Document:

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                          FIRST PREFERRED SHIP MORTGAGE

                         ON MARSHALL ISLANDS FLAG VESSEL

                [GENMAR MACEDON] [GENMAR SPARTIATE] [GENMAR ZOE]

                                   executed by

                  [GENMAR MACEDON LTD.] [GENMAR SPARTIATE LTD.]

                               [GENMAR ZOE LTD.],

                                                   as Shipowner

                                   in favor of

              CHRISTIANIA BANK OG KREDITKASSE ASA, NEW YORK BRANCH
                                                   as Trustee,
                                                   as Mortgagee

                                  June __, 2000

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                                TABLE OF CONTENTS

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                                                                                                               PAGE
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RECITALS......................................................................................................... 1

ARTICLE I             REPRESENTATIONS AND WARRANTIES OF THE SHIPOWNER.............................................3
   SECTION 1.         EXISTENCE; AUTHORIZATION....................................................................3
   SECTION 2.         TITLE TO VESSEL.............................................................................3

ARTICLE II            COVENANTS OF THE SHIPOWNER..................................................................3
   SECTION 1.         PAYMENT OF INDEBTEDNESS.....................................................................3
   SECTION 2.         MORTGAGE RECORDING..........................................................................4
   SECTION 3.         LAWFUL OPERATION............................................................................4
   SECTION 4.         PAYMENT OF TAXES............................................................................4
   SECTION 5.         PROHIBITION OF LIENS........................................................................4
   SECTION 6.         NOTICE OF MORTGAGE..........................................................................4
   SECTION 7.         REMOVAL OF LIENS............................................................................6
   SECTION 8.         RELEASE FROM ARREST.........................................................................6
   SECTION 9.         MAINTENANCE.................................................................................6
   SECTION 10.        INSPECTION; REPORTS.........................................................................8
   SECTION 11.        FLAG; HOME PORT.............................................................................9
   SECTION 12.        NO SALES, TRANSFERS OR CHARTERS.............................................................9
   SECTION 13.        (A)  INSURANCE..............................................................................9
   SECTION 14.        REIMBURSEMENT FOR EXPENSES.................................................................13
   SECTION 15.        PERFORMANCE OF CHARTERS....................................................................13
   SECTION 16.        CHANGE IN OWNERSHIP........................................................................13
   SECTION 17.        PREPAYMENT IF EVENT OF LOSS................................................................13

ARTICLE III           EVENTS OF DEFAULT AND REMEDIES.............................................................13
   SECTION 1.         EVENTS OF DEFAULT; REMEDIES................................................................13
   SECTION 2.         POWER OF SALE..............................................................................16
   SECTION 3.         POWER OF ATTORNEY - SALE...................................................................16

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   SECTION 4.         POWER OF ATTORNEY - COLLECTION.............................................................16
   SECTION 5.         DELIVERY OF VESSEL.........................................................................17
   SECTION 6.         MORTGAGEE TO DISCHARGE LIENS...............................................................17
   SECTION 7.         PAYMENT OF EXPENSES........................................................................17
   SECTION 8.         REMEDIES CUMULATIVE........................................................................18
   SECTION 9.         CURE OF DEFAULTS...........................................................................18
   SECTION 10.        DISCONTINUANCE OF PROCEEDINGS..............................................................18
   SECTION 11.        APPLICATION OF PROCEEDS....................................................................18
   SECTION 12.        POSSESSION UNTIL DEFAULT...................................................................19
   SECTION 13.        SEVERABILITY OF PROVISIONS, ETC............................................................20

ARTICLE IV            SUNDRY PROVISIONS..........................................................................21
   SECTION 1.         SUCCESSORS AND ASSIGNS.....................................................................21
   SECTION 2.         POWER OF SUBSTITUTION......................................................................21
   SECTION 3.         COUNTERPARTS...............................................................................21
   SECTION 4.         NOTICES....................................................................................21
   SECTION 5.         RECORDING CLAUSE...........................................................................21
   SECTION 6.         FURTHER ASSURANCES.........................................................................21
   SECTION 7.         GOVERNING LAW..............................................................................22
   SECTION 8.         ADDITIONAL RIGHTS OF THE MORTGAGEE.........................................................22

SIGNATURES.........................................................................................................

EXHIBIT A                  Credit Agreement with Schedules I and II and Exhibits A, B, C, D-2, D-3 and G.
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                            FIRST PREFERRED MORTGAGE

                [GENMAR MACEDON] [GENMAR SPARTIATE] [GENMAR ZOE]

                  This First Preferred Ship Mortgage made the _____ day of June
2000 (this "Mortgage"), by [GENMAR MACEDON LTD.] [GENMAR SPARTIATE LTD.] [GENMAR
ZOE LTD.], a Cayman Islands corporation (the "Shipowner"), in favor of
CHRISTIANIA BANK OG KREDITKASSE ASA, New York Branch, not in its individual
capacity, but solely as Trustee (together with its successors in trust and
assigns, the "Mortgagee"), pursuant to that certain Master Vessel and Collateral
Trust Agreement dated as of June __, 2000 (as the same may be amended,
supplemented or otherwise modified from time to time, the "Master Vessel Trust
Agreement") between CHRISTIANIA BANK OG KREDITKASSE ASA, NEW YORK BRANCH, as
Agent for the Lenders party to the Credit Agreement defined below, and
CHRISTIANIA BANK OG KREDITKASSE ASA, NEW YORK BRANCH, as Trustee.

                            W I T N E S S E T H That:

                  WHEREAS:

                  A.       The Shipowner is the sole owner of the whole of the
Marshall Islands flag vessel [GENMAR MACEDON (ex John Young)] [GENMAR SPARTIATE
(ex Bruce Smart)] [GENMAR ZOE], Official Number [ ____ ] of [88,946] gross tons
and [45,125] net tons built in 1991 at Ishikawajima, [Japan], with her home port
at Majuro, Marshall Islands.

                  B.       The Shipowner and [Genmar Zoe Ltd.], [Genmar Gabriel
Ltd.], [Genmar Macedon Ltd.] and [Genmar Spartiate Ltd.], each a Cayman Island
Corporation, as Borrowers, (the "Borrowers"), Ajax II, L.P., a Cayman Island
limited partnership, as Guarantor, the Lenders listed therein and Christiania
Bank og Kreditkasse ASA, New York Branch, as Agent for the Lenders, have entered
into a Credit Agreement dated as of June ___, 2000, (the "Credit Agreement"),
providing for a loan to the Borrowers, as joint and several borrowers, in the
principal amount of up to Seventy Million United States Dollars (US$70,000,000)
(the "Loan") (as the same may be amended, supplemented or otherwise modified
from time to time), (the "Credit Agreement"), a copy of the form of which
(together with its attachments, but excluding Exhibits D-1, D-4, F-1, F-2 and
F-3) is attached hereto as Exhibit A and made a part hereof), and the Shipowner
acknowledges that it is justly indebted to the Lenders pursuant to the Credit
Agreement in the principal amount of [[_______] Million United States Dollars
(US$__________) and the Credit Agreement provides for an additional loan to the
Shipowner in the principal amount of [_______] Million United States Dollars
(US$__________) on the terms therein provided][Seventy Million United States
Dollars (US$70,000,000)].

                  D.       The obligations of the Shipowner in respect of
principal of, and interest on, the Loan are evidenced by the Secured Promissory
Note dated the date hereof, and such other

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notes issued from to time pursuant to the Credit Agreement (the "Note"). A copy
of the form of the Note is attached as Exhibit A to the Credit Agreement.

                  E.       In order to secure the repayment of the Loan pursuant
to the Credit Agreement and the Note (including the principal of and interest
thereon) according to the terms thereof, and the payment of all other such sums
that may hereinafter be secured by this Mortgage in accordance with the terms
hereof, and to secure the performance and observance of and compliance with all
the agreements, covenants and conditions contained herein or in the Credit
Agreement, the Shipowner has duly authorized the execution and delivery of this
First Preferred Mortgage.

                  F.       Pursuant to the Master Vessel Trust Agreement, the
Mortgagee has agreed to act as Trustee for the Lenders and hold such preferred
mortgages as set forth in the Master Vessel Trust Agreement.

                  NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, and in order to secure the payment of the Loan
(including the principal of and interest thereon) according to the terms
thereof, and the payment of all other sums that may hereafter be secured by this
Mortgage in accordance with the terms hereof and with the provisions of the
Credit Agreement, the Note and the other Loan Documents as defined in the Credit
Agreement, the Shipowner hereby covenants to pay each and every sum of money
that may be or become owing under the terms of the Credit Agreement, the Note,
the Mortgage and the other Loan Documents or any of them at the time and in the
manner specified therein (all such principal, interest, and all other sums
hereinafter called the "Indebtedness hereby secured") and to secure the
performance and observance of and compliance with all of the agreements,
covenants and conditions contained in this Mortgage and the Credit Agreement,
the Shipowner has granted, conveyed, mortgaged, pledged, confirmed, assigned,
transferred and set over and by these presents does grant, convey, mortgage,
pledge, confirm, assign, transfer and set over, unto the Mortgagee, and its
successors and assigns, the whole of the said vessel [GENMAR MACEDON] [GENMAR
SPARTIATE] [GENMAR ZOE], including, without being limited to, all of the
boilers, engines, machinery, masts, spars, boats, anchors, cables, chains,
rigging, tackle, capstans, outfit, tools, pumps and pumping equipment, apparel,
furniture, drilling equipment, fittings, equipment, spare parts, and all other
appurtenances thereunto appertaining or belonging, whether now owned or
hereafter acquired, and also any and all additions, improvements, renewals and
replacements hereafter made in or to such vessel or any part thereof, including
all items and appurtenances aforesaid (such vessel, together with all of the
foregoing, being herein called the "Vessel").

                  TO HAVE AND TO HOLD all and singular the above mortgaged and
described property unto the Mortgagee and its successors and assigns, to its and
to its successors' and assigns' own use, benefit and behoof forever.

                  PROVIDED, and these presents are upon the condition, that, if
the Shipowner or its successors or assigns shall pay or cause to be paid the
Indebtedness hereby secured as and when the same shall become due and payable in
accordance with the terms of the Credit Agreement, the

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Note and this Mortgage and all other such sums as may hereafter become secured
by this Mortgage in accordance with the terms hereof, and the Shipowner shall
duly perform, observe and comply with or cause to be performed, observed, or
complied with all the covenants, terms and conditions of this Mortgage and the
Credit Agreement expressed or implied, to be performed, then this Mortgage and
the estate and rights hereunder shall cease, determine and be void, otherwise to
remain in full force and effect.

                  The Shipowner, for itself, its successors and assigns, hereby
covenants, declares and agrees with the Mortgagee and its successors and assigns
that the Vessel is to be held subject to the further covenants, conditions,
terms and uses hereinafter set forth.

                  The Shipowner covenants and agrees with the Mortgagee as
follows:

                                    ARTICLE I

                 REPRESENTATIONS AND WARRANTIES OF THE SHIPOWNER

                  Section 1. EXISTENCE; AUTHORIZATION. The Shipowner is a
corporation duly organized and validly existing under the laws of the Cayman
Islands, and registered in the Republic of the Marshall Islands as a Foreign
Maritime Entity and shall so remain during the life of this Mortgage. The
Shipowner has full power and authority to own and mortgage the Vessel; has full
right and entitlement to register the Vessel in its name under the flag of the
Republic of the Marshall Islands and all action necessary and required by law
for the execution and delivery of this Mortgage has been duly and effectively
taken; and each of the Indebtedness secured hereby and the Mortgage is and will
be the legal, valid and binding obligation of the Shipowner enforceable in
accordance with its terms.

                  Section 2. TITLE TO VESSEL. The Shipowner lawfully owns and is
lawfully possessed of the Vessel free from any lien or encumbrance whatsoever
other than this Mortgage, liens for current crew's wages and liens not yet
required to be removed under Section 7 of Article II hereof and will warrant and
defend the title and possession thereto and to every part thereof for the
benefit of the Mortgagee against the claims and demands of all persons
whomsoever.

                                   ARTICLE II

                           COVENANTS OF THE SHIPOWNER

                  Section 1. PAYMENT OF INDEBTEDNESS. The Shipowner will pay or
cause to be paid the Indebtedness secured hereby and will observe, perform and
comply with the covenants, terms and conditions herein and in the Credit
Agreement and in the Note, express or implied, on its part to be observed,
performed or complied with. In the event of inconsistency between this Mortgage
and the Credit Agreement, the provisions of this Mortgage shall prevail but only
to the extent required by Marshall Islands law.

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                  The obligation of the Indebtedness hereby secured is an
obligation in United States Dollars and the term "$" when used herein shall mean
such United States Dollars. Notwithstanding fluctuations in the value or rate of
United States Dollars in terms of gold or any other currency, all payments
hereunder or otherwise in respect of the Indebtedness hereby secured shall be
payable in terms of United States Dollars when due, in United States Dollars
when paid, whether such payment is made before or after the due date.

                  Section 2. MORTGAGE RECORDING. The Shipowner will cause this
Mortgage to be duly recorded or filed in the Office of the Deputy Commissioner
of Maritime Affairs of the Republic of the Marshall Islands, in accordance with
the provisions of Chapter 3 of the Republic of the Marshall Islands Maritime Act
of 1990, as amended (hereinafter called the "Marshall Islands Maritime Law") and
will otherwise comply with and satisfy all of the provisions of applicable laws
of the Republic of the Marshall Islands in order to establish and maintain this
Mortgage as a first preferred mortgage thereunder upon the Vessel and upon all
renewals, replacements and improvements made in or to the same for the amount of
the Indebtedness hereby secured.

                  Section 3. LAWFUL OPERATION. The Shipowner will not cause or
permit the Vessel to be operated in any manner contrary to law, and the
Shipowner will not engage in any unlawful trade or violate any law or carry any
cargo that will expose the Vessel to penalty, forfeiture or capture, and will
not do, or suffer or permit to be done, anything which can or may injuriously
affect the registration of the Vessel under the laws and regulations of the
Republic of the Marshall Islands and will at all times keep the Vessel duly
documented thereunder.

                  Section 4. PAYMENT OF TAXES. The Shipowner will pay and
discharge when due and payable, from time to time, all taxes, assessments,
governmental charges, fines and penalties lawfully imposed on the Vessel or any
income therefrom.

                  Section 5. PROHIBITION OF LIENS. Neither the Shipowner, any
charterer, the Master of the Vessel nor any other person has or shall have any
right, power or authority to create, incur or permit to be placed or imposed or
continued upon the Vessel, its freights, profits or hire any lien whatsoever
other than this Mortgage, other liens in favor of the Mortgagee and for crew's
wages and salvage.

                  Section 6. NOTICE OF MORTGAGE. The Shipowner will place, and
at all times and places will retain a properly certified copy of this Mortgage
on board the Vessel with her papers and will cause such certified copy and the
Vessel's marine document to be exhibited to any and all persons having business
therewith which might give rise to any lien thereon other than liens for crew's
wages and salvage, and to any representative of the Mortgagee.

                  The Shipowner will place and keep prominently displayed in the
chart room and in the Master's cabin on the Vessel a framed printed notice in
plain type reading as follows:

                               NOTICE OF MORTGAGE

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         THIS VESSEL IS OWNED BY [GENMAR MACEDON LTD.] [GENMAR SPARTIATE LTD.]
         [GENMAR ZOE LTD.] AND IS SUBJECT TO A FIRST PREFERRED MORTGAGE IN FAVOR
         OF CHRISTIANIA BANK OG KREDITKASSE ASA, NEW YORK BRANCH, AS
         TRUSTEE/MORTGAGEE UNDER AUTHORITY OF CHAPTER 3 OF THE MARSHALL ISLANDS
         MARITIME ACT 1990, AS AMENDED. UNDER THE TERMS OF SAID MORTGAGE,
         NEITHER THE SHIPOWNER, ANY CHARTERER, THE MASTER OF THE VESSEL, NOR ANY
         OTHER PERSON HAS ANY RIGHT, POWER OR AUTHORITY TO CREATE, INCUR OR
         PERMIT TO BE PLACED OR IMPOSED UPON THE VESSEL, ANY ENCUMBRANCES
         WHATSOEVER OR ANY OTHER LIEN WHATSOEVER OTHER THAN FOR CREW'S WAGES AND
         SALVAGE.

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                  Section 7. REMOVAL OF LIENS. Except for the lien of this
Mortgage, the Shipowner will not suffer to be continued any lien, encumbrance or
charge on the Vessel, and in due course and in any event within thirty (30) days
after the same becomes due and payable or within fourteen (14) days after being
requested to do so by the Mortgagee, the Shipowner will pay or cause to be
discharged or make adequate provision for the satisfaction or discharge of all
claims or demands, and will cause the Vessel to be released or discharged from
any lien, encumbrance or charge therefor.

                  Section 8. RELEASE FROM ARREST. If a libel, complaint or
similar process be filed against the Vessel or the Vessel be otherwise attached,
levied upon or taken into custody by virtue of any legal proceeding in any
court, the Shipowner will promptly notify the Mortgagee thereof by telex, or
telefax confirmed by letter, at the address, as specified in this Mortgage, and
within fourteen (14) days will cause the Vessel to be released and all liens
thereon other than this Mortgage to be discharged, will cause a certificate of
discharge to be recorded in the case of any recording of a notice of claim of
lien, and will promptly notify the Mortgagee thereof in the manner aforesaid.
The Shipowner will notify the Mortgagee within forty-eight (48) hours of any
average or salvage incurred by the Vessel.

                  Section 9. MAINTENANCE. (a) The Shipowner will at all times
and without cost or expense to the Mortgagee maintain and preserve, or cause to
be maintained and preserved, the Vessel and all its equipment, outfit and
appurtenances, tight, staunch, strong, in good condition, working order and
repair and in all respects seaworthy and fit for its intended service, and will
keep the Vessel, or cause her to be kept, in such condition as will entitle her
to the highest classification and rating for vessels of the same age and type in
the American Bureau of Shipping or other classification society of like standing
approved by the Mortgagee. The Shipowner covenants to deliver annually to the
Mortgagee a certificate from such class society showing such classification to
be maintained. The Shipowner will without cost or expense to the Mortgagee
irrevocably and unconditionally instruct and authorize the classification
society of the Vessel, and shall request the classification society to give an
undertaking to the Mortgagee as follows:

         1.       to send to the Mortgagee, following receipt of a written
                  request from the Mortgagee, certified true copies of all
                  original class records held by the classification society
                  relating to the Vessel;

         2.       to allow the Mortgagee (or its agents), at any time and from
                  time to time, to inspect the original class and related
                  records of the Shipowner and the Vessel at the offices of the
                  classification society and to take copies of them;

         3.       following receipt of a written request from the Mortgagee:

                           1.       to advise of any facts or matters which may
                                    result in or have resulted in a change,
                                    suspension, discontinuance, withdrawal or

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                                    expiry of the Vessel's class under the rules
                                    or terms and conditions of the Shipowner's
                                    or the Vessel's membership of the
                                    classification society; and

                           2.       to confirm that the Shipowner is not in
                                    default of any of its contractual
                                    obligations or liabilities to the
                                    classification society and, without limiting
                                    the foregoing, that it has paid in full all
                                    fees or other charges due and payable to the
                                    classification society; and

                           3.       if the Shipowner is in default of any of its
                                    contractual obligations or liabilities to
                                    the classification society, to specify to
                                    the Mortgagee in reasonable detail the facts
                                    and circumstances of such default, the
                                    consequences thereof, and any remedy period
                                    agreed or allowed by the classification
                                    society;

                           4.       to notify the Mortgagee immediately in
                                    writing if the classification society
                                    receives notification from the Shipowner or
                                    any other person that the Vessel's
                                    classification society is to be changed.

Notwithstanding the above instructions and undertaking given for the benefit of
the Mortgagee, the Shipowner shall continue to be responsible to the
classification society for the performance and discharge of all its obligations
and liabilities relating to or arising out of or in connection with the contract
it has with the classification society, and nothing herein or therein shall be
construed as imposing any obligation or liability of the Mortgagee to the
classification society in respect thereof.

                  The Shipowner shall further notify the classification society
that all the foregoing instructions and authorizations shall remain in full
force and effect until revoked or modified by written notice to the
classification society received from the Mortgagee, and that the Shipowner shall
reimburse the classification society for all its costs and expenses incurred in
complying with the foregoing instructions.

                  (b)      The Vessel shall, and the Shipowner covenants that
she will, at all times comply with all applicable laws, treaties and conventions
to which the Republic of the Marshall Islands is a party, and rules and
regulations issued thereunder, and shall have on board as and when required
thereby valid certificates showing compliance therewith. The Shipowner will not
make, or permit to be made, any substantial change in the structure, type or
speed of the Vessel or change in her rig, without first receiving the written
approval thereof by the Mortgagee.

                  (c)      The Shipowner agrees to give the Mortgagee at least
ten (10) days notice of the actual date and place of any survey or drydocking,
in order that the Mortgagee may have representatives present if desired. The
Shipowner agrees that at the Mortgagee's request it will satisfy the Mortgagee
that the expense of such survey or drydocking or work to be done thereat is

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within Shipowner's financial capability and will not result in a claim or lien
against the Vessel in violation of the provisions of this Mortgage or the Credit
Agreement.

                  (d)      The Shipowner shall promptly notify the Mortgagee of
and furnish the Mortgagee with full information, including copies of reports and
surveys, regarding any material accident or accident involving repairs where the
aggregate cost is likely to exceed U.S.$250,000 (or its equivalent in another
currency), any major damage to the Vessel, any event affecting the Vessel's
class, any occurrence in consequence whereof the Vessel has become or is likely
to suffer an Event of Loss as defined in the Credit Agreement.

                  (e)      The Mortgagee shall have the right at any time, on
reasonable notice, to have its surveyor conduct inspections and surveys of the
Vessel to ascertain the condition of the Vessel and to satisfy itself that the
Vessel is being properly repaired and maintained. Such inspections and surveys
shall be conducted at such times and in such manner as will not interfere with
the Shipowner's normal business operations and schedule.

                  Section 10. INSPECTION; REPORTS. (a) The Shipowner will at all
reasonable times afford the Mortgagee or its authorized representatives full and
complete access to the Vessel for the purpose of inspecting the Vessel and her
cargo and papers, including without limitation all records pertaining to the
Vessel's maintenance and repair, and, at the request of the Mortgagee, the
Shipowner will deliver for inspection copies of any and all contracts and
documents relating to the Vessel, whether on board or not.

                  (b)      The Shipowner hereby agrees to furnish promptly to
the Mortgagee, on demand, any reports or information which the Shipowner may
submit to shareholders or regulatory agencies and any additional information
which the Mortgagee may request in respect of the financial condition of the
Shipowner.

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                  Section 11. FLAG; HOME PORT. The Shipowner will not change the
flag or home port of the Vessel without the written consent of the Mortgagee and
any such written consent to any one change of flag or home port shall not be
construed to be a waiver of this provision with respect to any subsequent
proposed change of flag or home port.

                  Section 12. NO SALES, TRANSFERS OR CHARTERS. The Shipowner
will not sell, mortgage, transfer, or change the management of, or demise
charter the Vessel for any period or permit the Vessel to be sub-chartered for a
period longer than six (6) months (including any permitted extensions or
renewals) in each case, without the written consent of the Mortgagee first had
and obtained, and any such written consent to any one sale, mortgage, demise or
time charter or sub-charter, transfer, or change of management shall not be
construed to be a waiver of this provision with respect to any subsequent
proposed sale, mortgage, demise or time charter, transfer, or change of
management. Any such sale, mortgage, demise or time charter, sub-charter,
transfer, or change of management of the Vessel shall be subject to the
provisions of this Mortgage and the lien hereof.

                  Section 13. (a) INSURANCE. The Shipowner, at its own expense,
will keep the Vessel insured with insurers and protection and indemnity clubs or
associations of internationally recognized responsibility, and placed through
brokers, in each case reasonably satisfactory to the Mortgagee and under forms
of policies approved by the Mortgagee against the risks indicated below and such
other risks as the Mortgagee may specify from time to time:

                  (i)      Marine and war risk hull and machinery insurance in
         an amount in U.S. dollars equal to, except as otherwise approved or
         required in writing by the Mortgagee, the greater of (x) the then full
         commercial value of the Vessel or (y) an amount which, when aggregated
         with such insured value of the other Vessels referred to in the Credit
         Agreement (if the other Vessels are then subject to a mortgage in favor
         of the Mortgagee under the Credit Agreement and have not suffered an
         Event of Loss as defined in the Credit Agreement), is equal to 120% of
         the then outstanding principal amount of the Loan;

                  (ii)     Marine and war risk protection and indemnity
         insurance or equivalent insurance (including coverage against liability
         for passengers, fines and penalties arising out of the operation of the
         Vessel, insurance against liability arising out of pollution, spillage
         or leakage, and workmen's compensation or longshoremen's and harbor
         workers' insurance as shall be required by applicable law) in such
         amounts approved by the Mortgagee; provided, however that insurance
         against liability under law or international convention arising out of
         pollution, spillage or leakage shall be in an amount not less than the
         greater of:

         (y)      the maximum amount available, as that amount may from time to
                  time change, from the International Group of Protection and
                  Indemnity Associations or alternatively such sources of
                  pollution, spillage or leakage coverage as are

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                  commercially available in any absence of such coverage by the
                  International Group as shall be carried by prudent shipowners
                  for similar vessels engaged in similar trades plus amounts
                  available from customary excess insurers of such risks as
                  excess amounts shall be carried by prudent shipowners for
                  similar vessels engaged in similar trades; and

         (z)      the amounts required by the laws or regulations of the United
                  States of America or any applicable jurisdiction in which the
                  Vessel may be trading from time to time.

                  (iii)    Mortgagee's interest insurance (including extended
         mortgagee interest-additional perils-pollution) coverage satisfactory
         to the Mortgagee in an amount equal to 120% of the then outstanding
         aggregate principal amounts of the Loan; all such mortgagee's interest
         insurance cover may in the Mortgagee's discretion be obtained directly
         by the Mortgagee and the Shipowner shall on demand pay all costs of
         such cover.

                  (iv)     While the Vessel is idle or laid up, at the option of
         the Shipowner and in lieu of the above-mentioned marine and war risk
         hull insurance, port risk insurance insuring the Vessel against the
         usual risks encountered by like vessels under similar circumstances.

                  (b)      The marine and commercial war-risk insurance required
by this Section 13 shall have deductibles and franchises no higher than the
following: (i) Hull and Machinery - US$115,000 for all hull claims and
US$150,000 for all machinery claims each accident or occurrence and (ii)
Protection and Indemnity - US$50,000 for cargo claims, US$35,000 for crew
claims, US$10,000 passenger claims and US$15,000 all other claims, in each case
each accident or occurrence.

All insurance maintained hereunder shall be primary insurance without right of
contribution against any other insurance maintained by the Mortgagee. Each
policy of marine and war risk hull and machinery insurance with respect to the
Vessel shall provide that the Mortgagee shall be a named insured and a loss
payee. Each entry in a marine and war risk protection indemnity club with
respect to the Vessel shall note the interest of the Mortgagee. The Mortgagee
and its successors and assigns shall not be responsible for any premiums, club
calls, assessments or any other obligations or for the representations and
warranties made therein by the Shipowner or any other person.

                  (c)      The Shipowner will furnish the Mortgagee from time to
time on request, and in any event at least annually, a detailed report signed by
a firm of marine insurance brokers acceptable to the Mortgagee with respect to
the hull and machinery and war risk insurance and Mortgagee's interest insurance
carried and maintained on the Vessel, together with their opinion as to the
adequacy thereof and its compliance with the provisions of this Mortgage. At the
Shipowner's expense the Shipowner will cause such insurance broker and the P & I
club or association providing P & I insurance referred to in part (a)(ii) of
this Section 13, to agree to advise the Mortgagee by telex or telecopier
confirmed by letter of any expiration, termination, alteration

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or cancellation of any policy, any default in the payment of any premium and of
any other act or omission on the part of the Shipowner of which it has knowledge
and which might invalidate or render unenforceable, in whole or in part, any
insurance on the Vessel. To the extent obtainable from underwriters or brokers,
all policies required hereby shall provide for not less than 14 days prior
written notice to be received by the Mortgagee of the termination or
cancellation of the insurance evidenced thereby. All policies of insurance
maintained pursuant to this Section 13 for risks covered by insurance other than
that provided by a P & I Club shall contain provisions waiving underwriters'
rights of subrogation thereunder against any assured named in such policy and
any assignee of said assured. The Shipowner has assigned to the Mortgagee its
rights under any policies of insurance in respect of the Vessel. The Shipowner
agrees that, unless the insurances by their terms provide that they cannot cease
(by reason of nonrenewal or otherwise) without the Mortgagee being informed and
having the right to continue the insurance by paying any premiums not paid by
the Shipowner, receipts showing payment of premiums for required insurance and
also of demands from the Vessel's P & I underwriters shall be in the hands of
the Mortgagee at least two (2) days before the risk in question commences.

                  (d)      Unless the Mortgagee shall otherwise agree, all
amounts of whatsoever nature payable under any insurance must be payable to the
Mortgagee for distribution first to itself and thereafter to the Shipowner or
others as their interests may appear. Nevertheless, until otherwise required by
the Mortgagee by notice to the underwriters upon the occurrence and continuance
of a Default (as defined in the Credit Agreement) or an event of default
hereunder, (i) amounts payable under any insurance on the Vessel with respect to
protection and indemnity risks may be paid directly to the Shipowner to
reimburse it for any loss, damage or expense incurred by it and covered by such
insurance or to the person to whom any liability covered by such insurance has
been incurred provided that the underwriter shall have first received evidence
that the liability insured against has been discharged, and (ii) amounts payable
under any insurance with respect to the Vessel involving any damage to the
Vessel not constituting an Event of Loss (as defined in the Credit Agreement),
may be paid by underwriters directly for the repair, salvage or other charges
involved or, if the Shipowner shall have first fully repaired the damage or paid
all of the salvage or other charges, may be paid to the Shipowner as
reimbursement therefor; PROVIDED, HOWEVER, that if such amounts (including any
franchise or deductible) are in excess of U.S.$250,000, the underwriters shall
not make such payment without first obtaining the written consent thereto of the
Mortgagee.

                  (e)      All amounts paid to the Mortgagee in respect of any
insurance on the Vessel shall be disposed of as follows (after deduction of the
expenses of the Mortgagee in collecting such amounts):

                  (i)      any amount which might have been paid at the time, in
         accordance with the provisions of paragraph (d) above, directly to the
         Shipowner or others shall be paid by the Mortgagee to, or as directed
         by, the Shipowner;

                                       11
<PAGE>

                  (ii)     all amounts paid to the Mortgagee in respect of an
         Event of Loss (as defined in the Credit Agreement) of the Vessel shall
         be applied by the Mortgagee to the payment of the Indebtedness hereby
         secured pursuant to Section 2.05(d) of the Credit Agreement;

                  (iii)    all other amounts paid to the Mortgagee in respect of
         any insurance on the Vessel may, in the Mortgagee's sole discretion, be
         held and applied to the prepayment of the Indebtedness hereby secured
         or to making of needed repairs or other work on the Vessel, or to the
         payment of other claims incurred by the Shipowner relating to the
         Vessel, or may be paid to the Shipowner or whosoever may be entitled
         thereto.

                  (f)      In the event that any claim or lien is asserted
against the Vessel for loss, damage or expense which is covered by insurance
required hereunder and it is necessary for the Shipowner to obtain a bond or
supply other security to prevent arrest of the Vessel or to release the Vessel
from arrest on account of such claim or lien, the Mortgagee, on request of the
Shipowner, may, in the sole discretion of the Mortgagee, assign to any person,
firm or corporation executing a surety or guarantee bond or other agreement to
save or release the Vessel from such arrest, all right, title and interest of
the Mortgagee in and to said insurance covering said loss, damage or expense, as
collateral security to indemnify against liability under said bond or other
agreement.

                  (g)      The Shipowner shall deliver to the Mortgagee
certified copies and, whenever so requested by the Mortgagee, the originals of
all certificates of entry, cover notes, binders, evidences of insurance and
policies and all endorsements and riders amendatory thereof in respect of
insurance maintained under this Mortgage for the purpose of inspection or
safekeeping, or, alternatively, satisfactory letters of undertaking from the
broker holding the same. The Mortgagee shall be under no duty or obligation to
verify the adequacy or existence of any such insurance or any such policies,
endorsement or riders.

                  (h)      The Shipowner agrees that it will not execute or
permit or willingly allow to be done any act by which any insurance may be
suspended, impaired or cancelled, and that it will not permit or allow the
Vessel to undertake any voyage or run any risk or transport any cargo which may
not be permitted by the policies in force, without having previously notified
the Mortgagee in writing and insured the Vessel by additional coverage to extend
to such voyages, risks, passengers or cargoes.

                  (i)      In case any underwriter proposes to pay less on any
claim than the amount thereof, the Shipowner shall forthwith inform the
Mortgagee, and if a Default, an Event of Default or an Event of Loss (as such
terms are defined in the Credit Agreement) has occurred and is continuing the
Mortgagee shall have the exclusive right to negotiate and agree to any
compromise.

                  (j)      The Shipowner will comply with and satisfy all of the
provisions of any applicable law, convention, regulation, proclamation or order
concerning financial responsibility

                                       12
<PAGE>

for liabilities imposed on the Shipowner or the Vessel with respect to pollution
by any state or nation or political subdivision thereof and will maintain all
certificates or other evidence of financial responsibility as may be required by
any such law, convention, regulation, proclamation or order with respect to the
trade in which the Vessel is from time to time engaged and the cargo carried by
it.

                  Section 14. REIMBURSEMENT FOR EXPENSES. The Shipowner will
reimburse the Mortgagee promptly for any and all expenditures which the
Mortgagee may from time to time make, lay out or expend in providing such
protection in respect of insurance, discharge or purchase of liens, taxes, dues,
tolls, assessments, governmental charges, fines and penalties lawfully imposed,
repairs, attorney's fees, and other matters as the Shipowner is obligated herein
to provide, but fails to provide or which, in the sole judgment of the Mortgagee
are necessary or appropriate for the protection of the Vessel or the security
granted by this Mortgage. Such obligation of the Shipowner to reimburse the
Mortgagee shall be an additional indebtedness due from the Shipowner, shall bear
interest at the interest rate as set forth in Section 2.04(c) of the Credit
Agreement from the date of payment by the Mortgagee to and including the date of
reimbursement by the Shipowner, shall be secured by this Mortgage, and shall be
payable by the Shipowner on demand. The Mortgagee, though privileged to do so,
shall be under no obligation to the Shipowner to make any such expenditure, nor
shall the making thereof relieve the Shipowner of any default in that respect.

                  Section 15. PERFORMANCE OF CHARTERS. The Shipowner will fully
perform any and all charter parties which may be entered into with respect to
the Vessel and will promptly notify the Mortgagee of any material claim by any
charterer of non-performance thereunder by the Shipowner.

                  Section 16. CHANGE IN OWNERSHIP. The Shipowner further
covenants and agrees with the Mortgagee that, so long as any part of the
Indebtedness hereby secured remains unpaid, there shall be no change in the
ownership of the Vessel or any of the shares of the Shipowner without the prior
written consent of the Mortgagee.

                  Section 17. PREPAYMENT IF EVENT OF LOSS. In the event that the
Vessel suffers an Event of Loss as such term is defined in the Credit Agreement,
then and in each such case the Shipowner shall forthwith repay the Indebtedness
hereby secured at the time and in the amount set forth in Section 2.05(d) of the
Credit Agreement.

                                   ARTICLE III

                         EVENTS OF DEFAULT AND REMEDIES

                  Section 1. EVENTS OF DEFAULT; REMEDIES. In case any one or
more of the following events, herein termed "events of default", shall happen:

                                       13
<PAGE>

                  (a)      the Shipowner fails to pay within two Business Days
         of the date due any payment in respect of the Indebtedness secured
         hereby as provided herein; or

                  (b)      the statements in Article I shall prove to have been
         untrue when made in a material way; or

                  (c)      a default in the due and punctual observance and
         performance of any of the provisions of Sections 2, 3, 7, 8, 9(b), 11,
         12, 13(a), (b), (d), (h) and (j), 16 or 17 of Article II hereof shall
         have occurred and be continuing; or

                  (d)      a breach or omission in the due and punctual
         observance of any of the other covenants and conditions herein required
         to be kept and performed by the Shipowner and such breach or omission
         shall continue for 30 days after the day the Shipowner first knew or
         should have known of such breach or omission; or

                  (e)      an Event of Default shall have occurred and be
         continuing under the Credit Agreement; or

                  (f)      any notice shall have been issued by the government
         or any bureau, department, officer, board or agency thereof of the
         country of registry of the Vessel to the effect that the Vessel is
         subject to cancellation from such registry or the certificate of
         registry of the Vessel is subject to revocation or cancellation for any
         reason whatsoever;

then:

                  The security constituted by this Mortgage shall become
immediately enforceable and that without limitation, the enforcement remedies
specified can be exercised irrespective of whether or not the Mortgagee has
exercised the right of acceleration under the Credit Agreement and the Mortgagee
shall have the right to:

                  (i)      Declare all the then unpaid Indebtedness hereby
         secured to be due and payable immediately, and upon such declaration,
         the same shall become and be immediately due and payable provided,
         however, that no declaration shall be required if an event of default
         shall have occurred by reason of a default under Article VI, Section
         6.01 (e) of the Credit Agreement, then and in such case, the
         Indebtedness hereby secured shall become immediately due and payable on
         the occurrence of such event of default without any notice or demand;

                  (ii)     Exercise all of the rights and remedies in
         foreclosure and otherwise given to a mortgagee by the provisions of the
         laws of the country of registry of the Vessel or of any other
         jurisdiction where the Vessel may be found;

                                       14
<PAGE>

                  (iii)    Bring suit at law, in equity or in admiralty, as it
         may be advised, to recover judgment for the Indebtedness hereby
         secured, and collect the same out of any and all property of the
         Shipowner whether covered by this Mortgage or otherwise;

                  (iv)     Take and enter into possession of the Vessel, at any
         time, wherever the same may be, without legal process and without being
         responsible for loss or damage and the Shipowner or other person in
         possession forthwith upon demand of the Mortgagee shall surrender to
         the Mortgagee possession of the Vessel;

                  (v)      Without being responsible for loss or damage, the
         Mortgagee may hold, lay up, lease, charter, operate or otherwise use
         such Vessel for such time and upon such terms as it may deem to be for
         its best advantage, and demand, collect and retain all hire, freights,
         earnings, issues, revenues, income, profits, return premiums, salvage
         awards or recoveries, recoveries in general average, and all other sums
         due or to become due in respect of such Vessel or in respect of any
         insurance thereon from any person whomsoever, accounting only for the
         net profits, if any, arising from such use of the Vessel and charging
         upon all receipts from the use of the Vessel or from the sale thereof
         by court proceedings or pursuant to subsection (vi) next following, all
         costs, expenses, charges, damages or losses by reason of such use; and
         if at any time the Mortgagee shall avail itself of the right herein
         given them to take the Vessel, the Mortgagee shall have the right to
         dock the Vessel, for a reasonable time at any dock, pier or other
         premises of the Shipowner without charge, or to dock her at any other
         place at the cost and expense of the Shipowner;

                  (vi)     Without being responsible for loss or damage, the
         Mortgagee may sell the Vessel upon such terms and conditions as to the
         Mortgagee shall seem best, free from any claim of or by the Shipowner,
         at public or private sale, by sealed bids or otherwise, by mailing, by
         air or otherwise, notice of such sale, whether public or private,
         addressed to the Shipowner at its last known address and to any other
         registered mortgagee, twenty (20) calendar days prior to the date fixed
         for entering into the contract of sale and by first publishing notice
         of any such public sale for ten (10) consecutive days, in daily
         newspapers of general circulation published in the City of New York,
         State of New York; in the event that the Vessel shall be offered for
         sale by private sale, no newspaper publication of notice shall be
         required, nor notice of adjournment of sale; sale may be held at such
         place and at such time as the Mortgagee by notice may have specified,
         or may be adjourned by the Mortgagee from time to time by announcement
         at the time and place appointed for such sale or for such adjourned
         sale, and without further notice or publication the Mortgagee may make
         any such sale at the time and place to which the same shall be so
         adjourned; and any sale may be conducted without bringing the Vessel to
         the place designated for such sale and in such manner as the Mortgagee
         may deem to be for its best advantage, and the Mortgagee may become the
         purchaser at any sale. The Shipowner agrees that any sale made in
         accordance with the terms of this paragraph shall be deemed made in a
         commercially reasonable manner insofar as it is concerned;

                                       15
<PAGE>

                  (vii)    Require that all policies, contracts, certificates of
         entry and other records relating to the insurance with respect to the
         Vessel, including, but not limited to, those described in Article II,
         Section 13 hereof (the "Insurances") (including details of and
         correspondence concerning outstanding claims) be forthwith delivered to
         or to the order of the Mortgagee;

                  (viii)   Collect, recover, compromise and give a good
         discharge for any and all monies and claims for monies then outstanding
         or thereafter arising under the Insurances or in respect of the
         earnings or any requisition compensation and to permit any brokers
         through whom collection or recovery is effected to charge the usual
         brokerage therefore.

                  Section 2. POWER OF SALE. Any sale of the Vessel made in
pursuance of this Mortgage, whether under the power of sale hereby granted or
any judicial proceedings, shall operate to divest all right, title and interest
of any nature whatsoever of the Shipowner therein and thereto, and shall bar the
Shipowner, its successors and assigns, and all persons claiming by, through or
under them. No purchaser shall be bound to inquire whether notice has been
given, or whether any default has occurred, or as to the propriety of the sale,
or as to the application of the proceeds thereof. In case of any such sale, the
Mortgagee, if it is the purchaser, shall be entitled, for the purpose of making
settlement or payment for the property purchased, to use and apply the
Indebtedness hereby secured in order that there may be credited against the
amount remaining due and unpaid thereon the sums payable out of the net proceeds
of such sale to the Mortgagee after allowing for the costs and expense of sale
and other charges; and thereupon such purchaser shall be credited, on account of
such purchase price, with the net proceeds that shall have been so credited upon
the Indebtedness secured hereby. At any such sale, the Mortgagee may bid for and
purchase such property and upon compliance with the terms of sale may hold,
retain and dispose of such property without further accountability therefor.

                  Section 3. POWER OF ATTORNEY - SALE. The Mortgagee is hereby
irrevocably appointed attorney-in-fact of the Shipowner to execute and deliver
to any purchaser aforesaid, and is hereby vested with full power and authority
to make, in the name and on behalf of the Shipowner, a good conveyance of the
title to the Vessel so sold. Any person dealing with the Mortgagee or
attorney-in-fact shall not be put on enquiry as to whether the power of attorney
contained herein has become exercisable. In the event of any sale of the Vessel,
under any power herein contained, the Shipowner will, if and when required by
the Mortgagee, execute such form of conveyance of the Vessel as the Mortgagee
may direct or approve.

                  Section 4. POWER OF ATTORNEY - COLLECTION. The Mortgagee is
hereby irrevocably appointed attorney-in-fact of the Shipowner upon the
happening of any event of default, in the name of the Shipowner to demand,
collect, receive, compromise and sue for, so far as may be permitted by law, all
freight, hire, earnings, issues, revenues, income and profits of the Vessel and
all amounts due from underwriters under any insurance thereon as payment of
losses or as return premiums or otherwise, salvage awards and recoveries,
recoveries in general average or otherwise, and all other sums due or to become
due at the time of the happening of any event of

                                       16
<PAGE>

default as defined in Section 1 of Article III hereof in respect of the Vessel,
or in respect of any insurance thereon, from any person whomsoever, and to make,
give and execute in the name of the Shipowner acquittances, receipts, releases
or other discharges for the same, whether under seal or otherwise, and to
endorse and accept in the name of the Shipowner all checks, notes, drafts,
warrants, agreements and other instruments in writing with respect to the
foregoing. Any person dealing with the Mortgagee or attorney-in-fact shall not
be put on enquiry as to whether the Power of Attorney contained herein has
become exercisable.

                  Section 5. DELIVERY OF VESSEL. Upon the security constituted
by this Mortgage becoming immediately enforceable pursuant to Section 1 of
Article III, the Mortgagee shall (in addition to the powers described in Section
1 of Article III) become forthwith entitled (but not bound) to appoint, by an
instrument in writing under its seal or under the hand of any director or
officer or authorized signatory, a receiver and/or manager of the Vessel upon
such terms as to remuneration and otherwise as the Mortgagee shall deem fit with
power from time to time to remove any receiver and appoint another in his stead
and any receiver shall be the agent of the Shipowner (who shall be solely
responsible for his acts and defaults and remuneration) and shall have all the
powers conferred by law by way of addition to, but without limiting, those
powers any receiver shall have all the powers and entitlements conferred on the
Mortgagee by this Mortgage and generally shall be entitled to the same
protection and to exercise the same powers and discretions as are granted to the
Mortgagee under this Mortgage.

                  Section 6. MORTGAGEE TO DISCHARGE LIENS. The Shipowner
authorizes and empowers the Mortgagee or its appointees or any of them to appear
in the name of the Shipowner, its successors and assigns, in any court of any
country or nation of the world where a suit is pending against the Vessel
because of or on account of any alleged lien against the Vessel from which the
Vessel has not been released and to take such proceedings as to them or any of
them may seem proper towards the defense of such suit and the purchase or
discharge of such lien, and all expenditures made or incurred by them or any of
them for the purpose of such defense or purchase or discharge shall be a debt
due from the Shipowner, its successors and assigns, to the Mortgagee, and shall
be secured by the lien of this Mortgage in like manner and extent as if the
amount and description thereof were written herein.

                  Section 7. PAYMENT OF EXPENSES. The Shipowner covenants that
upon the happening of any one or more of the events of default, then, upon
written demand of the Mortgagee, the Shipowner will pay to the Mortgagee the
whole amount due and payable in respect of the Indebtedness secured hereby; and
in case the Shipowner shall fail to pay the same forthwith upon such demand, the
Mortgagee shall be entitled to recover judgment for the whole amount so due and
unpaid, together with such further amounts as shall be sufficient to cover the
reasonable compensation of the Mortgagee or its agents, attorneys and counsel
and any necessary advances, expenses and liabilities made or incurred by it or
them or the Mortgagee hereunder. All moneys collected by the Mortgagee under
this Section 7 shall be applied by the Mortgagee in accordance with the
provisions of Section 11 of this Article III.

                                       17
<PAGE>

                  Section 8. REMEDIES CUMULATIVE. Each and every power and
remedy herein given to the Mortgagee shall be cumulative and shall be in
addition to every other power and remedy herein given or now or hereafter
existing at law, in equity, in admiralty or by statute, and each and every power
and remedy whether herein given or otherwise existing may be exercised from time
to time and as often and in such order as may be deemed expedient by the
Mortgagee, and the exercise or the beginning of the exercise of any power or
remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other power or remedy. The Mortgagee shall not be
required or bound to enforce any of its rights under any of the other Loan
Documents (as such term is defined in the Credit Agreement) prior to enforcing
its rights under this Mortgage. No delay or omission by the Mortgagee in the
exercise of any right or power or in the pursuance of any remedy accruing upon
any default as above defined shall impair any such right, power or remedy or be
construed to be a waiver of any such event of default or to be an acquiescence
therein; nor shall the acceptance by the Mortgagee of any security or of any
payment of or on account of the Indebtedness hereby secured maturing after any
event of default or of any payment on account of any past default be construed
to be a waiver of any right to exercise its remedies due to any future event of
default or of any past event of default not completely cured thereby. No
consent, waiver or approval of the Mortgagee shall be deemed to be effective
unless in writing and duly signed by authorized signatories of the Mortgagee;
any waiver by the Mortgagee of any of the terms of this Mortgage or any consent
given under this Mortgage shall only be effective for the purpose and on the
terms which it is given and shall be without prejudice to the right to give or
withhold consent in relation to future matters (which are either the same or
different).

                  Section 9. CURE OF DEFAULTS. If at any time after an event of
default and prior to the actual sale of the Vessel by the Mortgagee or prior to
any enforcement or foreclosure proceedings the Shipowner offers completely to
cure all events of default and to pay all expenses, advances and damages to the
Mortgagee consequent on such events of default, with interest at the interest
rate set forth in Section 2.04(c) of the Credit Agreement, then the Mortgagee
may, but shall not be obligated to, accept such offer and payment and restore
the Shipowner to its former position, but such action, if taken, shall not
affect any subsequent event of default or impair any rights consequent thereon.

                  Section 10. DISCONTINUANCE OF PROCEEDINGS. In case the
Mortgagee shall have proceeded to enforce any right, power or remedy under this
Mortgage by foreclosure, entry or otherwise, and such proceedings shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to the Mortgagee, then and in every such case the Shipowner and the
Mortgagee shall be restored to its former position and right hereunder with
respect to the property subject or intended to be subject to this Mortgage, and
all rights, remedies and powers of the Mortgagee shall continue as if no such
proceedings had been taken.

                  Section 11. APPLICATION OF PROCEEDS. After an event of default
hereunder shall have occurred and be continuing, the proceeds of any sale of the
Vessel and any and all other moneys received by the Mortgagee pursuant to or
under the terms of this Mortgage or in any

                                       18
<PAGE>

proceedings hereunder, the application of which has not elsewhere herein been
specifically provided for, shall be applied as follows:

                  FIRST: So much of such amounts as shall be required to pay all
         taxes, assessments or liens in respect of the Vessel or any Loan
         Document having priority over liens or security interests in favor of
         the Mortgagee, shall be applied to the payment of such taxes,
         assessments or liens;

                  SECOND: So much of such amounts as shall be required to
         reimburse the Mortgagee for any expense or advance made or incurred by
         the Mortgagee in protection of its rights or pursuance of its remedies
         or other loss incurred by the Mortgagee in connection with the
         collection or distribution of such amounts including, but not limited
         to, the expenses of enforcement, any sale or taking, attorney's fees
         and court costs shall be applied to such reimbursement;

                  THIRD: So much of such amounts as shall be required to pay to
         the Mortgagee all amounts owed to it pursuant to the Credit Agreement,
         the Note or any of the Loan Documents, other than amounts specifically
         provided for in this Section 11, shall be applied to the payment of
         such amounts;

                  FOURTH: So much of such amounts as shall be required to pay in
         full the accrued but unpaid interest (including any interest on overdue
         principal) on the Note pursuant to the Credit Agreement and the Note to
         the date of distribution shall be applied to the payment of such
         interest on such Note;

                  FIFTH: So much of such amounts as shall be required to pay in
         full the unpaid principal amount of the Note shall be applied to the
         payment of such principal amount;

                  SIXTH: So much of such amounts as the Mortgagee in its sole
         discretion shall determine to be equal to any amounts which are not
         then accrued due and payable to the Lenders under the Credit Agreement
         and the Loan Documents (or any of them) or are not then due and payable
         to the Mortgagee by virtue of payment demanded under the Credit
         Agreement and the Loan Documents (or any of them) but which (in the
         sole and absolute opinion of the Mortgagee) will or may become due and
         payable in the future shall be retained by the Mortgagee and shall be
         applied upon the same becoming due and payable; and

                  SEVENTH: The balance, if any, remaining, shall be distributed
         to the Shipowner or to order.

                  Section 12. POSSESSION UNTIL DEFAULT. Until one or more of the
events of default hereinafter described shall happen, the Shipowner (a) shall be
suffered and permitted to retain actual possession and use of the Vessel and (b)
shall have the right, from time to time, in its discretion, and without
application to the Mortgagee, and without obtaining a release thereof by

                                       19
<PAGE>

the Mortgagee, to dispose of, free from the lien hereof, any boilers, engines,
machinery, masts, spars, sails, rigging, boats, anchors, chains, tackle,
apparel, furniture, fittings or equipment or any other appurtenances of the
Vessel that are no longer useful, necessary, profitable or advantageous in the
operation of the Vessel, first or simultaneously replacing the same by new
boilers, engines, machinery, masts, spars, sails, rigging, boats, anchors,
chains, tackle, apparel, furniture, fittings, equipment, or other appurtenances
of substantially equal value to the Shipowner, which shall forthwith become
subject to the lien of this Mortgage as a first priority mortgage thereon.

                  Section 13. SEVERABILITY OF PROVISIONS, ETC. (a) If any
provision of this Mortgage should be deemed invalid or shall be deemed to affect
adversely the preferred status of this Mortgage under any applicable law, such
provision shall be void and of no effect and shall cease to be a part of this
Mortgage without affecting the remaining provisions, which shall remain in full
force and effect.

                  (b)      In the event that the Credit Agreement, the Note,
this Mortgage, any of the other Loan Documents or any of the documents or
instruments which may from time to time be delivered thereunder or hereunder or
any provision thereof or hereof shall be deemed invalidated by present or future
law of any nation or by decision of any court, this shall not affect the
validity and/or enforceability of all or any other parts of the Credit
Agreement, the Note, this Mortgage, any of the other Loan Documents or such
documents or instruments and, in any such case, the Shipowner covenants and
agrees that, on demand, it will execute and deliver such other and further
agreements and/or documents and/or instruments and do such things as the
Mortgagee in its sole discretion may reasonably deem to be necessary to carry
out the true intent of this Mortgage, the Note, the Credit Agreement and any of
the other Loan Documents.

                  (c)      In the event that the title, or ownership of the
Vessel shall be requisitioned, purchased or taken by any government of any
country or any department, agency or representative thereof, pursuant to any
present or future law, proclamation, decree order or otherwise, the lien of this
Mortgage shall be deemed to attach to the claim for compensation therefor, and
the compensation, purchase or other taking of such title or ownership is hereby
agreed to be payable to the Mortgagee who shall be entitled to receive the same
and shall pay it to the Mortgagee who shall apply it as provided in Section 11
of this Article III. In the event of any such requisition, purchase or taking,
and the failure of the Mortgagee to receive proceeds as herein provided, the
Shipowner shall promptly execute and deliver to the Mortgagee such documents, if
any, as in the opinion of the Mortgagee may be necessary or useful to facilitate
or expedite the collection by the Mortgagee of such part of the compensation,
purchase price, reimbursement or award as is payable to it hereunder.

                  (d)      Anything herein to the contrary notwithstanding, it
is intended that nothing herein shall waive the priority status of this
Mortgage, and if any provision of this Mortgage or portion thereof shall be
construed to waive the priority status of this Mortgage, then such provision to
such extent shall be void and of no effect.

                                       20
<PAGE>

                                   ARTICLE IV

                                SUNDRY PROVISIONS

                  Section 1. SUCCESSORS AND ASSIGNS. All of the covenants,
promises, stipulations and agreements of the Shipowner in this Mortgage
contained shall bind the Shipowner and its successors and shall inure to the
benefit of the Mortgagee and its successors and assigns. In the event of any
assignment or transfer of this Mortgage, the term "Mortgagee", as used in this
Mortgage, shall be deemed to mean any such assignee or transferee.

                  Section 2. POWER OF SUBSTITUTION. Wherever and whenever herein
any right, power or authority is granted or given to the Mortgagee, such right,
power or authority may be exercised in all cases by the Mortgagee or such agent
or agents as it may appoint, and the act or acts of such agent or agents when
taken shall constitute the act of the Mortgagee hereunder.

                  Section 3. COUNTERPARTS. This Mortgage may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.

                  Section 4. NOTICES. Any notice or other communication to be
given pursuant hereto shall be transmitted by telex and immediately thereafter
confirmed by postage prepaid letter and addressed as set forth in Section 8.02
of the Credit Agreement.

                  Section 5. RECORDING CLAUSE. For purposes of recording this
First Preferred Mortgage as required by Chapter 3 of the Republic of the
Marshall Islands Maritime Act of 1990, as amended, the total amount of this
Mortgage is Seventy Million United States Dollars (U.S. $70,000,000), and
interest and performance of mortgage covenants. The maturity date is June 30,
2000. There is no separate discharge amount.

                  Section 6. FURTHER ASSURANCES. The Shipowner shall execute and
do all such assurances, acts and things as the Mortgagee, the Mortgagee, or any
receiver in its absolute discretion may require for:

                  (a)      perfecting or protecting the security created (or
         intended to be created) by this Mortgage; or

                  (b)      preserving or protecting any of the rights of the
         Mortgagee under this Mortgage (or any of them); or

                  (c)      ensuring that the security constituted by this
         Mortgage and the covenants and obligations of the Shipowner under this
         Mortgage shall enure to the benefit of assignees of the Mortgagee (or
         any of them); or

                                       21
<PAGE>

                  (d)      facilitating the appropriation or realization of the
         Vessel or any part thereof and enforcing the security constituted by
         this Mortgage on or at any time after the same shall have become
         enforceable; or

                  (e)      the exercise of any power, authority or discretion
         vested in the Mortgagee under this Mortgage,

in any such case, forthwith upon demand by the Mortgagee and at the expense of
the Shipowner.

                  Section 7. GOVERNING LAW. The provisions of this Mortgage
shall, with respect to its validity, effect, recordation and enforcement, be
governed by and construed in accordance with the applicable laws of the Republic
of the Marshall Islands.

                  Section 8. ADDITIONAL RIGHTS OF THE MORTGAGEE. In the event
the Mortgagee shall be entitled to exercise any of its remedies under Article
III hereof, the Mortgagee shall have the right to arrest and take action against
the Vessel at whatever place the Vessel shall be found lying and for the purpose
of any action which the Mortgagee may bring before the Courts of such
jurisdiction or other judicial authority and for the purpose of any action which
the Mortgagee may bring against the Vessel, any writ, notice, judgment or other
legal process or documents may (without prejudice to any other method of service
under applicable law) be served upon the Master of the Vessel (or upon anyone
acting as the Master) and such service shall be deemed good service on the
Shipowner for all purposes.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                       22
<PAGE>

                  IN WITNESS WHEREOF, the Shipowner has caused this First
Preferred Mortgage over the [M/T GENMAR MACEDON] [M/T GENMAR SPARTIATE] [M/T
GENMAR ZOE] to be duly executed by its authorized representative the day and
year first above written.

                                              [GENMAR MACEDON LTD.]
                                              [GENMAR SPARTIATE LTD.]
                                              [GENMAR ZOE LTD.]

                                              By:      _________________________
                                                       Name:
                                                       Title:

<PAGE>

                                 ACKNOWLEDGMENT

STATE OF NEW YORK )
                             :  ss:
COUNTY OF NEW YORK)

                  On this day of June, 2000, before me personally appeared
________________________________, known to me to be the person who executed the
foregoing instrument, who, being by me duly sworn did depose and say that she/he
resides at ____________________________________________, that she/he is
_____________________________of [Genmar Macedon Ltd.] [Genmar Spartiate Ltd.]
[Genmar Zoe Ltd.], the Cayman Island corporation described in and which executed
the foregoing instrument; that she/he signed her/his name pursuant to authority
granted to her/him by [Genmar Macedon Ltd.] [Genmar Spartiate Ltd.] [Genmar Zoe
Ltd.]; and that she/he further acknowledged that said instrument is the act and
deed of [Genmar Macedon Ltd.] [Genmar Spartiate Ltd.] [Genmar Zoe Ltd.].

                                                  ------------------------------
                                                  Notary Public

                [FOR USE IN THE REPUBLIC OF THE MARSHALL ISLANDS]<PAGE>

                                DEED OF COVENANTS

           TO ACCOMPANY A FIRST PRIORITY STATUTORY MORTGAGE OF A SHIP

                                 GENMAR GABRIEL

                                   executed by

                               GENMAR GABRIEL LTD.
                                                  as Shipowner

                                   in favor of

              CHRISTIANIA BANK OG KREDITKASSE ASA, NEW YORK BRANCH
                                                  as Trustee,
                                                  as Mortgagee

                                 June ___, 2000

<PAGE>

                                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               PAGE

<S>                                                                                                            <C>
RECITALS......................................................................................................... 1

ARTICLE I         Representations and Warranties of the Shipowner................................................ 2

Section 1         Existence; Authorization....................................................................... 2
Section 2         Title to Vessel................................................................................ 3

ARTICLE II        Covenants of the Shipowner..................................................................... 3

Section 1         Payment of Indebtedness........................................................................ 3
Section 2         Mortgage Recording............................................................................. 3
Section 3         Lawful Operation............................................................................... 3
Section 4         Payment of Taxes............................................................................... 3
Section 5         Prohibition of Liens........................................................................... 3
Section 6         Notice of Mortgage............................................................................. 4
Section 7         Removal of Liens............................................................................... 4
Section 8         Release from Arrest............................................................................ 4
Section 9         Maintenance.................................................................................... 4
Section 10        Inspection; Reports.............................................................................6
Section 11        Flag; Home Port................................................................................ 6
Section 12        No Sales, Transfers or Charters................................................................ 6
Section 13        Insurance...................................................................................... 6
Section 14        Reimbursement for Expenses..................................................................... 9
Section 15        Performance of Charters........................................................................ 9
Section 16        Change in Ownership........................................................................... 10
Section 17        Prepayment if Event of Loss....................................................................10

ARTICLE III Events of Default and Remedies.......................................................................10

Section 1         Events of Default; Remedies....................................................................10
Section 2         Power of Sale..................................................................................12
Section 3         Power of Attorney - Sale.......................................................................12
Section 4         Power of Attorney - Collection.................................................................12
Section 5         Delivery of Vessel.............................................................................13
Section 6         Mortgagee to Discharge Liens...................................................................13
Section 7         Payment of Expenses............................................................................13
Section 8         Remedies Cumulative............................................................................13
Section 9         Cure of Defaults...............................................................................14
Section 10        Discontinuance of Proceedings..................................................................14
Section 11        Application of Proceeds........................................................................14
Section 12        Possession Until Default.......................................................................15
Section 13        Severability of Provisions, etc................................................................15

                                       1
<PAGE>

ARTICLE IV Sundry Provisions.....................................................................................16

Section 1         Successors and Assigns.........................................................................16
Section 2         Power of Substitution..........................................................................16
Section 3         Counterparts...................................................................................16
Section 4         Notices........................................................................................16
Section 5         Statutory Mortgage.............................................................................16
Section 6         Conveyancing and Law of Property Act, Chapter 123..............................................16
Section 7         Further Assurances.............................................................................16
Section 8         Governing Law..................................................................................17

SIGNATURES.......................................................................................................18

EXHIBIT A          Credit Agreement with Schedules I and II and Exhibits A, B, C,
                    D-2, D-3 and G.
</TABLE>

                                       2
<PAGE>

                  This Deed is made the _______ day of June, 2000, between
Genmar Gabriel Ltd., a Cayman Islands corporation (the "Shipowner"), and
CHRISTIANIA BANK OG KREDITKASSE ASA, New York Branch, not in its individual
capacity, but solely as Trustee (the "Mortgagee"), pursuant to that certain
Master Vessel and Collateral Trust Agreement dated June __, 2000 between
CHRISTIANIA BANK OG KREDITKASSE ASA, NEW YORK BRANCH, as Agent and CHRISTIANIA
BANK OG KREDITKASSE ASA, NEW YORK BRANCH, as Trustee which expression shall
include its successors and assigns).

                            W I T N E S S E T H That:

                  WHEREAS:

                  A.       The Shipowner is the absolute and unencumbered owner
of 64/64th shares of the Bermuda flag vessel GENMAR GABRIEL registered in the
name of the Shipowner with its home port being Hamilton, Bermuda under Official
No. 731277 of about 52,512 gross tons and 27,198 net tons built in 1990 at
Hiroshima, Japan, which together with all shares and interest therein and the
engines, machinery, boats, tackle, outfits, spare gear, fuels, consumable and
other stores, belongings and appurtenances, whether on board or ashore,
including those which may hereafter be put on board or become appurtenant to or
intended to be used for the said vessel if on shore, is hereinafter referred to
as the "Vessel".

                  B.       The Shipowner has entered into a Credit Agreement
dated as of June ___, 2000 (as the same may be amended, supplemented or
otherwise modified from time to time, the "Credit Agreement", a form of which is
attached hereto as Exhibit A and made a part hereof) between, INTER ALIOS, the
Shipowner and the Agent.

                  C.       The Shipowner acknowledges that the loan in the
principal amount of [_______] Million United States Dollars (US$__________) has
been made to it and remains outstanding, and the Credit Agreement provides for
an additional loan to the Shipowner in the principal amount of [_______] Million
United States Dollars (US$__________) on the terms therein provided. The
Shipowner further acknowledges it is justly indebted to the Mortgagee for the
payment of all other sums which are due or may become due to the Mortgagee
pursuant to the Credit Agreement or this Deed or any other Loan Document (as
defined in the Credit Agreement). The obligations of the Shipowner in respect of
principal of, and interest on, the loan is evidenced by the Secured Promissory
Note dated the date hereof (the "Note"). A copy of the form of the Note is
attached as Exhibit A to the Credit Agreement.

                  D.       Contemporaneously with the execution of this Deed
there has been executed and registered by the Shipowner in favor of the
Mortgagee a first Priority Statutory Bermuda ship Mortgage (to secure an account
current) (the "Mortgage") to secure its obligations under the Note and all other
sums due or which may become due to the Mortgagee pursuant to the Credit
Agreement or any other Loan Document relating thereto, constituting a first
mortgage of the said Vessel and the Shipowner has agreed to execute this Deed
collateral to the Mortgage and to the security thereby created.

<PAGE>

                  E.       This Deed shall be read together with the Credit
Agreement, but in the case of any conflict between the two instruments, the
provisions of the Credit Agreement shall govern and prevail. Terms used herein
and not otherwise defined herein are used as defined in the Credit Agreement.

                  NOW THIS DEED WITNESSETH AS FOLLOWS:

                  A.       IN CONSIDERATION of the premises and other good and
valuable consideration, the Loan to the Shipowner in the principal amount of
Seventy Million United States Dollars (US$70,000,000), outstanding in accordance
with the provisions of the Credit Agreement and the Note, THE SHIPOWNER HEREBY
COVENANTS with the Mortgagee to repay the principal of the Loan as evidenced by
the Note by installments at the times and in the manner specified in the Credit
Agreement and the Note, and to pay interest thereon at the rates at the times
and in the manner specified therein, and to pay each and every sum of money that
may be or become owing to the Mortgagee under the terms of the Credit Agreement,
the Note, this Deed, the Mortgage and the other Loan Documents or any of them at
the time and in the manner specified therein, such amounts being hereinafter
referred to as the "Indebtedness hereby secured."

                  By way of security for payment of the Indebtedness secured
hereby, THE SHIPOWNER HEREBY MORTGAGE AND CHARGES to and in favor of the
Mortgagee all its interest present and future in the Vessel and proceeds thereof
(hereinafter the "Mortgaged Property") (which the Shipowner hereby warrants to
be free at the date hereof from any other charge or encumbrance whatsoever).

                  B.       The Shipowner and the Mortgagee hereby covenant with
each other that the security created by this Deed and any of the Loan Documents
shall be held by the Mortgagee as continuing security, and that the security so
created shall not be satisfied by any intermediate payment of any part of the
Indebtedness secured hereby.

                  Upon the Mortgagee being satisfied that the Indebtedness
secured hereby has been unconditionally and irrevocably paid and discharged in
full, and following a written request therefor from the Shipowner, the Mortgagee
will, subject to being indemnified in scope and substance to its satisfaction
for the costs and expenses incurred by it in connection therewith, release the
security created by the Mortgage and this Deed.

                  C.       It is hereby covenanted, declared and agreed that the
property above described is to be held subject to the further covenants,
conditions, provisions, terms and uses hereinafter set forth.

                  D.       The Shipowner shall remain liable to fulfill all
obligations assumed by it in relation to the Mortgaged Property and the
Mortgagee shall be under no obligation of any kind whatsoever in respect thereof
or be under any liability whatsoever in event of any failure by the Shipowner to
perform its obligations in respect thereof.

                                       2
<PAGE>

                  The Shipowner covenants and agrees with the Mortgagee as
follows:

                                    ARTICLE I

                 REPRESENTATIONS AND WARRANTIES OF THE SHIPOWNER

                  SECTION 1. EXISTENCE; AUTHORIZATION. The Shipowner is a
company duly organized and validly existing under the laws of the Cayman
Islands, and shall so remain during the life of this Deed. The Shipowner has
full power and authority to own and mortgage the Vessel; has full right and
entitlement to register the Vessel in its name under the flag of The Islands of
Bermuda and all action necessary and required by law for the execution and
delivery of this Deed or the Mortgage has been duly and effectively taken; and
each of the Indebtedness secured hereby, this Deed and the Mortgage is and will
be the legal, valid and binding obligation of the Shipowner enforceable in
accordance with its terms.

                  SECTION 2. TITLE TO VESSEL. The Shipowner lawfully owns and is
lawfully possessed of the Vessel free from any lien or encumbrance whatsoever
other than the Mortgage, this Deed, liens for current crew's wages and liens not
yet required to be removed under Section 7 hereof and will warrant and defend
the title and possession thereto and to every part thereof for the benefit of
the Mortgagee against the claims and demands of all persons whomsoever.

                                   ARTICLE II

                           COVENANTS OF THE SHIPOWNER

                  SECTION 1. PAYMENT OF INDEBTEDNESS. The Shipowner will pay or
cause to be paid the Indebtedness secured hereby and will observe, perform and
comply with the covenants, terms and conditions herein and in the Credit
Agreement and in the Note, express or implied, on its part to be observed,
performed or complied with.

                  The obligation of the Indebtedness hereby secured is an
obligation in United States Dollars and the term "$" when used herein shall mean
such United States Dollars. Notwithstanding fluctuations in the value or rate of
United States Dollars in terms of gold or any other currency, all payments
hereunder or otherwise in respect of the Indebtedness hereby secured shall be
payable in terms of United States Dollars when due, in United States Dollars
when paid, whether such payment is made before or after the due date.

                  SECTION 2. MORTGAGE RECORDING. The Shipowner will cause the
Mortgage to be duly recorded or filed in the office of the Bermuda Registry of
Shipping in Hamilton, Bermuda, in accordance with the applicable provisions of
the laws of The Islands of Bermuda and will otherwise comply with and satisfy
all of the provisions of applicable laws of The Islands of Bermuda in order to
establish and maintain (a) the Mortgage as a first priority statutory ship
mortgage thereunder upon the Vessel and upon all renewals, replacements and
improvements made in or to the same and (b) this Deed and any other Loan
Document as a first priority

                                       3
<PAGE>

assignment of, charge over, and security interest in the Mortgaged Property or
other property assigned thereunder.

                  SECTION 3. LAWFUL OPERATION. The Shipowner will not cause or
permit the Vessel to be operated in any manner contrary to law, and the
Shipowner will not engage in any unlawful trade or violate any law or carry any
cargo that will expose the Vessel to penalty, forfeiture or capture, and will
not do, or suffer or permit to be done, anything which can or may injuriously
affect the registration of the Vessel under the laws and regulations of The
Islands of Bermuda and will at all times keep the Vessel duly documented
thereunder.

                  SECTION 4. PAYMENT OF TAXES. The Shipowner will pay and
discharge when due and payable, from time to time, all taxes, assessments,
governmental charges, fines and penalties lawfully imposed on the Vessel or any
income therefrom.

                  SECTION 5. PROHIBITION OF LIENS. Neither the Shipowner, any
charterer, the Master of the Vessel nor any other person has or shall have any
right, power or authority to create, incur or permit to be placed or imposed or
continued upon the Vessel, its freights, profits or hire any lien whatsoever
other than the Mortgage, this Deed, other liens in favor of the Mortgagee and
for crew's wages and salvage and the Charter.

                  SECTION 6. NOTICE OF MORTGAGE. The Shipowner will place, and
at all times and places will retain, properly certified copies of the Mortgage
and a true copy of this Deed on board the Vessel with her papers and will cause
each such certified copy and the Vessel's marine document to be exhibited to any
and all persons having business therewith which might give rise to any lien
thereon other than liens for crew's wages and salvage, and to any representative
of the Mortgagee.

                  The Shipowner will place and keep prominently displayed in the
chart room and in the Master's cabin on the Vessel a framed printed notice in
plain type reading as follows:

                               NOTICE OF MORTGAGE

         THIS VESSEL IS OWNED BY GENMAR GABRIEL LTD. AND IS SUBJECT TO A FIRST
         PRIORITY STATUTORY MORTGAGE AND DEED OF COVENANTS COLLATERAL THERETO IN
         FAVOR OF CHRISTIANIA BANK OG KREDITKASSE ASA, NEW YORK BRANCH, AS
         MORTGAGEE. UNDER THE TERMS OF SAID DEED, NEITHER THE SHIPOWNER, ANY
         CHARTERER, THE MASTER OF THE VESSEL, NOR ANY OTHER PERSON HAS ANY
         RIGHT, POWER OR AUTHORITY TO CREATE, INCUR OR PERMIT TO BE PLACED OR
         IMPOSED UPON THE VESSEL, ITS FREIGHTS, PROFITS OR HIRE ANY ENCUMBRANCES
         WHATSOEVER OR ANY OTHER LIEN WHATSOEVER OTHER THAN FOR CREW'S WAGES AND
         SALVAGE.

                  SECTION 7. REMOVAL OF LIENS. Except for the lien of this Deed
and of the Mortgage, the Shipowner will not suffer to be continued any lien,
encumbrance or charge on the Vessel, and

                                       4
<PAGE>

in due course and in any event within thirty (30) days after the same becomes
due and payable or within fourteen (14) days after being requested to do so by
the Mortgagee, the Shipowner will pay or cause to be discharged or make adequate
provision for the satisfaction or discharge of all claims or demands, and will
cause the Vessel to be released or discharged from any lien, encumbrance or
charge therefor.

                  SECTION 8. RELEASE FROM ARREST. If a libel, complaint or
similar process be filed against the Vessel or the Vessel be otherwise attached,
levied upon or taken into custody by virtue of any legal proceeding in any
court, the Shipowner will promptly notify the Mortgagee thereof by telex, or
telefax confirmed by letter, at the address, as specified in this Deed, and
within fourteen (14) days will cause the Vessel to be released and all liens
thereon other than the Mortgage and this Deed to be discharged, will cause a
certificate of discharge to be recorded in the case of any recording of a notice
of claim of lien, and will promptly notify the Mortgagee thereof in the manner
aforesaid. The Shipowner will notify the Mortgagee within forty-eight (48) hours
of any average or salvage incurred by the Vessel.

                  SECTION 9. MAINTENANCE. (a) The Shipowner will at all times
and without cost or expense to the Mortgagee maintain and preserve, or cause to
be maintained and preserved, the Vessel and all its equipment, outfit and
appurtenances, tight, staunch, strong, in good condition, working order and
repair and in all respects seaworthy and fit for its intended service, and will
keep the Vessel, or cause her to be kept, in such condition as will entitle her
to the highest classification and rating for vessels of the same age and type in
Class NK or other classification society of like standing approved by the
Mortgagee. The Shipowner covenants to deliver annually to the Mortgagee a
certificate from such class society showing such classification to be
maintained. The Shipowner will without cost or expense to the Mortgagee
irrevocably and unconditionally instruct and authorize the classification
society of the Vessel, and shall request the classification society to give an
undertaking to the Mortgagee as follows:

                  1.       to send to the Mortgagee, following receipt of a
                           written request from the Mortgagee, certified true
                           copies of all original class records held by the
                           classification society relating to the Vessel;

                  2.       to allow the Mortgagee (or its agents), at any time
                           and from time to time, to inspect the original class
                           and related records of the Shipowner and the Vessel
                           at the offices of the classification society and to
                           take copies of them;

                  3.       following receipt of a written request from the
                           Mortgagee:

                           (i)      to advise of any facts or matters which may
                                    result in or have resulted in a change,
                                    suspension, discontinuance, withdrawal or
                                    expiry of the Vessel's class under the rules
                                    or terms and conditions of the Shipowner's
                                    or the Vessel's membership of the
                                    classification society; and

                                       5
<PAGE>

                           (ii)     to confirm that the Shipowner is not in
                                    default of any of its contractual
                                    obligations or liabilities to the
                                    classification society and, without limiting
                                    the foregoing, that it has paid in full all
                                    fees or other charges due and payable to the
                                    classification society; and

                           (iii)    if the Shipowner is in default of any of its
                                    contractual obligations or liabilities to
                                    the classification society, to specify to
                                    the Mortgagee in reasonable detail the facts
                                    and circumstances of such default, the
                                    consequences thereof, and any remedy period
                                    agreed or allowed by the classification
                                    society;

                  4.       to notify the Mortgagee immediately in writing if the
                           classification society receives notification from the
                           Shipowner or any other person that the Vessel's
                           classification society is to be changed.

Notwithstanding the above instructions and undertaking given for the benefit of
the Mortgagee, the Shipowner shall continue to be responsible to the
classification society for the performance and discharge of all its obligations
and liabilities relating to or arising out of or in connection with the contract
it has with the classification society, and nothing herein or therein shall be
construed as imposing any obligation or liability of the Mortgagee to the
classification society in respect thereof.

                  The Shipowner shall further notify the classification society
that all the foregoing instructions and authorizations shall remain in full
force and effect until revoked or modified by written notice to the
classification society received from the Mortgagee, and that the Shipowner shall
reimburse the classification society for all its costs and expenses incurred in
complying with the foregoing instructions.

                  (b)      The Vessel shall, and the Shipowner covenants that
she will, at all times comply with all applicable laws, treaties and conventions
to which The Islands of Bermuda is a party, and rules and regulations issued
thereunder, and shall have on board as and when required thereby valid
certificates showing compliance therewith. The Shipowner will not make, or
permit to be made, any substantial change in the structure, type or speed of the
Vessel or change in her rig, without first receiving the written approval
thereof by the Mortgagee.

                  (c)      The Shipowner agrees to give the Mortgagee at least
ten (10) days notice of the actual date and place of any survey or drydocking,
in order that the Mortgagee may have representatives present if desired. The
Shipowner agrees that at the Mortgagee's request it will satisfy the Mortgagee
that the expense of such survey or drydocking or work to be done thereat is
within Shipowner's financial capability and will not result in a claim or lien
against the Vessel in violation of the provisions of this Deed or the Credit
Agreement.

                  (d)      The Shipowner shall promptly notify the Mortgagee of
and furnish the Mortgagee with full information, including copies of reports and
surveys, regarding any material

                                       6
<PAGE>

accident or accident involving repairs where the aggregate cost is likely to
exceed U.S.$250,000 (or its equivalent in another currency), any major damage to
the Vessel, any event affecting the Vessel's class, any occurrence in
consequence whereof the Vessel has become or is likely to suffer an Event of
Loss.

                  (e)      The Mortgagee shall have the right at any time, on
reasonable notice, to have its surveyor conduct inspections and surveys of the
Vessel to ascertain the condition of the Vessel and to satisfy itself that the
Vessel is being properly repaired and maintained. Such inspections and surveys
shall be conducted at such times and in such manner as will not interfere with
the Shipowner's normal business operations and schedule.

                  SECTION 10. INSPECTION; REPORTS. (a) The Shipowner will at all
reasonable times afford the Mortgagee or its authorized representatives full and
complete access to the Vessel for the purpose of inspecting the Vessel and her
cargo and papers, including without limitation all records pertaining to the
Vessel's maintenance and repair, and, at the request of the Mortgagee, the
Shipowner will deliver for inspection copies of any and all contracts and
documents relating to the Vessel, whether on board or not.

                  (b)      The Shipowner hereby agrees to furnish promptly to
the Mortgagee, on demand, any reports or information which the Shipowner may
submit to shareholders or regulatory agencies and any additional information
which the Mortgagee may request in respect of the financial condition of the
Shipowner.

                  SECTION 11. FLAG; HOME PORT. The Shipowner will not change the
flag or home port of the Vessel without the written consent of the Mortgagee and
any such written consent to any one change of flag or home port shall not be
construed to be a waiver of this provision with respect to any subsequent
proposed change of flag or home port.

                  SECTION 12. NO SALES, TRANSFERS OR CHARTERS. The Shipowner
will not sell, mortgage, transfer, or change the management of, or demise
charter or time charter the Vessel for any period or permit the Vessel to be
sub-chartered for a period longer than six (6) months (including any committed
extensions or renewals) in each case, without the written consent of the
Mortgagee first had and obtained, and any such written consent to any one sale,
mortgage, demise or time charter or sub-charter, transfer, or change of
management shall not be construed to be a waiver of this provision with respect
to any subsequent proposed sale, mortgage, demise or time charter, transfer, or
change of management. Any such sale, mortgage, demise or time charter,
sub-charter, transfer, or change of management of the Vessel shall be subject to
the provisions of this Deed, the Mortgage and the lien thereof.

                  SECTION 13. (a) INSURANCE. The Shipowner, at its own expense,
will keep the Vessel insured with insurers and protection and indemnity clubs or
associations of internationally recognized responsibility, and placed through
brokers, in each case reasonably satisfactory to the Mortgagee and under forms
of policies approved by the Mortgagee against the risks indicated below and such
other risks as the Mortgagee may specify from time to time:

                                       7
<PAGE>

                  (i)      Marine and war risk hull and machinery insurance in
         an amount in U.S. dollars equal to, except as otherwise approved or
         required in writing by the Mortgagee, the greater of (x) the then full
         commercial value of the Vessel or (y) an amount which, when aggregated
         with such insured value of the other Vessels referred to in the Credit
         Agreement (if the other Vessels are then subject to a mortgage in favor
         of the Mortgagee under the Credit Agreement and have not suffered an
         Event of Loss as defined in the Credit Agreement), is equal to 120% of
         the then outstanding principal amount of the Loan;

                  (ii)     Marine and war risk protection and indemnity
         insurance or equivalent insurance (including coverage against liability
         for passengers, fines and penalties arising out of the operation of the
         Vessel, insurance against liability arising out of pollution, spillage
         or leakage, and workmen's compensation or longshoremen's and harbor
         workers' insurance as shall be required by applicable law) in such
         amounts approved by the Mortgagee; provided, however that insurance
         against liability under law or international convention arising out of
         pollution, spillage or leakage shall be in an amount not less than the
         greater of:

                  (y)      the maximum amount available, as that amount may from
                           time to time change, from the International Group of
                           Protection and Indemnity Associations or
                           alternatively such sources of pollution, spillage or
                           leakage coverage as are commercially available in any
                           absence of such coverage by the International Group
                           as shall be carried by prudent shipowners for similar
                           vessels engaged in similar trades plus amounts
                           available from customary excess insurers of such
                           risks as excess amounts shall be carried by prudent
                           shipowners for similar vessels engaged in similar
                           trades; and

                  (z)      the amounts required by the laws or regulations of
                           the United States of America or any applicable
                           jurisdiction in which the Vessel may be trading from
                           time to time.

                  (iii)    Mortgagee's interest insurance (including extended
         mortgagee interest-additional perils-pollution) coverage satisfactory
         to the Mortgagee in an amount equal to 120% of the then outstanding
         aggregate principal amounts of the Note; all such mortgagee's interest
         insurance cover may in the Mortgagee's discretion be obtained directly
         by the Mortgagee and the Shipowner shall on demand pay all costs of
         such cover; and

                  (iv)     While the Vessel is idle or laid up, at the option of
         the Shipowner and in lieu of the above-mentioned marine and war risk
         hull insurance, port risk insurance insuring the Vessel against the
         usual risks encountered by like vessels under similar circumstances.

                                       8
<PAGE>

                  (b)      The marine and commercial war-risk insurance required
by this Section 13 shall have deductibles and franchises no higher than the
following: (i) Hull and Machinery - US$115,000 for all hull claims and
US$150,000 for all machinery claims each accident or occurrence and (ii)
Protection and Indemnity - US$50,000 for cargo claims, US$35,000 for crew
claims, US$10,000 passenger claims and US$15,000 all other claims, in each case
each accident or occurrence.

All insurance maintained hereunder shall be primary insurance without right of
contribution against any other insurance maintained by the Mortgagee. Each
policy of marine and war risk hull and machinery insurance with respect to the
Vessel shall provide that the Mortgagee shall be a named insured and a loss
payee. Each entry in a marine and war risk protection indemnity club with
respect to the Vessel shall note the interest of the Mortgagee. The Mortgagee
and its successors and assigns shall not be responsible for any premiums, club
calls, assessments or any other obligations or for the representations and
warranties made therein by the Shipowner or any other person.

                  (c)      The Shipowner will furnish the Mortgagee from time to
time on request, and in any event at least annually, a detailed report signed by
a firm of marine insurance brokers acceptable to the Mortgagee with respect to
the hull and machinery and war risk insurance and Mortgagee's interest insurance
carried and maintained on the Vessel, together with their opinion as to the
adequacy thereof and its compliance with the provisions of this Deed. At the
Shipowner's expense the Shipowner will cause such insurance broker and the P & I
club or association providing P & I insurance referred to in part (a)(ii) of
this Section 13, to agree to advise the Mortgagee by telex or telecopier
confirmed by letter of any expiration, termination, alteration or cancellation
of any policy, any default in the payment of any premium and of any other act or
omission on the part of the Shipowner of which it has knowledge and which might
invalidate or render unenforceable, in whole or in part, any insurance on the
Vessel. To the extent obtainable from underwriters or brokers, all policies
required hereby shall provide for not less than 14 days prior written notice to
be received by the Mortgagee of the termination or cancellation of the insurance
evidenced thereby. All policies of insurance maintained pursuant to this Section
13 for risks covered by insurance other than that provided by a P & I Club shall
contain provisions waiving underwriters' rights of subrogation thereunder
against any assured named in such policy and any assignee of said assured. The
Shipowner has assigned to the Mortgagee its rights under any policies of
insurance in respect of the Vessel. The Shipowner agrees that, unless the
insurances by their terms provide that they cannot cease (by reason of
nonrenewal or otherwise) without the Mortgagee being informed and having the
right to continue the insurance by paying any premiums not paid by the
Shipowner, receipts showing payment of premiums for required insurance and also
of demands from the Vessel's P & I underwriters shall be in the hands of the
Mortgagee at least two (2) days before the risk in question commences.

                  (d)      Unless the Mortgagee shall otherwise agree, all
amounts of whatsoever nature payable under any insurance must be payable to the
Mortgagee for distribution first to itself and thereafter to the Shipowner or
others as their interests may appear. Nevertheless, until

                                       9
<PAGE>

otherwise required by the Mortgagee by notice to the underwriters upon the
occurrence and continuance of a Default or an Event of Default hereunder, (i)
amounts payable under any insurance on the Vessel with respect to protection and
indemnity risks may be paid directly to the Shipowner to reimburse it for any
loss, damage or expense incurred by it and covered by such insurance or to the
person to whom any liability covered by such insurance has been incurred
provided that the underwriter shall have first received evidence that the
liability insured against has been discharged, and (ii) amounts payable under
any insurance with respect to the Vessel involving any damage to the Vessel not
constituting an Event of Loss, may be paid by underwriters directly for the
repair, salvage or other charges involved or, if the Shipowner shall have first
fully repaired the damage or paid all of the salvage or other charges, may be
paid to the Shipowner as reimbursement therefor; PROVIDED, HOWEVER, that if such
amounts (including any franchise or deductible) are in excess of U.S.$250,000,
the underwriters shall not make such payment without first obtaining the written
consent thereto of the Mortgagee.

                  (e)      All amounts paid to the Mortgagee in respect of any
insurance on the Vessel shall be disposed of as follows (after deduction of the
expenses of the Mortgagee in collecting such amounts):

                  (i)      any amount which might have been paid at the time, in
         accordance with the provisions of paragraph (d) above, directly to the
         Shipowner or others shall be paid by the Mortgagee to, or as directed
         by, the Shipowner;

                  (ii)     all amounts paid to the Mortgagee in respect of an
         Event of Loss (as defined in the Credit Agreement) of the Vessel shall
         be applied by the Mortgagee to the payment of the Indebtedness hereby
         secured pursuant to Section 2.05(d) of the Credit Agreement;

                  (iii)    all other amounts paid to the Mortgagee in respect of
         any insurance on the Vessel may, in the Mortgagee's sole discretion, be
         held and applied to the prepayment of the Indebtedness hereby secured
         or to making of needed repairs or other work on the Vessel, or to the
         payment of other claims incurred by the Shipowner relating to the
         Vessel, or may be paid to the Shipowner or whosoever may be entitled
         thereto.

                  (f)      In the event that any claim or lien is asserted
against the Vessel for loss, damage or expense which is covered by insurance
required hereunder and it is necessary for the Shipowner to obtain a bond or
supply other security to prevent arrest of the Vessel or to release the Vessel
from arrest on account of such claim or lien, the Mortgagee, on request of the
Shipowner, may, in the sole discretion of the Mortgagee, assign to any person,
firm or corporation executing a surety or guarantee bond or other agreement to
save or release the Vessel from such arrest, all right, title and interest of
the Mortgagee in and to said insurance covering said loss, damage or expense, as
collateral security to indemnify against liability under said bond or other
agreement.

                                       10
<PAGE>

                  (g)      The Shipowner shall deliver to the Mortgagee
certified copies and, whenever so requested by the Mortgagee, the originals of
all certificates of entry, cover notes, binders, evidences of insurance and
policies and all endorsements and riders amendatory thereof in respect of
insurance maintained under this Deed for the purpose of inspection or
safekeeping, or, alternatively, satisfactory letters of undertaking from the
broker holding the same. The Mortgagee shall be under no duty or obligation to
verify the adequacy or existence of any such insurance or any such policies,
endorsement or riders.

                  (h)      The Shipowner agrees that it will not execute or
permit or willingly allow to be done any act by which any insurance may be
suspended, impaired or cancelled, and that it will not permit or allow the
Vessel to undertake any voyage or run any risk or transport any cargo which may
not be permitted by the policies in force, without having previously notified
the Mortgagee in writing and insured the Vessel by additional coverage to extend
to such voyages, risks, passengers or cargoes.

                  (i)      In case any underwriter proposes to pay less on any
claim than the amount thereof, the Shipowner shall forthwith inform the
Mortgagee, and if a Default, an Event of Default or an Event of Loss (as such
terms are defined in the Credit Agreement) has occurred and is continuing the
Mortgagee shall have the exclusive right to negotiate and agree to any
compromise.

                  (j)      The Shipowner will comply with and satisfy all of the
provisions of any applicable law, convention, regulation, proclamation or order
concerning financial responsibility for liabilities imposed on the Shipowner or
the Vessel with respect to pollution by any state or nation or political
subdivision thereof and will maintain all certificates or other evidence of
financial responsibility as may be required by any such law, convention,
regulation, proclamation or order with respect to the trade in which the Vessel
is from time to time engaged and the cargo carried by it.

                  SECTION 14. REIMBURSEMENT FOR EXPENSES. The Shipowner will
reimburse the Mortgagee promptly for any and all expenditures which the
Mortgagee may from time to time make, lay out or expend in providing such
protection in respect of insurance, discharge or purchase of liens, taxes, dues,
tolls, assessments, governmental charges, fines and penalties lawfully imposed,
repairs, attorney's fees, and other matters as the Shipowner is obligated herein
to provide, but fails to provide or which, in the sole judgment of the Mortgagee
are necessary or appropriate for the protection of the Vessel or the security
granted by this Deed. Such obligation of the Shipowner to reimburse the
Mortgagee shall be an additional indebtedness due from the Shipowner, shall bear
interest at the interest rate as set forth in Section 2.04(c) of the Credit
Agreement from the date of payment by the Mortgagee to and including the date of
reimbursement by the Shipowner, shall be secured by this Deed and the Mortgage,
and shall be payable by the Shipowner on demand. The Mortgagee, though
privileged to do so, shall be under no obligation to the Shipowner to make any
such expenditure, nor shall the making thereof relieve the Shipowner of any
default in that respect.

                                       11
<PAGE>

                  SECTION 15. PERFORMANCE OF CHARTERS. The Shipowner will fully
perform any and all charter parties which may be entered into with respect to
the Vessel and will promptly notify the Mortgagee of any material claim by any
charterer of non-performance thereunder by the Shipowner.

                  SECTION 16. CHANGE IN OWNERSHIP. The Shipowner further
covenants and agrees with the Mortgagee that, so long as any part of the
Indebtedness hereby secured remains unpaid, there shall be no change in the
ownership of the Vessel or any of the shares of the Shipowner (except as may be
otherwise allowed under Section 5.01(h) of the Credit Agreement) without the
prior written consent of the Mortgagee.

                  SECTION 17. PREPAYMENT IF EVENT OF LOSS. In the event that the
Vessel suffers an Event of Loss as such term is defined in the Credit Agreement,
then and in each such case the Shipowner shall forthwith repay the Indebtedness
hereby secured at the time and in the amount set forth in Section 2.05(d) of the
Credit Agreement.

                                   ARTICLE III

                         EVENTS OF DEFAULT AND REMEDIES

                  SECTION 1. EVENTS OF DEFAULT; REMEDIES. In case any one or
more of the following events, herein termed "events of default", shall happen:

                  (a)      the Shipowner fails to pay within two Business Days
         of the date due any payment in respect of the Indebtedness secured
         hereby as provided herein; or

                  (b)      the statements in Article I shall prove to have been
         untrue when made in a material way; or

                  (c)      a Default in the due and punctual observance and
         performance of any of the provisions of Sections 2, 3, 7, 8, 9(b), 11,
         12, 13(a), (b), (d), (h) and (j), 16 or 17 of Article II hereof shall
         have occurred and be continuing; or

                  (d)      a breach or omission in the due and punctual
         observance of any of the other covenants and conditions herein required
         to be kept and performed by the Shipowner and such breach or omission
         shall continue for 30 days after the day the Shipowner first knew or
         should have known of such breach or omission; or

                  (e)      an Event of Default shall have occurred and be
         continuing under the Credit Agreement; or

                  (f)      any notice shall have been issued by the government
         or any bureau, department, officer, board or agency thereof of the
         country of registry of the Vessel to the

                                       12
<PAGE>

         effect that the Vessel is subject to cancellation from such registry or
         the certificate of registry of the Vessel is subject to revocation or
         cancellation for any reason whatsoever;

then:

                  The Security constituted by the Mortgage and this Deed shall
become immediately enforceable and that without limitation, the enforcement
remedies specified can be exercised irrespective of whether or not the Mortgagee
has exercised the right of acceleration under the Credit Agreement and the
Mortgagee shall have the right to:

                  (i)      Declare all the then unpaid Indebtedness hereby
         secured to be due and payable immediately, and upon such declaration,
         the same shall become and be immediately due and payable provided,
         however, that no declaration shall be required if an event of default
         shall have occurred by reason of a default under Article VI, Section
         6.01 (e) of the Credit Agreement, then and in such case, the
         indebtedness hereby secured shall become immediately due and payable on
         the occurrence of such event of default without any notice or demand;

                  (ii)     Exercise all of the rights and remedies in
         foreclosure and otherwise given to a mortgagee by the provisions of the
         laws of the country of registry of the Vessel or of any other
         jurisdiction where the Vessel may be found;

                  (iii)    Bring suit at law, in equity or in admiralty, as it
         may be advised, to recover judgment for the Indebtedness hereby
         secured, and collect the same out of any and all property of the
         Shipowner whether covered by this Deed, the Mortgage or otherwise;

                  (iv)     Take and enter into possession of the Vessel, at any
         time, wherever the same may be, without legal process and without being
         responsible for loss or damage and the Shipowner or other person in
         possession forthwith upon demand of the Mortgagee shall surrender to
         the Mortgagee possession of the Vessel;

                  (v)      Without being responsible for loss or damage, the
         Mortgagee may hold, lay up, lease, charter, operate or otherwise use
         the Vessel for such time and upon such terms as it may deem to be for
         its best advantage, and demand, collect and retain all hire, freights,
         earnings, issues, revenues, income, profits, return premiums, salvage
         awards or recoveries, recoveries in general average, and all other sums
         due or to become due in respect of the Vessel or in respect of any
         insurance thereon from any person whomsoever, accounting only for the
         net profits, if any, arising from such use of the Vessel and charging
         upon all receipts from the use of the Vessel or from the sale thereof
         by court proceedings or pursuant to subsection (vi) next following, all
         costs, expenses, charges, damages or losses by reason of such use; and
         if at any time the Mortgagee shall avail itself of the right herein
         given them to take the Vessel, the Mortgagee shall have the right to
         dock the Vessel, for a reasonable time at any dock, pier or other
         premises of the

                                       13
<PAGE>

         Shipowner without charge, or to dock her at any other place at the cost
         and expense of the Shipowner;

                  (vi)     Without being responsible for loss or damage, the
         Mortgagee may sell the Vessel upon such terms and conditions as to the
         Mortgagee shall seem best, free from any claim of or by the Shipowner,
         at public or private sale, by sealed bids or otherwise, by mailing, by
         air or otherwise, notice of such sale, whether public or private,
         addressed to the Shipowner at its last known address and to any other
         registered mortgagee, twenty (20) calendar days prior to the date fixed
         for entering into the contract of sale and by first publishing notice
         of any such public sale for ten (10) consecutive days, in daily
         newspapers of general circulation published in the City of New York,
         State of New York; in the event that the Vessel shall be offered for
         sale by private sale, no newspaper publication of notice shall be
         required, nor notice of adjournment of sale; sale may be held at such
         place and at such time as the Mortgagee by notice may have specified,
         or may be adjourned by the Mortgagee from time to time by announcement
         at the time and place appointed for such sale or for such adjourned
         sale, and without further notice or publication the Mortgagee may make
         any such sale at the time and place to which the same shall be so
         adjourned; and any sale may be conducted without bringing the Vessel to
         the place designated for such sale and in such manner as the Mortgagee
         may deem to be for its best advantage, and the Mortgagee may become the
         purchaser at any sale. The Shipowner agrees that any sale made in
         accordance with the terms of this paragraph shall be deemed made in a
         commercially reasonable manner insofar as it is concerned;

                  (vii)    Require that all policies, contracts, certificates of
         entry and other records relating to the insurance with respect to the
         Vessel, including, but not limited to, those described in Article II,
         Section 13 hereof (the "Insurances") (including details of and
         correspondence concerning outstanding claims) be forthwith delivered to
         or to the order of the Mortgagee;

                  (viii)   Collect, recover, compromise and give a good
         discharge for any and all monies and claims for monies then outstanding
         or thereafter arising under the Insurances or in respect of the
         earnings or any requisition compensation and to permit any brokers
         through whom collection or recovery is effected to charge the usual
         brokerage therefore.

                  SECTION 2. POWER OF SALE. Any sale of the Vessel made in
pursuance of this Deed, whether under the power of sale hereby granted or any
judicial proceedings, shall operate to divest all right, title and interest of
any nature whatsoever of the Shipowner therein and thereto, and shall bar the
Shipowner, its successors and assigns, and all persons claiming by, through or
under them. No purchaser shall be bound to inquire whether notice has been
given, or whether any default has occurred, or as to the propriety of the sale,
or as to the application of the proceeds thereof. In case of any such sale, the
Mortgagee, if it is the purchaser, shall be entitled, for the purpose of making
settlement or payment for the property purchased, to use and apply the
Indebtedness hereby secured in order that there may be credited against the
amount remaining

                                       14
<PAGE>

due and unpaid thereon the sums payable out of the net proceeds of such sale to
the Mortgagee after allowing for the costs and expense of sale and other
charges; and thereupon such purchaser shall be credited, on account of such
purchase price, with the net proceeds that shall have been so credited upon the
Indebtedness secured hereby. At any such sale, the Mortgagee may bid for and
purchase such property and upon compliance with the terms of sale may hold,
retain and dispose of such property without further accountability therefor.

                  SECTION 3. POWER OF ATTORNEY - SALE. The Mortgagee is hereby
irrevocably appointed attorney-in-fact of the Shipowner to execute and deliver
to any purchaser aforesaid, and is hereby vested with full power and authority
to make, in the name and on behalf of the Shipowner, a good conveyance of the
title to the Vessel so sold. Any person dealing with the Mortgagee or
attorney-in-fact shall not be put on enquiry as to whether the power of attorney
contained herein has become exercisable. In the event of any sale of the Vessel,
under any power herein contained, the Shipowner will, if and when required by
the Mortgagee, execute such form of conveyance of the Vessel as the Mortgagee
may direct or approve.

                  SECTION 4. POWER OF ATTORNEY - COLLECTION. The Mortgagee is
hereby irrevocably appointed attorney-in-fact of the Shipowner upon the
happening of any event of default, in the name of the Shipowner to demand,
collect, receive, compromise and sue for, so far as may be permitted by law, all
freight, hire, earnings, issues, revenues, income and profits of the Vessel and
all amounts due from underwriters under any insurance thereon as payment of
losses or as return premiums or otherwise, salvage awards and recoveries,
recoveries in general average or otherwise, and all other sums due or to become
due at the time of the happening of any event of default as defined in Section 1
of Article III hereof in respect of the Vessel, or in respect of any insurance
thereon, from any person whomsoever, and to make, give and execute in the name
of the Shipowner acquittances, receipts, releases or other discharges for the
same, whether under seal or otherwise, and to endorse and accept in the name of
the Shipowner all checks, notes, drafts, warrants, agreements and other
instruments in writing with respect to the foregoing. Any person dealing with
the Mortgagee or attorney-in-fact shall not be put on enquiry as to whether the
Power of Attorney contained herein has become exercisable.

                  SECTION 5. DELIVERY OF VESSEL. Upon the security constituted
by the Mortgage and this Deed becoming immediately enforceable pursuant to
Section 1 of Article III the Mortgagee shall (in addition to the powers
described in Section 1 of Article III) become forthwith entitled (but not bound)
to appoint, by an instrument in writing under its seal or under the hand of any
director or officer or authorized signatory, a receiver and/or manager of the
Mortgaged Property upon such terms as to remuneration and otherwise as the
Mortgagee shall deem fit with power from time to time to remove any receiver and
appoint another in his stead and any receiver shall be the agent of the
Shipowner (who shall be solely responsible for his acts and defaults and
remuneration) and shall have all the powers conferred by the Conveyancing Act
1983 (save that Section 31 of that Act shall not apply) and by way of addition
to, but without limiting, those powers any receiver shall have all the powers
and entitlements conferred on the Mortgagee by this Deed

                                       15
<PAGE>

and generally shall be entitled to the same protection and to exercise the same
powers and discretions as are granted to the Mortgagee under this Deed.

                  SECTION 6. MORTGAGEE TO DISCHARGE LIENS. The Shipowner
authorizes and empowers the Mortgagee or its appointees or any of them to appear
in the name of the Shipowner, its successors and assigns, in any court of any
country or nation of the world where a suit is pending against the Vessel
because of or on account of any alleged lien against the Vessel from which the
Vessel has not been released and to take such proceedings as to them or any of
them may seem proper towards the defense of such suit and the purchase or
discharge of such lien, and all expenditures made or incurred by them or any of
them for the purpose of such defense or purchase or discharge shall be a debt
due from the Shipowner, its successors and assigns, to the Mortgagee, and shall
be secured by the lien of the Mortgage and this Deed in like manner and extent
as if the amount and description thereof were written herein.

                  SECTION 7. PAYMENT OF EXPENSES. The Shipowner covenants that
upon the happening of any one or more of the events of default, then, upon
written demand of the Mortgagee, the Shipowner will pay to the Mortgagee the
whole amount due and payable in respect of the Indebtedness secured hereby; and
in case the Shipowner shall fail to pay the same forthwith upon such demand, the
Mortgagee shall be entitled to recover judgment for the whole amount so due and
unpaid, together with such further amounts as shall be sufficient to cover the
reasonable compensation of the Mortgagee or its agents, attorneys and counsel
and any necessary advances, expenses and liabilities made or incurred by it or
them or the Mortgagee hereunder. All moneys collected by the Mortgagee under
this Section 7 shall be applied by the Mortgagee in accordance with the
provisions of Section 11 of this Article III.

                  SECTION 8. REMEDIES CUMULATIVE. Each and every power and
remedy herein given to the Mortgagee shall be cumulative and shall be in
addition to every other power and remedy herein given or now or hereafter
existing at law, in equity, in admiralty or by statute, and each and every power
and remedy whether herein given or otherwise existing may be exercised from time
to time and as often and in such order as may be deemed expedient by the
Mortgagee, and the exercise or the beginning of the exercise of any power or
remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other power or remedy. The Mortgagee shall not be
required or bound to enforce any of its rights under any of the other Loan
Documents (as such term is defined in the Credit Agreement) prior to enforcing
its rights under the Mortgage and this Deed. No delay or omission by the
Mortgagee in the exercise of any right or power or in the pursuance of any
remedy accruing upon any default as above defined shall impair any such right,
power or remedy or be construed to be a waiver of any such event of default or
to be an acquiescence therein; nor shall the acceptance by the Mortgagee of any
security or of any payment of or on account of the Indebtedness hereby secured
maturing after any event of default or of any payment on account of any past
default be construed to be a waiver of any right to exercise its remedies due to
any future event of default or of any past event of default not completely cured
thereby. No consent, waiver or approval of the Mortgagee shall be deemed to be
effective unless in writing and duly signed by authorized signatories of the
Mortgagee; any

                                       16
<PAGE>

waiver by the Mortgagee of any of the terms of this Deed or any consent given
under this Deed shall only be effective for the purpose and on the terms which
it is given and shall be without prejudice to the right to give or withhold
consent in relation to future matters (which are either the same or different).

                  SECTION 9. CURE OF DEFAULTS. If at any time after an event of
default and prior to the actual sale of the Vessel by the Mortgagee or prior to
any enforcement or foreclosure proceedings the Shipowner offers completely to
cure all events of default and to pay all expenses, advances and damages to the
Mortgagee consequent on such events of default, with interest at the interest
rate set forth in Section 2.04(c) of the Credit Agreement, then the Mortgagee
may, but shall not be obligated to, accept such offer and payment and restore
the Shipowner to its former position, but such action, if taken, shall not
affect any subsequent event of default or impair any rights consequent thereon.

                  SECTION 10. DISCONTINUANCE OF PROCEEDINGS. In case the
Mortgagee shall have proceeded to enforce any right, power or remedy under this
Deed by foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Mortgagee, then and in every such case the Shipowner and the Mortgagee
shall be restored to its former position and right hereunder with respect to the
property subject or intended to be subject to this Deed, and all rights,
remedies and powers of the Mortgagee shall continue as if no such proceedings
had been taken.

                  SECTION 11. APPLICATION OF PROCEEDS. After an event of default
hereunder shall have occurred and be continuing, the proceeds of any sale of the
Vessel and any and all other moneys received by the Mortgagee pursuant to or
under the terms of this Deed or in any proceedings hereunder, the application of
which has not elsewhere herein been specifically provided for, shall be applied
as follows:

                  FIRST: So much of such amounts as shall be required to pay all
         taxes, assessments or liens in respect of the Vessel or any Loan
         Document having priority over liens or security interests in favor of
         the Mortgagee, shall be applied to the payment of such taxes,
         assessments or liens;

                  SECOND: So much of such amounts as shall be required to
         reimburse the Mortgagee for any expense or advance made or incurred by
         the Mortgagee in protection of its rights or pursuance of its remedies
         or other loss incurred by the Mortgagee in connection with the
         collection or distribution of such amounts including, but not limited
         to, the expenses of enforcement, any sale or taking, attorney's fees
         and court costs shall be applied to such reimbursement;

                  THIRD: So much of such amounts as shall be required to pay to
         the Mortgagee all amounts owed to it pursuant to the Credit Agreement,
         the Note or any of the Loan Documents, other than amounts specifically
         provided for in this Section 11, shall be applied to the payment of
         such amounts;

                                       17
<PAGE>

                  FOURTH: So much of such amounts as shall be required to pay in
         full the accrued but unpaid interest (including any interest on overdue
         principal) on the Note pursuant to the Credit Agreement and the Note to
         the date of distribution shall be applied to the payment of such
         interest on such Note;

                  FIFTH: So much of such amounts as shall be required to pay in
         full the unpaid principal amount of the Note shall be applied to the
         payment of such principal amount;

                  SIXTH: So much of such amounts as the Mortgagee in its sole
         discretion shall determine to be equal to any amounts which are not
         then accrued due and payable to the Mortgagee under the Credit
         Agreement and the Loan Documents (or any of them) or are not then due
         and payable to the Mortgagee by virtue of payment demanded under the
         Credit Agreement and the Loan Documents (or any of them) but which (in
         the sole and absolute opinion of the Mortgagee) will or may become due
         and payable in the future shall be retained by the Mortgagee and shall
         be applied upon the same becoming due and payable; and

                  SEVENTH: The balance, if any, remaining, shall be distributed
         to the Shipowner or to order.

                  SECTION 12. POSSESSION UNTIL DEFAULT. Until one or more of the
events of default hereinafter described shall happen, the Shipowner (a) shall be
suffered and permitted to retain actual possession and use of the Vessel and (b)
shall have the right, from time to time, in its discretion, and without
application to the Mortgagee, and without obtaining a release thereof by the
Mortgagee, to dispose of, free from the lien hereof, any boilers, engines,
machinery, masts, spars, sails, rigging, boats, anchors, chains, tackle,
apparel, furniture, fittings or equipment or any other appurtenances of the
Vessel that are no longer useful, necessary, profitable or advantageous in the
operation of the Vessel, first or simultaneously replacing the same by new
boilers, engines, machinery, masts, spars, sails, rigging, boats, anchors,
chains, tackle, apparel, furniture, fittings, equipment, or other appurtenances
of substantially equal value to the Shipowner, which shall forthwith become
subject to the lien of this Deed and the Mortgage as a first priority mortgage
thereon.

                  SECTION 13. SEVERABILITY OF PROVISIONS, ETC. (a) If any
provision of this Deed should be deemed invalid or shall be deemed to affect
adversely the preferred status of the Mortgage under any applicable law, such
provision shall be void and of no effect and shall cease to be a part of this
Deed without affecting the remaining provisions, which shall remain in full
force and effect.

                  (b)      In the event that the Credit Agreement, the Note,
this Deed, the Mortgage, any of the other Loan Documents or any of the documents
or instruments which may from time to time be delivered thereunder or hereunder
or any provision thereof or hereof shall be deemed invalidated by present or
future law of any nation or by decision of any court, this shall not affect the
validity and/or enforceability of all or any other parts of the Credit
Agreement, the Note, this

                                       18
<PAGE>

Deed or the Mortgage, any of the other Loan Documents or such documents or
instruments and, in any such case, the Shipowner covenants and agrees that, on
demand, it will execute and deliver such other and further agreements and/or
documents and/or instruments and do such things as the Mortgagee in its sole
discretion may reasonably deem to be necessary to carry out the true intent of
this Deed, the Note, the Mortgage, the Credit Agreement and any of the other
Loan Documents.

                  (c)      In the event that the title, or ownership of the
Vessel shall be requisitioned, purchased or taken by any government of any
country or any department, agency or representative thereof, pursuant to any
present or future law, proclamation, decree order or otherwise, the lien of this
Deed and of the Mortgage shall be deemed to attach to the claim for compensation
therefor, and the compensation, purchase or other taking of such title or
ownership is hereby agreed to be payable to the Mortgagee who shall be entitled
to receive the same and shall pay it to the Mortgagee who shall apply it as
provided in Section 11 of this Article III. In the event of any such
requisition, purchase or taking, and the failure of the Mortgagee to receive
proceeds as herein provided, the Shipowner shall promptly execute and deliver to
the Mortgagee such documents, if any, as in the opinion of the Mortgagee may be
necessary or useful to facilitate or expedite the collection by the Mortgagee of
such part of the compensation, purchase price, reimbursement or award as is
payable to it hereunder.

                  (d)      Anything herein to the contrary notwithstanding, it
is intended that nothing herein shall waive the priority status of the Mortgage,
and if any provision of this Deed or portion thereof shall be construed to waive
the priority status of the Mortgage, then such provision to such extent shall be
void and of no effect.

                                   ARTICLE IV

                               SUNDRY PROVISIONS

                  SECTION 1. SUCCESSORS AND ASSIGNS. All of the covenants,
promises, stipulations and agreements of the Shipowner in this Deed contained
shall bind the Shipowner and its successors and shall inure to the benefit of
the Mortgagee and its successors and assigns. In the event of any assignment or
transfer of this Deed, the term "Mortgagee", as used in this Deed, shall be
deemed to mean any such assignee or transferee.

                  SECTION 2. POWER OF SUBSTITUTION. Wherever and whenever herein
any right, power or authority is granted or given to the Mortgagee, such right,
power or authority may be exercised in all cases by the Mortgagee or such agent
or agents as it may appoint, and the act or acts of such agent or agents when
taken shall constitute the act of the Mortgagee hereunder.

                  SECTION 3. COUNTERPARTS. This Deed may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.

                                       19
<PAGE>

                  SECTION 4. NOTICES. Any notice or other communication to be
given pursuant hereto shall be transmitted by telex and immediately thereafter
confirmed by postage prepaid letter and addressed as set forth in Section 8.02
of the Credit Agreement.

                  SECTION 5. STATUTORY MORTGAGE. This Deed accompanies and is to
be read with and forms part of the Mortgage dated the date hereof and shall be
effective from the date hereof.

                  SECTION 6. CONVEYANCING ACT 1983. The Shipowner hereby waives
the entitlement conferred by Section 29 of the Conveyancing Act 1983, and agrees
that Section 31 of that Act shall not apply to the security created by the
Mortgage and this Deed. For the avoidance of doubt, the powers of the Mortgagee
and any receiver by virtue of the Mortgage and this Deed shall not be limited to
those specified in Section 35 of the Conveyancing Act 1983.

                  SECTION 7. FURTHER ASSURANCES. The Shipowner shall execute and
do all such assurances, acts and things as the Mortgagee, the Mortgagee, or any
receiver in its absolute discretion may require for: -

                  (a)      perfecting or protecting the security created (or
         intended to be created) by the Mortgage and this Deed; or

                  (b)      preserving or protecting any of the rights of the
         Mortgagee under the Mortgage and this Deed (or any of them); or

                  (c)      ensuring that the security constituted by the
         Mortgage and this Deed and the covenants and obligations of the
         Shipowner under this Deed shall enure to the benefit of assignees of
         the Mortgagee (or any of them); or

                  (d)      facilitating the appropriation or realization of the
         Mortgaged Property or any part thereof and enforcing the security
         constituted by the Mortgage and this Deed on or at any time after the
         same shall have become enforceable; or

                  (e)      the exercise of any power, authority or discretion
         vested in the Mortgagee under the Mortgage and this Deed (or any of
         them),

in any such case, forthwith upon demand by the Mortgagee and at the expense of
the Shipowner.

                  SECTION 8. GOVERNING LAW. (a) This Deed shall be governed by,
and construed in accordance with, the laws of The Islands of Bermuda.

                  (b)      In the event the Mortgagee shall be entitled to
exercise any of its remedies under Article III hereof, the Mortgagee shall have
the right to arrest and take action against the Vessel at whatever place the
Vessel shall be found lying and for the purpose of any action which the
Mortgagee may bring before the Courts of such jurisdiction or other judicial
authority and for the purpose of any action which the Mortgagee may bring
against the Vessel, any writ, notice, judgment or other legal process or
documents may (without prejudice to any other method of

                                       20
<PAGE>

service under applicable law) be served upon the Master of the Vessel (or upon
anyone acting as the Master) and such service shall be deemed good service on
the Shipowner for all purposes.

                  SECTION 9. TERMS USED IN THE MORTGAGE. In the Mortgage,
references to "principal" shall be construed as references to all moneys (other
than interest) for the time being comprised in the Indebtedness.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                       21
<PAGE>

                  IN WITNESS WHEREOF, the parties have caused this Deed of
Covenants to be duly executed the day and year first above written.

SIGNED, SEALED AND DELIVERED                              )
as a Deed                                                 )
by                                                        )
the duly authorized                                       )
                                                          )
                                                          )
                                                          )
                                                          )
________________ of                                       )
Genmar Gabriel Ltd.                                       )
in the presence of:-                                      )
                                                          )
                                                          )
                                                          )
                                                          )
                                                          )
SIGNED, SEALED AND DELIVERED                              )
by                                                        )
the duly authorized                                       )
                                                          )
                                                          )
                                                          )
                                                          )
________________ of                                       )
CHRISTIANIA BANK OG                                       )
KREDITKASSE ASA,                                          )
NEW YORK BRANCH                                           )
as Trustee,                                               )
in the presence of:-                                      )

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