 -

                           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 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

<PAGE>
                                     - 14 -

                  (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 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

<PAGE>
                                     - 15 -

                  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 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

<PAGE>
                                     - 16 -

                  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 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;

<PAGE>
                                     - 17 -

                  (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;

                  (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
<PAGE>
                                     - 18 -

                           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;

         (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 second
                  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,

<PAGE>
                                     - 19 -

                  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, 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.

<PAGE>
                                     - 20 -

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 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:-

<PAGE>
                                     - 21 -

         (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 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, subject to the rights of the Prior
         Mortgagee under the Prior Mortgage, 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

<PAGE>
                                     - 22 -

                  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
                  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

<PAGE>
                                     - 23 -

                  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 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

<PAGE>
                                     - 24 -

         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 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 and shall in any event
         be subject to the rights of the Prior Mortgagee under the Prior
         Mortgage.

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

<PAGE>
                                     - 25 -

         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 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.

<PAGE>
                                     - 26 -

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 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.

<PAGE>
                                     - 27 -

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

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

<PAGE>
                                     - 28 -

                             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:-                   )

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