Document:

<PAGE>

                            SENIOR FACILITY AGREEMENT

                                     between

                             PACIFIC TANKSHIP LTD.,
                                   as borrower

                       CHRISTIANIA BANK OG KREDITKASSE ASA
                          as agent and security trustee

                                       and

                       CHRISTIANIA BANK OG KREDITKASSE ASA
                                    as lender

                                 Clifford Chance
                                     London

<PAGE>

                                    CONTENTS

<TABLE>
<CAPTION>
CLAUSE                                                                      PAGE
<S>                                                                         <C>
1.  Interpretation ........................................................    1
2.  The Facility ..........................................................    8
3.  Purpose ...............................................................    8
4.  Conditions Precedent ..................................................    8
5.  Nature of Banks' Rights and Obligations ...............................    8
6.  Availability ..........................................................    9
7.  Interest Periods ......................................................   10
8.  Interest ..............................................................   11
9.  Repayment and Prepayment ..............................................   11
10. Taxes and Tax Receipts ................................................   13
11. Changes in Circumstances ..............................................   14
12. Representations .......................................................   16
13. Information Covenants .................................................   18
14. Financial Condition ...................................................   19
15. General Covenants .....................................................   20
16. Events of Default .....................................................   22
17. Default Interest and Indemnity ........................................   25
18. Currency of Account and Payment .......................................   27
19. Payments ..............................................................   27
20. Set-Off ...............................................................   28
21. Sharing ...............................................................   28
22. Fees ..................................................................   29
23. Costs and Expenses ....................................................   29
24. The Agent and the Banks ...............................................   30
25. Benefit of Agreement ..................................................   34
26. Assignments and Transfers .............................................   34
27. Calculations and Evidence of Debt .....................................   35
28. Remedies and Waivers ..................................................   36
29. Partial Invalidity ....................................................   36
30. Notices ...............................................................   37
31. Law ...................................................................   37
32. Jurisdiction ..........................................................   38

The First Schedule
          Condition Precedent Documents ...................................   39

The Second Schedule
          Notice of Drawdown ..............................................   43

The Third Schedule
          Form of Transfer Certificate ....................................   44
</TABLE>

<PAGE>

THIS AGREEMENT is made on 27 October 1997

BETWEEN:

(1)      PACIFIC TANKSHIP LTD., (the "BORROWER");

(2)      CHRISTIANIA BANK OG KREDITKASSE ASA (in its capacity as agent, the
         "AGENT");

(3)      CHRISTIANIA BANK OG KREDITKASSE ASA (in its capacity as the security
         trustee, the "SECURITY Trustee"); and

(4)      CHRISTIANIA BANK OG KREDITKASSE ASA ("INITIAL BANK").

                                    RECITALS

A.       The Initial Bank has agreed to grant to the Borrower, upon the terms
         and subject to the conditions herein set forth, a loan facility in the
         amount of up to $18,000,000.

B.       By a further Loan Agreement (the "JUNIOR FACILITY AGREEMENT") of even
         date herewith and made between the Borrower, the Agent, the Security
         Trustee and Christiania Bank og Kreditkasse ASA as Initial Bank, the
         Initial Bank has agreed to lend to the Borrower a further sum of up to
         $4,500,000 secured by second ranking security over the assets mortgaged
         or charged by the Borrower to the Security Trustee pursuant to the
         Facility Documents defined therein.

NOW IT IS HEREBY AGREED  as follows:

1.       INTERPRETATION

1.1      In this Agreement:

         "ADMINISTRATIVE GENERAL PARTNER" means GMC Administration Ltd., a
         company duly incorporated under the laws of the Cayman Islands.

         "ADVANCE" means, save as otherwise provided herein, the advance made or
         to be made by             the Banks hereunder;

         "ASSIGNMENT OF ACCOUNTS" means the assignment of the Borrower's bank
         accounts to be executed by the Borrower in favour of the Security
         Trustee pursuant to paragraph 17, of Part 1 of the First Schedule;

         "ASSIGNMENT OF EARNINGS AND INSURANCES" means an assignment of earnings
         and insurances to be entered into by the Borrower in favour of the
         Security Trustee pursuant to paragraph 2, Part 2 of the First Schedule;

         "BANKS" means the Initial Bank and any Transferees of the Initial Bank
         (and any subsequent Transferees) and "BANK" means each of the Banks;

<PAGE>

         "BASLE PAPER" means the paper entitled "International Convergence of
         Capital Measurement and Capital Standards" dated July 1988 and prepared
         by the Basle Committee on Banking Regulations and Supervision, as
         amended in November 1991;

         "BORROWER DEPOSIT ACCOUNT " means the account held in the name of the
         Borrower with The Industrial Bank of Japan, Ltd., Japan;

         "CAPITAL ADEQUACY REQUIREMENT" means a request or requirement relating
         to the maintenance of capital, including one which makes any change to,
         or is based on any alteration in, the interpretation of the Basle Paper
         or which increases the amounts of capital required thereunder, other
         than a request or requirement made by way of implementation of the
         Basle Paper in the manner in which it is being implemented at the date
         hereof;

         "CHARTERS" means each of the Initial Charter and the Subsequent Charter
         and "CHARTER" means each of them;

         "CHARTERERS" means each of the Initial Charterer and the Subsequent
         Charterer and "CHARTERER" means each of them;

         "DRAWDOWN DATE" means the date on which the Advance is made to the
         Borrower hereunder;

         "EARNINGS ACCOUNT" has the meaning ascribed to it in the Assignment of
         Earnings and Insurances;

         "EVENT OF DEFAULT" means any of those events specified in Clause 16.1
         (EVENTS OF DEFAULT);

         "FACILITY" means the dollar loan facility granted to the Borrower in
         this Agreement;

         "FACILITY AMOUNT" means an amount of up to US$18,000,000 to be advanced
         by the Initial Bank to the Borrower;

         "FACILITY OFFICE" means in relation to a Bank, the Agent or the
         Security Trustee the office identified with the signature below (or in
         the case of a Transferee, at the end of the Transfer Certificate to
         which it is a party as Transferee) or such other office as it may from
         time to time select;

         "FAIR MARKET VALUE" means, in relation to the Vessel at any time, the
         sale value of the Vessel in dollars determined on the basis of a sale
         (for cash and prompt delivery) by a willing seller to a willing buyer,
         free of charter and encumbrances and at arm's length on normal
         commercial terms;

         "FINAL REPAYMENT DATE" means the date which falls 66 months after the
         Drawdown Date;

         "FACILITY DOCUMENTS" means this Agreement, the Interest Rate Swap
         Agreement, the Trust Deed, the Mortgage, the Assignment of Earnings and
         Insurances, the Priority Agreement and the Assignment of Accounts and
         any other document agreed between the Agent and the Borrower to be a
         Facility Document and "FACILITY DOCUMENT" means each of them;

<PAGE>

         "GENERAL PARTNERS" means the Managing General Partner and the
         Administrative General Partner and "GENERAL PARTNER" means each of
         them;

         "INITIAL CHARTER" means the bareboat charter party (as from time to
         time amended or novated) dated 6 October 1997 whereby the Initial
         Charterer has agreed to charter the Vessel on a bareboat charter basis
         from the Borrower for a period of approximately six months from the
         Drawdown Date;

         "INITIAL CHARTERER" means Rachel Lines S.A., a corporation duly
         incorporated under the laws of the Panama;

         "INSTRUCTING GROUP" means a Bank or group of Banks to whom in aggregate
         more than fifty per cent of the Loan is (or, immediately prior to its
         repayment, was then) owed;

         "INTEREST RATE SWAP AGREEMENT" means the International Swap Dealers
         Association, Inc. Master Agreement together with a confirmation letter
         both dated on or about the date hereof entered into by the Borrower and
         the Initial Bank as Swap Counterparty (as from time to time amended,
         supplemented or assigned by the parties thereunder) pursuant to which
         the Borrower will hedge all or part of its interest costs under this
         Agreement;

         "INTEREST PERIOD" means any of those periods mentioned in Clause 7.2
         (DURATION OF INTEREST PERIODS);

         "LIBOR" means, in relation to any period for which an interest rate is
         to be determined hereunder, the rate per annum determined by the Agent
         to be equal to the LIBOR fixing on Telerate page 3740 for deposits in
         dollars for a period corresponding to that period at 11.00 a.m. on the
         Quotation Date for that period Provided that if there are no such rates
         so appearing on such page at such time it means the rate per annum
         determined by the Agent to be equal to the arithmetic mean (rounded
         upwards, if not already such a multiple to the nearest whole multiple
         of one-sixteenth of one per cent.) of the respective rates (as notified
         to the Agent) at which the Reference Banks were offering to prime banks
         in the London Interbank Market deposits in dollars for a period
         corresponding to such period at such time;

         "LOAN" means the aggregate principal amount for the time being
         outstanding hereunder;

         "MANAGEMENT AGREEMENT" means the agreement (as from time to time
         amended or novated) to be entered or entered into between the Borrower
         and Universe Tankships (Bermuda) Ltd., relating to the management of
         the Vessel pursuant to paragraph 13, Part 1, of the First Schedule;

         "MANAGING GENERAL PARTNER" means Genmar Pacific Ltd., a corporation
         duly incorporated under the laws of the State of New York, USA;

         "MARGIN" means one and one-eighth per cent. (1-1/8%) per annum;

         "MEMORANDUM OF AGREEMENT" means the agreement (as from time to time
         amended or novated) for the purchase and sale of the Vessel dated 6
         October 1997 and made between the

<PAGE>

         Borrower and the Seller;

         "MORTGAGE" means a first preferred Panamanian ship mortgage over the
         Vessel to be granted by the Borrower to the Security Trustee pursuant
         to paragraph 1, Part 2 of the First Schedule;

         "NOTICE OF DRAWDOWN" means a notice in the form or substantially the
         form of that set out in the Second Schedule;

         "PANAMA" means the Republic of Panama;

         "PERMITTED LIENS" has the meaning ascribed to it in the Assignment of
         Earnings and Insurances;

         "PRIORITY AGREEMENT" means the agreement between the Agent, the Banks,
         the Borrower and the Agent and the lenders under the Junior Facility
         Agreement regulating the priorities and the rights of enforcement of
         security between the Banks and the lenders under the Junior Facility
         Agreement pursuant to paragraph 19, Part 1 of the First Schedule;

         "QUOTATION DATE" in relation to any period for which an interest rate
         is to be determined hereunder means the day on which quotations would
         ordinarily be given by prime banks in the London Interbank Market for
         dollar deposits for delivery on the first day of that period Provided
         that if, for any such period, quotations would ordinarily be given on
         more than one date, the Quotation Date for that period shall be the
         last of those dates;

         "REFERENCE BANK" means the principal Oslo office of Christiania Bank og
         Kreditkasse ASA and such other banks as may from time to time be agreed
         between the Borrower and the Agent;

         "REPAYMENT DATES" means the days which fall 3, 6, 9, 12, 15, 18, 21,
         24, 27, 30, 33, 36, 39, 42, 45, 48, 51, 54, 57, 60, 63 and 66 months
         after the Drawdown Date;

         "RETENTION ACCOUNT" has the meaning ascribed to it in the Assignment of
         Earnings and Insurances;

         "SELLER" means Rachel Lines S.A., Panama;

         "SHAREHOLDER" means Pacific Tankship, L.P., the sole shareholder of the
         Borrower;

         "SUBSEQUENT CHARTER" means the time charter (as from time to time
         amended or novated) dated as of 17 October 1997 whereby the Subsequent
         Charterer has agreed to charter the Vessel from the Borrower for a
         minimum of sixty months immediately upon the termination of the Initial
         Charter;

         "SUBSEQUENT CHARTERER" means American Eagle Tankers Inc. Limited;

         "TERMINATION DATE" means the earlier of 31 December 1997 and the date
         on which the Facility Amount has been reduced to zero;

<PAGE>

         "TRANSFER CERTIFICATE" means a certificate in the form set out in the
         Third Schedule (or such other form as may be agreed between the
         relevant Bank, the proposed Transferee, the Agent and the Borrower
         pursuant to Clause 26.2 (ASSIGNMENTS AND TRANSFERS BY BANKS)) signed by
         a Bank and a Transferee whereby:

                  (i)      such Bank seeks to procure the transfer to such
                           Transferee of all or a part of such Bank's rights and
                           obligations hereunder upon and subject to the terms
                           and conditions set out in Clause 26.2 (ASSIGNMENTS
                           AND TRANSFERS BY BANKS); and

                  (ii)     such Transferee undertakes to perform the obligations
                           it will assume as a result of delivery of such
                           certificate to the Borrower as is contemplated in
                           Clause 26.4 (TRANSFERS BY BANKS)

         "TRANSFER DATE" in relation to any Transfer Certificate means the date
         for the making of the transfer as specified in the schedule to such
         Transfer Certificate;

         "TRANSFEREE" means a bank or other financial institution to which a
         Bank seeks to transfer all or part of such Bank's rights and
         obligations hereunder;

         "TRUST DEED" means a security trust deed of the date hereof entered
         into between the Security Trustee, the Agent, the Borrower and the
         Banks and the agent and lenders under the Junior Facility Agreement
         pursuant to paragraph 18, Part 1 of the First Schedule;

         "VESSEL" means the vessel known as m/t "PACIFIC JUPITER", more
         particularly described in the Mortgage.

1.2      Any reference in this Agreement to:

         the Agent, the Security Trustee, or the Banks shall be construed so as
         to include their respective successors, Transferees and permitted
         assigns in accordance with their respective interests;

         a "BUSINESS DAY" shall be construed as a reference to a day (other than
         a Saturday or Sunday) on which banks are generally open for business in
         Oslo, London and New York City;

         a "CHARTER" shall be construed as a reference to any agreement
         (including the Charters) pursuant to which the Vessel is, or will be,
         employed;

         a "CLAUSE" shall, subject to any contrary indication, be construed as a
         reference to a clause hereof;

         an "ENCUMBRANCE" shall be construed as a reference to a mortgage,
         charge, pledge, lien or other encumbrance securing any obligation of
         any person or any other type of preferential arrangement (including,
         without limitation, title transfer and retention arrangements) having a
         similar effect;

         the "EQUIVALENT" in one currency (in this paragraph the "FIRST
         CURRENCY") of an amount

<PAGE>

         denominated in another currency (in this paragraph the "SECOND
         CURRENCY") on any date shall, save as otherwise provided, be construed
         as a reference to the amount of the first currency which could be
         purchased with that amount of the second currency at the spot rate of
         exchange quoted by the Agent at or about 11.00 a.m. on such date for
         the purchase of the first currency with the second currency for
         delivery on the second business day thereafter;

         a "GUARANTEE" includes any guarantee, indemnity or other obligation to
         pay, purchase, provide funds for the payment of or indemnify against
         the consequences of default in the payment of indebtedness of any other
         person and any encumbrance which secures the payment of any
         indebtedness of any other person;

         a "HOLDING COMPANY" of a company or corporation shall be construed as a
         reference to any company or corporation of which the first-mentioned
         company or corporation is a subsidiary;

         "INDEBTEDNESS" shall be construed so as to include any obligation
         (whether incurred as principal or as surety) for the payment or
         repayment of money, whether present or future, actual or contingent;

         a "MONTH" is a reference to a period starting on one day in a calendar
         month and ending on the numerically corresponding day in the next
         calendar month save that, where any such period would otherwise end on
         a day which is not a business day, it shall end on the next business
         day, unless that day falls in the calendar month succeeding that in
         which it would otherwise have ended, in which case it shall end on the
         preceding business day Provided that, if a period starts on the last
         business day in a calendar month or if there is no numerically
         corresponding day in the month in which that period ends, that period
         shall end on the last business day in that later month (and references
         to "MONTHS" shall be construed accordingly);

         a "PERSON" shall be construed as a reference to any person, firm,
         company, corporation, government, state or agency of a state or any
         association or partnership (whether or not having separate legal
         personality) of two or more of the foregoing;

         a "SCHEDULE" shall, subject to any contrary indication, be construed as
         a reference to a schedule hereto;

         a "SUBSIDIARY" of a company or corporation shall be construed as a
         reference to any company or corporation:

                  (i)      which is controlled, directly or indirectly, by the
                           first-mentioned company or corporation;

                  (ii)     more than half the issued share capital of which is
                           beneficially owned, directly or indirectly, by the
                           first-mentioned company or corporation; or

                  (iii)    which is a subsidiary of another subsidiary of the
                           first-mentioned company or corporation

         and, for these purposes, a company or corporation shall be treated as
         being controlled by

<PAGE>

         another if that other company or corporation is able to direct its
         affairs and/or to control the composition of its board of directors or
         equivalent body;

         "TAX" shall be construed so as to include any present or future tax,
         levy, impost, duty or other charge of a similar nature (including,
         without limitation, any penalty or interest payable in connection with
         any failure to pay or any delay in paying any of the same);

         "TOTAL LOSS" includes any actual, constructive, arranged, agreed or
         compromised total loss, any requisitioning for title and the capture,
         seizure, arrest, detention, or confiscation of the Vessel by any
         government, or by persons purporting to act on behalf of any
         government, unless the Vessel be released and restored to the Owner
         from such capture, seizure, detention or confiscation within one month
         after the date thereof; and

         the "WINDING-UP" or "DISSOLUTION" of a company or limited partnership
         shall be construed so as to include any equivalent or analogous
         proceedings under the law of the jurisdiction in which such company or
         limited partnership is incorporated or established or any jurisdiction
         in which such company or limited partnership carries on business.

1.3      "$" and "DOLLARS" denote lawful currency of the United States of
         America.

1.4      Save where the contrary is indicated, any reference in this Agreement
         to:

                  (i)      this Agreement or any other agreement or document
                           shall be construed as a reference to this Agreement
                           or, as the case may be, such other agreement or
                           document as the same may have been, or may from time
                           to time be, amended, varied or supplemented;

                  (ii)     a statute shall be construed as a reference to such
                           statute as the same may have been, or may from time
                           to time be, amended or re-enacted; and

                  (iii)    a time of day shall be construed as a reference to
                           London time.

1.5      Clause headings are for ease of reference only.

1.6      For the purposes of the Facility Documents, a total loss of the Vessel
         shall be deemed to have occurred:

                  (i)      if it consists of an actual total loss, at noon
                           Greenwich Mean Time on the actual date of loss or, if
                           that is not known, on the date on which she was last
                           heard of;

                  (ii)     if it consists of a requisitioning for title, at noon
                           Greenwich Mean Time on the date on which the same is
                           expressed to take effect by the person making the
                           same; and

                  (iii)    if it consists of a constructive or compromised or
                           arranged or agreed total loss, at noon Greenwich Mean
                           Time on the date at which notice of her abandonment
                           is given to her insurers for the time being or (if
                           her insurers for

<PAGE>

                           the time being do not admit the claim for total loss)
                           at the time on which a total loss is subsequently
                           adjudged to have occurred by a competent court or
                           arbitration tribunal or liability in respect thereof
                           as a total loss is admitted by underwriters.

2.       THE FACILITY

         The Initial Bank hereby grants to the Borrower, upon the terms and
         subject to the conditions hereof, a loan facility in the maximum amount
         of $18,000,000.

3.       PURPOSE

         The purpose of the Facility is to provide the Borrower with funds to
         finance the purchase of the Vessel and, accordingly, the Borrower shall
         apply all of the amounts raised by it hereunder in or towards such
         purpose (but so that neither the Agent nor the Initial Bank shall be
         obliged to concern itself with the application of amounts borrowed by
         the Borrower hereunder).

4.       CONDITIONS PRECEDENT

         The Borrower shall not be entitled to give any Notice of Drawdown
         hereunder unless the Agent shall have confirmed to the Borrower by
         facsimile or letter that it has received three days prior to the
         proposed Drawdown Date each of the documents specified in Part 1 of the
         First Schedule and found the same to be satisfactory to it in form and
         substance.

5.       NATURE OF BANKS' RIGHTS AND OBLIGATIONS

5.1      OBLIGATIONS OF BANKS SEVERAL

         The obligations of each Bank hereunder are several.

5.2      FAILURE OF ANY BANK TO PERFORM OBLIGATIONS

         The failure by a Bank to perform its obligations hereunder shall not
         affect the obligations of the Borrower towards any other party hereto
         nor shall any other party be liable for the failure by such Bank to
         perform its obligations hereunder.

5.3      RIGHTS OF BANKS SEVERAL

         The rights of the Banks hereunder are also several. The amount at any
         time owing by the Borrower to any party under this Agreement shall be a
         separate and independent debt from any amount owing to any other party.

6.       AVAILABILITY

6.1      THE FACILITY

         The Facility shall be made by the Initial Bank to the Borrower by way
         of a single Advance.

<PAGE>

         It is hereby agreed that on the Drawdown Date, the Advance shall be
         paid into the Borrower Deposit Account and shall be held in escrow in
         the Borrower Deposit Account until its release therefrom in accordance
         with the provisions of the Memorandum of Agreement.

6.2      DRAWDOWN CONDITIONS

         Save as otherwise provided herein, the Advance will be made by the
         Initial Bank and paid into the Borrower Deposit Account , on the
         request of the Borrower if:

                  (i)      not more than ten nor less than two business days
                           before the proposed date for the making of the
                           Advance the Agent has received from the Borrower a
                           Notice of Drawdown therefor, receipt of which shall
                           oblige the Borrower to borrow the amount therein
                           requested on the date therein stated upon the terms
                           and subject to the conditions contained herein;

                  (ii)     the amount stated in the Notice of Drawdown shall not
                           be more than the lesser of the amount of the Facility
                           Amount and 67% of the purchase price of Vessel as set
                           out in the Memorandum of Agreement;

                  (iii)    the Drawdown Date is a business day which is or
                           precedes the Termination Date;

                  (iv)     the interest rate applicable to the Advance during
                           its first Interest Period does not fall to be
                           determined pursuant to the proviso to Clause 7.2
                           (DURATION OF INTEREST PERIODS); and

                  (v)      (a)      no event has occurred which is or may become
                                    (with the passage of time, the giving of
                                    notice, the making of any determination
                                    hereunder or any combination thereof) an
                                    Event of Default; and

                           (b)      the representations set out in Clause 12
                                    (REPRESENTATIONS) are true on and as of the
                                    proposed date for the making of such Advance

                  or the Agent agrees (notwithstanding any matter mentioned at
                  (a) or (b) above) that the Advance should be made and paid
                  into the Borrower Deposit Account .

6.3      RELEASE CONDITION

         The Borrower hereby covenants that prior to the release of the Advance
         held in the Borrower Deposit Account to the Seller it will deliver to
         the Agent each of the documents specified in Part 2 of the First
         Schedule and in both form and substance satisfactory to the Agent.

7.       INTEREST PERIODS

7.1      INTEREST PERIODS

         The period for which the Advance is outstanding shall be divided into
         successive periods each

<PAGE>

         of which (other than the first) shall start on the last day of the
         preceding such period.

7.2      DURATION OF INTEREST PERIODS

         The duration of each Interest Period relating to the Advance shall,
         save as otherwise provided herein, be one, three, six or twelve months,
         or any such other period as may be agreed from time to time between the
         Borrower and the Agent, in each case as the Borrower may select by not
         less than three business days' prior notice to the Agent Provided that:

                  (i)      if the Borrower selects a duration of twelve months
                           in relation to an Interest Period, then:

                           (a)      the Borrower may, at the same time, notify
                                    the Agent of an alternative selection of
                                    three or six months to apply if the
                                    Borrower's selection becomes ineffective
                                    pursuant to (b) below; and

                           (b)      any Bank may, at any time before 9.00 a.m.
                                    on the second business day preceding the
                                    first day of such Interest Period, notify
                                    the Agent that it objects to the Borrower's
                                    selection, whereupon such selection shall
                                    become ineffective Provided that no such
                                    objection shall be given except for reason
                                    of the non availability to such Bank of
                                    dollars for twelve months interest periods
                                    in the London Inter-bank Market;

                  (ii)     if the Borrower fails to give such notice of its
                           selection in relation to an Interest Period, or if
                           its selection becomes ineffective under (i)(b) above
                           and the Borrower has failed to give the Agent any
                           permitted alternative selection pursuant to (i)(a)
                           above, then the duration of that Interest Period
                           shall, subject to (iii) below, be three months;

                  (iii)    the Borrower may not select an Interest Period of one
                           month more than three times during any calendar year;
                           and

                  (iv)     any Interest Period which would otherwise end during
                           the month preceding, or extend beyond, the Final
                           Repayment Date shall be of such duration that it
                           shall end on the Final Repayment Date.

7.3      If pursuant to Clause 7.2 the Borrower selects an Interest Period for
         an Advance which will extend beyond one or more Repayment Dates, then
         such Advance shall be divided into parts such that on such (or each
         such) Repayment Date there will be one or more parts in an amount equal
         to the amount scheduled to be repaid on each such Repayment Date, each
         such part to constitute an Advance and to have an Interest Period
         ending on that Repayment Date.

<PAGE>

8.       INTEREST

8.1      PAYMENT OF INTEREST

         On the last day of each Interest Period (and, in the case of an
         Interest Period of a duration of more than three months, on the last
         day of each successive period of three months falling within such
         Interest Period) the Borrower shall pay accrued interest on the Advance
         to which such Interest Period relates.

8.2      CALCULATION OF INTEREST

         The rate of interest applicable to the Advance from time to time during
         an Interest Period relating thereto shall be the rate per annum which
         is the sum of the Margin and LIBOR for such Interest Period Provided
         that if LIBOR for an Interest Period falls to be determined in
         accordance with the proviso to the definition thereof but none of the
         Reference Banks was offering to prime banks in the London Interbank
         Market dollar deposits for the proposed duration of such Interest
         Period, the rate of interest applicable to the Advance to which such
         Interest Period relates from time to time during such Interest Period
         shall be the rate per annum which is the sum of the Margin and the
         weighted average of the rates per annum notified to the Agent by each
         Bank before the last day of such Interest Period to be that which
         expresses as a percentage rate per annum the cost to it of funding such
         Advance during such Interest Period from whatever sources it may select
         and the Agent shall notify the Borrower accordingly.

9.       REPAYMENT AND PREPAYMENT

9.1      REPAYMENT

         The Borrower shall repay the Loan in instalments by repaying on each
         Repayment Date an amount as set out below:

<TABLE>
<CAPTION>
         REPAYMENT DATE NO.                                      INSTALMENT PAYABLE IN $000
         <S>                                                     <C>
                   1                                                         500
                   2                                                         500
                   3                                                         500
                   4                                                         500
                   5                                                         600
                   6                                                         600
                   7                                                         600
                   8                                                         600
                   9                                                         700
                  10                                                         700
                  11                                                         700
                  12                                                         700
                  13                                                         800
                  14                                                         800

<PAGE>

                  15                                                         800
                  16                                                         800
                  17                                                         800
                  18                                                         800
                  19                                                         800
                  20                                                         800
                  21                                                         800
                  22                                                        3600
</TABLE>

9.2      PREPAYMENT

         The Borrower may, if it has given to the Agent not less than fifteen
         (15) business days' prior notice to that effect, prepay the whole or
         any part of the Advance (but if in part being an amount or integral
         multiple of $100,000) on the last day of an Interest Period relating
         thereto. Any prepayment made by the Borrower shall satisfy the
         Borrower's remaining obligations under Clause 9.1 (REPAYMENT) in
         inverse order of maturity.

9.3      NOTICE OF PREPAYMENT

         Any notice of prepayment given by the Borrower pursuant to Clause 9.2
         (PREPAYMENT) shall be irrevocable and shall specify the date upon which
         such prepayment is to be made and the amount thereof and shall oblige
         the Borrower to make such prepayment on such date.

9.4      PREPAYMENT FEE

         If the Borrower makes any prepayment pursuant to Clause 9.2
         (PREPAYMENT) the Borrower shall be obliged, together with such
         prepayment, to pay a prepayment fee equal to one quarter of one per
         cent. (1/4%) of the amount so prepaid Provided that no such fee shall
         be payable if such prepayment was made either (i) pursuant to a
         refinancing of the Loan granted by Christiania Bank og Kreditkasse ASA
         or by a syndicate of banks of which Christiania Bank og Kreditkasse ASA
         is an agent or an underwriter or (ii) during the 12 months preceding
         the Final Repayment Date.

9.5      INTEREST RATE SWAP AGREEMENTS

         If the Borrower makes prepayment pursuant to Clause 9.2, it shall be
         obliged to pay to the Initial Bank as counterparty to the Interest Rate
         Swap Agreement and, to any assignees of any part of the Initial Bank's
         interest in the Interest Rate Swap Agreement (the "ASSIGNEE") (or the
         Initial Bank and or the Assignee shall pay to the Agent for account of
         the Borrower) the amount of any loss (or, as the case may be, profit)
         incurred or made by the Initial Bank and any Assignee as a result of a
         total or partial early termination of that Interest Rate Swap Agreement
         made to ensure that the notional principal amount of that Interest Rate
         Swap Agreement matches the reduced amount of the Loan.

<PAGE>

9.6      NO OTHER REPAYMENTS OR REBORROWING

         No amount repaid or prepaid hereunder may be reborrowed.

10.      TAXES AND TAX RECEIPTS

10.1     TAX GROSS-UP

         All payments to be made by the Borrower to any person under any of the
         Facility Documents shall be made free and clear of and without
         deduction for or on account of tax unless the Borrower is required to
         make such a payment subject to the deduction or withholding of tax, in
         which case the sum payable by the Borrower in respect of which such
         deduction or withholding is required to be made shall be increased to
         the extent necessary to ensure that, after the making of such deduction
         or withholding, such person receives and retains (free from any
         liability in respect of any such deduction or withholding) a net sum
         equal to the sum which it would have received and so retained had no
         such deduction or withholding been made or required to be made.

10.2     TAX INDEMNITY

         Without prejudice to the provisions of Clause 10.1 (TAX GROSS-UP), if
         any person or the Agent on its behalf is required to make any payment
         on account of tax or otherwise (not being a tax imposed on the net
         income of the Facility Office by the jurisdiction in which it is
         incorporated or in which the Facility Office is located) on or in
         relation to any sum received or receivable by such person under any of
         the Facility Documents (including, without limitation, any sum received
         or receivable under this Clause 10) or any liability in respect of any
         such payment is asserted, imposed, levied or assessed against the such
         person, the Borrower shall, upon demand of the Agent, promptly
         indemnify the such person against such payment or liability, together
         with any interest, penalties and expenses payable or incurred in
         connection therewith Provided that if a Bank or the Agent or the
         Security Trustee considers that it is reasonable to do so and that it
         would not be otherwise prejudiced thereby, it will, prior to
         instructing the Agent to make a demand under this Clause 10.2, use
         reasonable endeavours to determine whether any such payment or
         liability was correctly or legally imposed or asserted.

10.3     CLAIMS BY A BANK

         If a Bank intends to make a claim pursuant to Clause 10.2 (TAX
         INDEMNITY) it shall notify the Agent of the event by reason of which it
         is entitled to do so whereupon the Agent shall notify the Borrower
         accordingly.

10.4     NOTIFICATION OF REQUIREMENT TO DEDUCT TAX

         If, at any time, the Borrower is required by law to make any deduction
         or withholding from any sum payable by it under any of the Facility
         Documents (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 notify the Agent, whereupon the Agent shall
         notify

<PAGE>

         the Banks and the Security Trustee accordingly.

10.5     EVIDENCE OF PAYMENT OF TAX

         If the Borrower makes any payment under any of the Facility Documents
         in respect of which it is required to make any deduction or
         withholding, it shall pay the full amount required 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 days after it has received the same, an original
         receipt (or a certified copy thereof) issued by such authority
         evidencing the payment to such authority of all amounts so required to
         be deducted or withheld in respect of such payment.

11.      CHANGES IN CIRCUMSTANCES

11.1     INCREASED COSTS

         If, by reason of (a) any change in law or in its interpretation or
         administration and/or (b) compliance with any Capital Adequacy
         Requirement or any request from or requirement of any central bank or
         other fiscal, monetary or other authority:

                  (i)      a Bank or any holding company of such Bank incurs a
                           cost as a result of such Bank having entered into
                           and/or performing its obligations under this
                           Agreement and/or assuming or maintaining a commitment
                           under this Agreement and/or making its advance
                           hereunder;

                  (ii)     a Bank or any holding company of such Bank is unable
                           to obtain the rate of return on its overall capital
                           which it would have been able to obtain but for such
                           Bank having entered into and/or performing its
                           obligations and/or assuming or maintaining a
                           commitment under this Agreement;

                  (iii)    there is any increase in the cost to a Bank or any
                           holding company of such Bank of funding or
                           maintaining all or any of the advances comprised in a
                           class of advances formed by or including the advance
                           made or to be made by such Bank hereunder; or

                  (iv)     a Bank or any holding company of such Bank becomes
                           liable to make any payment on account of tax or
                           otherwise (not being a tax imposed on the net income
                           of the Facility Office by the jurisdiction in which
                           such Bank is incorporated or in which the Facility
                           Office is located) on or calculated by reference to
                           the amount of the Advance made or to be made
                           hereunder and/or by reference to any sum received or
                           receivable by such Bank hereunder,

         then the Borrower shall, from time to time on demand of the Agent,
         promptly pay to the Agent for the account of such Bank amounts
         sufficient to indemnify it (or,as the case may be, to enable it to
         indemnify its holding company) against, as the case may be, (1) such
         cost, (2) such reduction in such rate of return (or such proportion of
         such reduction as is, in the opinion of such Bank, attributable to its
         obligations hereunder), (3) such increased cost (or

<PAGE>

         such proportion of such increased cost as is, in the opinion of such
         Bank, attributable to its funding or maintaining its advance hereunder)
         or (4) such liability.

11.2     INCREASED COSTS CLAIMS

         If a Bank intends to make a claim pursuant to Clause 11.1 (INCREASED
         COSTS) it shall notify the Agent of the event by reason of which it is
         entitled to do so whereupon the Agent shall notify the Borrower
         accordingly.

11.3     ILLEGALITY

         If at any time it is unlawful for a Bank to make its portion of the
         Advance or to fund or allow to remain outstanding its portion of the
         Loan, then that Bank shall, promptly after becoming aware of such fact,
         deliver to the Agent who will deliver to the Borrower a certificate to
         that effect whereupon:

                  (i)      if no Advance has been made hereunder, the Bank shall
                           not thereafter be obliged to make the Advance
                           hereunder and its Facility Commitment shall be
                           reduced to zero; and

                  (ii)     if the Advance has already been made hereunder, then,
                           if the Agent on behalf of any relevant Bank so
                           requires, the Borrower shall on such date as the
                           Agent shall have specified repay such Bank's portion
                           of the Loan in full together with accrued interest
                           thereon.

11.4     MITIGATION

         (a)      If circumstances arise which would (or would upon the giving
                  of notice) result in:

                           (i)      the reduction of a Bank's portion of the
                                    Loan pursuant to Clause 11.3 (ILLEGALITY);

                           (ii)     the prepayment of the Loan pursuant to
                                    Clause 11.3 (ILLEGALITY);

                           (iii)    an increase in the amount of any payment
                                    pursuant to Clause 10.1 (TAX GROSS-UP); or

                           (iv)     a claim by a Bank for indemnification
                                    pursuant to Clause 10.2 (TAX INDEMNITY) or a
                                    claim by a Bank for indemnification pursuant
                                    to Clause 11.1 (INCREASED COSTS),

                  then, without in any way limiting, reducing or otherwise
                  qualifying the obligations of the Borrower under any of the
                  Clauses referred to above, such Bank shall, in consultation
                  with the Agent and the Borrower, take such reasonable steps as
                  may be reasonably open to it to mitigate the effects of such
                  circumstances, including by transferring its Facility Office
                  to another jurisdiction or by assigning its rights hereunder
                  to another financial institution approved by the Borrower
                  Provided that such Bank shall have no obligation to transfer
                  its Facility Office or assign its rights

<PAGE>

                  hereunder as aforesaid if it is of the opinion that to do so
                  would or might have an adverse effect on its business,
                  operations or financial condition.

         (b)      If circumstances arise which would result in the Security
                  Trustee being entitled pursuant to Clause 4.5 of the Trust
                  Deed to exercise its rights to make deductions and
                  withholdings from payments made to the Agent hereunder, the
                  Security Trustee shall, in consultation with the Borrower,
                  take such reasonable steps as may be reasonably open to it to
                  mitigate the effects of such circumstances Provided that the
                  Security Trustee shall have no obligation to do so if it is of
                  the opinion that to do so would or might have an adverse
                  effect on its business operations or financial condition.

12.      REPRESENTATIONS

12.1     Subject to any reservations and/or qualifications as to matters of law
         which may be made in the legal opinions referred to in paragraphs 3, 4,
         5, 6 and 7 of Part 1 of the First Schedule, the Borrower represents
         that:

                  (i)      STATUS It is a limited liability company duly
                           organised under the laws of the Cayman Islands with
                           power to enter into the Facility Documents and to
                           exercise its rights and perform its obligations under
                           the Facility Documents and it is duly qualified to
                           register the Vessel under Panamanian flag;

                  (ii)     DUE AUTHORISATION All corporate and other action
                           required to authorise the execution by the Borrower
                           of the Facility Documents and the performance of its
                           obligations under the Facility Documents has been
                           duly taken;

                  (iii)    NO DEDUCTIONS OR WITHHOLDING Under the laws of the
                           Cayman Islands and Panama in force at the date
                           hereof, the Borrower will not be required to make any
                           deduction or withholding from any payment it may make
                           under any of the Facility Documents;

                  (iv)     CLAIMS PARI PASSU Without prejudice to the security
                           constituted by or pursuant to any Facility Documents
                           under the laws of the Cayman Islands and Panama in
                           force at the date hereof, the claims of the Agent,
                           the Banks and the Security Trustee against the
                           Borrower under any Facility Documents will, to the
                           extent that such claims exceed the realised value of
                           the security therefor, rank at least PARI PASSU with
                           the claims of all its other unsecured and
                           non-subordinated creditors save those whose claims
                           are preferred solely by any bankruptcy, insolvency or
                           other similar laws of general application;

                  (v)      NO IMMUNITY In any proceedings taken in the Cayman
                           Islands in relation to any of the Facility Documents,
                           the Borrower will not be entitled to claim for itself
                           or any of its assets immunity from suit, execution,
                           attachment or other legal process;

                  (vi)     GOVERNING LAW AND JUDGMENTS In any proceedings taken
                           in the Cayman Islands in relation to any of the
                           Facility Documents, the choice of English law as the
                           governing law of those of the Facility Documents as
                           are expressed

<PAGE>

                           to be governed by English law and any judgment
                           obtained in England will be recognised and enforced;

                  (vii)    VALIDITY AND ADMISSIBILITY IN EVIDENCE Other than the
                           recording of the Mortgage on a preliminary basis
                           through the Consulate of Panama in New York and on a
                           permanent basis at the Public Registry Office of the
                           Republic of Panama and any required registration in
                           the Cayman Islands all acts, conditions and things
                           required to be done, fulfilled and performed in order
                           (a) to enable the Borrower lawfully to enter into,
                           exercise its rights under and perform and comply with
                           the obligations expressed to be assumed by it in the
                           Facility Documents, (b) to ensure that the
                           obligations expressed to be assumed by it in the
                           Facility Documents are legal, valid and binding and
                           (c) to make the Facility Documents admissible in
                           evidence in the Cayman Islands have been done,
                           fulfilled and performed;

                  (viii)   NO FILING OR STAMP TAXES Under the laws of the Cayman
                           Islands in force at the date hereof, it is not
                           necessary that any of the Facility Documents be
                           filed, recorded or enrolled with any court or other
                           authority in its jurisdiction of incorporation or
                           that any stamp, registration or similar tax be paid
                           on or in relation to any such Facility Documents; and

                  (ix)     BINDING OBLIGATION The obligations expressed to be
                           assumed by the Borrower in the Facility Documents are
                           legal and valid obligations binding on it in
                           accordance with the terms of such Facility Documents.

12.2     The Borrower further represents that:

                  (i)      NO WINDING-UP It has not taken any corporate action
                           nor have any other steps been taken or legal
                           proceedings been started or (to the best of its
                           knowledge and belief) threatened against it for its
                           winding-up, dissolution or reorganisation or for the
                           appointment of a receiver, administrator,
                           administrative receiver, trustee or similar officer
                           of it or of any or all of its assets or revenues;

                  (ii)     NO MATERIAL DEFAULT It is not in breach of or in
                           default under any agreement to which it is a party or
                           which is binding on it or any of its assets to an
                           extent or in a manner which might have a material
                           adverse effect on its business or financial
                           condition;

                  (iii)    NO MATERIAL PROCEEDINGS No action or administrative
                           proceeding of or before any court or agency which
                           might have a material adverse effect on its business
                           or financial condition has been started or
                           threatened;

                  (iv)     NO OTHER BUSINESS It has not incurred any liabilities
                           or entered into any other commitments nor undertaken
                           any business other than in connection with the
                           purchase or operation of the Vessel;

                  (v)      NO UNDISCLOSED LIABILITIES As at the date hereof it
                           has no liabilities

<PAGE>

                           (contingent or otherwise) which have not been
                           disclosed to the Agent nor any unrealised or
                           anticipated losses arising from commitments entered
                           into by it;

                  (vi)     FULL DISCLOSURE Each of the Charters, the Memorandum
                           of Agreement and the Management Agreement are in full
                           force and effect and the Borrower has disclosed to
                           the Agent all of the terms and conditions of each
                           such agreement and there are no amendments or
                           variations to any such document which have not been
                           disclosed to the Agent;

                  (vii)    NO OBLIGATION TO CREATE SECURITY Its execution of the
                           Facility Documents and its exercise of its rights and
                           performance of its obligations thereunder will not
                           result in the existence of nor oblige it to create
                           any encumbrance over all or any of its present or
                           future revenues or assets except pursuant to the
                           Facility Documents;

                  (viii)   EXECUTION OF FACILITY DOCUMENTS Its execution of the
                           Facility Documents and its exercise of its rights and
                           performance of its obligations under the Facility
                           Documents do not constitute and will not result in
                           any breach of any agreement or treaty;

                  (ix)     ENCUMBRANCES Save as permitted by Clause 15(ix), no
                           encumbrance exists over all or any of its present or
                           future revenues or assets;

                  (x)      OWNERSHIP OF THE BORROWER The Shareholder is the sole
                           shareholder of the Borrower;

                  (xi)     OWNERSHIP OF THE SHAREHOLDER The General Partners are
                           the only general partners of the Shareholder; and

                  (xii)    MANAGEMENT OF THE VESSEL The Vessel will be managed
                           by Universe Tankships (Bermuda) Ltd., in accordance
                           with the provisions of the Management Agreement
                           during the Subsequent Charter.

13.      INFORMATION COVENANTS

13.1     ANNUAL STATEMENTS

         The Borrower shall using its best endeavours and as soon as the same
         become available, but in any event within one hundred and eighty days
         after the end of each of their respective financial years, furnish to
         the Agent, the Borrower's and the Initial Charterer's or, as the case
         may be, the Subsequent Charterer's balance sheets as at the end of such
         financial year and the Borrower's and the Initial Charterer's or, as
         the case may be, the Subsequent Charterer's profit-and-loss accounts in
         respect of that financial year, in each case prepared in accordance
         with internationally accepted accounting principles consistently
         applied.

<PAGE>

13.2     SEMI-ANNUAL STATEMENTS

         The Borrower using its best endeavours and shall as soon as the same
         become available, but in any event within 90 days after the end of each
         of their respective financial half years, furnish to the Agent, the
         Borrower's and the Initial Charterer's or, as the case may be, the
         Subsequent Charterer's balance sheets as at the end of such accounting
         period and the Borrower's and the Initial Charterer's or, as the case
         may be, the Subsequent Charterer's profit-and-loss accounts in respect
         of that accounting period, together with the Borrower's cash flow
         reports for such period in each case prepared in accordance with
         internationally accepted accounting principles consistently applied.

13.3     NOTIFICATION OF EVENT OF DEFAULT

         The Borrower shall promptly inform the Agent of the occurrence of any
         event which is or may become (with the passage of time, the giving of
         notice, the making of any determination hereunder or any combination
         thereof) an Event of Default and, upon receipt of a written request to
         that effect from the Agent, promptly deliver to the Agent a written
         confirmation given by a duly authorised officer of the Borrower to the
         effect that, save as previously notified to the Agent or as notified in
         such confirmation, no such event has occurred.

13.4     NOTIFICATION OF OFF-HIRE

         The Borrower shall promptly inform the Agent of any material
         interruption in the operation of the Vessel (which shall include
         situations where the Vessel is off-hire for a period of 5 days or more
         at any one time) and the financial implications of such interruption.

13.5     OTHER FINANCIAL INFORMATION

         The Borrower shall from time to time on the request of the Agent use
         its best endeavours to furnish the Agent with such other information
         about its and either the Initial Charterer's or, as the case may be,
         the Subsequent Charterer's business, assets and financial condition
         (including financial accounts and cash flow reports) as the Agent may
         reasonably request.

13.6     PROVISO

         It is hereby agreed that the Borrower's obligations under this Clause
         13 to provide or furnish the Agent with any information regarding the
         Initial Charterer shall cease upon termination of the Initial Charter.

<PAGE>

14.      FINANCIAL CONDITION

14.1     FAIR MARKET VALUE OF VESSEL

         The Borrower shall ensure that the Fair Market Value of the Vessel as
         established by R.S. Platou and H Clarkson Limited or such other two (2)
         reputable brokers appointed by the Agent (after consultation with the
         Borrower) shall at all times equal to or exceed 140% of the Loan. If at
         any time this ratio is not met, the Borrower will forthwith on the
         demand of the Agent prepay such portion of the Loan as will ensure that
         such ratios are complied with. The Agent shall be entitled to request
         such estimates of the Fair Market Value at least twice per calendar
         year (or at any time after the occurrence of an Event of Default) and
         the Borrower shall promptly pay or reimburse to the Agent the cost of
         obtaining such valuations.

14.2     MINIMUM WORKING CAPITAL

         The Borrower shall maintain at all times Working Capital (which shall
         mean Current Assets less Current Liabilities) of at least $500,000.

14.3     NOTIFICATION OF FINANCIAL CONDITION

         The Borrower shall deliver to the Agent semi-annually a certificate
         stating the Borrower's compliance with the covenants undertaken
         pursuant to this Clause 14 with each of the semi-annual financial
         statements delivered pursuant to Clause 13.2.

14.4     For the purposes of Clause 14.2:

         "CURRENT ASSETS" means all assets of the Borrower which, in accordance
         with internationally accepted accounting principles, would be classed
         as current assets; and

         "CURRENT LIABILITIES" means all obligations of the Borrower which, in
         accordance with internationally accepted accounting principles, would
         be considered as current liabilities, excluding all amounts of
         principal due under this Facility within one year from the date of
         calculation.

15.      GENERAL COVENANTS

         The Borrower:

                  (i)      shall obtain, comply with the terms of and do all
                           that is necessary to maintain in full force and
                           effect all authorisations, approvals, licences and
                           consents required in or by the laws and regulations
                           of the Cayman Islands and all other applicable
                           jurisdictions to enable it lawfully to enter into and
                           perform its obligations under the Facility Documents
                           or to ensure the legality, validity, enforceability
                           or admissibility in evidence in the Cayman Islands
                           and all other applicable jurisdictions of the
                           Facility Documents;

                  (ii)     shall procure that no change of the classification or
                           flag of the Vessel,

<PAGE>

                           management of the Vessel or the Charters shall occur
                           without the prior written consent of the Agent;

                  (iii)    shall, in the event of total loss of the Vessel,
                           procure that the Loan is repaid in full within 90
                           days of the Agent's written notice (whether as a
                           result of the application of insurance proceeds or
                           otherwise);

                  (iv)     shall not, without the prior written consent of the
                           Agent, (such consent not to be unreasonably withheld)
                           permit any distributions of the Borrower's profits or
                           assets or pay any dividends or other distributions to
                           the Shareholder or any of the Shareholder's partners;

                  (v)      shall not make any loans, grant any credit (save in
                           the ordinary course of business) or give any
                           guarantee or indemnity to or for the benefit of any
                           person or otherwise voluntarily assume any liability,
                           whether actual or contingent, in respect of any
                           obligations of any person;

                  (vi)     shall not, without prior written consent of the
                           Agent, make any investments which exceed $500,000
                           with the assets of the Borrower (otherwise than by
                           placing its cash into bank accounts with the Agent)
                           except for any investments required to maintain the
                           classification status of the Vessel;

                  (vii)    shall not, without the prior written consent of the
                           Instructing Group and the Agent, permit any change to
                           its shareholding;

                  (viii)   shall maintain all its bank accounts with the Agent's
                           branch in New York and shall only operate such
                           accounts in accordance with Clause 11 of the
                           Assignment of Earnings and Insurances;

                  (ix)     shall not, without the prior consent of the Agent,
                           create or permit to subsist any encumbrance over all
                           or any of its present or future revenues or assets
                           other than the Permitted Liens and any encumbrance
                           created pursuant to the Facility Documents and any
                           second priority security over the Vessel and its
                           earnings, insurances and bank accounts in favour of
                           the Security Trustee on terms acceptable to the Agent
                           to secure the Borrower's obligations under the Junior
                           Facility Agreement;

                  (x)      shall manage its business and procure that the Vessel
                           is managed in compliance with all applicable laws and
                           regulations applicable thereto and shall promptly
                           notify the Agent of any non-compliance other than of
                           a minor or technical nature;

                  (xi)     shall not engage in any other business other than the
                           ownership and chartering of the Vessel;

                  (xii)    shall procure that the Vessel is at all times fully
                           approved by major oil companies relevant in its
                           trade;

<PAGE>

                  (xiii)   shall ensure that during the currency of the
                           Subsequent Charter, the technical management of the
                           Vessel remains with Universe Tankships (Bermuda)
                           Ltd.; and

                  (xiv)    shall ensure that the Vessel has been sent for
                           drydocking and has been subject to special survey
                           prior to it being redelivered to the Borrower upon
                           termination of the Initial Charter.

16.      EVENTS OF DEFAULT

16.1     If:

                  (i)      FAILURE TO PAY The Borrower or the Initial Charterer
                           or, as the case may be, the Subsequent Charterer,
                           fails to pay any sum due from it under this Agreement
                           or the Initial Charter or, as the case may be, the
                           Subsequent Charter at any time in the currency and in
                           the manner specified herein or therein Provided that
                           it shall not be an Event of Default if any sum due
                           under the Initial Charter or, as the case may be, the
                           Subsequent Charter is paid by the Initial Charterer
                           or, as the case may be, the Subsequent Charterer,
                           within 5 business days of the due date for payment as
                           specified therein; or

                  (ii)     MISREPRESENTATION Any representation or statement
                           made by the Borrower in any Facility Document or in
                           any notice or other document, certificate or
                           statement delivered by it pursuant hereto or thereto
                           or in connection herewith or therewith is or proves
                           to have been incorrect or misleading in any material
                           respect when made; or

                  (iii)    COVENANTS The Borrower fails duly to perform the
                           obligations expressed to be assumed by it in Clause
                           14 (FINANCIAL CONDITION) or 15 (GENERAL COVENANTS);
                           or

                  (iv)     INSURANCE The Borrower fails to insure or procure the
                           insurance of the Vessel in accordance with the
                           requirements of the Assignment of Earnings and
                           Insurances and/or the Mortgage; or

                  (v)      OTHER OBLIGATION The Borrower fails duly to perform
                           or comply with any other obligation expressed to be
                           assumed by it in any Facility Document and such
                           failure is not remedied within thirty days after the
                           Agent has given notice to the Borrower requiring the
                           same to be remedied; or

                  (vi)     CROSS DEFAULT If (a) any indebtedness of the Borrower
                           or the Shareholder or either General Partner or the
                           Initial Charterer or, as the case may be, the
                           Subsequent Charterer is not paid when due (or within
                           any period of grace applicable thereto), (b) any
                           indebtedness of the Borrower or the Shareholder or
                           either General Partner or the Initial Charterer or,
                           as the case may be, the Subsequent Charterer is
                           declared to be or otherwise becomes due and payable
                           prior to its specified maturity or (c) any creditor
                           of the Borrower or the

<PAGE>

                           Shareholder or either General Partner, the Initial
                           Charterer or, as the case may be, the Subsequent
                           Charterer become entitled to declare any indebtedness
                           of the Borrower or the Shareholder or either General
                           Partner or the Initial Charterer or, as the case may
                           be, the Subsequent Charterer due and payable prior to
                           its specified maturity Provided that it shall not be
                           an Event of Default if, with respect to either
                           General Partner, the events specified in (a), (b) and
                           (c) above are genuinely disputed by such General
                           Partner in appropriate legal proceedings; or

                  (vii)    INSOLVENCY AND RESCHEDULING The Borrower or the
                           Shareholder or either General Partner or the Initial
                           Charterer or, as the case may be, the Subsequent
                           Charterer is unable to pay its debts as they fall
                           due, commences negotiations with any one or more of
                           its creditors with a view to the general readjustment
                           or rescheduling of its indebtedness or makes a
                           general assignment for the benefit of or a
                           composition with its creditors; or

                  (viii)   WINDING-UP Otherwise than for the purposes of a
                           reconstruction on terms previously approved by the
                           Instructing Group, the Borrower or the Shareholder or
                           either General Partner or the Initial Charterer or,
                           as the case may be, the Subsequent Charterer takes
                           any corporate action or other steps are taken or
                           legal proceedings are started for its winding-up,
                           dissolution or re-organisation or for the appointment
                           of a receiver, administrator, administrative
                           receiver, trustee or similar officer of it or of any
                           or all of its revenues and assets; or

                  (ix)     REPUDIATION The Borrower or the Initial Charterer or,
                           as the case may be, the Subsequent Charterer
                           repudiates any Facility Document or the Initial
                           Charter or, as the case may be, the Subsequent
                           Charter or does or causes to be done any act or thing
                           evidencing an intention to repudiate any such
                           Facility Document or the Initial Charter or, as the
                           case may be, the Subsequent Charter; or

                  (x)      LEGALITY OF FACILITY DOCUMENTS At any time any act,
                           condition or thing required to be done, fulfilled or
                           performed in order (a) to enable the Borrower
                           lawfully to enter into, exercise its rights under and
                           perform its obligations expressed to be assumed by it
                           in the Facility Documents, (b) to ensure that the
                           obligations expressed to be assumed by the Borrower
                           in the Facility Documents are legal, valid and
                           binding or (c) to make any of the Facility Documents
                           admissible in evidence in the Cayman Islands is not
                           done, fulfilled or performed; or

                  (xi)     COMPLIANCE WITH OBLIGATIONS At any time it is or
                           becomes unlawful for the Borrower to perform or
                           comply with any or all of its obligations under any
                           Facility Document or any of the obligations of the
                           Borrower under the Facility Document are not or cease
                           to be legal, valid and binding; or

<PAGE>

                  (xii)    SEIZURE BY GOVERNMENT By or under the authority of
                           any government, (a) the management of the Borrower is
                           wholly or partially displaced or the authority of the
                           Borrower in the conduct of its business is wholly or
                           partially curtailed or (b) the whole or any part (the
                           market value of which is twenty per cent. or more of
                           the market value of the whole) of its revenues or
                           assets is seized, nationalised, expropriated or
                           compulsorily acquired; or

                  (xiii)   MATERIAL ADVERSE CHANGE There shall occur any event
                           or circumstance which in the opinion of the
                           Instructing Group may, or may be likely to,
                           materially and adversely affect the ability of the
                           Borrower or the Initial Charterer or, as the case may
                           be, the Subsequent Charterer to discharge its
                           obligations under the Facility Documents or the
                           Initial Charter or, as the case may be, the
                           Subsequent Charter in the manner provided therein; or

                  (xiv)    VARIATION OR TERMINATION OF AGREEMENTS The Memorandum
                           of Agreement or either Charters is amended in any
                           material manner without the prior written consent of
                           the Agent or terminated otherwise than by reason of
                           the due discharge of all obligations of each of the
                           parties thereto or if any party thereto is in breach
                           of any of its obligations thereunder; or

                  (xv)     MANAGEMENT AGREEMENT If there is any material
                           amendment to the Management Agreement or the
                           Management Agreement is terminated or otherwise
                           ceases to be effective without the Agent's prior
                           written consent; or

                  (xvi)    JUNIOR FACILITY Any event of default (howsoever
                           described) occurs under the Junior Facility
                           Agreement; or

                  (xvii)   PARTNERSHIP/OWNERSHIP STRUCTURE If there is any
                           change in the shareholding of the Borrower or of
                           either General Partner without the prior written
                           consent of the Instructing Group; or

                  (xviii)  ANALOGOUS EVENT If any event occurs to the Borrower,
                           the Shareholder, any General Partner, the Initial
                           Charterer or, as the case may be, the Subsequent
                           Charterer under the laws of any other jurisdiction
                           which is analogous to any of the events or
                           circumstances referred to in paragraphs (vii) or
                           (viii) above; or

                  (xix)    SWAP AGREEMENT Any event of default (howsoever
                           described) occurs under the Interest Rate Swap
                           Agreements; or

                  (xx)     SUBSEQUENT CHARTERER If the Subsequent Charterer
                           fails to take delivery of the Vessel pursuant to the
                           Subsequent Charter promptly upon the expiry of the
                           Initial Charter,

         then, and in any such case and at any time thereafter, the Agent may,
         and shall if so instructed by the Instructing Group, by written notice
         to the Borrower:

<PAGE>

         (a)      declare the Loan to be immediately due and payable (whereupon
                  the same shall become so payable together with accrued
                  interest thereon and any other sums then owed by the Borrower
                  hereunder) or declare the Loan to be due and payable on demand
                  of the Agent; and/or

         (b)      declare that the Facility Amount shall be cancelled, whereupon
                  the same shall be cancelled and the amount thereof reduced to
                  zero.

16.2     ADVANCE DUE ON DEMAND

         If, pursuant to Clause 16.1, the Agent declares the Loan to be due and
         payable on demand of the Agent, then, and at any time thereafter, the
         Agent may by written notice to the Borrower:

                  (i)      call for repayment of the Loan on such date as it may
                           specify in such notice (whereupon the same shall
                           become due and payable on such date together with
                           accrued interest thereon and any other sums then owed
                           by the Borrower hereunder) or withdraw its
                           declaration with effect from such date as it may
                           specify in such notice; and/or

                  (ii)     select as the duration of any Interest Period
                           relating to an Advance which begins whilst such
                           declaration remains in effect a period of six months
                           or less.

16.3     PROVISO

                  (i)      It is hereby agreed that each of the events set out
                           in Clause 16.1(i), (vi), (vii), (viii), (ix), (xiii)
                           and (xiv) shall not be an Event of Default if it
                           occurs in relation to the Initial Charterer after the
                           termination of the Initial Charter as a result of the
                           obligations thereunder having been fully performed by
                           the Initial Charterer in accordance with the terms
                           specified therein; and

                  (ii)     It is hereby agreed that if any Event of Default
                           occurs only in relation to the Initial Charterer or
                           Subsequent Charterer and within 15 days thereafter
                           alternative arrangements in form and substance
                           satisfactory to the Agent and the Instructing Group,
                           as determined in their sole discretion, are entered
                           into to provide alternative security for the
                           performance by the Borrower of its obligations
                           hereunder, then the Agent, on instruction of the
                           Instructing Group, may agree that the event of
                           circumstances giving rise to such Event of Default
                           shall not be treated as an Event of Default.

<PAGE>

17.      DEFAULT INTEREST AND INDEMNITY

17.1     DEFAULT INTEREST PERIODS

         If any sum due and payable by the Borrower hereunder is not paid on the
         due date therefor in accordance with the provisions of Clause 19
         (PAYMENTS) or if any sum due and payable by the Borrower under any
         judgment of any court in connection with this Agreement is not paid on
         the date of such judgment, the period beginning on such due date or, as
         the case may be, the date of such judgment and ending on the date upon
         which the obligation of the Borrower to pay such sum (the balance
         thereof for the time being unpaid being herein referred to as an
         "UNPAID SUM") is discharged shall be divided into successive periods,
         each of which (other than the first) shall start on the last day of the
         preceding such period and the duration of each of which shall be
         selected by the Agent.

17.2     DEFAULT INTEREST

         During each such period relating thereto as is mentioned in Clause 17.1
         (DEFAULT INTEREST PERIODS) an unpaid sum shall bear interest at the
         rate per annum which is the sum from time to time of one per cent., the
         Margin and LIBOR for that period Provided that:

                  (i)      if, for any such period, LIBOR falls to be determined
                           pursuant to the proviso to the definition thereof but
                           none of the Reference Banks was offering dollar
                           deposits for the period aforesaid, the rate of
                           interest applicable to such unpaid sum shall be
                           determined by reference to the cost to each Bank of
                           obtaining such deposits from such sources as it may
                           select as notified to the Agent; and

                  (ii)     if such unpaid sum is all or part of the Advance
                           which became due and payable on a day other than the
                           last day of an Interest Period relating thereto, the
                           first such period applicable thereto shall be of a
                           duration equal to the unexpired portion of that
                           Interest Period and the rate of interest applicable
                           thereto during such period shall be that which
                           exceeds by one per cent. the rate which would have
                           been applicable to it had it not so fallen due.

17.3     PAYMENT OF DEFAULT INTEREST

         Any interest which shall have accrued under Clause 17.2 (DEFAULT
         INTEREST) in respect of an unpaid sum shall be due and payable and
         shall be paid by the Borrower at the end of the period by reference to
         which it is calculated or on such other dates as the Agent may specify
         by written notice to the Borrower.

<PAGE>

17.4     BROKEN PERIODS

         If any Bank receives or recovers all or any part of such Bank's share
         of the Advance otherwise than on the last day of an Interest Period
         relating to the Advance, the Borrower shall pay to the Agent on demand
         an amount equal to the amount (if any) by which (a) the additional
         interest which would have been payable on the amount so received or
         recovered had it been received or recovered on the last day of that
         Interest Period exceeds (b) the amount of interest which in the opinion
         of the Agent would have been payable to the Agent on the last day of
         that Interest Period in respect of a dollar deposit equal to the amount
         so received or recovered placed by it with a prime bank in London for a
         period starting on the third business day following the date of such
         receipt or recovery and ending on the last day of that Interest Period.

17.5     BORROWER'S INDEMNITY

         The Borrower undertakes:

                  (i)      to indemnify each of the Agent, each Bank and the
                           Security Trustee against any loss or expense,
                           including legal fees on a full indemnity basis, which
                           any of them may sustain or incur as a consequence of
                           any default by the Borrower in the performance of any
                           of the obligations expressed to be assumed by it in
                           any of the Facility Documents to which it is a party;
                           and

                  (ii)     to indemnify each Bank against any loss it may suffer
                           as a result of its funding its share of the Advance
                           requested by the Borrower hereunder but not made by
                           reason of the operation of any one or more of the
                           provisions hereof.

17.6     Any unpaid sum shall (for the purposes of this Clause 17 and Clause
         11.1 (INCREASED COSTS) be treated as an advance and accordingly in this
         Clause 17 and Clause 11.1 (INCREASED COSTS) the term "Advance" includes
         any unpaid sum and the term "Interest Period", in relation to an unpaid
         sum, includes each such period relating thereto as is mentioned in
         Clause 17.1 (DEFAULT INTEREST PERIODS).

18.      CURRENCY OF ACCOUNT AND PAYMENT

18.1     CURRENCY OF ACCOUNT

         The dollar is the currency of account and payment for each and every
         sum at any time due from the Borrower hereunder Provided that each
         payment in respect of costs and expenses shall be made in the currency
         in which the same were incurred.

<PAGE>

18.2     CURRENCY INDEMNITY

         If any sum due from the Borrower under any Facility Document to which
         the Borrower is a party or any order or judgment given or made in
         relation hereto or thereto has to be converted from the currency (the
         "FIRST CURRENCY") in which the same is payable under such Facility
         Document or order or judgment into another currency (the "SECOND
         CURRENCY") for the purpose of (i) making or filing a claim or proof
         against the Borrower, (ii) obtaining an order or judgment in any court
         or other tribunal or (iii) enforcing any order or judgment given or
         made in relation to any Facility Document, the Borrower shall indemnify
         and hold harmless each of the persons to whom such sum is due from and
         against any loss suffered as a result of any discrepancy between (a)
         the rate of exchange used for such purpose to convert the sum in
         question from the first currency into the second currency and (b) the
         rate or rates of exchange at which such person may in the ordinary
         course of business purchase the first currency with the second currency
         upon receipt of a sum paid to it in satisfaction, in whole or in part,
         of any such order, judgment, claim or proof.

19.      PAYMENTS

19.1     PAYMENTS

         On each date on which this Agreement requires an amount to be paid by
         the Borrower or a Bank hereunder, the Borrower or, as the case may be,
         such Bank shall make the same available to the Agent by payment in
         dollars and in same day funds (or in such other funds as may for the
         time being be customary in New York City for the settlement in New York
         City of international banking transactions in dollars) to the account
         of the Agent in Oslo or such other account as the Agent may have
         specified for this purpose.

19.2     NO SET-OFF

         All payments made by the Borrower hereunder shall be made free and
         clear of and without any deduction for or on account of any set-off or
         counterclaim.

20.      SET-OFF

         The Borrower authorises each Bank at any time following the occurrence
         of an Event of Default to apply any credit balance to which the
         Borrower is entitled on any account of the Borrower with such Bank in
         satisfaction of any sum due and payable from the Borrower to such Bank
         under this Agreement but unpaid; for this purpose, such Bank is
         authorised to purchase with the moneys standing to the credit of any
         such account such other currencies as may be necessary to effect such
         application.

<PAGE>

21.      SHARING

21.1     REDISTRIBUTION OF PAYMENTS

         If at any time, the proportion which any Bank (a "RECOVERING BANK") has
         received or recovered (whether by payment, the exercise of a right of
         set-off or combination of accounts or otherwise) in respect of its
         portion of any payment (a "RELEVANT PAYMENT") to be made under this
         Agreement by the Borrower for account of such Recovering Bank and one
         or more other Banks is greater (the portion of such receipt or recovery
         giving rise to such excess proportion being herein called an "EXCESS
         amount") than the proportion thereof so received or recovered by the
         Bank or Banks so receiving or recovering the smallest proportion
         thereof, then:

                  (i)      such Recovering Bank shall pay to the Agent an amount
                           equal to such excess amount;

                  (ii)     there shall thereupon fall due from such Recovering
                           Bank an amount equal to the amount paid out by such
                           Recovering Bank pursuant to paragraph (i) above, the
                           amount so due being, for the purposes hereof, treated
                           as if it were an unpaid part of such Recovering
                           Bank's portion of such relevant payment; and

                  (iii)    the Agent shall treat the amount received by it from
                           such Recovering Bank pursuant to paragraph (i) above
                           as if such amount had been received by it from the
                           Borrower in respect of such relevant payment and
                           shall pay the same to the persons entitled thereto
                           (including such Recovering Bank) PRO RATA to their
                           respective entitlements thereto.

21.2     REPAYABLE RECOVERIES

         If any sum (a "RELEVANT SUM") received or recovered by a Recovering
         Bank in respect of any amount owing to it by the Borrower becomes
         repayable and is repaid by such Recovering Bank, then:

                  (i)      each Bank which has received a share of such relevant
                           sum by reason of the implementation of Clause 19.1
                           (PAYMENTS) shall, upon request of the Agent, pay to
                           the Agent for account of such Recovering Bank an
                           amount equal to its share of such relevant sum; and

                  (ii)     there shall thereupon fall due from the Borrower to
                           each such Bank an amount equal to the amount paid out
                           by it pursuant to paragraph (i) above, the amount so
                           due being, for the purposes hereof, treated as if it
                           were the sum payable to such Bank against which such
                           Bank's share of such relevant sum was applied.

<PAGE>

22.      FEES

22.1     ARRANGEMENT FEE

         The Borrower shall pay to the Agent for its own account hereunder an
         arrangement fee of the amount specified in the letter exchanged between
         the Agent and General Maritime Corporation dated 10 October, 1997, such
         fee to be payable at the Drawdown Date.

22.2     AGENCY FEE

         The Borrower shall pay to the Agent a non-refundable agency fee of the
         amount specified in the letter exchanged between the Agent and General
         Maritime Corporation dated 10 October, 1997, such fee to be payable on
         the Drawdown Date and on each anniversary thereof.

23.      COSTS AND EXPENSES

23.1     TRANSACTION EXPENSES

         The Borrower shall, from time to time on demand of the Agent, reimburse
         the Agent for all costs and expenses including legal fees) incurred by
         it in connection with the negotiation, preparation and execution of the
         Facility Documents and the completion of the transactions herein
         contemplated.

23.2     PRESERVATION AND ENFORCEMENT OF RIGHTS

         The Borrower shall, from time to time on demand of the Agent, reimburse
         the Agent, the Banks and the Security Trustee for all costs and
         expenses (including legal fees) incurred in or in connection with the
         preservation and/or enforcement of any of the rights of the Agent, the
         Banks and the Security Trustee under the Facility Documents.

23.3     STAMP TAXES

         The Borrower shall pay all stamp, registration and other taxes to which
         any Facility Document or any judgment given in connection with any
         Facility Document is or at any time may be subject and shall, from time
         to time on demand of the Agent, indemnify the Security Trustee and the
         Bank against any liabilities, costs, claims and expenses resulting from
         any failure to pay or any delay in paying any such tax.

23.4     BANKS' LIABILITIES FOR COSTS

         If the Borrower fails to perform any of its obligations under this
         Clause 23, each Bank shall, in the proportion borne by its share of the
         Loan to the amount of the Loan for the time being indemnify the Agent
         against any loss incurred by it as a result of such failure and the
         Borrower shall forthwith reimburse each Bank for any payment made by it
         pursuant to this Clause 23.4.

<PAGE>

24.      THE AGENT AND THE BANKS

24.1     APPOINTMENT OF THE AGENT

         Each Bank hereby appoints the Agent to act as its agent in connection
         with this Agreement and the other Facility Documents and authorises the
         Agent to exercise such rights, powers and discretions as are
         specifically delegated to the Agent by the terms hereof together with
         all such rights, powers and discretions as are reasonably incidental
         thereto.

24.2     AGENT'S DISCRETIONS

         The Agent may:

                  (i)      assume that:

                           (a)      any representation made by the Borrower in
                                    connection with this Agreement and the other
                                    Facility Documents is true;

                           (b)      no event which is or may become an Event of
                                    Default has occurred; and

                           (c)      the Borrower is not in breach of or default
                                    under its obligations with this Agreement
                                    and the other Facility Documents

                           unless it has actual knowledge or actual notice to
                           the contrary;

                  (ii)     assume that the Facility Office of each Bank is that
                           identified with its signature (or, in the case of a
                           Transferee, at the end of the Transfer Certificate to
                           which it is a party as Transferee) below until it has
                           received from such Bank a notice designating some
                           other office of such Bank to replace its Facility
                           Office and act upon any such notice until the same is
                           superseded by a further such notice;

                  (iii)    engage and pay for the advice or services of any
                           lawyers, accountants, surveyors or other experts
                           whose advice or services may to it seem necessary,
                           expedient or desirable and rely upon any advice so
                           obtained;

                  (iv)     rely as to any matters of fact which might reasonably
                           be expected to be within the knowledge of the
                           Borrower upon a certificate signed by or on behalf of
                           the Borrower;

                  (v)      rely upon any communication or document believed by
                           it in good faith to be genuine;

                  (vi)     refrain from exercising any right, power or
                           discretion vested in it as agent hereunder unless and
                           until instructed by an Instructing Group as to
                           whether or not such right, power or discretion is to
                           be exercised and, if it is to be

<PAGE>

                           exercised, as to the manner in which it should be
                           exercised; and

                  (vii)    refrain from acting in accordance with any
                           instructions of an Instructing Group to begin any
                           legal action or proceeding arising out of or in
                           connection with this Agreement until it shall have
                           received such security as it may require (whether by
                           way of payment in advance or otherwise) for all
                           costs, claims, expenses (including legal fees) and
                           liabilities which it will or may expend or incur in
                           complying with such instructions.

24.3     AGENT'S OBLIGATIONS

         The Agent shall:

                  (i)      promptly inform each Bank of the contents of any
                           notice or document received by it from the Borrower
                           under this Agreement and the other Facility
                           Documents;

                  (ii)     promptly notify each Bank of the occurrence of any
                           Event of Default or any default by the Borrower in
                           the due performance of or compliance with its
                           obligations under this Agreement and the other
                           Facility Documents of which the Agent has actual
                           knowledge or actual notice;

                  (iii)    save as otherwise provided herein, act as agent
                           hereunder in accordance with any instructions given
                           to it by an Instructing Group, which instructions
                           shall be binding on all the Banks; and

                  (iv)     if so instructed by an Instructing Group, refrain
                           from exercising any right, power or discretion vested
                           in it as agent hereunder.

24.4     EXCLUDED OBLIGATIONS

         Notwithstanding anything to the contrary expressed or implied herein,
         the Agent shall not:

                  (i)      be bound to enquire as to:

                           (a)      whether or not any representation made by
                                    the Borrower in connection with the Facility
                                    Documents is true;

                           (b)      the occurrence or otherwise of any event
                                    which is or may become an Event of Default;

                           (c)      the performance by the Borrower of its
                                    obligations under any of the Facility
                                    Documents; or

                           (d)      any breach of or default by the Borrower of
                                    or under its obligations under any of the
                                    Facility Documents;

                  (ii)     be bound to account to each Bank for any sum or the
                           profit element of any

<PAGE>

                           sum received by it for its own account;

                  (iii)    be bound to disclose to any other person any
                           information relating to the Borrower if such
                           disclosure would or might in its opinion constitute a
                           breach of any law or regulations or be otherwise
                           actionable at the suit of any person; or

                  (iv)     be under any obligations other than those for which
                           express provision is made herein.

24.5     INDEMNIFICATION

         Each Bank shall, from time to time on demand by the Agent, indemnify
         the Agent, in the proportion its share of the Loan bears to the amount
         of the Loan at the time of such demand or, if the Loan has then been
         repaid in full, against any and all costs, claims, losses, expenses
         (including legal fees) and liabilities together with any VAT thereon
         which the Agent may incur, otherwise than by reason of its own
         negligence or wilful misconduct, in acting in its capacity as agent
         hereunder.

24.6     EXCLUSION OF LIABILITIES

         The Agent does not accept any responsibility for the accuracy and/or
         completeness of information supplied by the Borrower in connection
         herewith or with any other Facility Document or for the legality,
         validity, effectiveness, adequacy or enforceability of this Agreement
         or any other Facility Document and the Agent shall not be under any
         liability as a result of taking or omitting to take any action in
         relation to this Agreement or any other Facility Document, save in the
         case of gross negligence or wilful misconduct.

24.7     NO ACTION

         Each Bank agrees that it will not assert or seek to assert against any
         director, officer or employee of the Agent any claim it might have
         against any of them in respect of the matters referred to in Clause
         24.6 (EXCLUSION OF LIABILITIES).

24.8     BUSINESS WITH THE BORROWER

         The Agent and each of the Banks may accept deposits from, lend money to
         and generally engage in any kind of banking or other business with the
         Borrower.

24.9     RESIGNATION

         The Agent may resign its appointment hereunder at any time without
         assigning any reason therefor by giving not less than thirty days'
         prior written notice to that effect to each of the other parties hereto
         Provided that no such resignation shall be effective until a successor
         for the Agent is appointed in accordance with the succeeding provisions
         of this Clause 24.

<PAGE>

24.10    SUCCESSOR AGENT

         If the Agent gives notice of its resignation pursuant to Clause 24.9
         then any reputable and experienced bank or other financial institution
         may be appointed as a successor to the Agent by an Instructing Group
         with the Borrower's consent (such consent not to be unreasonably
         delayed or withheld) during the period of such notice but, if no such
         successor is so appointed, the Agent may appoint such a successor
         itself.

24.11    RIGHTS AND OBLIGATIONS

         If a successor to the Agent is appointed under the provisions of Clause
         24.10 (SUCCESSOR AGENT), then (i) the retiring Agent shall be
         discharged from any further obligation hereunder but shall remain
         entitled to the benefit of the provisions of this Clause 24 and (ii)
         its successor and each of the other parties hereto shall have the same
         rights and obligations amongst themselves as they would have had if
         such successor had been a party hereto.

24.12    OWN RESPONSIBILITY

         It is understood and agreed by each Bank that it has itself been, and
         will continue to be, solely responsible for making its own independent
         appraisal of and investigations into the financial condition,
         creditworthiness, condition, affairs, status and nature of the Borrower
         and, accordingly, each Bank warrants to the Agent that it has not
         relied and will not hereafter rely on the Agent:

                  (i)      to check or enquire on its behalf into the adequacy,
                           accuracy or completeness of any information provided
                           by the Borrower in connection with the Facility
                           Documents or the transactions therein contemplated
                           (whether or not such information has been or is
                           hereafter circulated to each Bank by the Agent); or

                  (ii)     to assess or keep under review on its behalf the
                           financial condition, creditworthiness, condition,
                           affairs, status or nature of the Borrower.

24.13    AGENCY DIVISION SEPARATE

         In acting as agent hereunder for the Banks, the Agent shall be regarded
         as acting through its agency division which shall be treated as a
         separate entity from any other of its divisions or departments and,
         notwithstanding the foregoing provisions of this Clause 24, any
         information received by some other division or department of the Agent
         may be treated as confidential and shall not be regarded as having been
         given to the Agent's agency division.

24.14    CONFIDENTIAL INFORMATION

         Notwithstanding anything to the contrary expressed or implied herein
         and without prejudice to the provisions of Clause 24.13 (AGENCY
         DIVISION SEPARATE), the Agent shall not as between itself and the Banks
         be bound to disclose to any Bank or other person any information which
         is supplied by Borrower to the Agent in its capacity as agent hereunder
         for the Banks and which is identified by such member of the Group at
         the time it is so supplied as being

<PAGE>

         confidential information Provided that the consent of the Borrower to
         such disclosure shall not be required in relation to any information
         which in the opinion of the Agent relates to an Event of Default or in
         respect of which the Banks have given a confidentiality undertaking in
         a form satisfactory to the Agent and the Borrower.

25.      BENEFIT OF AGREEMENT

         This Agreement shall be binding upon and enure to the benefit of each
         party hereto and its successors and permitted assigns.

26.      ASSIGNMENTS AND TRANSFERS

26.1     NO ASSIGNMENT AND TRANSFER BY THE BORROWER

         The Borrower shall not be entitled to assign or transfer all or any of
         its rights, benefits and obligations hereunder.

26.2     ASSIGNMENTS AND TRANSFERS BY BANKS

         Any Bank may at any time (and at its own cost) assign or transfer all
         or any of its rights and benefits hereunder.

26.3     ASSIGNMENTS BY BANKS

         If any Bank assigns all or any of its rights and benefits hereunder in
         accordance with Clause 26.2 (ASSIGNMENTS AND TRANSFERS BY BANKS), then,
         unless and until the assignee has agreed with the Agent and the
         Security Trustee that it shall be under the same obligations towards
         each of them as it would have been under if it had been an original
         party hereto as a Bank, the Agent and the Security Trustee shall not be
         obliged to recognise such assignee as having the rights against each of
         them which it would have had if it had been such a party hereto.

26.4     TRANSFERS BY BANKS

         If a Bank wishes to transfer all or any of its rights, benefits and/or
         obligations hereunder as contemplated in Clause 26.2 (ASSIGNMENTS AND
         TRANSFERS BY BANKS), then such transfer may be effected by the delivery
         to the Agent and the Borrower of a duly completed and duly executed
         Transfer Certificate in which event, on the later of the Transfer Date
         specified in such Transfer Certificate and the fifth business day after
         (or such earlier business day endorsed by the Agent on such Transfer
         Certificate) the date of delivery of such Transfer Certificate to the
         Agent:

                  (i)      to the extent that in such Transfer Certificate such
                           Bank seeks to transfer its rights and obligations
                           hereunder, the Borrower and such Bank shall be
                           released from further obligations towards one another
                           hereunder and their respective rights against one
                           another shall be cancelled (such rights and
                           obligations being referred to in this Clause 26.4 as
                           "DISCHARGED RIGHTS AND OBLIGATIONS"); and

<PAGE>

                  (ii)     the Borrower and the Transferee party thereto shall
                           assume obligations towards one another and/or acquire
                           rights against one another which differ from such
                           discharged rights and obligations only insofar as the
                           Borrower and such Transferee have assumed and/or
                           acquired the same in place of the Borrower and such
                           Bank;

26.5     TRANSFER FEES

         On the date upon which a transfer takes effect pursuant to this Clause
         26, the Transferee in respect of such transfer shall pay to the Agent
         for its own account a transfer fee of $500.

26.6     Any assignment or transfer which is not contemplated by the express
         provisions of this Clause 26 may only be made by a Bank with the prior
         written consent of the Borrower and in such event, the provisions of
         Clauses 26.2 (ASSIGNMENTS AND TRANSFERS BY BANKS), 26.4 (TRANSFERS BY
         BANKS) and 26.5 (TRANSFER FEES) shall apply MUTATIS MUTANDIS thereto.

26.7     DISCLOSURE OF INFORMATION

         Any Bank may, with the prior written consent of the Borrower (such
         consent not to be unreasonably withheld or delayed), disclose to any
         actual or potential assignee or to any person who may otherwise enter
         into contractual relations with such Bank in relation to this Agreement
         such information about the Borrower as such Bank and the Borrower shall
         consider appropriate.

27.      CALCULATIONS AND EVIDENCE OF DEBT

27.1     BASIS OF ACCRUAL

         Interest and commitment commission shall accrue from day to day and
         shall be calculated on the basis of a year of 360 days and the actual
         number of days elapsed.

27.2     EVIDENCE OF DEBT

         Each Bank shall maintain in accordance with its usual practice accounts
         evidencing the amounts from time to time lent by and owing to it
         hereunder; in any legal action or proceeding arising out of or in
         connection with this Agreement and other Facility Documents, the
         entries made in such accounts shall be conclusive evidence of the
         existence and amounts of the obligations of the Borrower therein
         recorded.

<PAGE>

27.3     CONTROL ACCOUNTS

         The Agent shall maintain on its books a control account or accounts in
         which shall be recorded (i) the amount of the Advance made hereunder by
         the Banks, (ii) the amount of all principal, interest and other sums
         due or to become due from the Borrower to each of the Banks under the
         Facility Documents and (iii) the amount of any sum received or
         recovered by the Agent under the Facility Documents and each Bank's
         share therein. To the extent that discrepancies exist between accounts
         maintained by each Bank pursuant to clause 27.2 (EVIDENCE OF DEBT) and
         control accounts maintained by the Agent under this Clause 27.3, the
         control accounts herein maintained shall prevail.

27.4     PRIMA FACIE EVIDENCE

         In any legal action or proceeding arising out of or in connection with
         this Agreement and/or any other Facility Document, the entries made in
         the accounts maintained pursuant to Clause 27.2 (EVIDENCE OF DEBT) or
         Clause 27.3 (CONTROL ACCOUNTS) shall be PRIMA FACIE evidence of the
         existence and extent of the obligations of the Borrower therein
         recorded.

27.5     CHANGE OF CIRCUMSTANCE CERTIFICATES

         A certificate of the Bank as to (a) the amount by which a sum payable
         to it hereunder is to be increased under Clause 10.1 (TAX GROSS-UP) or
         (b) the amount for the time being required to indemnify it against any
         such cost or liability as is mentioned in Clause 10.2 (TAX INDEMNITY)
         or 11.1 (INCREASED COSTS) shall, in the absence of manifest error, be
         conclusive for the purposes of this Agreement and PRIMA FACIE evidence
         in any legal action or proceeding arising out of or in connection with
         this Agreement.

28.      REMEDIES AND WAIVERS

         No failure to exercise, nor any delay in exercising, on the part of the
         Agent, any Bank and the Security Trustee or any of them, any right or
         remedy hereunder shall operate as a waiver thereof, nor shall any
         single or partial exercise of any right or remedy prevent any further
         or other exercise thereof or the exercise of any other right or remedy.
         The rights and remedies herein provided are cumulative and not
         exclusive of any rights or remedies provided by law.

29.      PARTIAL INVALIDITY

         If at any time any provision hereof is or becomes illegal, invalid or
         unenforceable in any respect under the law of any jurisdiction, neither
         the legality, validity or enforceability of the remaining provisions
         hereof nor the legality, validity or enforceability of such provision
         under the law of any other jurisdiction shall in any way be affected or
         impaired thereby.

<PAGE>

30.      NOTICES

30.1     COMMUNICATIONS IN WRITING

         Each communication to be made hereunder shall be made in writing but,
         unless otherwise stated, may be made by telex, facsimile or letter.

30.2     COMMUNICATIONS THROUGH THE AGENT

         Each communication between the Banks and the Borrower hereunder shall
         only be effected through the Agent.

30.3     DELIVERY

         Any communication or document to be made or delivered by one party to
         the other pursuant to this Agreement shall (unless the other party has
         by three days' written notice to the one specified another address or
         telex or facsimile number) be made or delivered to that other party at
         the address or telex or facsimile number identified with its signature
         below and shall be deemed to have been made or delivered when
         despatched and answerback received (in the case of any communication
         made by telex) or (in the case of any communication made by facsimile)
         when legibly received or (in the case of any communication made by
         letter) when left at that address or (as the case may be) ten days
         after being deposited in the post postage prepaid in an envelope
         addressed to it at that address Provided that:

                  (i)      if any such communication or document would otherwise
                           be deemed to have been received on a day which is not
                           a business day it shall be deemed to have been
                           received on the first business day thereafter; and

                  (ii)     any communication or document to be made or delivered
                           by the Borrower to each Bank shall be effective only
                           when legibly received by the Bank and then only if
                           the same is expressly marked for the attention of the
                           department or officer identified with such Bank's
                           signature below (or such other department or officer
                           as such Bank shall from time to time specify for this
                           purpose).

30.4     ENGLISH LANGUAGE

         Each communication and document made or delivered by one party to
         another pursuant to this Agreement shall be in the English language or
         accompanied by a translation thereof into English certified (by an
         officer of the person making or delivering the same) as being a true
         and accurate translation thereof.

<PAGE>

31.      LAW

         This Agreement shall be governed by, and construed in accordance with,
         English law.

32.      JURISDICTION

32.1     ENGLISH COURTS

         Each of the parties hereto irrevocably agrees for the benefit of the
         Agent, the Banks and the Security Trustee that the courts of England
         shall have jurisdiction to hear and determine any suit, action or
         proceeding, and to settle any disputes, which may arise out of or in
         connection with this Agreement and, for such purposes, irrevocably
         submits to the jurisdiction of such courts.

32.2     APPROPRIATE FORUM

         The Borrower irrevocably waives any objection which it might now or
         hereafter have to the courts referred to in Clause 32.1 (ENGLISH
         COURTS) being nominated as the forum to hear and determine any suit,
         action or proceeding, and to settle any disputes, which may arise out
         of or in connection with this Agreement and agrees not to claim that
         any such court is not a convenient or appropriate forum.

32.3     SERVICE OF PROCESS

         The Borrower agrees that the process by which any suit, action or
         proceeding in England is begun may be served on it by being delivered
         to Clifford Chance Secretaries Limited at 200 Aldersgate Street,
         London, EC1A 4JJ or other of its registered offices for the time being.

32.4     NON-EXCLUSIVE SUBMISSIONS

         The submission to the jurisdiction of the courts referred to in Clause
         32.1 (ENGLISH COURTS) shall not (and shall not be construed so as to)
         limit the right of the Agent, the Banks or the Security Trustee to take
         proceedings against the Borrower in any other court of competent
         jurisdiction nor shall the taking of proceedings in any one or more
         jurisdictions preclude the taking of proceedings in any other
         jurisdiction, whether concurrently or not.

AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.

<PAGE>

                               THE FIRST SCHEDULE

                          CONDITION PRECEDENT DOCUMENTS

                                     PART 1

1.       In relation to the Borrower, the Shareholder, the Managing General
Partner, the Initial Charterer and the Subsequent Charterer (herein together
referred to as the "RELEVANT PARTIES"):

                  (i)      a copy, certified a true copy by a duly authorised
                           officer of the Borrower, of a Board Resolution of the
                           Borrower approving the execution, delivery and
                           performance of each of the Facility Documents to
                           which it is a party and the terms and conditions
                           thereof and authorising a named person or persons to
                           sign each of the Facility Documents;

                  (ii)     a copy, certified a true copy by a duly authorised
                           officer of the Managing General Partner of the
                           Shareholder's Certificate of Registration as a
                           Limited Partnership and its Limited Partnership
                           Agreement;

                  (iii)    a copy, certified a true copy by a duly authorised
                           officer of the Relevant Party, of the constitutive
                           documents of such Relevant Party;

                  (iv)     a copy, certified a true copy by a duly authorised
                           officer of the Initial Charterer, of a Board
                           Resolution of the Initial Charterer approving the
                           execution, delivery and performance of the Initial
                           Charter and the terms and conditions thereof and
                           authorising a named person or persons to sign the
                           Initial Charter;

                  (v)      a copy, certified a true copy by a duly authorised
                           officer of the Subsequent Charterer, of a Board
                           Resolution of the Subsequent Charterer approving the
                           execution, delivery and performance of the Subsequent
                           Charter and the terms and conditions thereof and
                           authorising a named person or persons to sign and
                           deliver the Subsequent Charter;

                  (vi)     a certificate of a duly authorised officer of the
                           Borrower setting out the names and signatures of the
                           persons authorised to sign, on behalf of the
                           Borrower, each of the Facility Documents and any
                           documents to be delivered pursuant thereto; and

                  (vii)    a copy certified a true copy by a duly authorised
                           officer of the Borrower of the proforma opening
                           balance sheet of the Borrower evidencing its capital
                           structure including the amount of its Working
                           Capital;

                  (viii)   a certificate of a duly authorised officer of the
                           Managing General Partner of the Shareholder setting
                           out the partners (both general and limited) of the
                           Shareholder; and

                  (ix)     a certificate of a duly authorised officer of the
                           Borrower certifying that the

<PAGE>

                           Shareholder is the sole Shareholder of the Borrower.

2.       A copy of the Cayman Islands Exempted Limited Partnership Law and of
each such other law, decree, consent, licence, approval, registration or
declaration as is, in the opinion of counsel to the Banks, necessary to render
the Facility Documents the Charter and the CHARTER GUARANTEE legal, valid,
binding and enforceable, to make them admissible in evidence in the Cayman
Islands and Panama and to enable the Borrower lawfully to perform its
obligations under the Facility Documents.

3.       An opinion of the Initial Bank's counsel in relation to Panamanian law
in a form satisfactory to the Initial Bank.

4.       An opinion of the Initial Bank's Cayman Islands counsel in a form
satisfactory to the Initial Bank.

5.       An opinion of the Initial Charterer's internal counsel in a form
satisfactory to the Initial Bank relating to the Initial Charter.

6.       An opinion of the Subsequent Charterer's internal counsel in a form
satisfactory to the Initial Bank relating to the Subsequent Charter;

7.       An opinion of Clifford Chance in a form satisfactory to the Initial
Bank.

8.       Evidence that Clifford Chance Secretaries Limited has agreed to act as
the agent of the Borrower for the service of process in England.

9.       A copy, certified to be a true copy by a duly authorised officer of the
Borrower of the Memorandum of Agreement showing the purchase price of the Vessel
to be $31,000,000.

10.      A copy, certified to be a true copy by a duly authorised officer of the
Borrower of each of the Charters.

11.      [Intentionally Deleted]

12.      Valid up-to-date class certificates from a classification society
acceptable to the Agent and showing the Vessel to be in a class acceptable to
the Agent, without extension or recommendations.

13.      Details of the manager of the Vessel during the subsequent Charter and
a certified true copy of such Management Agreement in a form acceptable to the
Initial Bank.

14.      A copy of the Bill of Sale relating to the Vessel and any other
documents required to be produced by the Seller or the Borrower pursuant to the
Memorandum of Agreement.

15.      Evidence of the discharge of any existing mortgages over the Vessel.

16.      Confirmation that the technical management of the Vessel during the
Subsequent Charter is with Universe Tankships (Bermuda) Ltd.

<PAGE>

17.      An assignment of the Borrower's bank accounts in a form acceptable to
the Agent.

18.      A security trust deed whereby the Security Trustee agrees to hold the
benefit of the security created by the mortgage and the assignment of earnings
and insurances and the assignment of accounts referred to in paragraphs 1, 2 and
3 above on trust for the Beneficiaries named therein in a form acceptable to the
Agent.

19.      A Priority Agreement between the Borrower, the Banks and the agent
under this Agreement and the Agent under this Agreement and the Agent and the
lenders under the Junior Facility Agreement.

20.      A copy of the Seller's latest Annual Franchise Tax Receipt ("TASA
ANUAL").

21.      A letter of undertaking from Poles, Tublin, Patestides & Stratakis that
the Protocol of Delivery and Acceptance of the Vessel shall not be delivered to
the Industrial Bank of Japan, Ltd., until consent of the Agent or its
representative is given.

22.      An opinion of the Initial Bank's New York counsel in a form
satisfactory to the Initial Bank.

23.      A Letter of Awareness from Neptune Orient Lines relating to the
Subsequent Charter.

<PAGE>

                                     PART 2

Each of the following documents duly executed by the Borrower:

1.       A first preferred Panamanian ship mortgage over the Vessel granted by
the Borrower in favour of the Security Trustee in a form acceptable to the
Agent.

2.       An assignment of earnings and insurances agreement entered into by the
Borrower in favour of the Security Trustee to secure the Borrower's obligations
under this Agreement in a form acceptable to the Agent.

3.       All notices to be given under the assignments referred to in 2 above.

4.       The Protocol of Delivery and Acceptance of the Vessel duly signed by
the Borrower and the Seller.

5.       Evidence that the Vessel has been properly insured and the terms of the
insurances are acceptable to the Agent.

<PAGE>

                               THE SECOND SCHEDULE

                               NOTICE OF DRAWDOWN

From:    Pacific Tankship Ltd.,

To:      Christiania Bank og Kreditkasse ASA as Agent

Dear Sirs,

1.       We refer to the agreement (the "FACILITY AGREEMENT") dated ____ October
1997 and made between ourselves as borrower, yourselves as agent and security
trustee and the Initial Bank. Terms defined in the Facility Agreement shall have
the same meaning in this notice.

2.       We hereby give you notice that, pursuant to the Facility Agreement and
on _____________________, we wish to borrow the amount of ________________
United States Dollars (being an amount equal to the lesser of the amount of the
Facility Amount and 67 per cent. of the purchase price of the m/t "PACIFIC
JUPITER" upon the terms and subject to the conditions contained therein.

3.       We would like the Advance to have a first Interest Period of:

         First Choice: _____________________________ months' duration.

         Second Choice:* __________________________ months' duration.

4.       We further confirm that, at the date hereof, the representations set
out in Clauses 12.1 and 12.2 of the Facility Agreement are true and that no
event which is or may become (with the passage of time, the giving of notice,
the making of any determination under the Facility Agreement or any combination
thereof) an Event of Default has occurred.

5.       The proceeds of this drawdown should be credited to our account
No.0007110471 with The Industrial Bank of Japan, Ltd.

                                Yours faithfully

                          -----------------------------
                              for and on behalf of
                             PACIFIC TANKSHIP LTD.,

--------------------------------------------------------------------------------
*        Only if the first choice Interest Period is twelve months.

<PAGE>

                               THE THIRD SCHEDULE

                          FORM OF TRANSFER CERTIFICATE

To:      Christiania Bank og Kreditkasse ASA (as Agent) and
         Pacific Tankership Ltd.,

                              TRANSFER CERTIFICATE

relating to the agreement (as from time to time amended, varied, novated or
supplemented, the "FACILITY AGREEMENT") dated [ ] whereby a US$18,000,000 loan
facility was made available to [ ] (the "BORROWER") by the Initial Bank as
defined therein in connection with which Christiania Bank og Kreditkasse ASA
acted as Agent and Security Trustee.

1.       Terms defined in the Facility Agreement shall, subject to any contrary
indication, have the same meanings herein. The terms Bank, Transferee, Bank's
Participation and Amount Transferred are defined in the schedule hereto.

2.       The Bank confirms that the Bank's Participation is an accurate summary
of its participation in the Facility Agreement and requests the Transferee to
accept and procure the transfer to the Transferee of a percentage of the Bank's
Participation (equal to the percentage that the Amount Transferred is of the
aggregate of the component amounts (as set out in the Schedule hereto) of the
Bank's Participation) by counter-signing and delivering this Transfer
Certificate to the Agent at its address for the service of notices specified in
the Facility Agreement.

3.       The Transferee hereby requests the Agent to accept this Transfer
Certificate as being delivered to the Agent pursuant to and for the purposes of
Clause 26.2 of the Facility Agreement so as to take effect in accordance with
the terms thereof on the Transfer Date or on such later date as may be
determined in accordance with the terms thereof.

4.       The Transferee warrants that it has received a copy of the Facility
Agreement together with such other information as it has required in connection
with this transaction and that it has not relied and will not hereafter rely on
the Bank to check or enquire on its behalf into the legality, validity,
effectiveness, adequacy, accuracy or completeness of any such information and
further agrees that it has not relied and will not rely on the Bank to assess or
keep under review on its behalf the financial condition, creditworthiness,
condition, affairs, status or nature of the Borrower.

5.       The Transferee hereby undertakes with the Bank and each of the other
parties to the Facility Agreement that it will perform in accordance with their
terms all those obligations which by the terms of the Facility Agreement will be
assumed by it after delivery of this Transfer Certificate to the Agent and
satisfaction of the conditions (if any) subject to which this Transfer
Certificate is expressed to take effect.

6.       The Bank makes no representation or warranty and assumes no
responsibility with respect to the legality, validity, effectiveness, adequacy
or enforceability of the Facility Agreement or any document relating thereto and
assumes no responsibility for the financial condition of the Borrower or

<PAGE>

for the performance and observance by the Borrower of any of its obligations
under the Facility Agreement or any document relating thereto and any and all
such conditions and warranties, whether express or implied by law or otherwise,
are hereby excluded.

7.       The Bank hereby gives notice that nothing herein or in the Facility
Agreement (or any document relating thereto) shall oblige the Bank to (i) accept
a re-transfer from the Transferee of the whole or any part of its rights,
benefits and/or obligations under the Facility Agreement transferred pursuant
hereto or (ii) support any losses directly or indirectly sustained or incurred
by the Transferee for any reason whatsoever including, without limitation, the
non-performance by the Borrower or any other party to the Facility Agreement (or
any document relating thereto) of its obligations under any such document. The
Transferee hereby acknowledges the absence of any such obligations under any
such document. The Transferee hereby acknowledges the absence of any such
obligation as is referred to in (i) or (ii) above.

8.       This Transfer Certificate and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with English law.

                                    SCHEDULE

1.       Bank:

2.       Transferee:

3.       Transfer Date:

4.       Bank's Participation:

         Bank's portion of the Loan:

         Bank's Commitment:

5.       Amount Transferred:

[Transferor Bank]                           [Transferee Bank]

By:                                         By:

Date:                                       Date:

                                            Address:

<PAGE>

                                 EXECUTION PAGE

THE BORROWER

PACIFIC TANKSHIP LTD.,

By:               PETER GEORGIOPOULOS

Address:          c/o General Maritime Corporation
                  730 Fifth Avenue (15th Floor)
                  New York
                  NY 10019
                  USA

Attention:
Tel:              (212) 698 9630
Fax:              (212) 698 9628

THE AGENT AND SECURITY TRUSTEE

CHRISTIANIA BANK OG KREDITKASSE ASA

By:               AMELIA SWEETLAND

Address:          PO Box 1166
                  Sentrum
                  0107 Oslo
                  Norway

Attention:
Tel:              47 2248 5000
Fax:              47 2248 6668

<PAGE>

THE INITIAL BANK

CHRISTIANIA BANK OG KREDITKASSE ASA

By:               AMELIA SWEETLAND

Address:          PO Box 1166
                  Sentrum
                  0107 Oslo
                  Norway

Attention:        Shipping Department
Tel:              47 2248 5000
Fax:              47 2248 6668<PAGE>

                            JUNIOR FACILITY AGREEMENT

                                     between

                             PACIFIC TANKSHIP LTD.,
                                   as borrower

                       CHRISTIANIA BANK OG KREDITKASSE ASA
                          as agent and security trustee

                                       and

                       CHRISTIANIA BANK OG KREDITKASSE ASA
                                    as lender

                                 Clifford Chance
                                     London

<PAGE>

                                    CONTENTS

<TABLE>
<CAPTION>
CLAUSE                                                                      PAGE

<S>                                                                         <C>
1.  Interpretation ........................................................    1
2.  The Facility ..........................................................    8
3.  Purpose ...............................................................    8
4.  Conditions Precedent ..................................................    8
5.  Nature of Banks' Rights and Obligations ...............................    8
6.  Availability ..........................................................    9
7.  Interest Periods ......................................................   10
8.  Interest ..............................................................   10
9.  Repayment and Prepayment ..............................................   11
10. Taxes and Tax Receipts ................................................   12
11. Changes in Circumstances ..............................................   13
12. Representations .......................................................   15
13. Information Covenants .................................................   18
14. Financial Condition ...................................................   19
15. General Covenants .....................................................   20
16. Events of Default .....................................................   21
17. Default Interest and Indemnity ........................................   25
18. Currency of Account and Payment .......................................   27
19. Payments ..............................................................   27
20. Set-Off ...............................................................   27
21. Sharing ...............................................................   28
22. Fees ..................................................................   29
23. Costs and Expenses ....................................................   29
24. The Agent and the Banks ...............................................   30
25. Benefit of Agreement ..................................................   34
26. Assignments and Transfers .............................................   34
27. Calculations and Evidence of Debt .....................................   35
28. Remedies and Waivers ..................................................   36
29. Partial Invalidity ....................................................   36
30. Notices ...............................................................   36
31. Law ...................................................................   37
32. Jurisdiction ..........................................................   37

The First Schedule
    Condition Precedent Documents .........................................   39

The Second Schedule
    Notice of Drawdown ....................................................   43

The Third Schedule
    Form of Transfer Certificate ..........................................   44
</TABLE>

<PAGE>

THIS AGREEMENT is made on 27 October 1997

BETWEEN:

(1)      PACIFIC TANKSHIP LTD., (the "BORROWER");

(2)      CHRISTIANIA BANK OG KREDITKASSE ASA (in its capacity as agent, the
         "AGENT");

(3)      CHRISTIANIA BANK OG KREDITKASSE ASA (in its capacity as the security
         trustee, the "SECURITY Trustee"); and

(4)      CHRISTIANIA BANK OG KREDITKASSE ASA ("INITIAL BANK").

                                    RECITALS

A.       The Initial Bank has agreed to grant to the Borrower, upon the terms
         and subject to the conditions herein set forth, a loan facility in the
         amount of up to $4,500,000.

B.       By a further Loan Agreement (the "SENIOR FACILITY AGREEMENT") of even
         date herewith and made between the Borrower, the Agent, the Security
         Trustee and the Initial Bank as defined therein the Initial Bank has
         agreed to lend to the Borrower a further sum of up to $18,000,000
         secured by first ranking security over the assets mortgaged or charged
         by the Borrower to the Security Trustee pursuant to the Facility
         Documents defined therein.

NOW IT IS HEREBY AGREED  as follows:

1.       INTERPRETATION

1.1      In this Agreement:

         "ADMINISTRATIVE GENERAL PARTNER" means GMC Administration Ltd., a
         company duly incorporated under the laws of the Cayman Islands.

         "ADVANCE" means, save as otherwise provided herein, the advance made or
         to be made by the Banks hereunder;

         "ASSIGNMENT OF ACCOUNTS" MEANS THE ASSIGNMENT OF THE BORROWER'S BANK
         ACCOUNTS TO BE EXECUTED BY THE BORROWER IN FAVOUR OF THE SECURITY
         TRUSTEE PURSUANT TO PARAGRAPH 17, OF PART 1 OF THE FIRST SCHEDULE;

         "ASSIGNMENT OF EARNINGS AND INSURANCES" means an assignment of earnings
         and insurances to be entered into by the Borrower in favour of the
         Security Trustee pursuant to paragraph 2, Part 2 of the First Schedule;

         "BANKS" means the Initial Bank and any Transferees of the Initial Bank
         (and any subsequent Transferees) and "BANK" means each of the Banks;

         "BASLE PAPER" means the paper entitled "International Convergence of
         Capital Measurement

<PAGE>

         and Capital Standards" dated July 1988 and prepared by the Basle
         Committee on Banking Regulations and Supervision, as amended in
         November 1991;

         "BORROWER DEPOSIT ACCOUNT" means the account held in the name of the
         Borrower with The Industrial Bank of Japan, Ltd., Japan;

         "CAPITAL ADEQUACY REQUIREMENT" means a request or requirement relating
         to the maintenance of capital, including one which makes any change to,
         or is based on any alteration in, the interpretation of the Basle Paper
         or which increases the amounts of capital required thereunder, other
         than a request or requirement made by way of implementation of the
         Basle Paper in the manner in which it is being implemented at the date
         hereof;

         "CHARTERS" means each of the Initial Charter and the Subsequent Charter
         and "CHARTER" means each of them;

         "CHARTERERS" means each of the Initial Charterer and the Subsequent
         Charterer and "CHARTERER" means each of them;

         "DRAWDOWN DATE" means the date on which the Advance is made to the
         Borrower hereunder;

         "EARNINGS ACCOUNT" has the meaning ascribed to it in the Assignment of
         Earnings and Insurances;

         "EVENT OF DEFAULT" means any of those events specified in Clause 16.1
         (EVENTS OF DEFAULT);

         "FACILITY" means the dollar loan facility granted to the Borrower in
         this Agreement;

         "FACILITY AMOUNT" means an amount of up to US$2,500,000 to be advanced
         by the Initial Bank to the Borrower;

         "FACILITY OFFICE" means in relation to a Bank, the Agent or the
         Security Trustee the office identified with the signature below (or in
         the case of a Transferee, at the end of the Transfer Certificate to
         which it is a party as Transferee) or such other office as it may from
         time to time select;

         "FAIR MARKET VALUE" means, in relation to the Vessel at any time, the
         sale value of the Vessel in dollars determined on the basis of a sale
         (for cash and prompt delivery) by a willing seller to a willing buyer,
         free of charter and encumbrances and at arm's length on normal
         commercial terms;

         "FINAL REPAYMENT DATE" means the date which falls 66 months after the
         Drawdown Date;

         "FACILITY DOCUMENTS" means this Agreement, the Guarantee, the Interest
         Rate Swap Agreement, the Trust Deed, the Mortgage, the Assignment of
         Earnings and Insurances, the Priority Agreement and the Assignment of
         Accounts and any other document agreed between the Agent and the
         Borrower to be a Facility Document and "FACILITY DOCUMENT" means each
         of them;

<PAGE>

         "GENERAL PARTNERS" means the Managing General Partner and the
         Administrative General Partner and "GENERAL PARTNER" means each of
         them;

         "GUARANTEE" means the guarantee to be executed by the Guarantor in
         favour of the Agent on behalf of the Initial Bank pursuant to paragraph
         11, of Part 1 of the First Schedule;

         "GUARANTOR" means Maritime Equity Management Ltd., a New York
         corporation;

         "INITIAL CHARTER" means the bareboat charter party (as from time to
         time amended or novated) dated 6 October 1997 whereby the Initial
         Charterer has agreed to charter the Vessel on a bareboat charter basis
         from the Borrower for a period of approximately six months from the
         Drawdown Date;

         "INITIAL CHARTERER" means Rachel Lines S.A., a corporation duly
         incorporated under the laws of the Panama;

         "INSTRUCTING GROUP" means a Bank or group of Banks to whom in aggregate
         more than fifty per cent of the Loan is (or, immediately prior to its
         repayment, was then) owed;

         "INTEREST RATE SWAP AGREEMENT" means the International Swap Dealers
         Association, Inc. Master Agreement together with a confirmation letter
         both dated on or about the date hereof entered into by the Borrower and
         the Initial Bank as Swap Counterparty (as from time to time amended,
         supplemented or extended by the parties thereunder) pursuant to which
         the Borrower will hedge all or part of its interest costs under this
         Agreement;

         "INTEREST PERIOD" means any of those periods mentioned in Clause 7.2
         (DURATION OF INTEREST PERIODS);

         "LIBOR" means, in relation to any period for which an interest rate is
         to be determined hereunder, the rate per annum determined by the Agent
         to be equal to the LIBOR fixing on Telerate page 3740 for deposits in
         dollars for a period corresponding to that period at 11.00 a.m. on the
         Quotation Date for that period Provided that if there are no such rates
         so appearing on such page at such time it means the rate per annum
         determined by the Agent to be equal to the arithmetic mean (rounded
         upwards, if not already such a multiple to the nearest whole multiple
         of one-sixteenth of one per cent.) of the respective rates (as notified
         to the Agent) at which the Reference Banks were offering to prime banks
         in the London Interbank Market deposits in dollars for a period
         corresponding to such period at such time;

         "LOAN" means the aggregate principal amount for the time being
         outstanding hereunder;

         "MANAGEMENT AGREEMENT" means the agreement (as from time to time
         amended or novated) to be entered or entered into between the Borrower
         and Universe Tankships (Bermuda) Ltd. relating to the management of the
         Vessel pursuant to paragraph 13, Part 1, of the First Schedule;

         "MANAGING GENERAL PARTNER" means Genmar Pacific Ltd., a corporation
         duly incorporated under the laws of the State of New York, USA;

<PAGE>

         "MARGIN" means three per cent. (3%) per annum;

         "MEMORANDUM OF AGREEMENT" means the agreement (as from time to time
         amended or novated) for the purchase and sale of the Vessel dated 6
         October 1997 and made between the Borrower and the Seller;

         "MORTGAGE" means a first preferred Panamanian ship mortgage over the
         Vessel to be granted by the Borrower to the Security Trustee pursuant
         to paragraph 1, Part 2 of the First Schedule;

         "NOTICE OF DRAWDOWN" means a notice in the form or substantially the
         form of that set out in the Second Schedule;

         "PANAMA" means Republic of Panama;

         "PERMITTED LIENS" has the meaning ascribed to it in the Assignment of
         Earnings and Insurances;

         "PRIORITY AGREEMENT" means the agreement between the Agent, the Banks,
         the Borrower and the agent and the lenders under the Senior Facility
         Agreement regulating the priorities and the rights of enforcement of
         security between the Banks and the lenders under the Senior Facility
         Agreement pursuant to paragraph 19, Part 1 of the First Schedule;

         "QUOTATION DATE" in relation to any period for which an interest rate
         is to be determined hereunder means the day on which quotations would
         ordinarily be given by prime banks in the London Interbank Market for
         dollar deposits for delivery on the first day of that period Provided
         that if, for any such period, quotations would ordinarily be given on
         more than one date, the Quotation Date for that period shall be the
         last of those dates;

         "REFERENCE BANK" means the principal Oslo office of Christiania Bank og
         Kreditkasse ASA and such other banks as may from time to time be agreed
         between the Borrower and the Agent;

         "RETENTION ACCOUNT" has the meaning ascribed to it in the Assignment of
         Earnings and Insurances;

         "SELLER" means Rachel Lines S.A. Panama;

         "SHAREHOLDER" means Pacific Tankship, L.P., the sole shareholder of the
         Borrower;

         "SUBSEQUENT CHARTER" means the time charter (as from time to time
         amended or novated) dated as of 17 October 1997 whereby the Subsequent
         Charterer has agreed to charter the Vessel from the Borrower for a
         minimum of sixty months immediately upon the termination of the Initial
         Charter;

         "SUBSEQUENT CHARTERER" means American Eagle Tankers Inc. Limited;

         "TERMINATION DATE" means the earlier of 31 December 1997 and the date
         on which the

<PAGE>

         Facility Amount has been reduced to zero;

         "TRANSFER CERTIFICATE" means a certificate in the form set out in the
         Third Schedule (or such other form as may be agreed between the
         relevant Bank, the proposed Transferee, the Agent and the Borrower
         pursuant to Clause 26.2 (ASSIGNMENTS AND TRANSFERS BY BANKS)) signed by
         a Bank and a Transferee whereby:

                  (i)      such Bank seeks to procure the transfer to such
                           Transferee of all or a part of such Bank's rights and
                           obligations hereunder upon and subject to the terms
                           and conditions set out in Clause 26.2 (ASSIGNMENTS
                           AND TRANSFERS BY BANKS); and

                  (ii)     such Transferee undertakes to perform the obligations
                           it will assume as a result of delivery of such
                           certificate to the Borrower as is contemplated in
                           Clause 26.4 (TRANSFERS BY BANKS)

         "TRANSFER DATE" in relation to any Transfer Certificate means the date
         for the making of the transfer as specified in the schedule to such
         Transfer Certificate;

         "TRANSFEREE" means a bank or other financial institution to which a
         Bank seeks to transfer all or part of such Bank's rights and
         obligations hereunder;

         "TRUST DEED" means a security trust deed of the date hereof entered
         into between the Security Trustee, the Agent, the Borrower and the
         Banks and the agent and lenders under the Senior Facility Agreement
         pursuant to paragraph 18, Part 1 of the First Schedule;

         "VESSEL" means the vessel known as m/t "PACIFIC JUPITER", more
         particularly described in the Mortgage.

1.2      Any reference in this Agreement to:

         the Agent, the Security Trustee, or the Banks shall be construed so as
         to include their respective successors, Transferees and permitted
         assigns in accordance with their respective interests;

         a "BUSINESS DAY" shall be construed as a reference to a day (other than
         a Saturday or Sunday) on which banks are generally open for business in
         Oslo, London and New York City;

         a "CHARTER" shall be construed as a reference to any agreement
         (including the Charters) pursuant to which the Vessel is, or will be,
         employed;

         a "CLAUSE" shall, subject to any contrary indication, be construed as a
         reference to a clause hereof;

         an "ENCUMBRANCE" shall be construed as a reference to a mortgage,
         charge, pledge, lien or other encumbrance securing any obligation of
         any person or any other type of preferential arrangement (including,
         without limitation, title transfer and retention arrangements) having a
         similar effect;

<PAGE>

         the "EQUIVALENT" in one currency (in this paragraph the "FIRST
         CURRENCY") of an amount denominated in another currency (in this
         paragraph the "SECOND CURRENCY") on any date shall, save as otherwise
         provided, be construed as a reference to the amount of the first
         currency which could be purchased with that amount of the second
         currency at the spot rate of exchange quoted by the Agent at or about
         11.00 a.m. on such date for the purchase of the first currency with the
         second currency for delivery on the second business day thereafter;

         a "GUARANTEE" includes any guarantee, indemnity or other obligation to
         pay, purchase, provide funds for the payment of or indemnify against
         the consequences of default in the payment of indebtedness of any other
         person and any encumbrance which secures the payment of any
         indebtedness of any other person;

         a "HOLDING COMPANY" of a company or corporation shall be construed as a
         reference to any company or corporation of which the first-mentioned
         company or corporation is a subsidiary;

         "INDEBTEDNESS" shall be construed so as to include any obligation
         (whether incurred as principal or as surety) for the payment or
         repayment of money, whether present or future, actual or contingent;

         a "MONTH" is a reference to a period starting on one day in a calendar
         month and ending on the numerically corresponding day in the next
         calendar month save that, where any such period would otherwise end on
         a day which is not a business day, it shall end on the next business
         day, unless that day falls in the calendar month succeeding that in
         which it would otherwise have ended, in which case it shall end on the
         preceding business day Provided that, if a period starts on the last
         business day in a calendar month or if there is no numerically
         corresponding day in the month in which that period ends, that period
         shall end on the last business day in that later month (and references
         to "MONTHS" shall be construed accordingly);

         a "PERSON" shall be construed as a reference to any person, firm,
         company, corporation, government, state or agency of a state or any
         association or partnership (whether or not having separate legal
         personality) of two or more of the foregoing;

         a "SCHEDULE" shall, subject to any contrary indication, be construed as
         a reference to a schedule hereto;

         a "SUBSIDIARY" of a company or corporation shall be construed as a
         reference to any company or corporation:

                  (i)      which is controlled, directly or indirectly, by the
                           first-mentioned company or corporation;

                  (ii)     more than half the issued share capital of which is
                           beneficially owned, directly or indirectly, by the
                           first-mentioned company or corporation; or

                  (iii)    which is a subsidiary of another subsidiary of the
                           first-mentioned company or corporation

<PAGE>

         and, for these purposes, a company or corporation shall be treated as
         being controlled by another if that other company or corporation is
         able to direct its affairs and/or to control the composition of its
         board of directors or equivalent body;

         "TAX" shall be construed so as to include any present or future tax,
         levy, impost, duty or other charge of a similar nature (including,
         without limitation, any penalty or interest payable in connection with
         any failure to pay or any delay in paying any of the same);

         "TOTAL LOSS" includes any actual, constructive, arranged, agreed or
         compromised total loss, any requisitioning for title and the capture,
         seizure, arrest, detention, or confiscation of the Vessel by any
         government, or by persons purporting to act on behalf of any
         government, unless the Vessel be released and restored to the Owner
         from such capture, seizure, detention or confiscation within one month
         after the date thereof; and

         the "WINDING-UP" or "DISSOLUTION" of a company or limited partnership
         shall be construed so as to include any equivalent or analogous
         proceedings under the law of the jurisdiction in which such company or
         limited partnership is incorporated or established or any jurisdiction
         in which such company or limited partnership carries on business.

1.3      "$" and "DOLLARS" denote lawful currency of the United States of
         America.

1.4      Save where the contrary is indicated, any reference in this Agreement
         to:

                  (i)      this Agreement or any other agreement or document
                           shall be construed as a reference to this Agreement
                           or, as the case may be, such other agreement or
                           document as the same may have been, or may from time
                           to time be, amended, varied or supplemented;

                  (ii)     a statute shall be construed as a reference to such
                           statute as the same may have been, or may from time
                           to time be, amended or re-enacted; and

                  (iii)    a time of day shall be construed as a reference to
                           London time.

1.5      Clause headings are for ease of reference only.

1.6      For the purposes of the Facility Documents, a total loss of the Vessel
         shall be deemed to have occurred:

                  (i)      if it consists of an actual total loss, at noon
                           Greenwich Mean Time on the actual date of loss or, if
                           that is not known, on the date on which she was last
                           heard of;

                  (ii)     if it consists of a requisitioning for title, at noon
                           Greenwich Mean Time on the date on which the same is
                           expressed to take effect by the person making the
                           same; and

                  (iii)    if it consists of a constructive or compromised or
                           arranged or agreed total loss, at noon Greenwich Mean
                           Time on the date at which notice of her

<PAGE>

                           abandonment is given to her insurers for the time
                           being or (if her insurers for the time being do not
                           admit the claim for total loss) at the time on which
                           a total loss is subsequently adjudged to have
                           occurred by a competent court or arbitration tribunal
                           or liability in respect thereof as a total loss is
                           admitted by underwriters.

2.       THE FACILITY

         The Initial Bank hereby grants to the Borrower, upon the terms and
         subject to the conditions hereof, a loan facility in the maximum amount
         of $4,500,000.

3.       PURPOSE

         The purpose of the Facility is to provide the Borrower with funds to
         finance the purchase of the Vessel and, accordingly, the Borrower shall
         apply all of the amounts raised by it hereunder in or towards such
         purpose (but so that neither the Agent nor the Initial Bank shall be
         obliged to concern itself with the application of amounts borrowed by
         the Borrower hereunder).

4.       CONDITIONS PRECEDENT

         The Borrower shall not be entitled to give any Notice of Drawdown
         hereunder unless the Agent shall have confirmed to the Borrower by
         facsimile or letter that it has received three days prior to the
         proposed Drawdown Date each of the documents specified in Part 1 of the
         First Schedule and found the same to be satisfactory to it in form and
         substance.

5.       NATURE OF BANKS' RIGHTS AND OBLIGATIONS

5.1      OBLIGATIONS OF BANKS SEVERAL

         The obligations of each Bank hereunder are several.

5.2      FAILURE OF ANY BANK TO PERFORM OBLIGATIONS

         The failure by a Bank to perform its obligations hereunder shall not
         affect the obligations of the Borrower towards any other party hereto
         nor shall any other party be liable for the failure by such Bank to
         perform its obligations hereunder.

5.3      RIGHTS OF BANKS SEVERAL

         The rights of the Banks hereunder are also several. The amount at any
         time owing by the Borrower to any party under this Agreement shall be a
         separate and independent debt from any amount owing to any other party.

<PAGE>

6.       AVAILABILITY

6.1      THE FACILITY

         The Facility shall be made by the Initial Bank to the Borrower by way
         of a single Advance.

         It is hereby agreed that on the Drawdown Date, the Advance shall be
         paid into the Borrower Deposit Account and shall be held in escrow in
         the Borrower Deposit Account until its release therefrom in accordance
         with the provisions of the Memorandum of Agreement;

6.2      DRAWDOWN CONDITIONS

         Save as otherwise provided herein, the Advance will be made by the
         Initial Bank and paid into the Borrower Deposit Account, on the request
         of the Borrower if:

                  (i)      not more than ten nor less than two business days
                           before the proposed date for the making of the
                           Advance the Agent has received from the Borrower a
                           Notice of Drawdown therefor, receipt of which shall
                           oblige the Borrower to borrow the amount therein
                           requested on the date therein stated upon the terms
                           and subject to the conditions contained herein;

                  (ii)     the aggregate sum of the amount stated in the Notice
                           of Drawdown and the amount drawn down or to be drawn
                           down under the Senior Facility Agreement shall not
                           exceed 75% of the Fair Market Value of the Vessel as
                           determined in accordance to Clause 14.1 (FAIR MARKET
                           VALUE OF VESSEL);

                  (iii)    the Drawdown Date is a business day which is or
                           precedes the Termination Date;

                  (iv)     the interest rate applicable to the Advance during
                           its first Interest Period does not fall to be
                           determined pursuant to the proviso to Clause 7.2
                           (DURATION OF INTEREST PERIODS); and

                  (v)      (a)      no event has occurred which is or may become
                                    (with the passage of time, the giving of
                                    notice, the making of any determination
                                    hereunder or any combination thereof) an
                                    Event of Default; and

                           (b)      the representations set out in Clause 12
                                    (REPRESENTATIONS) are true on and as of the
                                    proposed date for the making of such Advance

                  or the Agent agrees (notwithstanding any matter mentioned at
                  (a) or (b) above) that the Advance should be made and paid
                  into the Borrower Deposit Account.

<PAGE>

6.3      RELEASE CONDITION

         The Borrower hereby covenants that prior to the release of the Advance
         held in the Borrower Deposit Account to the Seller it will deliver to
         the Agent each of the documents specified in Part 2 of the First
         Schedule and in both form and substance satisfactory to the Agent.

7.       INTEREST PERIODS

7.1      INTEREST PERIODS

         The period for which the Advance is outstanding shall be divided into
         successive periods each of which (other than the first) shall start on
         the last day of the preceding such period.

7.2      DURATION OF INTEREST PERIODS

         The duration of each Interest Period relating to the Advance shall,
         save as otherwise provided herein, be one, three, six or twelve months,
         or any such other period as may be agreed from time to time between the
         Borrower and the Agent, in each case as the Borrower may select by not
         less than three business days' prior notice to the Agent Provided that:

                  (i)      if the Borrower selects a duration of twelve months
                           in relation to an Interest Period, then:

                           (a)      the Borrower may, at the same time, notify
                                    the Agent of an alternative selection of
                                    three or six months to apply if the
                                    Borrower's selection becomes ineffective
                                    pursuant to (b) below; and

                           (b)      any Bank may, at any time before 9.00 a.m.
                                    on the second business day preceding the
                                    first day of such Interest Period, notify
                                    the Agent that it objects to the Borrower's
                                    selection, whereupon such selection shall
                                    become ineffective Provided that no such
                                    objection shall be given except for reason
                                    of the non availability to such Bank of
                                    dollars for twelve months interest periods
                                    in the London Inter-bank Market;

                  (ii)     if the Borrower fails to give such notice of its
                           selection in relation to an Interest Period, or if
                           its selection becomes ineffective under (i)(b) above
                           and the Borrower has failed to give the Agent any
                           permitted alternative selection pursuant to (i)(a)
                           above, then the duration of that Interest Period
                           shall, subject to (iii) below, be three months;

                  (iii)    the Borrower may not select an Interest Period of one
                           month more than three times during any calendar year;
                           and

                  (iv)     any Interest Period which would otherwise end during
                           the month preceding, or extend beyond, the Final
                           Repayment Date shall be of such duration that it
                           shall end on the Final Repayment Date.

<PAGE>

8.       INTEREST

8.1      PAYMENT OF INTEREST

         On the last day of each Interest Period (and, in the case of an
         Interest Period of a duration of more than three months, on the last
         day of each successive period of three months falling within such
         Interest Period) the Borrower shall pay accrued interest on the Advance
         to which such Interest Period relates.

8.2      CALCULATION OF INTEREST

         The rate of interest applicable to the Advance from time to time during
         an Interest Period relating thereto shall be the rate per annum which
         is the sum of the Margin and LIBOR for such Interest Period Provided
         that if LIBOR for an Interest Period falls to be determined in
         accordance with the proviso to the definition thereof but none of the
         Reference Banks was offering to prime banks in the London Interbank
         Market dollar deposits for the proposed duration of such Interest
         Period, the rate of interest applicable to the Advance to which such
         Interest Period relates from time to time during such Interest Period
         shall be the rate per annum which is the sum of the Margin and the
         weighted average of the rates per annum notified to the Agent by each
         Bank before the last day of such Interest Period to be that which
         expresses as a percentage rate per annum the cost to it of funding such
         Advance during such Interest Period from whatever sources it may select
         and the Agent shall notify the Borrower accordingly.

9.       REPAYMENT AND PREPAYMENT

9.1      REPAYMENT

         The Borrower shall repay the Loan in full on the Final Repayment Date.

9.2      PREPAYMENT

         The Borrower may, if it has given to the Agent not less than fifteen
         (15) business days' prior notice to that effect, prepay the whole or
         any part of the Advance (but if in part being an amount or integral
         multiple of $100,000) on the last day of an Interest Period relating
         thereto. Any prepayment made by the Borrower shall satisfy the
         Borrower's remaining obligations under Clause 9.1 (REPAYMENT) in
         inverse order of maturity.

9.3      NOTICE OF PREPAYMENT

         Any notice of prepayment given by the Borrower pursuant to Clause 9.2
         (PREPAYMENT) shall be irrevocable and shall specify the date upon which
         such prepayment is to be made and the amount thereof and shall oblige
         the Borrower to make such prepayment on such date.

9.4      PREPAYMENT FEE

         If the Borrower makes any prepayment pursuant to Clause 9.2
         (PREPAYMENT), the Borrower

<PAGE>

         shall be obliged, together with such prepayment, to pay a prepayment
         fee. The prepayment fee shall equal to:-

         (a)      for any prepayments made within 12 months of the Drawdown
                  Date, 7% of the amounts so prepaid;

         (b)      for any prepayments made in the period beginning 12 months and
                  ending 24 months from Drawdown Date, 5.5% of the amounts so
                  prepaid;

         (c)      for any prepayments made in the period beginning 24 months and
                  ending 36 months from Drawdown Date, 4.0% of the amounts so
                  prepaid;

         (d)      for any prepayments made in the period beginning 36 months and
                  ending 48 months from Drawdown Date, 2.5% of the amounts so
                  prepaid;

         (e)      for any prepayments made during the 12 months preceding the
                  Final Repayment Date, 1% of the amounts so prepaid.

         Provided that no such fee shall be payable if such prepayment was made
         pursuant to a refinancing of the Loan granted by the Initial Bank or by
         a syndicate of banks of which the Initial Bank is an agent or an
         underwriter.

9.5      INTEREST RATE SWAP AGREEMENTS

         If the Borrower makes any prepayment pursuant to Clause 9.2, it shall
         be obliged to pay to the Initial Bank as counterparty to the Interest
         Rate Swap Agreement (or the Initial Bank shall pay to the Agent for
         account of the Borrower) the amount of any loss (or, as the case may
         be, profit) incurred or made by the Initial Bank as a result of a total
         or partial early termination of the Interest Rate Swap Agreement made
         to ensure that the notional principal amount of the Interest Rate Swap
         Agreement matches the reduced amount of the Loan.

9.6      NO OTHER REPAYMENTS OR REBORROWING

         No amount repaid or prepaid hereunder may be reborrowed.

10.      TAXES AND TAX RECEIPTS

10.1     TAX GROSS-UP

         All payments to be made by the Borrower to any person under any of the
         Facility Documents to which it is a party shall be made free and clear
         of and without deduction for or on account of tax unless the Borrower
         is required to make such a payment subject to the deduction or
         withholding of tax, in which case the sum payable by the Borrower in
         respect of which such deduction or withholding is required to be made
         shall be increased to the extent necessary to ensure that, after the
         making of such deduction or withholding, such person receives and
         retains (free from any liability in respect of any such deduction or
         withholding) a net sum equal to the sum which it would have received
         and so retained had no such deduction or withholding been made or
         required to be made.

<PAGE>

10.2     TAX INDEMNITY

         Without prejudice to the provisions of Clause 10.1 (TAX GROSS-UP), if
         any person or the Agent on its behalf is required to make any payment
         on account of tax or otherwise (not being a tax imposed on the net
         income of the Facility Office by the jurisdiction in which it is
         incorporated or in which the Facility Office is located) on or in
         relation to any sum received or receivable by such person under any of
         the Facility Documents (including, without limitation, any sum received
         or receivable under this Clause 10) or any liability in respect of any
         such payment is asserted, imposed, levied or assessed against the such
         person, the Borrower shall, upon demand of the Agent, promptly
         indemnify the such person against such payment or liability, together
         with any interest, penalties and expenses payable or incurred in
         connection therewith Provided that if a Bank or the Agent or the
         Security Trustee considers that it is reasonable to do so and that it
         would not be otherwise prejudiced thereby, it will, prior to
         instructing the Agent to make a demand under this Clause 10.2, use
         reasonable endeavours to determine whether any such payment or
         liability was correctly or legally imposed or asserted.

10.3     CLAIMS BY A BANK

         If a Bank intends to make a claim pursuant to Clause 10.2 (TAX
         INDEMNITY) it shall notify the Agent of the event by reason of which it
         is entitled to do so whereupon the Agent shall notify the Borrower
         accordingly.

10.4     NOTIFICATION OF REQUIREMENT TO DEDUCT TAX

         If, at any time, the Borrower is required by law to make any deduction
         or withholding from any sum payable by it under any of the Facility
         Documents to which it is a party (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 notify the
         Agent, whereupon the Agent shall notify the Banks and the Security
         Trustee accordingly.

10.5     EVIDENCE OF PAYMENT OF TAX

         If the Borrower makes any payment under any of the Facility Documents
         to which it is a party in respect of which it is required to make any
         deduction or withholding, it shall pay the full amount required 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 days after it has received the
         same, an original receipt (or a certified copy thereof) issued by such
         authority evidencing the payment to such authority of all amounts so
         required to be deducted or withheld in respect of such payment.

<PAGE>

11.      CHANGES IN CIRCUMSTANCES

11.1     INCREASED COSTS

         If, by reason of (a) any change in law or in its interpretation or
         administration and/or (b) compliance with any Capital Adequacy
         Requirement or any request from or requirement of any central bank or
         other fiscal, monetary or other authority:

                  (i)      a Bank or any holding company of such Bank incurs a
                           cost as a result of such Bank having entered into
                           and/or performing its obligations under this
                           Agreement and/or assuming or maintaining a commitment
                           under this Agreement and/or making its advance
                           hereunder;

                  (ii)     a Bank or any holding company of such Bank is unable
                           to obtain the rate of return on its overall capital
                           which it would have been able to obtain but for such
                           Bank having entered into and/or performing its
                           obligations and/or assuming or maintaining a
                           commitment under this Agreement;

                  (iii)    there is any increase in the cost to a Bank or any
                           holding company of such Bank of funding or
                           maintaining all or any of the advances comprised in a
                           class of advances formed by or including the advance
                           made or to be made by such Bank hereunder; or

                  (iv)     a Bank or any holding company of such Bank becomes
                           liable to make any payment on account of tax or
                           otherwise (not being a tax imposed on the net income
                           of the Facility Office by the jurisdiction in which
                           such Bank is incorporated or in which the Facility
                           Office is located) on or calculated by reference to
                           the amount of the Advance made or to be made
                           hereunder and/or by reference to any sum received or
                           receivable by such Bank hereunder,

         then the Borrower shall, from time to time on demand of the Agent,
         promptly pay to the Agent for the account of such Bank amounts
         sufficient to indemnify it (or,as the case may be, to enable it to
         indemnify its holding company) against, as the case may be, (1) such
         cost, (2) such reduction in such rate of return (or such proportion of
         such reduction as is, in the opinion of such Bank, attributable to its
         obligations hereunder), (3) such increased cost (or such proportion of
         such increased cost as is, in the opinion of such Bank, attributable to
         its funding or maintaining its advance hereunder) or (4) such
         liability.

11.2     INCREASED COSTS CLAIMS

         If a Bank intends to make a claim pursuant to Clause 11.1 (INCREASED
         COSTS) it shall notify the Agent of the event by reason of which it is
         entitled to do so whereupon the Agent shall notify the Borrower
         accordingly.

<PAGE>

11.3     ILLEGALITY

         If at any time it is unlawful for a Bank to make its portion of the
         Advance or to fund or allow to remain outstanding its portion of the
         Loan, then that Bank shall, promptly after becoming aware of such fact,
         deliver to the Agent who will deliver to the Borrower a certificate to
         that effect whereupon:

                  (i)      if no Advance has been made hereunder, the Bank shall
                           not thereafter be obliged to make the Advance
                           hereunder and its Facility Commitment shall be
                           reduced to zero; and

                  (ii)     if the Advance has already been made hereunder, then,
                           if the Agent on behalf of any relevant Bank so
                           requires, the Borrower shall on such date as the
                           Agent shall have specified repay such Bank's portion
                           of the Loan in full together with accrued interest
                           thereon.

11.4     MITIGATION

         (a)      If circumstances arise which would (or would upon the giving
                  of notice) result in:

                           (i)      the reduction of a Bank's portion of the
                                    Loan pursuant to Clause 11.3 (ILLEGALITY);

                           (ii)     the prepayment of the Loan pursuant to
                                    Clause 11.3 (ILLEGALITY);

                           (iii)    an increase in the amount of any payment
                                    pursuant to Clause 10.1 (TAX GROSS-UP); or

                           (iv)     a claim by a Bank for indemnification
                                    pursuant to Clause 10.2 (TAX INDEMNITY) or a
                                    claim by a Bank for indemnification pursuant
                                    to Clause 11.1 (INCREASED COSTS),

                  then, without in any way limiting, reducing or otherwise
                  qualifying the obligations of the Borrower under any of the
                  Clauses referred to above, such Bank shall, in consultation
                  with the Agent and the Borrower, take such reasonable steps as
                  may be reasonably open to it to mitigate the effects of such
                  circumstances, including by transferring its Facility Office
                  to another jurisdiction or by assigning its rights hereunder
                  to another financial institution approved by the Borrower
                  Provided that such Bank shall have no obligation to transfer
                  its Facility Office or assign its rights hereunder as
                  aforesaid if it is of the opinion that to do so would or might
                  have an adverse effect on its business, operations or
                  financial condition.

         (b)      If circumstances arise which would result in the Security
                  Trustee being entitled pursuant to Clause 4.5 of the Trust
                  Deed to exercise its rights to make deductions and
                  withholdings from payments made to the Agent hereunder, the
                  Security Trustee shall, in consultation with the Borrower,
                  take such reasonable steps as may be reasonably open to it to
                  mitigate the effects of such circumstances Provided that the
                  Security

<PAGE>

         Trustee shall have no obligation to do so if it is of the opinion that
         to do so would or might have an adverse effect on its business
         operations or financial condition.

12.      REPRESENTATIONS

12.1     Subject to any reservations and/or qualifications as to matters of law
         which may be made in the legal opinions referred to in paragraphs 3, 4,
         5, 6 and 7 of Part 1 of the First Schedule, the Borrower represents
         that:

                  (i)      STATUS It is a limited liability company duly
                           organised under the laws of the Cayman Islands with
                           power to enter into the Facility Documents to which
                           it is a party and to exercise its rights and perform
                           its obligations under the Facility Documents and it
                           is duly qualified to register the Vessel under
                           Panamanian flag;

                  (ii)     DUE AUTHORISATION All corporate and other action
                           required to authorise the execution by the Borrower
                           of the Facility Documents to which it is a party and
                           the performance of its obligations under such
                           Facility Documents has been duly taken;

                  (iii)    NO DEDUCTIONS OR WITHHOLDING Under the laws of the
                           Cayman Islands and Panama in force at the date
                           hereof, the Borrower will not be required to make any
                           deduction or withholding from any payment it may make
                           under any of the Facility Documents to which it is a
                           party;

                  (iv)     CLAIMS PARI PASSU Without prejudice to the security
                           constituted by or pursuant to any Facility Documents
                           to which it is a party under the laws of the Cayman
                           Islands and Panama in force at the date hereof, the
                           claims of the Agent, the Banks and the Security
                           Trustee against the Borrower under any such Facility
                           Documents will, to the extent that such claims exceed
                           the realised value of the security therefor, rank at
                           least PARI PASSU with the claims of all its other
                           unsecured and non-subordinated creditors save those
                           whose claims are preferred solely by any bankruptcy,
                           insolvency or other similar laws of general
                           application;

                  (v)      NO IMMUNITY In any proceedings taken in the Cayman
                           Islands in relation to any of the Facility Documents
                           to which it is a party, the Borrower will not be
                           entitled to claim for itself or any of its assets
                           immunity from suit, execution, attachment or other
                           legal process;

                  (vi)     GOVERNING LAW AND JUDGMENTS In any proceedings taken
                           in the Cayman Islands in relation to any of the
                           Facility Documents to which it is a party, the choice
                           of English law as the governing law of those Facility
                           Documents as are expressed to be governed by English
                           law and any judgment obtained in England will be
                           recognised and enforced;

                  (vii)    VALIDITY AND ADMISSIBILITY IN EVIDENCE Other than the
                           recording of the Mortgage on a preliminary basis
                           through the Consulate of Panama in New

<PAGE>

                           York and on a permanent basis at the Republic
                           Registry Office of the Republic of Panama and any
                           required registration in the Cayman Islands all acts,
                           conditions and things required to be done, fulfilled
                           and performed in order (a) to enable the Borrower
                           lawfully to enter into, exercise its rights under and
                           perform and comply with the obligations expressed to
                           be assumed by it in the Facility Documents to which
                           it is a party, (b) to ensure that the obligations
                           expressed to be assumed by it in such Facility
                           Documents are legal, valid and binding and (c) to
                           make such Facility Documents admissible in evidence
                           in the Cayman Islands have been done, fulfilled and
                           performed;

                  (viii)   NO FILING OR STAMP TAXES Under the laws of the Cayman
                           Islands in force at the date hereof, it is not
                           necessary that any of the Facility Documents to which
                           it is a party be filed, recorded or enrolled with any
                           court or other authority in its jurisdiction of
                           incorporation or that any stamp, registration or
                           similar tax be paid on or in relation to any such
                           Facility Documents; and

                  (ix)     BINDING OBLIGATION The obligations expressed to be
                           assumed by the Borrower in the Facility Documents to
                           which it is a party are legal and valid obligations
                           binding on it in accordance with the terms of such
                           Facility Documents.

12.2     The Borrower further represents that:

                  (i)      NO WINDING-UP It has not taken any corporate action
                           nor have any other steps been taken or legal
                           proceedings been started or (to the best of its
                           knowledge and belief) threatened against it for its
                           winding-up, dissolution or reorganisation or for the
                           appointment of a receiver, administrator,
                           administrative receiver, trustee or similar officer
                           of it or of any or all of its assets or revenues;

                  (ii)     NO MATERIAL DEFAULT It is not in breach of or in
                           default under any agreement to which it is a party or
                           which is binding on it or any of its assets to an
                           extent or in a manner which might have a material
                           adverse effect on its business or financial
                           condition;

                  (iii)    NO MATERIAL PROCEEDINGS No action or administrative
                           proceeding of or before any court or agency which
                           might have a material adverse effect on its business
                           or financial condition has been started or
                           threatened;

                  (iv)     NO OTHER BUSINESS It has not incurred any liabilities
                           or entered into any other commitments nor undertaken
                           any business other than in connection with the
                           purchase or operation of the Vessel;

                  (v)      NO UNDISCLOSED LIABILITIES As at the date hereof it
                           has no liabilities (contingent or otherwise) which
                           have not been disclosed to the Agent nor any
                           unrealised or anticipated losses arising from
                           commitments entered into by it;

                  (vi)     FULL DISCLOSURE Each of the Charters, the Charter
                           Guarantee, the

<PAGE>

                           Memorandum of Agreement and the Management Agreement
                           are in full force and effect and the Borrower has
                           disclosed to the Agent all of the terms and
                           conditions of each such agreement and there are no
                           amendments or variations to any such document which
                           have not been disclosed to the Agent;

                  (vii)    NO OBLIGATION TO CREATE SECURITY Its execution of the
                           Facility Documents to which it is a party and its
                           exercise of its rights and performance of its
                           obligations thereunder will not result in the
                           existence of nor oblige it to create any encumbrance
                           over all or any of its present or future revenues or
                           assets except pursuant to such Facility Documents;

                  (viii)   EXECUTION OF FACILITY DOCUMENTS Its execution of the
                           Facility Documents to which it is a party and its
                           exercise of its rights and performance of its
                           obligations under such Facility Documents do not
                           constitute and will not result in any breach of any
                           agreement or treaty;

                  (ix)     ENCUMBRANCES Save as permitted by Clause 15(ix), no
                           encumbrance exists over all or any of its present or
                           future revenues or assets;

                  (x)      OWNERSHIP OF THE BORROWER The Shareholder is the sole
                           shareholder of the Borrower;

                  (xi)     OWNERSHIP OF THE SHAREHOLDER The General Partners are
                           the only general partners of the Shareholder; and

                  (xii)    MANAGEMENT OF THE VESSEL The Vessel will be managed
                           by Universe Tankships (Bermuda) Ltd in accordance
                           with the provisions of the Management Agreement
                           during the Subsequent Charter.

13.      INFORMATION COVENANTS

13.1     ANNUAL STATEMENTS

         The Borrower shall using its best endeavours and as soon as the same
         become available, but in any event within one hundred and eighty days
         after the end of each of their respective financial years, furnish to
         the Agent, the Borrower's and the Initial Charterer's or, as the case
         may be, the Subsequent Charterer balance sheets as at the end of such
         financial year and the Borrower's and the Initial Charterer's or, as
         the case may be, the Subsequent Charterer profit-and-loss accounts in
         respect of that financial year, in each case prepared in accordance
         with internationally accepted accounting principles consistently
         applied.

<PAGE>

13.2     SEMI-ANNUAL STATEMENTS

         The Borrower using its best endeavours and shall as soon as the same
         become available, but in any event within 90 days after the end of each
         of their respective financial half years, furnish to the Agent, the
         Borrower's and the Initial Charterer's or, as the case may be, the
         Subsequent Charterer's balance sheets as at the end of such accounting
         period and the Borrower's and the Initial Charterer's or, as the case
         may be, the Subsequent Charterer's profit-and-loss accounts in respect
         of that accounting period, together with the Borrower's cash flow
         reports for such period in each case prepared in accordance with
         internationally accepted accounting principles consistently applied.

13.3     NOTIFICATION OF EVENT OF DEFAULT

         The Borrower shall promptly inform the Agent of the occurrence of any
         event which is or may become (with the passage of time, the giving of
         notice, the making of any determination hereunder or any combination
         thereof) an Event of Default and, upon receipt of a written request to
         that effect from the Agent, promptly deliver to the Agent a written
         confirmation given by a duly authorised officer of the Borrower to the
         effect that, save as previously notified to the Agent or as notified in
         such confirmation, no such event has occurred.

13.4     NOTIFICATION OF OFF-HIRE

         The Borrower shall promptly inform the Agent of any material
         interruption in the operation of the Vessel (which shall include
         situations where the Vessel is off-hire for a period of 5 days or more
         at any one time) and the financial implications of such interruption.

13.5     OTHER FINANCIAL INFORMATION

         The Borrower shall from time to time on the request of the Agent use
         its best endeavours to furnish the Agent with such other information
         about its and either the Initial Charterer's or, as the case may be,
         the Subsequent Charterer's business, assets and financial condition
         (including financial accounts and cash flow reports) as the Agent may
         reasonably request.

13.6     PROVISO

         It is hereby agreed that the Borrower's obligations under this Clause
         13 to provide or furnish the Agent with any information regarding the
         Initial Charterer shall cease upon termination of the Initial Charter.

<PAGE>

14.      FINANCIAL CONDITION

14.1     FAIR MARKET VALUE OF VESSEL

         The Borrower shall ensure that the Fair Market Value of the Vessel as
         established by R.S. Platou and H Clarkson Limited or such other two (2)
         reputable brokers appointed by the Agent (after consultation with the
         Borrower) shall at all times equal to or exceed 140% of the Loan as
         defined in the Senior Facility Agreement. If at any time this ratio is
         not met, the Borrower will forthwith on the demand of the Agent prepay
         such portion of the Loan as will ensure that such ratios are complied
         with. The Agent shall be entitled to request such estimates of the Fair
         Market Value at least twice per calendar year (or at any time after the
         occurrence of an Event of Default) and the Borrower shall promptly pay
         or reimburse to the Agent the cost of obtaining such valuations.

14.2     MINIMUM WORKING CAPITAL

         The Borrower shall maintain at all times Working Capital (which shall
         mean Current Assets less Current Liabilities) of at least $500,000.

14.3     NOTIFICATION OF FINANCIAL CONDITION The Borrower shall deliver to the
         Agent semi annually a certificate stating the Borrower's compliance
         with the covenants undertaken pursuant to this Clause 14 with each of
         the semi-annual financial statements delivered pursuant to Clause 13.2.

14.4     For the purposes of Clause 14.2:

         "CURRENT ASSETS" means all assets of the Borrower which, in accordance
         with internationally accepted accounting principles, would be classed
         as current assets; and

         "CURRENT LIABILITIES" means all obligations of the Borrower which, in
         accordance with internationally accepted accounting principles, would
         be considered as current liabilities, excluding all amounts of
         principal due under this Facility within one year from the date of
         calculation.

15.      GENERAL COVENANTS

         The Borrower:

                  (i)      shall obtain, comply with the terms of and do all
                           that is necessary to maintain in full force and
                           effect all authorisations, approvals, licences and
                           consents required in or by the laws and regulations
                           of the Cayman Islands and all other applicable
                           jurisdictions to enable it lawfully to enter into and
                           perform its obligations under the Facility Documents
                           to which it is a party or to ensure the legality,
                           validity, enforceability or admissibility in evidence
                           in the Cayman Islands and all other applicable
                           jurisdictions of such Facility Documents;

<PAGE>

                  (ii)     shall procure that no change of the classification or
                           flag of the Vessel, management of the Vessel or the
                           Charters shall occur without the prior written
                           consent of the Agent;

                  (iii)    shall, in the event of total loss of the Vessel,
                           procure that the Loan is repaid in full within 90
                           days of the Agent's written notice (whether as a
                           result of the application of insurance proceeds or
                           otherwise);

                  (iv)     shall not, without the prior written consent of the
                           Agent, (such consent not to be unreasonably withheld)
                           permit any distributions of the Borrower's profits or
                           assets or pay any dividends or other distributions to
                           the Shareholder or any of the Shareholder's partners;

                  (v)      shall not make any loans, grant any credit (save in
                           the ordinary course of business) or give any
                           guarantee or indemnity to or for the benefit of any
                           person or otherwise voluntarily assume any liability,
                           whether actual or contingent, in respect of any
                           obligations of any person;

                  (vi)     shall not, without prior written consent of the
                           Agent, make any investments which exceed $500,000
                           with the assets of the Borrower (otherwise than by
                           placing its cash into bank accounts with the Agent)
                           except for any investments required to maintain the
                           classification status of the Vessel;

                  (vii)    shall not, without the prior written consent of the
                           Instructing Group and the Agent, permit any change to
                           its shareholding;

                  (viii)   shall maintain all its bank accounts with the Agent's
                           branch in New York and shall only operate such
                           accounts in accordance with Clause 11 of the
                           Assignment of Earnings and Insurances;

                  (ix)     shall not, without the prior consent of the Agent,
                           create or permit to subsist any encumbrance over all
                           or any of its present or future revenues or assets
                           other than the Permitted Liens and any encumbrance
                           created pursuant to the Facility Documents to which
                           it is a party and any first priority security over
                           the Vessel and its earnings, insurances and bank
                           accounts in favour of the Security Trustee on terms
                           acceptable to the Agent to secure the Borrower's
                           obligations under the Senior Facility Agreement;

                  (x)      shall manage its business and procure that the Vessel
                           is managed in compliance with all applicable laws and
                           regulations applicable thereto and shall promptly
                           notify the Agent of any non-compliance other than of
                           a minor or technical nature;

                  (xi)     shall not engage in any other business other than the
                           ownership and chartering of the Vessel;

                  (xii)    shall procure that the Vessel is at all times fully
                           approved by major oil companies relevant in its
                           trade;

<PAGE>

                  (xiii)   shall ensure that during the currency of the
                           Subsequent Charter the technical management of the
                           Vessel remains with Universal Tankships (Bermuda)
                           Ltd.;

                  (xiv)    shall ensure that the Vessel has been sent for
                           drydocking and has been subject to special survey
                           prior to it being redelivered to the Borrower upon
                           termination of the Initial Charter.

16.      EVENTS OF DEFAULT

16.1     If:

                  (i)      FAILURE TO PAY The Borrower or the Initial Charterer
                           or, as the case may be, the Subsequent Charterer,
                           fails to pay any sum due from it under this Agreement
                           or, the Initial Charter or, as the case may be, the
                           Subsequent Charter at any time in the currency and in
                           the manner specified herein or therein Provided that
                           it shall not be an Event of Default if any sum due
                           under the Initial Charter or, as the case may be, the
                           Subsequent Charter is paid by the Initial Charterer
                           or, as the case may be, the Subsequent Charterer,
                           within 5 business days of the due date for payment as
                           specified therein; or

                  (ii)     MISREPRESENTATION Any representation or statement
                           made by the Borrower in any Facility Document or in
                           any notice or other document, certificate or
                           statement delivered by it pursuant hereto or thereto
                           or in connection herewith or therewith is or proves
                           to have been incorrect or misleading in any material
                           respect when made; or

                  (iii)    COVENANTS The Borrower fails duly to perform the
                           obligations expressed to be assumed by it in Clause
                           14 (FINANCIAL CONDITION) or 15 (GENERAL COVENANTS);
                           or

                  (iv)     INSURANCE The Borrower fails to insure or procure the
                           insurance of the Vessel in accordance with the
                           requirements of the Assignment of Earnings and
                           Insurances and/or the Mortgage; or

                  (v)      OTHER OBLIGATION The Borrower fails duly to perform
                           or comply with any other obligation expressed to be
                           assumed by it in any Facility Document and such
                           failure is not remedied within thirty days after the
                           Agent has given notice to the Borrower requiring the
                           same to be remedied; or

                  (vi)     CROSS DEFAULT If (a) any indebtedness of the Borrower
                           or the Shareholder or either General Partner or the
                           Initial Charterer or, as the case may be, the
                           Subsequent Charterer or the Guarantor is not paid
                           when due (or within any period of grace applicable
                           thereto), (b) any indebtedness of the Borrower or the
                           Shareholder, or either General Partner or the Initial
                           Charterer or, as the case may be, the Subsequent
                           Charterer or the Guarantor is declared to be or

<PAGE>

                           otherwise becomes due and payable prior to its
                           specified maturity or (c) any creditor of the
                           Borrower or the Shareholder or either General
                           Partner, the Initial Charterer or, as the case may
                           be, the Subsequent Charterer or the Guarantor become
                           entitled to declare any indebtedness of the Borrower
                           or the Shareholder or either General Partner or the
                           Initial Charterer or, as the case may be, the
                           Subsequent Charterer or the Guarantor due and payable
                           prior to its specified maturity Provided that it
                           shall not be an Event of Default if, with respect to
                           either General Partner, the events specified in (a),
                           (b) and (c) above are genuinely disputed by such
                           General Partner in appropriate legal proceedings; or

                  (vii)    INSOLVENCY AND RESCHEDULING The Borrower or the
                           Shareholder or either General Partner or the Initial
                           Charterer or, as the case may be, the Subsequent
                           Charterer or the Guarantor is unable to pay its debts
                           as they fall due, commences negotiations with any one
                           or more of its creditors with a view to the general
                           readjustment or rescheduling of its indebtedness or
                           makes a general assignment for the benefit of or a
                           composition with its creditors; or

                  (viii)   WINDING-UP Otherwise than for the purposes of a
                           reconstruction on terms previously approved by the
                           Instructing Group, the Borrower or the Shareholder or
                           either General Partner or the Initial Charterer or,
                           as the case may be, the Subsequent Charterer or the
                           Guarantor takes any corporate action or other steps
                           are taken or legal proceedings are started for its
                           winding-up, dissolution or re-organisation or for the
                           appointment of a receiver, administrator,
                           administrative receiver, trustee or similar officer
                           of it or of any or all of its revenues and assets; or

                  (ix)     REPUDIATION The Borrower or the Initial Charterer or,
                           as the case may be, the Subsequent Charterer
                           repudiates any Facility Document to which is a party
                           or the Initial Charter or, as the case may be, the
                           Subsequent Charter or does or causes to be done any
                           act or thing evidencing an intention to repudiate any
                           such Facility Document or the Initial Charter or, as
                           the case may be, the Subsequent Charter; or

                  (x)      LEGALITY OF FACILITY DOCUMENTS At any time any act,
                           condition or thing required to be done, fulfilled or
                           performed in order (a) to enable the Borrower
                           lawfully to enter into, exercise its rights under and
                           perform its obligations expressed to be assumed by it
                           in the Facility Documents to which it is a party, (b)
                           to ensure that the obligations expressed to be
                           assumed by the Borrower in such Facility Documents
                           are legal, valid and binding or (c) to make any of
                           such Facility Documents admissible in evidence in the
                           Cayman Islands is not done, fulfilled or performed;
                           or

                  (xi)     COMPLIANCE WITH OBLIGATIONS At any time it is or
                           becomes unlawful for the Borrower to perform or
                           comply with any or all of its obligations under any
                           Facility Document or any of the obligations of the
                           Borrower under the Facility Document are not or cease
                           to be legal, valid and binding; or

<PAGE>

                  (xii)    SEIZURE BY GOVERNMENT By or under the authority of
                           any government, (a) the management of the Borrower is
                           wholly or partially displaced or the authority of the
                           Borrower in the conduct of its business is wholly or
                           partially curtailed or (b) the whole or any part (the
                           market value of which is twenty per cent. or more of
                           the market value of the whole) of its revenues or
                           assets is seized, nationalised, expropriated or
                           compulsorily acquired; or

                  (xiii)   MATERIAL ADVERSE CHANGE There shall occur any event
                           or circumstance which in the opinion of the
                           Instructing Group may, or may be likely to,
                           materially and adversely affect the ability of the
                           Borrower or the Initial Charterer or, as the case may
                           be, the Subsequent Charterer to discharge its
                           obligations under the Facility Documents to which it
                           is a party or the Initial Charter or, as the case may
                           be, the Subsequent Charter in the manner provided
                           therein; or

                  (xiv)    VARIATION OR TERMINATION OF AGREEMENTS The Memorandum
                           of Agreement or either Charters is amended in any
                           material manner without the prior written consent of
                           the Agent or terminated otherwise than by reason of
                           the due discharge of all obligations of each of the
                           parties thereto or if any party thereto is in breach
                           of any of its obligations thereunder; or

                  (xv)     MANAGEMENT AGREEMENT If there is any material
                           amendment to the Management Agreement or the
                           Management Agreement is terminated or otherwise
                           ceases to be effective without the Agent's prior
                           written consent; or

                  (xvi)    SENIOR FACILITY Any event of default (howsoever
                           described) occurs under the Senior Facility
                           Agreement; or

                  (xvii)   PARTNERSHIP/OWNERSHIP STRUCTURE If there is any
                           change in the shareholding of the Borrower or of
                           either General Partner without the prior written
                           consent of the Instructing Group; or

                  (xviii)  ANALOGOUS EVENT If any event occurs to the Borrower,
                           the Shareholder, any General Partner, the Initial
                           Charterer or, as the case may be, the Subsequent
                           Charterer under the laws of any other jurisdiction
                           which is analogous to any of the events or
                           circumstances referred to in paragraphs (vii) or
                           (viii) above; or

                  (xix)    SWAP AGREEMENT Any event of default (howsoever
                           described) occurs under the Interest Rate Swap
                           Agreement; or

                  (xx)     SUBSEQUENT CHARTERER If the Subsequent Charterer
                           fails to take delivery of the Vessel pursuant to the
                           Subsequent Charter promptly upon the expiry of the
                           Initial Charter,

         then, and in any such case and at any time thereafter, the Agent may,
         and shall if so instructed by the Instructing Group, by written notice
         to the Borrower:

<PAGE>

         (a)      declare the Loan to be immediately due and payable (whereupon
                  the same shall become so payable together with accrued
                  interest thereon and any other sums then owed by the Borrower
                  hereunder) or declare the Loan to be due and payable on demand
                  of the Agent; and/or

         (b)      declare that the Facility Amount shall be cancelled, whereupon
                  the same shall be cancelled and the amount thereof reduced to
                  zero.

16.2     ADVANCE DUE ON DEMAND

         If, pursuant to Clause 16.1, the Agent declares the Loan to be due and
         payable on demand of the Agent, then, and at any time thereafter, the
         Agent may by written notice to the Borrower:

                  (i)      call for repayment of the Loan on such date as it may
                           specify in such notice (whereupon the same shall
                           become due and payable on such date together with
                           accrued interest thereon and any other sums then owed
                           by the Borrower hereunder) or withdraw its
                           declaration with effect from such date as it may
                           specify in such notice; and/or

                  (ii)     select as the duration of any Interest Period
                           relating to an Advance which begins whilst such
                           declaration remains in effect a period of six months
                           or less.

16.3     PROVISO

                  (i)      It is hereby agreed that each of the events set out
                           in Clause 16.1(i), (vi), (vii), (viii), (ix), (xiii)
                           and (xiv) shall not be an Event of Default if it
                           occurs in relation to the Initial Charterer after the
                           termination of the Initial Charter as a result of the
                           obligations thereunder having been fully performed by
                           the Initial Charterer in accordance with the terms
                           specified therein; and

                  (ii)     It is hereby agreed that if any Event of Default
                           occurs only in relation to the Initial Charterer or
                           Subsequent Charterer and within 15 days thereafter
                           alternative arrangements in form and substance
                           satisfactory to the Agent and the Instructing Group,
                           as determined in their sole discretion, are entered
                           into to provide alternative security for the
                           performance by the Borrower of its obligations
                           hereunder, then the Agent, on instruction of the
                           Instructing Group, may agree that the event of
                           circumstances giving rise to such Event of Default
                           shall not be treated as an Event of Default.

<PAGE>

17.      DEFAULT INTEREST AND INDEMNITY

17.1     DEFAULT INTEREST PERIODS

         If any sum due and payable by the Borrower hereunder is not paid on the
         due date therefor in accordance with the provisions of Clause 19
         (PAYMENTS) or if any sum due and payable by the Borrower under any
         judgment of any court in connection with this Agreement is not paid on
         the date of such judgment, the period beginning on such due date or, as
         the case may be, the date of such judgment and ending on the date upon
         which the obligation of the Borrower to pay such sum (the balance
         thereof for the time being unpaid being herein referred to as an
         "UNPAID SUM") is discharged shall be divided into successive periods,
         each of which (other than the first) shall start on the last day of the
         preceding such period and the duration of each of which shall be
         selected by the Agent.

17.2     DEFAULT INTEREST

         During each such period relating thereto as is mentioned in Clause 17.1
         (DEFAULT INTEREST PERIODS) an unpaid sum shall bear interest at the
         rate per annum which is the sum from time to time of one per cent., the
         Margin and LIBOR for that period Provided that:

                  (i)      if, for any such period, LIBOR falls to be determined
                           pursuant to the proviso to the definition thereof but
                           none of the Reference Banks was offering dollar
                           deposits for the period aforesaid, the rate of
                           interest applicable to such unpaid sum shall be
                           determined by reference to the cost to each Bank of
                           obtaining such deposits from such sources as it may
                           select as notified to the Agent; and

                  (ii)     if such unpaid sum is all or part of the Advance
                           which became due and payable on a day other than the
                           last day of an Interest Period relating thereto, the
                           first such period applicable thereto shall be of a
                           duration equal to the unexpired portion of that
                           Interest Period and the rate of interest applicable
                           thereto during such period shall be that which
                           exceeds by one per cent. the rate which would have
                           been applicable to it had it not so fallen due.

17.3     PAYMENT OF DEFAULT INTEREST

         Any interest which shall have accrued under Clause 17.2 (DEFAULT
         INTEREST) in respect of an unpaid sum shall be due and payable and
         shall be paid by the Borrower at the end of the period by reference to
         which it is calculated or on such other dates as the Agent may specify
         by written notice to the Borrower.

<PAGE>

17.4     BROKEN PERIODS

         If any Bank receives or recovers all or any part of such Bank's share
         of the Advance otherwise than on the last day of an Interest Period
         relating to the Advance, the Borrower shall pay to the Agent on demand
         an amount equal to the amount (if any) by which (a) the additional
         interest which would have been payable on the amount so received or
         recovered had it been received or recovered on the last day of that
         Interest Period exceeds (b) the amount of interest which in the opinion
         of the Agent would have been payable to the Agent on the last day of
         that Interest Period in respect of a dollar deposit equal to the amount
         so received or recovered placed by it with a prime bank in London for a
         period starting on the third business day following the date of such
         receipt or recovery and ending on the last day of that Interest Period.

17.5     BORROWER'S INDEMNITY

         The Borrower undertakes:

                  (i)      to indemnify each of the Agent, each Bank and the
                           Security Trustee against any loss or expense,
                           including legal fees on a full indemnity basis, which
                           any of them may sustain or incur as a consequence of
                           any default by the Borrower in the performance of any
                           of the obligations expressed to be assumed by it in
                           any of the Facility Documents to which it is a party;
                           and

                  (ii)     to indemnify each Bank against any loss it may suffer
                           as a result of its funding its share of the Advance
                           requested by the Borrower hereunder but not made by
                           reason of the operation of any one or more of the
                           provisions hereof.

17.6     Any unpaid sum shall (for the purposes of this Clause 17 and Clause
         11.1 (INCREASED COSTS) be treated as an advance and accordingly in this
         Clause 17 and Clause 11.1 (INCREASED COSTS) the term "Advance" includes
         any unpaid sum and the term "Interest Period", in relation to an unpaid
         sum, includes each such period relating thereto as is mentioned in
         Clause 17.1 (DEFAULT INTEREST PERIODS).

18.      CURRENCY OF ACCOUNT AND PAYMENT

18.1     CURRENCY OF ACCOUNT

         The dollar is the currency of account and payment for each and every
         sum at any time due from the Borrower hereunder Provided that each
         payment in respect of costs and expenses shall be made in the currency
         in which the same were incurred.

<PAGE>

18.2     CURRENCY INDEMNITY

         If any sum due from the Borrower under any Facility Document to which
         the Borrower is a party or any order or judgment given or made in
         relation hereto or thereto has to be converted from the currency (the
         "FIRST CURRENCY") in which the same is payable under such Facility
         Document or order or judgment into another currency (the "SECOND
         CURRENCY") for the purpose of (i) making or filing a claim or proof
         against the Borrower, (ii) obtaining an order or judgment in any court
         or other tribunal or (iii) enforcing any order or judgment given or
         made in relation to any Facility Document, the Borrower shall indemnify
         and hold harmless each of the persons to whom such sum is due from and
         against any loss suffered as a result of any discrepancy between (a)
         the rate of exchange used for such purpose to convert the sum in
         question from the first currency into the second currency and (b) the
         rate or rates of exchange at which such person may in the ordinary
         course of business purchase the first currency with the second currency
         upon receipt of a sum paid to it in satisfaction, in whole or in part,
         of any such order, judgment, claim or proof.

19.      PAYMENTS

19.1     PAYMENTS

         On each date on which this Agreement requires an amount to be paid by
         the Borrower or a Bank hereunder, the Borrower or, as the case may be,
         such Bank shall make the same available to the Agent by payment in
         dollars and in same day funds (or in such other funds as may for the
         time being be customary in New York City for the settlement in New York
         City of international banking transactions in dollars) to the account
         of the Agent in Oslo or such other account as the Agent may have
         specified for this purpose.

19.2     NO SET-OFF

         All payments made by the Borrower hereunder shall be made free and
         clear of and without any deduction for or on account of any set-off or
         counterclaim.

20.      SET-OFF

         The Borrower authorises each Bank at any time following the occurrence
         of an Event of Default to apply any credit balance to which the
         Borrower is entitled on any account of the Borrower with such Bank in
         satisfaction of any sum due and payable from the Borrower to such Bank
         under this Agreement but unpaid; for this purpose, such Bank is
         authorised to purchase with the moneys standing to the credit of any
         such account such other currencies as may be necessary to effect such
         application.

<PAGE>

21.      SHARING

21.1     REDISTRIBUTION OF PAYMENTS

         If at any time, the proportion which any Bank (a "RECOVERING BANK") has
         received or recovered (whether by payment, the exercise of a right of
         set-off or combination of accounts or otherwise) in respect of its
         portion of any payment (a "RELEVANT PAYMENT") to be made under this
         Agreement by the Borrower for account of such Recovering Bank and one
         or more other Banks is greater (the portion of such receipt or recovery
         giving rise to such excess proportion being herein called an "EXCESS
         AMOUNT") than the proportion thereof so received or recovered by the
         Bank or Banks so receiving or recovering the smallest proportion
         thereof, then:

                  (i)      such Recovering Bank shall pay to the Agent an amount
                           equal to such excess amount;

                  (ii)     there shall thereupon fall due from such Recovering
                           Bank an amount equal to the amount paid out by such
                           Recovering Bank pursuant to paragraph (i) above, the
                           amount so due being, for the purposes hereof, treated
                           as if it were an unpaid part of such Recovering
                           Bank's portion of such relevant payment; and

                  (iii)    the Agent shall treat the amount received by it from
                           such Recovering Bank pursuant to paragraph (i) above
                           as if such amount had been received by it from the
                           Borrower in respect of such relevant payment and
                           shall pay the same to the persons entitled thereto
                           (including such Recovering Bank) PRO RATA to their
                           respective entitlements thereto.

21.2     REPAYABLE RECOVERIES

         If any sum (a "RELEVANT SUM") received or recovered by a Recovering
         Bank in respect of any amount owing to it by the Borrower becomes
         repayable and is repaid by such Recovering Bank, then:

                  (i)      each Bank which has received a share of such relevant
                           sum by reason of the implementation of Clause 19.1
                           (PAYMENTS) shall, upon request of the Agent, pay to
                           the Agent for account of such Recovering Bank an
                           amount equal to its share of such relevant sum; and

                  (ii)     there shall thereupon fall due from the Borrower to
                           each such Bank an amount equal to the amount paid out
                           by it pursuant to paragraph (i) above, the amount so
                           due being, for the purposes hereof, treated as if it
                           were the sum payable to such Bank against which such
                           Bank's share of such relevant sum was applied.

<PAGE>

22.      FEES

22.1     ARRANGEMENT FEE

         The Borrower shall pay to the Agent for its own account hereunder an
         arrangement fee of the amount specified in the letter exchanged between
         the Agent and General Maritime Corporation dated 10 October 1997 such
         fee to be payable at the Drawdown Date.

22.2     AGENCY FEE

         The Borrower shall pay to the Agent a non-refundable agency fee of the
         amount specified in the letter exchanged between the Agent and General
         Maritime Corporation dated 10 October 1997, such fee to be payable on
         the Drawdown Date and on each anniversary thereof.

23.      COSTS AND EXPENSES

23.1     TRANSACTION EXPENSES

         The Borrower shall, from time to time on demand of the Agent, reimburse
         the Agent for all costs and expenses including legal fees) incurred by
         it in connection with the negotiation, preparation and execution of the
         Facility Documents to which it is party and the completion of the
         transactions herein contemplated.

23.2     PRESERVATION AND ENFORCEMENT OF RIGHTS

         The Borrower shall, from time to time on demand of the Agent, reimburse
         the Agent, the Banks and the Security Trustee for all costs and
         expenses (including legal fees) incurred in or in connection with the
         preservation and/or enforcement of any of the rights of the Agent, the
         Banks and the Security Trustee under the Facility Documents to which it
         is a party.

23.3     STAMP TAXES

         The Borrower shall pay all stamp, registration and other taxes to which
         any Facility Document or any judgment given in connection with any
         Facility Document is or at any time may be subject and shall, from time
         to time on demand of the Agent, indemnify the Security Trustee and the
         Bank against any liabilities, costs, claims and expenses resulting from
         any failure to pay or any delay in paying any such tax.

23.4     BANKS' LIABILITIES FOR COSTS

         If the Borrower fails to perform any of its obligations under this
         Clause 23, each Bank shall, in the proportion borne by its share of the
         Loan to the amount of the Loan for the time being indemnify the Agent
         against any loss incurred by it as a result of such failure and the
         Borrower shall forthwith reimburse each Bank for any payment made by it
         pursuant to this Clause 23.4.

<PAGE>

24.      THE AGENT AND THE BANKS

24.1     APPOINTMENT OF THE AGENT

         Each Bank hereby appoints the Agent to act as its agent in connection
         with this Agreement and the other Facility Documents and authorises the
         Agent to exercise such rights, powers and discretions as are
         specifically delegated to the Agent by the terms hereof together with
         all such rights, powers and discretions as are reasonably incidental
         thereto.

24.2     AGENT'S DISCRETIONS

         The Agent may:

                  (i)      assume that:

                           (a)      any representation made by the Borrower in
                                    connection with this Agreement and the other
                                    Facility Documents is true;

                           (b)      no event which is or may become an Event of
                                    Default has occurred; and

                           (c)      the Borrower is not in breach of or default
                                    under its obligations with this Agreement
                                    and the other Facility Documents

                           unless it has actual knowledge or actual notice to
                           the contrary;

                  (ii)     assume that the Facility Office of each Bank is that
                           identified with its signature (or, in the case of a
                           Transferee, at the end of the Transfer Certificate to
                           which it is a party as Transferee) below until it has
                           received from such Bank a notice designating some
                           other office of such Bank to replace its Facility
                           Office and act upon any such notice until the same is
                           superseded by a further such notice;

                  (iii)    engage and pay for the advice or services of any
                           lawyers, accountants, surveyors or other experts
                           whose advice or services may to it seem necessary,
                           expedient or desirable and rely upon any advice so
                           obtained;

                  (iv)     rely as to any matters of fact which might reasonably
                           be expected to be within the knowledge of the
                           Borrower upon a certificate signed by or on behalf of
                           the Borrower;

                  (v)      rely upon any communication or document believed by
                           it in good faith to be genuine;

                  (vi)     refrain from exercising any right, power or
                           discretion vested in it as agent hereunder unless and
                           until instructed by an Instructing Group as to
                           whether or not such right, power or discretion is to
                           be exercised and, if it is to be

<PAGE>

                           exercised, as to the manner in which it should be
                           exercised; and

                  (vii)    refrain from acting in accordance with any
                           instructions of an Instructing Group to begin any
                           legal action or proceeding arising out of or in
                           connection with this Agreement until it shall have
                           received such security as it may require (whether by
                           way of payment in advance or otherwise) for all
                           costs, claims, expenses (including legal fees) and
                           liabilities which it will or may expend or incur in
                           complying with such instructions.

24.3     AGENT'S OBLIGATIONS

         The Agent shall:

                  (i)      promptly inform each Bank of the contents of any
                           notice or document received by it from the Borrower
                           or, as the case may be, the Guarantor under this
                           Agreement and the other Facility Documents;

                  (ii)     promptly notify each Bank of the occurrence of any
                           Event of Default or any default by the Borrower or,
                           as the case may be, the Guarantor in the due
                           performance of or compliance with its obligations
                           under this Agreement and the other Facility Documents
                           of which the Agent has actual knowledge or actual
                           notice;

                  (iii)    save as otherwise provided herein, act as agent
                           hereunder in accordance with any instructions given
                           to it by an Instructing Group, which instructions
                           shall be binding on all the Banks; and

                  (iv)     if so instructed by an Instructing Group, refrain
                           from exercising any right, power or discretion vested
                           in it as agent hereunder.

24.4     EXCLUDED OBLIGATIONS

         Notwithstanding anything to the contrary expressed or implied herein,
         the Agent shall not:

                  (i)      be bound to enquire as to:

                           (a)      whether or not any representation made by
                                    the Borrower or, as the case may be, the
                                    Guarantor in connection with the Facility
                                    Documents is true;

                           (b)      the occurrence or otherwise of any event
                                    which is or may become an Event of Default;

                           (c)      the performance by the Borrower or, as the
                                    case may be, the Guarantor of its
                                    obligations under any of the Facility
                                    Documents; or

                           (d)      any breach of or default by the Borrower or,
                                    as the case may be, the Guarantor of or
                                    under its obligations under any of the
                                    Facility

<PAGE>

                                    Documents;

                  (ii)     be bound to account to each Bank for any sum or the
                           profit element of any sum received by it for its own
                           account;

                  (iii)    be bound to disclose to any other person any
                           information relating to the Borrower or as the case
                           may be, the Guarantor if such disclosure would or
                           might in its opinion constitute a breach of any law
                           or regulations or be otherwise actionable at the suit
                           of any person; or

                  (iv)     be under any obligations other than those for which
                           express provision is made herein.

24.5     INDEMNIFICATION

         Each Bank shall, from time to time on demand by the Agent, indemnify
         the Agent, in the proportion its share of the Loan bears to the amount
         of the Loan at the time of such demand or, if the Loan has then been
         repaid in full, against any and all costs, claims, losses, expenses
         (including legal fees) and liabilities together with any VAT thereon
         which the Agent may incur, otherwise than by reason of its own
         negligence or wilful misconduct, in acting in its capacity as agent
         hereunder.

24.6     EXCLUSION OF LIABILITIES

         The Agent does not accept any responsibility for the accuracy and/or
         completeness of information supplied by the Borrower or as the case may
         be, the Guarantor in connection herewith or with any other Facility
         Document or for the legality, validity, effectiveness, adequacy or
         enforceability of this Agreement or any other Facility Document and the
         Agent shall not be under any liability as a result of taking or
         omitting to take any action in relation to this Agreement or any other
         Facility Document, save in the case of gross negligence or wilful
         misconduct.

24.7     NO ACTION

         Each Bank agrees that it will not assert or seek to assert against any
         director, officer or employee of the Agent any claim it might have
         against any of them in respect of the matters referred to in Clause
         24.6 (EXCLUSION OF LIABILITIES).

24.8     BUSINESS WITH THE BORROWER

         The Agent and each of the Banks may accept deposits from, lend money to
         and generally engage in any kind of banking or other business with the
         Borrower or as the case may be, the Guarantor.

<PAGE>

24.9     RESIGNATION

         The Agent may resign its appointment hereunder at any time without
         assigning any reason therefor by giving not less than thirty days'
         prior written notice to that effect to each of the other parties hereto
         Provided that no such resignation shall be effective until a successor
         for the Agent is appointed in accordance with the succeeding provisions
         of this Clause 24.

24.10    SUCCESSOR AGENT

         If the Agent gives notice of its resignation pursuant to Clause 24.9
         then any reputable and experienced bank or other financial institution
         may be appointed as a successor to the Agent by an Instructing Group
         with the Borrower's consent (such consent not to be unreasonably
         delayed or withheld) during the period of such notice but, if no such
         successor is so appointed, the Agent may appoint such a successor
         itself.

24.11    RIGHTS AND OBLIGATIONS

         If a successor to the Agent is appointed under the provisions of Clause
         24.10 (SUCCESSOR AGENT), then (i) the retiring Agent shall be
         discharged from any further obligation hereunder but shall remain
         entitled to the benefit of the provisions of this Clause 24 and (ii)
         its successor and each of the other parties hereto shall have the same
         rights and obligations amongst themselves as they would have had if
         such successor had been a party hereto.

24.12    OWN RESPONSIBILITY

         It is understood and agreed by each Bank that it has itself been, and
         will continue to be, solely responsible for making its own independent
         appraisal of and investigations into the financial condition,
         creditworthiness, condition, affairs, status and nature of the Borrower
         or, as the case may be, the Guarantor and, accordingly, each Bank
         warrants to the Agent that it has not relied and will not hereafter
         rely on the Agent:

                  (i)      to check or enquire on its behalf into the adequacy,
                           accuracy or completeness of any information provided
                           by the Borrower or, as the case may be, the Guarantor
                           in connection with any of the Facility Documents or
                           the transactions therein contemplated (whether or not
                           such information has been or is hereafter circulated
                           to each Bank by the Agent); or

                  (ii)     to assess or keep under review on its behalf the
                           financial condition, creditworthiness, condition,
                           affairs, status or nature of the Borrower or, as the
                           case may be, the Guarantor.

<PAGE>

24.13    AGENCY DIVISION SEPARATE

         In acting as agent hereunder for the Banks, the Agent shall be regarded
         as acting through its agency division which shall be treated as a
         separate entity from any other of its divisions or departments and,
         notwithstanding the foregoing provisions of this Clause 24, any
         information received by some other division or department of the Agent
         may be treated as confidential and shall not be regarded as having been
         given to the Agent's agency division.

24.14    CONFIDENTIAL INFORMATION

         Notwithstanding anything to the contrary expressed or implied herein
         and without prejudice to the provisions of Clause 24.13 (AGENCY
         DIVISION SEPARATE), the Agent shall not as between itself and the Banks
         be bound to disclose to any Bank or other person any information which
         is supplied by Borrower or, as the case may be, the Guarantor to the
         Agent in its capacity as agent hereunder for the Banks and which is
         identified by such member of the Group at the time it is so supplied as
         being confidential information Provided that the consent of the
         Borrower or, as the case may be, the Guarantor to such disclosure shall
         not be required in relation to any information which in the opinion of
         the Agent relates to an Event of Default or in respect of which the
         Banks have given a confidentiality undertaking in a form satisfactory
         to the Agent and the Borrower or, as the case may be, the Guarantor.

25.      BENEFIT OF AGREEMENT

         This Agreement shall be binding upon and enure to the benefit of each
         party hereto and its successors and permitted assigns.

26.      ASSIGNMENTS AND TRANSFERS

26.1     NO ASSIGNMENT AND TRANSFER BY THE BORROWER

         The Borrower shall not be entitled to assign or transfer all or any of
         its rights, benefits and obligations hereunder.

26.2     ASSIGNMENTS AND TRANSFERS BY BANKS

         Any Bank may at any time (and at its own cost) assign or transfer all
         or any of its rights and benefits hereunder.

26.3     ASSIGNMENTS BY BANKS

         If any Bank assigns all or any of its rights and benefits hereunder in
         accordance with Clause 26.2 (ASSIGNMENTS AND TRANSFERS BY BANKS), then,
         unless and until the assignee has agreed with the Agent and the
         Security Trustee that it shall be under the same obligations towards
         each of them as it would have been under if it had been an original
         party hereto as a Bank, the Agent and the Security Trustee shall not be
         obliged to recognise such assignee as having the rights against each of
         them which it would have had if it had been such a party hereto.

<PAGE>

26.4     TRANSFERS BY BANKS

         If a Bank wishes to transfer all or any of its rights, benefits and/or
         obligations hereunder as contemplated in Clause 26.2 (ASSIGNMENTS AND
         TRANSFERS BY BANKS), then such transfer may be effected by the delivery
         to the Agent and the Borrower of a duly completed and duly executed
         Transfer Certificate in which event, on the later of the Transfer Date
         specified in such Transfer Certificate and the fifth business day after
         (or such earlier business day endorsed by the Agent on such Transfer
         Certificate) the date of delivery of such Transfer Certificate to the
         Agent:

                  (i)      to the extent that in such Transfer Certificate such
                           Bank seeks to transfer its rights and obligations
                           hereunder, the Borrower and such Bank shall be
                           released from further obligations towards one another
                           hereunder and their respective rights against one
                           another shall be cancelled (such rights and
                           obligations being referred to in this Clause 26.4 as
                           "DISCHARGED RIGHTS AND OBLIGATIONS"); and

                  (ii)     the Borrower and the Transferee party thereto shall
                           assume obligations towards one another and/or acquire
                           rights against one another which differ from such
                           discharged rights and obligations only insofar as the
                           Borrower and such Transferee have assumed and/or
                           acquired the same in place of the Borrower and such
                           Bank;

26.5     TRANSFER FEES

         On the date upon which a transfer takes effect pursuant to this Clause
         26, the Transferee in respect of such transfer shall pay to the Agent
         for its own account a transfer fee of $500.

26.6     Any assignment or transfer which is not contemplated by the express
         provisions of this Clause 26 may only be made by a Bank with the prior
         written consent of the Borrower and in such event, the provisions of
         Clauses 26.2 (ASSIGNMENTS AND TRANSFERS BY BANKS), 26.4 (TRANSFERS BY
         BANKS) and 26.5 (TRANSFER FEES) shall apply MUTATIS MUTANDIS thereto.

26.7     DISCLOSURE OF INFORMATION

         Any Bank may, with the prior written consent of the Borrower (such
         consent not to be unreasonably withheld or delayed), disclose to any
         actual or potential assignee or to any person who may otherwise enter
         into contractual relations with such Bank in relation to this Agreement
         such information about the Borrower as such Bank and the Borrower shall
         consider appropriate.

27.      CALCULATIONS AND EVIDENCE OF DEBT

27.1     BASIS OF ACCRUAL

         Interest and commitment commission shall accrue from day to day and
         shall be calculated on the basis of a year of 360 days and the actual
         number of days elapsed.

<PAGE>

27.2     EVIDENCE OF DEBT

         Each Bank shall maintain in accordance with its usual practice accounts
         evidencing the amounts from time to time lent by and owing to it
         hereunder; in any legal action or proceeding arising out of or in
         connection with this Agreement and other Facility Documents, the
         entries made in such accounts shall be conclusive evidence of the
         existence and amounts of the obligations of the Borrower therein
         recorded.

27.3     CONTROL ACCOUNTS

         The Agent shall maintain on its books a control account or accounts in
         which shall be recorded (i) the amount of the Advance made hereunder by
         the Banks, (ii) the amount of all principal, interest and other sums
         due or to become due from the Borrower to each of the Banks under the
         Facility Documents and (iii) the amount of any sum received or
         recovered by the Agent under the Facility Documents and each Bank's
         share therein. To the extent that discrepancies exist between accounts
         maintained by each Bank pursuant to clause 27.2 (EVIDENCE OF DEBT) and
         control accounts maintained by the Agent under this Clause 27.3, the
         control accounts herein maintained shall prevail.

27.4     PRIMA FACIE EVIDENCE

         In any legal action or proceeding arising out of or in connection with
         this Agreement and/or any other Facility Document, the entries made in
         the accounts maintained pursuant to Clause 27.2 (EVIDENCE OF DEBT) or
         Clause 27.3 (CONTROL ACCOUNTS) shall be PRIMA FACIE evidence of the
         existence and extent of the obligations of the Borrower therein
         recorded.

27.5     CHANGE OF CIRCUMSTANCE CERTIFICATES

         A certificate of the Bank as to (a) the amount by which a sum payable
         to it hereunder is to be increased under Clause 10.1 (TAX GROSS-UP) or
         (b) the amount for the time being required to indemnify it against any
         such cost or liability as is mentioned in Clause 10.2 (TAX INDEMNITY)
         or 11.1 (INCREASED COSTS) shall, in the absence of manifest error, be
         conclusive for the purposes of this Agreement and PRIMA FACIE evidence
         in any legal action or proceeding arising out of or in connection with
         this Agreement.

28.      REMEDIES AND WAIVERS

         No failure to exercise, nor any delay in exercising, on the part of the
         Agent, any Bank and the Security Trustee or any of them, any right or
         remedy hereunder shall operate as a waiver thereof, nor shall any
         single or partial exercise of any right or remedy prevent any further
         or other exercise thereof or the exercise of any other right or remedy.
         The rights and remedies herein provided are cumulative and not
         exclusive of any rights or remedies provided by law.

<PAGE>

29.      PARTIAL INVALIDITY

         If at any time any provision hereof is or becomes illegal, invalid or
         unenforceable in any respect under the law of any jurisdiction, neither
         the legality, validity or enforceability of the remaining provisions
         hereof nor the legality, validity or enforceability of such provision
         under the law of any other jurisdiction shall in any way be affected or
         impaired thereby.

30.      NOTICES

30.1     COMMUNICATIONS IN WRITING

         Each communication to be made hereunder shall be made in writing but,
         unless otherwise stated, may be made by telex, facsimile or letter.

30.2     COMMUNICATIONS THROUGH THE AGENT

         Each communication between the Banks and the Borrower hereunder shall
         only be effected through the Agent.

30.3     DELIVERY

         Any communication or document to be made or delivered by one party to
         the other pursuant to this Agreement shall (unless the other party has
         by three days' written notice to the one specified another address or
         telex or facsimile number) be made or delivered to that other party at
         the address or telex or facsimile number identified with its signature
         below and shall be deemed to have been made or delivered when
         despatched and answerback received (in the case of any communication
         made by telex) or (in the case of any communication made by facsimile)
         when legibly received or (in the case of any communication made by
         letter) when left at that address or (as the case may be) ten days
         after being deposited in the post postage prepaid in an envelope
         addressed to it at that address Provided that:

                  (i)      if any such communication or document would otherwise
                           be deemed to have been received on a day which is not
                           a business day it shall be deemed to have been
                           received on the first business day thereafter; and

                  (ii)     any communication or document to be made or delivered
                           by the Borrower to each Bank shall be effective only
                           when legibly received by the Bank and then only if
                           the same is expressly marked for the attention of the
                           department or officer identified with such Bank's
                           signature below (or such other department or officer
                           as such Bank shall from time to time specify for this
                           purpose).

30.4     ENGLISH LANGUAGE

         Each communication and document made or delivered by one party to
         another pursuant to this Agreement shall be in the English language or
         accompanied by a translation thereof into English certified (by an
         officer of the person making or delivering the same) as being a true
         and accurate translation thereof.

<PAGE>

31.      LAW

         This Agreement shall be governed by, and construed in accordance with,
         English law.

32.      JURISDICTION

32.1     ENGLISH COURTS

         Each of the parties hereto irrevocably agrees for the benefit of the
         Agent, the Banks and the Security Trustee that the courts of England
         shall have jurisdiction to hear and determine any suit, action or
         proceeding, and to settle any disputes, which may arise out of or in
         connection with this Agreement and, for such purposes, irrevocably
         submits to the jurisdiction of such courts.

32.2     APPROPRIATE FORUM

         The Borrower irrevocably waives any objection which it might now or
         hereafter have to the courts referred to in Clause 32.1 (ENGLISH
         COURTS) being nominated as the forum to hear and determine any suit,
         action or proceeding, and to settle any disputes, which may arise out
         of or in connection with this Agreement and agrees not to claim that
         any such court is not a convenient or appropriate forum.

32.3     SERVICE OF PROCESS

         The Borrower agrees that the process by which any suit, action or
         proceeding in England is begun may be served on it by being delivered
         to Clifford Chance Secretaries Limited at 200 Aldersgate Street,
         London, EC1A 4JJ or other of its registered offices for the time being.

32.4     NON-EXCLUSIVE SUBMISSIONS

         The submission to the jurisdiction of the courts referred to in Clause
         32.1 (ENGLISH COURTS) shall not (and shall not be construed so as to)
         limit the right of the Agent, the Banks or the Security Trustee to take
         proceedings against the Borrower in any other court of competent
         jurisdiction nor shall the taking of proceedings in any one or more
         jurisdictions preclude the taking of proceedings in any other
         jurisdiction, whether concurrently or not.

AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.

<PAGE>

                               THE FIRST SCHEDULE

                          CONDITION PRECEDENT DOCUMENTS

                                     PART 1

1.       In relation to the Borrower, the Shareholder, the Managing General
Partner, the Initial Charterer, the Subsequent Charterer and the Guarantor
(herein together referred to as the "RELEVANT PARTIES"):

                  (i)      a copy, certified a true copy by a duly authorised
                           officer of the Borrower, of a Board Resolution of the
                           Borrower approving the execution, delivery and
                           performance of each of the Facility Documents to
                           which it is a party and the terms and conditions
                           thereof and authorising a named person or persons to
                           sign each of such Facility Documents;

                  (ii)     a copy, certified a true copy by a duly authorised
                           officer of the Managing General Partner of the
                           Shareholder's Certificate of Registration as a
                           Limited Partnership and its Limited Partnership
                           Agreement;

                  (iii)    a copy, certified a true copy by a duly authorised
                           officer of the Relevant Party, of the constitutive
                           documents of such Relevant Party;

                  (iv)     a copy, certified a true copy by a duly authorised
                           officer of the Initial Charterer, of a Board
                           Resolution of the Initial Charterer approving the
                           execution, delivery and performance of the Initial
                           Charter and the terms and conditions thereof and
                           authorising a named person or persons to sign the
                           Initial Charter;

                  (v)      a copy, certified a true copy by a duly authorised
                           officer of the Subsequent Charterer, of a Board
                           Resolution of the Subsequent Charterer approving the
                           execution, delivery and performance of the Subsequent
                           Charter and the terms and conditions thereof and
                           authorising a named person or persons to sign and
                           deliver the Subsequent Charter;

                  (vi)     a copy, certified a true copy by a duly authorised
                           officer of the Guarantor of a Board Resolution of the
                           Guarantor approving the execution, delivery and
                           performance of the Guarantee and the terms and
                           conditions thereof and authorising a named person or
                           persons to sign the Guarantee;

                  (vii)    a certificate of a duly authorised officer of the
                           Borrower setting out the names and signatures of the
                           persons authorised to sign, on behalf of the
                           Borrower, each of the Facility Documents to which it
                           is a party and any documents to be delivered pursuant
                           thereto; and

                  (viii)   a copy certified a true copy by a duly authorised
                           officer of the Borrower of the proforma opening
                           balance sheet of the Borrower evidencing its capital
                           structure including the amount of its Working
                           Capital;

<PAGE>

                  (ix)     a certificate of a duly authorised officer of the
                           Managing General Partner of the Shareholder setting
                           out the partners (both general and limited) of the
                           Shareholder; and

                  (x)      a certificate of a duly authorised officer of the
                           Borrower certifying that the Shareholder is the sole
                           Shareholder of the Borrower.

2.       A copy of the Cayman Islands Exempted Limited Partnership Law and of
each such other law, decree, consent, licence, approval, registration or
declaration as is, in the opinion of counsel to the Banks, necessary to render
the Facility Documents and the Charters legal, valid, binding and enforceable,
to make them admissible in evidence in the Cayman Islands and Panama and to
enable the Borrower lawfully to perform its obligations under the Facility
Documents to which it is a party.

3.       An opinion of the Initial Bank's counsel in relation to Panamanian law
in a form satisfactory to the Initial Bank.

4.       An opinion of the Initial Bank's Cayman Islands counsel in a form
satisfactory to the Initial Bank.

5.       An opinion of the Initial Charterer's internal counsel in a form
satisfactory to the Initial Bank relating to the Initial Charter.

6.       An opinion of the Subsequent Charterer's internal counsel in a form
satisfactory to the Initial Bank relating to the Subsequent Charter;

7.       An opinion of Clifford Chance in a form satisfactory to the Initial
Bank.

8.       Evidence that Clifford Chance Secretaries Limited has agreed to act as
the agent of the Borrower for the service of process in England.

9.       A copy, certified to be a true copy by a duly authorised officer of the
Borrower of the Memorandum of Agreement showing the purchase price of the Vessel
to be $31,000,000.

10.      A copy, certified to be a true copy by a duly authorised officer of the
Borrower of each of the Charters.

11.      A Guarantee where the Guarantor guarantees the obligations of the
Borrower under this Agreement for a sum not exceeding $2,000,000 in favour of
the Agent on behalf of the Initial Bank.

12.      Valid up-to-date class certificates from a classification society
acceptable to the Agent and showing the Vessel to be in a class acceptable to
the Agent, without extension or recommendations.

13.      Details of the manager of the Vessel during the Subsequent Charter and
a certified true copy of the Management Agreement in a form acceptable to the
Initial Bank.

14.      A copy of the Bill of Sale relating to the Vessel and any other
documents required to be produced by the Seller or the Borrower pursuant to the
Memorandum of Agreement.

<PAGE>

15.      Evidence of the discharge of any existing mortgages over the Vessel.

16.      Confirmation that the technical management of the Vessel is during the
Subsequent Charter with Universe Tankships (Bermuda) Ltd.

17.      An assignment of the Borrower's bank accounts in a form acceptable to
the Agent.

18.      A security trust deed whereby the Security Trustee agrees to hold the
benefit of the security created by the mortgage and the assignment of earnings
and insurances and the assignment of accounts referred to in paragraphs 1, 2 and
3 above on trust for the Beneficiaries named therein in a form acceptable to the
Agent.

19.      A Priority Agreement between the Borrower, the Banks and the Agent
under this Agreement and the agent and the lenders under the Senior Facility
Agreement.

20.      A copy of the Seller's Latest Annual Franchise Tax Receipt ("Tasa
Annual").

21.      A letter of undertaking from Poles, Tublin, Patestides & Stratakis that
the Protocol of Delivery and Acceptance of the Vessel shall not be delivered to
The Industrial Bank of Japan, Ltd., until consent of the Agent or its
representative is given.

22.      An opinion of the Initial Bank's New York counsel in a form
satisfactory to the Initial Bank.

23.      A Letter of Awareness from Neptune Orient Lines relating to the
Subsequent Charter.

<PAGE>

                                     PART 2

Each of the following documents duly executed by the Borrower:

1.       A first preferred Panamanian ship mortgage over the Vessel granted by
the Borrower in favour of the Security Trustee in a form acceptable to the
Agent.

2.       An assignment of earnings and insurances agreement entered into by the
Borrower in favour of the Security Trustee to secure the Borrower's obligations
under this Agreement in a form acceptable to the Agent.

3.       All notices to be given under the assignments referred to in 2 above.

4.       The Protocol of Delivery and Acceptance of the Vessel duly signed by
the Borrower and the Seller.

5.       Evidence that the Vessel has been properly insured and the terms of the
insurances are acceptable to the Agent.

<PAGE>

                               THE SECOND SCHEDULE

                               NOTICE OF DRAWDOWN

From:    Pacific Tankship Ltd.,

To:      Christiania Bank og Kreditkasse ASA as Agent

Dear Sirs,

1.       We refer to the agreement (the "JUNIOR FACILITY AGREEMENT") dated ____
October 1997 and made between ourselves as borrower, yourselves as agent and
security trustee and Initial Bank. Terms defined in the Junior Facility
Agreement shall have the same meaning in this notice.

2.       We hereby give you notice that, pursuant to the Junior Facility
Agreement and on ____________, we wish to borrow the amount of ________________
United States Dollars (being an amount equal to the lesser of the amount of the
Facility Amount) upon the terms and subject to the conditions contained therein.
We hereby confirm that the aggregate sum of this proposed drawdown and the
amount drawndown (or to be drawndown) under the Senior Facility Agreement shall
not exceed 75% of the Fair Market Value of the Vessel.

3.       We would like the Advance to have a first Interest Period of:

         First Choice: _____________________________ months' duration.

         Second Choice:* __________________________ months' duration.

4.       We further confirm that, at the date hereof, the representations set
out in Clauses 12.1 and 12.2 of the Facility Agreement are true and that no
event which is or may become (with the passage of time, the giving of notice,
the making of any determination under the Facility Agreement or any combination
thereof) an Event of Default has occurred.

5.       The proceeds of this drawdown should be credited to our account
No.0007110471 with The Industrial Bank of Japan, Ltd.

                                Yours faithfully

                          ----------------------------
                              for and on behalf of
                             PACIFIC TANKSHIP LTD.,

--------------------------------------------------------------------------------
*        Only if the first choice Interest Period is twelve months.

<PAGE>

                               THE THIRD SCHEDULE

                          FORM OF TRANSFER CERTIFICATE

To:      Christiania Bank og Kreditkasse ASA (as Agent) and
         Pacific Tankship Ltd.,

                              TRANSFER CERTIFICATE

relating to the agreement (as from time to time amended, varied, novated or
supplemented, the "FACILITY AGREEMENT") dated [        ] whereby a
US$4,500,000 loan facility was made available to [           ] (the "BORROWER")
by the Initial Bank as defined therein in connection with which Christiania
Bank og Kreditkasse ASA acted as Agent and Security Trustee.

1.       Terms defined in the Facility Agreement shall, subject to any contrary
indication, have the same meanings herein. The terms Bank, Transferee, Bank's
Participation and Amount Transferred are defined in the schedule hereto.

2.       The Bank confirms that the Bank's Participation is an accurate summary
of its participation in the Facility Agreement and requests the Transferee to
accept and procure the transfer to the Transferee of a percentage of the Bank's
Participation (equal to the percentage that the Amount Transferred is of the
aggregate of the component amounts (as set out in the Schedule hereto) of the
Bank's Participation) by counter-signing and delivering this Transfer
Certificate to the Agent at its address for the service of notices specified in
the Facility Agreement.

3.       The Transferee hereby requests the Agent to accept this Transfer
Certificate as being delivered to the Agent pursuant to and for the purposes of
Clause 26.2 of the Facility Agreement so as to take effect in accordance with
the terms thereof on the Transfer Date or on such later date as may be
determined in accordance with the terms thereof.

4.       The Transferee warrants that it has received a copy of the Facility
Agreement together with such other information as it has required in connection
with this transaction and that it has not relied and will not hereafter rely on
the Bank to check or enquire on its behalf into the legality, validity,
effectiveness, adequacy, accuracy or completeness of any such information and
further agrees that it has not relied and will not rely on the Bank to assess or
keep under review on its behalf the financial condition, creditworthiness,
condition, affairs, status or nature of the Borrower.

5.       The Transferee hereby undertakes with the Bank and each of the other
parties to the Facility Agreement that it will perform in accordance with their
terms all those obligations which by the terms of the Facility Agreement will be
assumed by it after delivery of this Transfer Certificate to the Agent and
satisfaction of the conditions (if any) subject to which this Transfer
Certificate is expressed to take effect.

6.       The Bank makes no representation or warranty and assumes no
responsibility with respect to the legality, validity, effectiveness, adequacy
or enforceability of the Facility Agreement or any document relating thereto and
assumes no responsibility for the financial condition of the Borrower or

<PAGE>

for the performance and observance by the Borrower of any of its obligations
under the Facility Agreement or any document relating thereto and any and all
such conditions and warranties, whether express or implied by law or otherwise,
are hereby excluded.

7.       The Bank hereby gives notice that nothing herein or in the Facility
Agreement (or any document relating thereto) shall oblige the Bank to (i) accept
a re-transfer from the Transferee of the whole or any part of its rights,
benefits and/or obligations under the Facility Agreement transferred pursuant
hereto or (ii) support any losses directly or indirectly sustained or incurred
by the Transferee for any reason whatsoever including, without limitation, the
non-performance by the Borrower or any other party to the Facility Agreement (or
any document relating thereto) of its obligations under any such document. The
Transferee hereby acknowledges the absence of any such obligations under any
such document. The Transferee hereby acknowledges the absence of any such
obligation as is referred to in (i) or (ii) above.

8.       This Transfer Certificate and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with English law.

                                    SCHEDULE

1.       Bank:

2.       Transferee:

3.       Transfer Date:

4.       Bank's Participation:

         Bank's portion of the Loan:

         Bank's Commitment:

5.       Amount Transferred:

[Transferor Bank]                           [Transferee Bank]

By:                                         By:

Date:                                       Date:

                                            Address:

<PAGE>

                                 EXECUTION PAGE

THE BORROWER

PACIFIC TANKSHIP LTD.,

By:               PETER GEORGIOPOULOS

Address:          c/o General Maritime Corporation
                  730 Fifth Avenue (15th Floor)
                  New York
                  NY 10019
                  USA

Attention:
Tel:              (212) 698 9630
Fax:              (212) 698 9628

THE AGENT AND SECURITY TRUSTEE

CHRISTIANIA BANK OG KREDITKASSE ASA

By:               AMELIA SWEETLAND

Address:          PO Box 1166
                  Sentrum
                  0107 Oslo
                  Norway

Attention:
Tel:              47 2248 5000
Fax:              47 2248 6668

<PAGE>

THE INITIAL BANK

CHRISTIANIA BANK OG KREDITKASSE ASA

By:               PETER GEORGIOPOULOS

Address:          PO Box 1166
                  Sentrum
                  0107 Oslo
                  Norway

Attention:        Shipping Department
Tel:              47 2248 5000
Fax:              47 2248 6668

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