Document:

<PAGE>

                                                                    EXHIBIT 10.7

[HOLLANDSCHE BANK-UNIE N.V. LOGO]

                                CREDIT AGREEMENT

THE UNDERSIGNED:

1.   Adventure Three S.A., established in Majuro, Marshall Islands, hereinafter
     referred to as 'the Borrower',

2.   HOLLANDSCHE BANK-UNIE N.V., having its registered office in Amsterdam, the
     Netherlands, hereinafter referred to as 'HBU'.

HAVE AGREED AS FOLLOWS:

On the basis of the information supplied to HBU, the Borrower is granted a
facility on the terms and conditions and at the rates and charges stated in this
agreement and the appendix hereto. The facility is granted to finance the
purchase of the M/V Free Envoy.

FACILITY AMOUNT                                    USD   6,000,000

Overdraft facility

The credit may also be used for drawing short-term loans in USD. The terms and
conditions governing these short-term loans will be incorporated in a separate
short-Term loan agreement.

Reduction scheme

Except for earlier alteration, the limit of the overdraft facility will be
reduced by USD 425,000 per three months and a last instalment of USD 900,000,
beginning three months after drawing date.

RATES AND CHARGES

Overdraft facility

-    Current USD debit interest rate, based on the market rate, will be 3.5%

-    Short term loans: libor + 2%.

-    Upfront fee                                   USD 54,000

The upfront fee will be charged after this Credit Agreement has been signed.

SECURITY AND COVENANTS

-    First preferred mortgage of USD 6,000,000 plus 40% for interest and costs,
     on the vessel m.v. "Free Envoy", registered under the flag of the Marshall
     Islands. Fuller details will be included in the mortgage deed. On this
     mortgage the laws of the Marshall Islands will be applicable.

     As far as possible HBU's General Conditions applicable to Ship Mortgages
     are incorporated in the mortgage deed. The mortgage deed shall be
     accompanied by a law firm's legal opinion in form and substance acceptable
     to the Bank.

-    Suretyship of USD 500,000, plus interest and costs, from Mr G.D.
     Gourdomichalis, residing in Piraeus, Greece and/or Mr S.D. Gourdomichalis,
     residing in Piraeus, Greece and/or Mr I.G. Varouxakis, residing in Piraeus,
     Greece.

<PAGE>

[HOLLANDSCHE BANK-UNIE N.V. LOGO]

-    Joint and several liability of One Adventure S.A.

-    Pledge of rights and earnings under time charter contracts concluded or to
     be concluded.

-    Pledge of rights under insurance policies.

-    Pledge of bank balances of USD 600,000 either in the name of Mr.
     G.D.Gourdomichalis, Mr. S.D.Gourdomichalis and Mr. I.G. Varouxakis or one
     of their companies. The pledge will be reduced to USD 400,000 after the
     first repayment of the principal amount and will be reduced to USD 250,000
     after the second repayment.

-    Pursuant to Art. 18 of the HBU General Banking Conditions HBU has a right
     of pledge on all goods and documents of title which are in possession or
     will come into the possession of HBU or a third party on HBU's behalf from
     or for the benefit of the Borrower on any account whatsoever and on all
     present or future claims of the Borrower vis-a-vis HBU on any account
     whatsoever to secure any obligations of the Borrower to HBU on any account
     whatsoever. Insofar as such pledge has not been created yet, this agreement
     shall be considered as an instrument of pledge and, insofar as necessary,
     as notification of such pledge.

OTHER PROVISIONS

-    Borrower will give HBU the time charter agreements for inspection. The
     contents thereof must be acceptable to HBU.

-    At any moment at least 60% of the value of the ship must be covering the
     outstanding facility.

-    The Borrower will submit once a year to HBU a surveyor's report of the
     vessel to be mortgaged to HBU. The contents must be acceptable to HBU.

-    There will be no change of ownership with respect to the shares in the
     companies of the Borrower.

-    The enclosed HBU General Credit Provisions dated January 1999 will apply.
     By signing this Credit Agreement the Borrower declares that he has received
     a copy of said General Credit Provisions and is fully aware of the contents
     thereof.

Signature:

Rotterdam, 24 June 2004

HOLLANDSCHE BANK - UNIE N.V.

/s/ Mr. Cees Verdel
--------------------------
Mr. Cees Verdel

/s/ Mr. Leo Bloemeuvel
--------------------------
Mr. Leo Bloemeuvel
<PAGE>

[HOLLANDSCHE BANK-UNIE N.V. LOGO]

Majuro, 8 July 2004

/s/ Ion Varouxakis
---------------------
Adventure Three S.A.

The undersigned, One Adventure S.A., declares that he assumes joint and several
liability towards HBU for all sums that the Borrower is now or will at any time
hereafter become due to HBU under this credit arrangement.

Majuro, 8 July 2004

/s/ Ion Varouxakis
---------------------
One Adventure S.A.<PAGE>

                                                                    EXHIBIT 10.8

                                    MORTGAGE

                                       by

                              ADVENTURE THREE S.A.
                                  as mortgagor

                                  in favour of

                           HOLLANDSCHE BANK-UNIE N.V.
                                  as mortgagee

                     DATED the 29th day of September, 2004

                                 - relating to -
                                m.v. "FREE ENVOY"

                                NAUTADUTILH N.V.
                                    ROTTERDAM

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Clause                                  Heading                                  Page
------                                  -------                                  ----
<S>         <C>                                                                  <C>
1.          Interpretation .....................................................   2

2.          Representations and warranties .....................................   7

3.          Payment covenants ..................................................   8

4.          Charging Clause ....................................................   9

5.          Continuing security and other provisions ...........................   9

6.          Covenants ..........................................................  10

7.          Powers of Mortgagee to protect security and remedy defaults ........  21

8.          Events of Default ..................................................  22

9.          Enforceability and Mortgagee's powers ..............................  24

10.         Application of Moneys ..............................................  26

11.         Omissions or Delay .................................................  26

12.         Delegation of Powers ...............................................  27

13.         Indemnity ..........................................................  27

14.         Power of Attorney ..................................................  27

15.         Further Assurance ..................................................  28

16.         Discharge amount; maturity date; discharge mortgage ................  28

17.         Partial Invalidity .................................................  28

18.         Notices ............................................................  29

19.         Law and jurisdiction ...............................................  30
</TABLE>

<PAGE>

                                        1

THIS FIRST PREFERRED MORTGAGE is made the 29th day of September, 2004

BY:

ADVENTURE THREE S.A., a company incorporated and existing under the laws of the
Marshall Islands, having its registered office at Ajeltake Road, Ajeltake
Island, Majuro, Marshall Islands MH96960 (the "Mortgagor")

IN FAVOUR OF:

HOLLANDSCHE BANK-UNIE N.V., a company incorporated and existing under the laws
of the Netherlands, having its corporate seat at Amsterdam, the Netherlands,
acting herein through its branch office at Coolsingel 104, 3011 AG Rotterdam,
the Netherlands (the "Mortgagee");

WHEREAS:

(1)   the Mortgagor is the absolute owner of the vessel described and defined in
      clause 1.1;

(2)   by, and subject to and upon the terms and conditions of (i) a credit
      agreement signed by the Mortgagee on the 24th day of June 2004 and signed
      by the Mortgagor on the 8th day of July 2004 and in which One Adventure
      S.A. assumed joint and several liability towards the Mortgagee for all
      sums which Mortgagor will owe to the Mortgagee under the credit agreement
      from time to time and (ii) a short-term loan agreement dated the 8th day
      of July 2004 and made between the Mortgagor and the Mortgagee (as the same
      may be amended, supplemented or varied from time to time together with the
      therein referred to HBU General Credit Provisions dated January 1999 the
      "Financial Agreement", copies of which are annexed hereto as Exhibit A, B
      and C respectively), the Mortgagee agreed to make available to the
      Mortgagor by way of an overdraft facility the amount of USD 6,000,000.00
      (six million United States Dollars) (the "Loan");

(3)   it is a condition of the Financial Agreement that the Mortgagor shall
      execute to the Mortgagee a first preferred mortgage over the Vessel (as
      hereinafter defined) for securing the Outstanding Indebtedness (as
      hereinafter defined) in the form herein set out;

<PAGE>

                                        2

(4)   the Mortgagor in order to secure the repayment of the Loan and the payment
      of interest thereon and all other sums of moneys from time to time owing
      to the Mortgagee under the Financial Agreement and the performance and
      observe of and compliance with all the covenants, terms and conditions
      contained in the Financial Agreement and this Mortgage, has duly
      authorized the execution and delivery of this Preferred Mortgage under and
      pursuant to Chapter 3 of the Maritime Act, 1990 of the Marshall Islands
      (as amended) which is executed by the Mortgagor in consideration of the
      Mortgagee making available the Loan.

NOW THIS MORTGAGE PROVIDES as follows:

1.    Interpretation

1.1   In this Mortgage unless the context otherwise requires:

      "Business Day" means a day on which the banks are open for business in
      Amsterdam, London and New York (whichever is applicable) for all kinds of
      business as contemplated herein and/or the Financial Agreement;

      "DOC" means a document of compliance issued to an Operator in accordance
      with the ISM Code;

      "Dollars" and "USD" means the lawful currency of the United States of
      America;

      "Earnings" means all moneys whatsoever from time to time due or payable
      actually or contingently to the Mortgagor arising out of the use or
      operation of the Vessel including (but without prejudice to the generality
      of the foregoing) all freight, hire and passage moneys, income arising
      under pooling arrangements, compensation payable to the Mortgagor in the
      event of requisition of the Vessel for hire, remuneration for salvage and
      towage services, demurrage and detention moneys and damages for breach (or
      payments for variation or termination) of any charterparty or other
      contract for the employment of the Vessel;

      "Environmental Approvals" means all approvals, licences, permits,
      exemptions or authorisations required under applicable Environmental Laws;

      "Environmental Claim" means:

<PAGE>

                                        3

(a)   any claim by, or directive from, any applicable governmental, judicial or
      other regulatory authority alleging breach of, or non-compliance with, any
      Environmental Laws or Environmental Approvals or otherwise howsoever
      relating to or arising out of an Environmental Incident; or

(b)   any claim by any other third party howsoever relating to or arising out of
      any Environmental Incident

and, in each such case, "claim" shall mean a claim for damages, clean-up costs,
compliance, remedial action or otherwise;

"Environmental Incident" means:

(a)   any release of Environmentally Sensitive Material from the Vessel;

(b)   any incident in which Environmentally Sensitive Material is released from
      a vessel other than the Vessel and which involves collision between the
      Vessel and such other vessel or some other incident of navigation or
      operation, in either case, where the Vessel, the Mortgagor or the Manager
      are actually or allegedly at fault or otherwise liable (in whole or in
      part); or

(c)   any incident in which Environmentally Sensitive Material is released from
      a vessel other than the Vessel and where the Vessel is actually
      potentially liable to be arrested as a result and/or where the Mortgagor
      or the Manager are actually or allegedly at fault or otherwise liable;

"Environmental Laws" means all laws, regulations, conventions and agreements
whatsoever relating to pollution or protection of the environment (including,
without limitation, the United States Oil Pollution Act of 1990 and any
comparable laws of the individual States of the United States of America);

"Environmentally Sensitive Material" means oil, oil products, any other
substance which is polluting, toxic or hazardous or any substance the release of
which into the environment is regulated, prohibited or penalised by or pursuant
to any Environmental Law;

"Event of Default" means any one of the events of default specified and referred
to

<PAGE>

                                        4

in the Financial Agreement and/or clause 8;

"Financial Agreement" has the meaning given in recital (2) hereto;

"Insurances" means all policies and contracts of insurance (which expression
includes without limitation all entries of the Vessel in a protection and
indemnity or war risks association) which are from time to time in place or
taken out or entered into by or for the benefit of the Mortgagor in respect of
the Vessel and her Earnings or otherwise howsoever in connection with the Vessel
and all the benefits thereof including all claims of whatsoever nature and
return of premiums;

"ISM Code" means the International Safety Management Code for the Safe Operation
of Ships and for Pollution Prevention constituted pursuant to Resolution A.741
(18) of the International Maritime Organisation and incorporated into the Safety
of Life at Sea Convention and includes any amendments or extensions of it and
any regulation issued pursuant to it;

"Loan" has the meaning given in recital (2) hereto;

"Major Casualty Amount" means USD 100,000.00 (one hundred thousand United States
Dollars) or the equivalent thereof in any other currency;

"Manager" means such manager of the Vessel as approved by the Mortgagee in
writing;

"Operator" means any entity who is at any time during the Security Period
concerned in the operation of the Vessel and falls within the definition of
"Company" set out in the ISM Code;

"Outstanding Indebtedness" means (a) the aggregate of all sums of money actual
or contingent, present or future due by the Security Parties as joint and
several obligors to the Mortgagee under or in connection with the Security
Documents or any of them and (b) all costs and expenses incurred in connection
with the Security Documents, including any taxes payable by the Mortgagee (other
than on net profit), as well as any reasonable costs and expenses incurred by
the Mortgagee in connection with the Mortgagor's failure to comply with or
fulfil any obligation under the Security Documents at the time and in the manner
required,

<PAGE>

                                        5

including collection charges, disbursements, fees of legal consultants and other
experts and costs of proceedings, irrespective against whom brought;

"Requisition Compensation" means all moneys or other compensation payable by
reason of requisition for title or other compulsory acquisition of the Vessel
otherwise than by requisition for hire;

"Security Documents" means the Financial Agreement, this Mortgage and any other
such document as may be executed from time to time to secure and/or regulate the
Outstanding Indebtedness;

"Security Interest" means a mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, assignment or other security interest or
arrangement of any kind whatsoever;

"Security Parties" means the Mortgagor and One Adventure S.A., having its
registered office at Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands
MH96960;

"Security Period" means the period commencing on the date of this Mortgage and
terminating on the date upon which all moneys payable or to become payable from
time to time pursuant to the terms of the Financial Agreement, this Mortgage
and/or any of the other Security Documents shall have been paid and discharged
in full;

"SMC" means a safety management certificate issued in respect of the Vessel in
accordance with the ISM Code;

"Total Loss" means:

(a)   actual or constructive or compromised or arranged total loss of the
      Vessel;

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

<PAGE>

                                        6

      (c)   capture seizure arrest detention or confiscation of the Vessel by
            any government or entity or individual acting or purporting to act
            on behalf of any government unless the Vessel be released and
            restored to the Mortgagor from such capture seizure arrest detention
            or confiscation within thirty (30) days after the occurrence
            thereof;

      "Vessel" means the Marshall Islands flag vessel "Free Envoy" with Official
      Number 2161, gross tonnage approximately 15,715, net tonnage approximately
      9,106, built in 1984 by Kurushima yard, Ehime, Japan and includes her
      engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel,
      consumable or other stores, belongings and appurtenances whether on board
      or ashore and whether now owned or hereafter required.

1.2   In clause 6.1:

      "excess risks" means the proportion (if any) of claims for general average
      and salvage charges and under the Institute Collision Clause not
      recoverable in consequence of the value at which a vessel is assessed for
      the purpose of such claims exceeding her insured value;

      "protection and indemnity risks" means the usual risks (including
      pollution and a Freight Demurrage and Defence cover) covered by a
      protection and indemnity association including the proportion (if any) not
      recoverable in case of collision under the Institute Collision Clause;

      "war risks" includes the risks of mines and all risks excluded from the
      standard form of English marine policy by the Institute War Exclusion
      Clause.

1.3   This Mortgage shall be read together with the Financial Agreement, but in
      the case of conflict between the two instruments the provisions of the
      Financial Agreement shall prevail in as far as it does not contravene the
      laws of the Marshall Islands.

1.4   In this Mortgage:

      (a)   clause headings are inserted for convenience of reference only and
            shall be ignored in the interpretation of this Mortgage;

      (b)   unless the context otherwise requires, words denoting the singular
            number

<PAGE>

                                        7

            shall include the plural and vice versa;

      (c)   references to clauses and schedules shall be construed as references
            to clauses of and schedules to this Deed;

      (d)   an "entity" shall be construed to include any firm, company,
            association, partnership (whether or not having separate legal
            personality), institution, government (local, national or
            supranational), state, agency or sub division thereof or
            international organisation;

      (e)   reference to any document including this Mortgage shall be construed
            as reference to such document as amended supplemented or varied from
            time to time;

      (f)   words and expressions defined in the Financial Agreement shall,
            unless it is stated otherwise herein, have the same meaning when
            used in this Mortgage; and

      (g)   the Mortgagee, the Mortgagor, the Security Parties and any other
            entity or individual shall include their respective successors in
            title, estates and, in the event of an assignment permitted under
            this Mortgage, assignees.

2.    Representations and warranties

2.1   The Mortgagor hereby represents and warrants to the Mortgagee that:

      (a)   it is fully entitled to grant this Mortgage and further to agree the
            terms and conditions hereof;

      (b)   it is the sole, absolute, legal and beneficial owner of the Vessel;

      (c)   save for an existing time charter agreement between the Mortgagor
            and Express Sea Transport Corporation of Panama City, Republic of
            Panama dated the 14th day of April 2004, the Vessel is not subject
            to any charter which, if entered into after the date of this
            Mortgage, would have required the consent of the Mortgagee under
            clause 6.1 (k) and there is no existing agreement or arrangement
            whereby the Earnings may be shared with any other entity or
            individual;

<PAGE>

                                        8

      (d)   the Vessel is not subject to any charge and/or encumbrance (save as
            constituted by the Security Documents or otherwise permitted by the
            terms thereof); and

      (e)   the Operator has obtained and maintains a DOC (a true copy of which
            has been delivered to the Mortgagee) and has obtained and maintains
            a SMC (a true copy of which has been delivered to the Mortgagee) in
            respect of the Vessel, both are in full force and effect and nothing
            has happened which might cause either to be withdrawn.

2.2   The Mortgagor hereby further represents and warrants to the Mortgagee
      that:

      (a)   all applicable Environmental Laws and Environmental Approvals
            relating to the Vessel, its operation and management and the
            business of the Mortgagor (as now conducted and as reasonably
            anticipated to be conducted in the future) have been complied with;

      (b)   no Environmental Claim has been made or threatened against the
            Mortgagor, the Manager or otherwise in connection with the Vessel;
            and

      (c)   no Environmental Incident has occurred.

3.    Payment covenants

      The Mortgagor hereby covenants duly to observe and perform all its
      obligations under the Financial Agreement in accordance with the terms and
      conditions thereof and in particular:

      (a)   to repay the Loan by the instalments and on the dates referred to
            and otherwise in the manner and upon the terms set out in the
            Financial Agreement;

      (b)   to pay interest on the Loan and on other moneys payable under the
            Financial Agreement at the rate or rates from time to time
            applicable thereto in the manner and upon the terms set out in the
            Financial Agreement;

<PAGE>

                                        9

      (c)   to pay all other moneys payable by the Mortgagor under or in
            connection with the Security Documents or any of them at the times
            and in the manner therein specified.

4.    Charging Clause

4.1   In pursuance of the Financial Agreement and in consideration of the
      premises and by way of security for payment of the Outstanding
      Indebtedness and the performance of the obligations under the Financial
      Agreement, this Mortgage and the other Security Documents by the
      Mortgagor, the Mortgagor with full title guarantee hereby mortgages and
      charges and agrees to mortgage and charge to and in favour of the
      Mortgagee all its right, title and interest (present and future) to and in
      the Vessel TO HAVE AND HOLD the same unto and in favour of the Mortgagee
      forever upon the terms set forth in this Mortgage to secure the
      Outstanding Indebtedness and further to secure the performance and
      observance of and the compliance with the covenants, terms and conditions
      in the Financial Agreement, this Mortgage and the other Security Documents
      contained.

4.2   Notwithstanding anything to the contrary in this Mortgage it is not
      intended that any provision of this Mortgage shall waive the preferred
      status of this Mortgage and that if any provision or part thereof in this
      Mortgage shall be construed as waiving the preferred status of this
      Mortgage, then such provisions shall to such extent be void and of no
      effect.

4.3   The Mortgagor shall remain liable to perform all the obligations assumed
      by it in relation to the Vessel and the Mortgagee shall not be under any
      obligation of any kind whatsoever in respect thereof or be under any
      liability whatsoever in event of any failure by the Mortgagor to perform
      its obligations in respect thereof.

5.    Continuing security and other provisions

      It is declared and agreed that:

      (a)   the security created by this Mortgage and the other Security
            Documents shall be held by the Mortgagee as a continuing security
            for the payment of the Outstanding Indebtedness and the performance
            and observance of and compliance with all obligations of the
            Mortgagor under the Security Documents or any of them, express or
            implied;
<PAGE>

                                       10

      (b)   the security so created shall not be satisfied by any intermediate
            payment or satisfaction of any part of the Outstanding Indebtedness
            and shall be in addition to and shall not in any way prejudice or
            affect and may be enforced by the Mortgagee without prior recourse
            to the security created by any other of the Security Documents or by
            any other security now or hereafter held by the Mortgagee and shall
            not in any way be prejudiced or affected thereby or by the
            invalidity or unenforceability thereof or by the Mortgagee
            releasing, modifying or refraining from perfecting or enforcing any
            of the same or granting time or indulgence or compounding with any
            liable entity or individual;

      (c)   all the rights, remedies and powers vested in the Mortgagee under
            this Mortgage shall be in addition to and not a limitation of any
            and every other right, power or remedy vested in the Mortgagee under
            any other of the Security Documents or at law (whether Marshall
            Islands or otherwise) and that all the powers so vested in the
            Mortgagee may be exercised from time to time and as often as the
            Mortgagee may deem expedient; and

      (d)   the Mortgagee shall not be obliged to make any enquiry as to the
            nature or sufficiency of any payment received by it under this
            Mortgage or to make any claim or to take any action or to enforce
            any rights and benefits hereby assigned to the Mortgagee or to which
            the Mortgagee may at any time be entitled under this Mortgage.

6.    Covenants

6.1   The Mortgagor further covenants with the Mortgagee throughout the Security
      Period:

      (a)   Insurance

            (i)   to insure and keep the Vessel insured at the expense of the
                  Mortgagor against:

                  (A)   fire and usual marine risks (including excess risks);

                  (B)   war risks;

<PAGE>

                                       11

                  (C)   protection and indemnity risks (including pollution
                        risks and a freight demurrage and defence cover); and

                  (D)   where the Vessel shall, at any time enter waters under
                        the jurisdiction of the United States of America and/or
                        the Exclusive Economic Zone (as defined in the United
                        States Oil Pollution Act of 1990), oil pollution
                        liability risks in excess of the cover for oil pollution
                        liability risks included within the cover for protection
                        and indemnity risks;

                  and, at the option of the Mortgagee, either (i) to effect and
                  keep effected, in the name and for the benefit of the
                  Mortgagee, but at the expense of the Mortgagor or (ii) to
                  reimburse the Mortgagee on demand for any and all costs
                  incurred by it in effecting and maintaining such insurance in
                  relation to the Vessel:

                  (E)   a mortgagee's interest insurance; and

                  (F)   where the Vessel shall, at any time enter waters under
                        the jurisdiction of the United States of America and/or
                        the Exclusive Economic Zone (as defined in the United
                        States Oil Pollution Act of 1990) insurance against the
                        possible consequences of pollution due to, without
                        limitation, oil or any other substance involving the
                        Vessel including, without limitation, the risk of
                        expropriation or sequestration of the Vessel or the
                        imposition of any Security Interest having priority over
                        the Mortgage ("Mortgagee's Interest Insurance -
                        Additional Perils (Pollution)");

            (ii)  to effect and keep effected the Insurances (if not effected by
                  the Mortgagee) in such amounts and in such currency and upon
                  such terms and through such brokers (hereinafter called the
                  "approved brokers") and with such insurance companies,
                  underwriters, war risks and protection and indemnity
                  associations (hereinafter called the "approved associations")
                  as shall from time to time be approved in writing by the
                  Mortgagee PROVIDED HOWEVER

<PAGE>

                                       12

                  that the insurances against war risks and protection and
                  indemnity risks may be effected by the entry of the Vessel
                  with such war risks and protection and indemnity risks
                  associations as shall from time to time be approved in writing
                  by the Mortgagee and if so required by the Mortgagee (but
                  without, as between the Mortgagor and the Mortgagee, liability
                  on the part of the Mortgagee for premiums or calls) with the
                  Mortgagee named as co-assured;

            (iii) if any of the Insurances forms part of a fleet cover, to
                  procure that the approved brokers and (as the case may be) the
                  approved associations shall undertake to the Mortgagee that
                  they shall neither set off against any claims in respect of
                  the Vessel any premiums due in respect of other vessels under
                  such fleet cover or any premiums due for other insurances, nor
                  cancel such insurance in respect of the Vessel for reason of
                  non-payment of premiums for other vessels under such fleet
                  cover or of premiums for such other insurances and shall
                  undertake to issue a separate policy in respect of the Vessel
                  if and when so requested by the Mortgagee;

            (iv)  at least fourteen (14) days before the relevant policies,
                  contracts or entries expire, to notify the Mortgagee in
                  writing of the names of the brokers and/or the war risks and
                  protection and indemnity risks associations proposed to be
                  employed by the Mortgagor for the purposes of the renewal of
                  such insurances (subject to the Mortgagee's approval of such
                  brokers and/or associations) and of the amounts in which such
                  insurances are proposed to be renewed and the risks to be
                  covered and, (subject to compliance with any requirements of
                  the Mortgagee pursuant to this clause 6.1(a)), to renew (or
                  procure the renewal of) such Insurances at least ten (10) days
                  before the relevant policies, contracts or entries expire and
                  to procure that such brokers and (as the case may be) such
                  associations will at least seven (7) days before such expiry
                  confirm such renewals in writing to the Mortgagee;

            (v)   punctually to pay all premiums, calls, contributions or other
                  sums payable in respect of the Insurances and to produce all
                  relevant receipts or other evidence if and when so required by
                  the Mortgagee;

<PAGE>

                                       13

           (vi)   to arrange for the execution of such guarantees or indemnities
                  as may from time to time be required by or in connection with
                  any protection and indemnity or war risks association or
                  required by or in connection with a usual marine risks policy
                  (including excess risks and war risks);

           (vii)  to procure that the interest of the Mortgagee shall be duly
                  endorsed upon all slips, cover notes, policies, certificates
                  of entry or other instruments of insurance issued or to be
                  issued in connection with the Insurances by means of a loss
                  payable and notice of cancellation clause and a notice of
                  assignment (signed by the Mortgagor) in such forms as from
                  time to time required by the Mortgagee;

           (viii) to procure that all instruments of the Insurances shall be
                  deposited with the approved brokers and that such brokers
                  shall (if so required by the Mortgagee) furnish the Mortgagee
                  with pro forma copies thereof and a letter or letters of
                  undertaking in such form as may from time to time be required
                  by the Mortgagee;

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

           (x)    not to employ the Vessel or suffer the Vessel to be employed
                  otherwise than in conformity with the terms of the instruments
                  of the Insurances (including any warranties express or implied
                  therein) without first obtaining the consent to such
                  employment of the insurers and complying with such
                  requirements as to extra premium or otherwise as the insurers
                  may prescribe;

           (xi)   to reimburse to the Mortgagee on demand any costs or expenses
                  incurred by the Mortgagee in obtaining (if and when so
                  required by the Mortgagee) reports from an independent marine
                  insurance broker appointed by the Mortgagee as to the adequacy
                  of the

<PAGE>

                                       14

                  insurances effected or proposed to be effected pursuant to
                  this clause 6 and procure that there is delivered to such
                  broker any and all such information in relation to such
                  insurances as such broker may require;

           (xii)  not to make, do, consent or agree to any act or omission which
                  would or might render any instrument of insurance invalid,
                  void, voidable or unenforceable or render any sum paid
                  thereunder repayable in whole or in part;

           (xiii) to do all things necessary and provide all documents,
                  evidence and information to enable the Mortgagee to collect or
                  recover any moneys which shall at any time become due in
                  respect of the Insurances;

           (xiv)  to apply such sums receivable in respect of the Insurances
                  other than in respect of a Total Loss and any major casualty
                  (that is to say any casualty the claim in respect of which
                  exceeds the Major Casualty Amount inclusive of any deductible)
                  which shall be payable to the Mortgagee as are paid to the
                  Mortgagor for the purpose of making good the loss and fully
                  repairing all damage in respect whereof the insurance moneys
                  shall have been received;

           (xv)   to make all such quarterly or other voyage declaration as may
                  from time to time be required by the protection and indemnity
                  risks association to maintain cover for trading (including,
                  without limitation, trading to the United States of America
                  and Exclusive Economic Zone (as defined in the United States
                  Oil Pollution Act 1990))

           PROVIDED ALWAYS THAT the Mortgagee shall be entitled to review the
           requirements of this clause 6.1 (a) from time to time in order to
           take account of significant changes in circumstances after the date
           of this Mortgage (such changes in circumstances include, without
           limitation, changes in the availability or the cost of insurance
           coverage). The Mortgagee may notify the Mortgagor in writing from
           time to time of any proposed modification to the requirements of this
           clause 6.1(a) which it deems appropriate in the circumstances, and
           such modification shall take

<PAGE>

                                       15

            effect on and from the date it is notified in writing to the
            Mortgagor as an amendment to this clause 6.1(a) and shall bind the
            Mortgagor accordingly;

      (b)   Name and Registration

            not to change the name of the Vessel and to keep the Vessel
            registered with full registration as a Marshall Island ship in the
            Republic of the Marshall Islands at the Port of Majuro in the name
            of the Mortgagor and not do or suffer to be done anything, or omit
            to do anything, the doing or omission of which could or might result
            in the Vessel being required to be registered otherwise than as a
            Marshall Islands ship in the Republic of Marshall Islands at the
            Port of Majuro and not to do or suffer to be done anything, or omit
            to do anything, the doing or omission of which could or might result
            in such registration being forfeited, terminated or imperilled and
            not to register the Vessel or permit its registration under any
            other name, flag or at any other port or with any other numbers
            without the prior written consent of the Mortgagee and to procure
            the renewal of such registration of the Vessel as a Marshall Islands
            ship with full registration at least one month before the same shall
            expire;

      (c)   Operator

            (i)   to comply and to procure that the Operator will comply with,
                  and ensure that the Vessel and the Operator at all times
                  comply with, the requirements of the ISM Code;

            (ii)  immediately to inform and to procure that the Operator will
                  inform the Mortgagee if there is any threatened or actual
                  withdrawal of its or the Operator's DOC or the Vessel's SMC;
                  and

            (iii) promptly to inform and to procure that the Operator will
                  promptly inform the Mortgagee upon the issue to the Mortgagor
                  or the Operator of a DOC and to the Vessel of a SMC;

      (d)   Employment

            not knowingly to employ the Vessel or suffer its employment in any
            trade or business which is forbidden by international law or is
            otherwise illegal

<PAGE>

                                       16

            or in carrying illegal or prohibited goods or in any manner
            whatsoever which may render the Vessel or its cargo liable to
            condemnation in a Prize Court or to penalty, destruction, seizure or
            confiscation and in the event of any major political confrontation
            or hostilities (whether or not war shall have been formally
            declared) or during any civil war or insurrection, not to carry or
            permit to be carried on or in the Vessel any cargo that is or may be
            declared contraband of war or that may render the Vessel or its
            cargo liable to penalty, destruction, seizure, or confiscation
            unless special war risks policies previously approved by the
            Mortgagee shall have been effected prior to undertaking any such
            risk and to deliver the signed cover notes in respect thereof
            forthwith to the Mortgagee;

      (e)   Encumbrances, sale or other disposal

            (i)   not without the previous consent in writing of the Mortgagee
                  to create or suffer the creation of any Security Interest on
                  or in respect of the Vessel to or in favour of any entity or
                  individual other than the Mortgagee;

            (ii)  not without the previous consent in writing of the Mortgagee
                  (and then only subject to such terms as the Mortgagee may
                  impose) to sell agree to sell transfer or abandon or otherwise
                  dispose of the Vessel or any share or interest therein;

      (f)   Prevention of and release from arrest

            to pay and discharge all debts and liabilities which may give rise
            to maritime statutory or possessory liens on the Vessel or to claims
            enforceable by actions in rem against the Vessel or similar process
            so as to keep her free from arrest or detention and in the event of
            arrest or detention of the Vessel being threatened or effected
            forthwith to notify the Mortgagee thereof and to take all steps and
            to make all payments necessary to obtain the release of the Vessel
            from such arrest or detention within thirty days from receiving
            notice thereof;

      (g)   Repair and Class

            to maintain the Vessel in her present class, and (subject to clause
            6.1(q)) to

<PAGE>

                                       17

            keep her and her machinery, auxiliaries and all equipment at such
            times in thoroughly good and seaworthy condition and in such
            condition as to make her comply with all regulations and
            requirements of the laws and Government of the Republic of Liberia
            of any country where the Vessel may come and to renew and replace
            all parts and equipment as and when they may become worn out,
            damaged or lost by others of a similar nature and of at least equal
            value;

      (h)   Surveys

            to submit the Vessel to such periodical or other surveys as may be
            required for classification purposes and if so required to supply to
            the Mortgagee copies of all survey reports issued in respect
            thereof;

      (i)   Inspections

            to permit the Mortgagee to inspect the condition of the Vessel at
            all reasonable times and to give the Mortgagee sufficient notice
            whenever practicable of dry-dockings, surveys and major repairs so
            as to enable the Mortgagee's surveyors or other entity or individual
            appointed by it to attend thereat and if so required to supply to
            the Mortgagee copies of survey reports on the Vessel;

      (j)   Modification, Removal of Parts, Equipment owned by third parties

            not without the prior written consent of the Mortgagee to:

            (i)   make any modification to the Vessel in consequence of which
                  her structure, type or performance characteristics could or
                  might materially be altered or her value materially reduced;
                  or

            (ii)  remove any material part of the Vessel or any equipment the
                  value of which is such that its removal from the Vessel would
                  materially reduce the value of the Vessel without replacing
                  the same with equivalent parts or equipment owned by the
                  Mortgagor free from encumbrances; or

            (iii) install on the Vessel any equipment owned by a third party
                  which

<PAGE>

                                       18

                  cannot be removed without causing damage to the structure or
                  fabric of the Vessel and not to permit any of the foregoing by
                  any third party;

      (k)   Chartering

            not without the prior written consent of the Mortgagee, which shall
            not unreasonably be withheld, to:

            (i)   let the Vessel on demise charter for any period; or

            (ii)  let the Vessel on time or consecutive voyage charter or
                  otherwise dispose of the Vessel, except for an existing time
                  charter agreement between the Mortgagor and Express Sea
                  Transport Corporation of Panama City, Republic of Panama dated
                  the 14th day of April 2004 and a time or consecutive voyage
                  charter agreement for a period which does not exceed or which
                  by virtue of any optional extensions therein contained is not
                  likely to exceed twelve (12) months'duration; or

            (iii) charter the Vessel on terms whereby more than three (3)
                  months' hire is payable in advance;

      (l)   Information

            to supply to the Mortgagee on request full information regarding the
            Vessel, her employment, position and engagements, particulars of all
            towages and salvages and copies of all charters and other contracts
            concerning the Vessel;

      (m)   Notification of certain events

            to notify the Mortgagee forthwith by letter or in case of urgency by
            telefax of any accident to the Vessel involving repairs the cost
            whereof is likely to exceed the Major Casualty Amount, of any
            occurrence whereby the Vessel has or is likely to become a Total
            Loss, of any actual or threatened arrest, detention, seizure,
            confiscation or requisition of the Vessel, of any requirement of
            insurers, classification society or any competent authority

<PAGE>

                                       19

            which is not immediately carried out and of any petition or notice
            or meeting to consider any resolution to dissolve wind-up or
            liquidate the Mortgagor;

      (n)   Reimbursement

            to pay to the Mortgagee on demand all moneys whatsoever which the
            Mortgagee shall or may expend be put to or become liable for in or
            about the protection maintenance or enforcement of the security
            created by this Mortgage and the other Security Documents or in or
            about the exercise by the Mortgagee of any of the powers vested in
            it hereunder or thereunder and to pay interest thereon at the
            default rate as per the Financial Agreement;

      (o)   Costs

            to pay on demand to the Mortgagee (or as it may direct) the amount
            of all investigation and legal expenses of any kind whatsoever stamp
            duties (if any) registration fees and any other charges incurred by
            the Mortgagee in connection with the preparation completion
            registration and discharge of the Security Documents or otherwise in
            connection with the Outstanding Indebtedness and the security
            therefor and to pay interest thereon at the default rate as per the
            Financial Agreement;

      (p)   Manager

            not without the previous consent in writing of the Mortgagee (and
            then only on and subject to such terms as the Mortgagee may impose)
            to appoint a manager of the Vessel other than the Manager;

      (q)   Repairers' liens

            not without the previous consent in writing of the Mortgagee to put
            the Vessel into the possession of any entity or individual for the
            purpose of work being done upon her in an amount exceeding or likely
            to exceed the Major Casualty Amount, unless such entity or
            individual shall first have given to the Mortgagee and in terms
            satisfactory to it a written undertaking not to exercise any lien on
            the Vessel or her Earnings for the

<PAGE>

                                       20

            cost of such work or otherwise;

      (r)   Payment of outgoings and evidence of payment

            promptly to pay all tolls dues and other outgoings whatsoever in
            respect of the Vessel and her Earnings and Insurances and to keep
            proper books of account in respect of the Vessel and her Earnings
            and as and when the Mortgagee may so require to make such books
            available for inspection on behalf of the Mortgagee and furnish
            satisfactory evidence that the wages allotments the premiums for
            social insurances and pension contributions of the master and crew
            are being regularly paid and that all deductions from crew's wages
            in respect of Marshall Islands tax liability are being properly
            accounted for and that the master has no claim for disbursements
            other than those incurred by him in the ordinary course of trading
            on the voyage then in progress;

      (s)   Notice on board Vessel

            to carry a certified copy of this Mortgage with the Vessel's papers
            on board and exhibit it on demand to any person having business with
            the Vessel or to any representative of the Mortgagee and to place
            and keep prominently displayed in the chartroom and in the master's
            cabin of the Vessel a notice, printed in plain type of such size
            that the paragraph of reading matter shall cover a space not less
            than six inches wide by nine inches high, framed, reading as
            follows:

            "NOTICE OF MORTGAGE

            This Vessel is covered by a FIRST PREFERRED SHIP MORTGAGE to
            HOLLANDSCHE BANK-UNIE N.V. under the authority of the Maritime Act
            1990 of the Republic of the Marshall Islands (as amended). Under the
            terms of said Mortgage, neither the Owner, any charterer nor the
            Master of the Vessel nor any other person has any right, power or
            authority to create, incur or permit to be imposed upon this vessel
            any lien whatsoever other than for crew's wages or salvage."; and
<PAGE>

                                       21

      (t)   Libel

            if a libel be filed against the Vessel or the Vessel be otherwise
            attached, levied upon or taken into custody by virtue of any legal
            proceedings in any Court, to promptly notify the Mortgagee thereof
            by telex or fax confirmed by a letter at its office as herein
            referred to and within thirty (30) days cause the Vessel to be
            released and all liens thereon to be discharged except for this
            Mortgage and promptly notify the Mortgagee within 48 (forty-eight)
            hours after is has become known to the Mortgagor of any average or
            salvage incurred by the Vessel.

6.2   The Mortgagor hereby further covenants with the Mortgagee that throughout
      the Security Period it will:

      (a)   comply, or procure compliance with, all Environmental Laws and
            Environmental Approvals relating to the Vessel, its operation or
            management and the business of the Mortgagor from time to time;

      (b)   notify the Mortgagee forthwith upon:

            (i)   any Environmental Claim being made against the Mortgagor, the
                  Manager or otherwise in connection with the Vessel; and

            (ii)  any Environmental Incident occurring; and

      (c)   keep the Mortgagee advised, in writing on such regular basis and in
            such detail as the Mortgagee shall require, of the Mortgagor's
            response to such Environmental Claim or Environmental Incident.

7.    Powers of Mortgagee to protect security and remedy defaults

7.1   The Mortgagee shall without prejudice to its other rights and powers under
      this Mortgage and the other Security Documents be entitled (but not bound)
      at any time and as often as may be necessary to take any such action as it
      may in its discretion think fit for the purpose of protecting or
      maintaining the security created by this Mortgage (including, without
      limitation, such action as is referred to in clause 7.2) and each and
      every expense, liability, or loss (including, without limitation, legal
      fees) so incurred by the Mortgagee in or about the protection or

<PAGE>

                                       22

      maintenance of the said security together with default interest as per the
      Financial Agreement payable thereon shall be repayable to it by the
      Mortgagor on demand.

7.2   Without prejudice to the generality of clause 7.1:

      (a)   if the Mortgagor does not comply with the provisions of clause
            6.1(a) the Mortgagee shall be entitled (but not bound) to effect or
            to replace and renew and thereafter to maintain the Insurances in
            such manner as in its discretion it may think fit and to require
            that all policies, contracts and other records relating to the
            Insurances (including details of any correspondence concerning
            outstanding claims) be forthwith delivered to such brokers as the
            Mortgagee may nominate and to collect, recover, compromise and give
            a good discharge for all claims then outstanding or thereafter
            arising under the Insurances or any of them and to take over or
            institute (if necessary using the name of the Mortgagor) all such
            proceedings in connection therewith as the Mortgagee in its absolute
            discretion may think fit and to permit the brokers through whom the
            collection or recovery is effected to charge the usual brokerage
            therefor; and

      (b)   if the Mortgagor does not comply with the provisions of clauses
            6.1(g), 6.1(h) and 6.1(i) or any of them the Mortgagee shall be
            entitled (but not bound) to arrange for the carrying out of such
            repairs to and/or surveys of the Vessel as it deems expedient or
            necessary; and

      (c)   if the Mortgagor does not comply with the provisions of clauses
            6.1(f) and 6.1(r) or any of them the Mortgagee shall be entitled
            (but not bound) to pay and discharge all such debts, damages and
            liabilities and all such tolls, dues, taxes, assessments, charges,
            fines, penalties and other outgoings as are therein mentioned and/or
            to take any such measures as it deems expedient or necessary for the
            purpose of securing the release of the Vessel.

8.    Events of Default

      Upon the happening of any of the following events the Outstanding
      Indebtedness shall immediately become due and payable to the Mortgagee
      without notice and

<PAGE>

                                       23

      without the necessity of any Court declaration to the effect that an Event
      of Default has taken place:

      (a)   any of the Security Parties fails to pay any sum of money payable
            under any of the Security Documents on the date stipulated for
            payment of such sum; or

      (b)   any of the Security Parties does not observe or perform or fails in
            the punctual performance or observance of any undertaking covenant
            obligation or other provision contained in any of the Security
            Documents; or

      (c)   a petition is filed or an order is made or an effective resolution
            is passed for the dissolution or winding up of any of the Security
            Parties or a receiver, administrative receiver, administrator or a
            similar officer is appointed of the undertaking or property of any
            of the Security Parties or any of the Security Parties suspends
            payment or ceases to carry on its business or make special
            arrangements for composition with its creditors or anything
            analogous to any of the foregoing events occurs under the law of any
            applicable jurisdiction; or

      (d)   anything is done or suffered, or omitted to be done or occurs, which
            in the reasonable opinion of the Mortgagee imperils the security
            created by the Security Documents; or

      (e)   the Vessel becomes a Total Loss; or

      (f)   it becomes impossible or unlawful of the any of the Security Parties
            to fulfil any of the covenants and obligations on its part to be
            fulfilled as contained in the Security Documents or for the
            Mortgagee to exercise the rights or any of them vested in it under
            the Security Documents; or

      (g)   anything is done or suffered or omitted to be done by of the any of
            the Security Parties which in the reasonable opinion of the Mortgage
            may imperil or materially decrease the value of the security created
            by the Security Documents or any of them; or

<PAGE>

                                       24

      (h)   there is in the opinion of the Mortgagee any material adverse change
            in the financial situation of any of the Security Parties or
            otherwise affecting its affairs; or

      (i)   if the Outstanding Indebtedness becomes immediately due and payable
            to the Mortgagee in accordance with the provisions of the Financial
            Agreement or any of the other Security Documents.

9.    Enforceability and Mortgagee's powers

      Upon the happening of any Event of Default the Mortgagee shall become
      forthwith entitled to enforce the security created by this Mortgage
      without prior notice and in any manner available to it and in such
      sequence as the Mortgagee may in its absolute discretion prefer and when
      it may see fit to put into force and to exercise all or any of the rights
      powers and remedies conferred upon mortgagees by law and/or possessed by
      it as mortgagee and chargee of the Vessel by virtue of this Mortgage and
      in particular (without limiting the generality of the foregoing):

      (a)   to take possession of the Vessel;

      (b)   to require that all policies contracts, certificates of entry and
            other records relating to the Insurances (including details of and
            correspondence concerning outstanding claims) be forthwith delivered
            to such brokers as the Mortgagee may nominate;

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

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

<PAGE>

                                       25

      (e)   to terminate any charterparty in respect of the Vessel without being
            responsible for any loss thereby occurred;

      (f)   to sell the Vessel or any share therein with or without prior notice
            to the Mortgagor and with or without the benefit of any charterparty
            or other contract for her employment by public auction or private
            contract at such place and upon such terms as the Mortgagee in its
            absolute discretion may determine with power to postpone any such
            sale and without being answerable for any loss occasioned by such
            sale or resulting from postponement thereof;

      (g)   to manage, insure, maintain and repair the Vessel and to employ or
            lay up the Vessel in such manner and for such period as the
            Mortgagee in its absolute discretion deems expedient and for the
            purposes aforesaid the Mortgagee shall be entitled to do all acts
            and things incidental or conducive thereto and in particular to
            enter into such arrangement respecting the Vessel her insurance
            management maintenance repair classification and employment in all
            respects as if the Mortgagee was the owner of the Vessel and without
            being responsible for any loss thereby incurred;

      (h)   to recover from the Mortgagor on demand any such losses as may be
            incurred by the Mortgagee in or about the exercise of the power
            vested in the Mortgagee under sub-clause (g) of this clause with
            interest thereon at the default rate as per the Financial Agreement
            from the date when such losses were incurred by the Mortgagee until
            the date of payment whether before or after any relevant judgment;

      (i)   to recover from the Mortgagor on demand all expenses payments and
            disbursements incurred by the Mortgagee in or about or incidental to
            the exercise by it of any of the powers aforesaid together with
            interest thereon at the default rate as per the Financial Agreement
            from the date when such expenses payments or disbursements were
            incurred by the Mortgagee until the date of payment whether before
            or after any relevant judgment

      PROVIDED ALWAYS that (i) the Mortgagee shall not be liable as mortgagee in
      possession in respect of the Vessel to account or be liable for any loss
      upon

<PAGE>

                                       26

      realisation or for any neglect or default of any nature whatsoever in
      connection therewith for which a mortgagee in possession may be liable as
      such and (ii) upon any sale of the Vessel or any share therein by the
      Mortgagee pursuant to sub-clause (f) of this clause the purchaser shall
      not be bound to see or enquire whether the Mortgagee's power of sale has
      arisen in the manner herein provided and the sale shall be deemed to be
      within the power of the Mortgagee and the receipt of the Mortgagee for the
      purchase money shall effectively discharge the purchaser who shall not be
      concerned with the manner of application of the proceeds of sale or be in
      any way answerable therefor.

10.   Application of Moneys

      Upon the happening of any Event of Default the Mortgagee shall become
      forthwith entitled as and when it may see fit to apply any amounts
      received by it from the Mortgagor and the Mortgagee shall similarly be
      entitled to apply any amounts received by it in respect of:

      (a)   sale of the Vessel or any share therein;

      (b)   recovery under the Insurances;

      (c)   any Earnings or moneys received pursuant to the provisions of clause
            9.(g);

      (d)   any Requisition Compensation,

      in the manner as specified in the Financial Agreement.

11.   Omissions or Delay

      No delay, indulgence or omission of the Mortgagee to exercise any right
      power or remedy vested in it under the Security Documents or any of them
      shall in any way prejudice or impair such right power or remedy or be
      construed as a waiver of or as acquiescence in any default by the
      Mortgagor and in event of the Mortgagee at any time agreeing to waive any
      such right power or remedy such waiver shall be revocable by the Mortgagee
      at any time and the right power or remedy shall thereafter be again
      exercisable as though there had been no such waiver.

<PAGE>

                                       27

12.   Delegation of Powers

      The Mortgagee shall be entitled at any time and as often as may be
      expedient to delegate all or any of the powers and discretions vested in
      it by the Security Documents or any of them (including the powers vested
      in it by virtue of clause 7.2(a) and clause 14) in such manner upon such
      terms and to such entities or individuals as the Mortgagee in its absolute
      discretion may think fit.

13.   Indemnity

13.1  The Mortgagor hereby agrees and covenants to indemnify the Mortgagee
      against all losses actions claims expenses demands obligations and
      liabilities whatsoever and whensoever arising which the Mortgagee may
      incur in respect of, in relation to or in connection with the Vessel or
      otherwise, howsoever, in relation to or in connection with any of the
      matters dealt with in the Security Documents or any of them.

13.2  The Mortgagor hereby agrees and undertakes to indemnify the Mortgagee on
      demand against all losses, actions, claims, expenses, demands, obligations
      and liabilities sustained or incurred as result of or in connection with
      any Environmental Claim being made against the Mortgagee or otherwise
      howsoever arising out of any Environmental Incident.

14.   Power of Attorney

14.1  The Mortgagor, by way of security and in order more fully to secure the
      performance of the Mortgagor's obligations under this Mortgage, hereby
      irrevocably appoints the Mortgagee as its attorney during the Security
      Period for the purposes of:

      (a)   doing in its name all acts and executing, signing and (if required)
            registering in its name all documents which the Mortgagor itself
            could do, execute, sign or register in relation to the Vessel
            (including without limitation, transferring title to the Vessel to a
            third party and deleting the Vessel from the Marshall Islands Ships
            Registry); provided, however, that such power shall not be
            exercisable by or on behalf of the Mortgagee until this Mortgage
            shall have become immediately enforceable pursuant to clause 9; and

<PAGE>

                                       28

      (b)   executing, signing, perfecting, doing and (if required) registering
            every such further assurance document, act or thing as is referred
            to in clause 15.

14.2  The exercise of such power as is referred to in clause 14.1(a) by or on
      behalf of the Mortgagee shall not put any entity or individual dealing
      with the Mortgagee upon any enquiry as to whether this Mortgage has become
      enforceable nor shall such entity or individual be in any way affected by
      notice that this Mortgage has not become enforceable and, in relation to
      both clauses 14.1(a) and 14.1(b), the exercise by the Mortgagee of such
      power shall be conclusive evidence of its right to exercise the same.

15.   Further Assurance

      The Mortgagor hereby further covenants at its own expense from time to
      time to execute, sign, perfect, do and (if required) register any such
      further assurance, document, act or thing as in the opinion of the
      Mortgagee may be necessary or desirable for the purpose of more
      effectually mortgaging and charging the Vessel or perfecting the security
      constituted or intended to be constituted by the Security Documents.

16.   Discharge amount; maturity date; discharge mortgage

16.1  For the purpose of recording this Mortgage as required by Chapter 3 of the
      Maritime Act, 1990 of the Marshall Islands (as amended), the total amount
      of this Mortgage is USD 6,000,000.00 (six million United States Dollars)
      together with interest thereon, fees, commissions and performance of
      mortgage covenants, and the date of maturity is the 31st day of December
      2010, and the discharge amount is the same as the total amount.

16.2  Upon payment and discharge in full to the satisfaction of the Mortgagee of
      the Outstanding Indebtedness, the Mortgagee shall, at the request and cost
      of the Mortgagor, discharge this Mortgage.

17.   Partial Invalidity

      If at any time any one or more of the provisions in this Mortgage is or
      becomes invalid, illegal or unenforceable in any respect under any law or
      regulation, the

<PAGE>

                                       29

      validity, legality and enforceability of the remaining provisions of this
      Mortgage shall not be in any way affected or impaired thereby.

18.   Notices

18.1  Any notice or other communication under this Mortgage shall be in writing
      but may be given or made by telex or facsimile to:

      the Mortgagor

      -  ADVENTURE THREE S.A.
      -  c/o Free Bulkers S.A.
      -  Akti Miaouli 93
      -  Piraeus 185 382
      -  Greece
      -  telephone: +30 210 4528770
      -  fax: +30 210 4291100

      the Mortgagee:

      -  HOLLANDSCHE BANK-UNIE N.V.
      -  Coolsingel 104
      -  3011 AG Rotterdam
      -  the Netherlands
      or
      -  P.O. Box 249
      -  3000 AE Rotterdam
      -  the Netherlands
      -  telephone: +31 10 2820282
      -  fax: +31 10 2820399.

18.2  Any such notice or other communication shall be deemed to have been duly
      given or made as follows:

      (a)   if sent by personal delivery, upon delivery at the address of the
            relevant party;

      (b)   if sent by registered post three (3) Business Days after the date of
            posting;

      (c)   if sent by telex, when dispatched but only if the recipient's
            answerback

<PAGE>

                                       30

            appears correctly at the start and end of the sender's telex; and

      (d)   if sent by facsimile, when dispatched.

      Any communication by telex or facsimile sent by the Mortgagor to the
      Mortgagee shall be confirmed by letter if so required by the Mortgagee.

19.   Law and jurisdiction

19.1  This Mortgage shall be governed by and construed in accordance with the
      laws of the Marshall Islands.

19.2  Subject to clause 19.3, the courts of Rotterdam, the Netherlands shall
      have exclusive jurisdiction in relation to all matters which may arise out
      of or connection with this Mortgage with the exclusion of any other court
      of law.

19.3  For the exclusive benefit of the Mortgagee the Mortgagor agrees that the
      Mortgagee reserves the right to commence proceedings in relation to any
      matter which arises out of or in connection with this Mortgage in the
      courts of any place in the Netherlands other than Rotterdam or any country
      other than the Netherlands and which have jurisdiction to that matter.

19.4  In this clause 19 "proceedings" means proceedings of any kind, including
      an application for a provisional or protective measure.

<PAGE>

                                       31

19.5  The Mortgagor hereby agrees that any writ, judgment or other notice of
      process shall be sufficiently and effectively served on it, if served on
      it at the address specified in clause 18.1.

IN WITNESS whereof the Mortgagor has caused this Mortgage to be duly executed
the day and year first written.

SIGNED                      )                  Kassandra L. Slangan
by /s/ Kassandra L. Slangan )                  Attorney-IN-Fact
as attorney-in-fact for     )
ADVENTURE THREE S.A.        )
in the presence of:         )
________________________    )
<PAGE>

                                       1

ACKNOWLEDGEMENT

CITY OF NEW YORK     )
                   :SS
COUNTY OF NEW YORK   )

On this 21st day of September 2004, before me personally appeared, Kassandra L.
Slangar to me known, who being by me duly sworn deposes and says that he resides
at One [????] Park Plaza, New York, New York; 10004 that he is the
Attorney-in-Fact of Adventure Three S.A., the corporation described in and which
executed the foregoing instrument and that he signed his name thereto pursuant
to authority from the Board of Directors of said corporation.

                                                             /s/ [ILLEGIBLE]
                                                             -------------------
                                                             SPECIAL AGENT

[SEAL]

<PAGE>

[HBU LOGO]                                   HBU GENERAL CREDIT PROVISION

                     consisting of:
                     I.   General Provisions

                     II.  General Provisions governing Overdraft
                          and Contingent Liability Facilities

                     III. General Provisions governing Loans

                     (January 1999)

                     Hollandschs Bank-Unis N.V.
                     Established in Amsterdam. Register
                     of Commerce no. 33259495.

<PAGE>

1    DEFINITIONS

In these HBU General Credit Provisions the following expressions shall have the
following meanings:

a "Borrower" shall mean the legal or natural person or persons, both together
and individually, to whom the Credit has been or will be made available;

b "HBU" shall mean Hollandsche Bank-Unie N.V.;

c "Credit Agreement" shall mean the agreement concluded between the Borrower and
HBU in which these HBU General Credit Provisions have been stated to apply;

d "Credit" shall mean overdraft facilities and/or contingent liability
facilities and/or loans granted to the Borrower under the Credit Agreement.

2    AVAILABILITY

The"Credit will not be made available to the Borrower until all security
interests, covenants, documents and information stated in the Credit Agreement
have been provided and the other terms and conditions stipulated in the Credit
Agreement regarding availability of the Credit have also been complied with.

3    SECURITY AND COVENANTS

3.1   AGREEMENTS AND PRIORITY

Any security and covenants provided shall serve to secure all present and future
indebtedness of the Borrower to HBU on any account whatsoever, and shall be
documented using agreements to be determined by HBU or in the Credit Agreement.
Any costs involved shall be for the Borrower's account. Unless otherwise stated,
security interests in favour of HBU shall rank prior to any other charges.

3.2   MORTGAGE

If a mortgage is given, in addition to the provisions contained in the mortgage
deed, the General Terms and Conditions for Mortgages (Algemene Bepalingen voor
Hypotheekstelling) shall also apply. A mortgage interest in respect of various
registered properties shall be created by means of separate mortgages in
respect of each property individually, in each case for the full principal plus
interest and costs.

3.3   DISCLOSURE

The Borrower agrees that if third parties have provided security or covenants,
HBU may provide such third parties with information about his financial position
and any facts relating to the Credit which may be of importance to such third
parties.

4    PLURALITY OF BORROWERS/JOINT AND SEVERAL LIABILITY

If the Borrower consists of various legal or natural persons, each of them shall
irrevocably be jointly and severally liable to HBU for all present or future
indebtedness of any or all of them to HBU on account of the Credit or on any
other account whatsoever, whether as part of ordinary banking business or
Otherwise. Unless otherwise stated, notices and communications to the Borrower
first named in the Credit Agreement shall be deemed to have been given or made
to all jointly and severally liable persons. This provision shall not apply if
the Borrower is jointly and severally liable to HBU under a separate agreement
concluded to that effect.

5    NEGATIVE PLEDGE

As long as the Borrower owes HBU any sum on any account whatsoever, or may in
any manner become indebted to HBU as a result of present or future obligations,
the Borrower shall not except where such transfer forms part of his ordinary
business -, or charge, or promise to charge, all or any of his assets in favour
of a third party unless he has obtained the prior express consent of HBU.

6    INSURANCE

The Borrower shall at all times provide for sufficient and adequate insurance
against general business risks as well as the specific risks pertaining to his
line of business.

7    RESTRUCTURING CLAUSE (COMPANIES ONLY)

The Borrower shall notify HBU without delay of any changes in the structure of
his company and any subsidiaries and group companies, including changes in the
person or persons of any shareholders of the Borrower and any subsidiaries and
group companies.

8    COSTS AND EXPENSES

All costs and expenses incurred in connection with the Credit Agreement,
including any taxes payable by HBU (other than on net profit), as well as any
reasonable costs and expenses incurred by HBU in connection with the Borrower's
failure to comply with or fulfil any obligation under the Credit Agreement at
the time and in the manner required, including collection charges, fees of legal
consultants and other experts and costs of proceedings, irrespective against
whom brought, shall be for the account of the Borrower and be paid by the
Borrower on HBU's first demand.

9    INFORMATION

9.1   ANNUAL ACCOUNTS

The Borrower shall send HBU two copies of his balance sheet, profit and loss
account and notes thereto for the past financial year immediately after
completion but in any event not later than six months after the end of his
financial year.

9.2   DETAILS

The Borrower shall provide HBU, both on its first demand and unsolicited, with
any details of his financial position and business developments which may have a
material effect on his financial position.

10   GENERAL CONDITIONS

All relations between the Borrower and HBU shall be governed by the General
Conditions (Algemene Voorwaarden) of HBU. By signing the Credit Agreement the
Borrower declares that he has received a copy of said General Conditions.

<PAGE>

II    GENERAL PROVISIONS GOVERNING OVERDRAFT AND CONTINGENT LIABILITY FACILITIES

1     USE

1.1   OVERDRAFT FACILITY

An overdraft facility may be used to borrow money on current account, and if
agreed explicitly, to enter into contingent liabilities with a maximum term of
one year, such as those arising from the issuance of guarantees, the issuance of
letters of credit, the discounting of bills and any other purposes stated in the
Credit Agreement.

1.2   CONTINGENT LIABILITY FACILITY

A contingent liability facility may be used for the purpose stated in the Credit
Agreement.

2     EXPOSURE/UNUSED PART OF FACILITY

2.1   OVERDRAFT FACILITY

The limit of an overdraft facility shall always be reduced by the obligations of
the Borrower to HBU on account of:

-     the current account debit balance (including accrued interest and fees);

-     contingent liabilities such as those arising out of obligations HBU has
undertaken against third parties for the account and at the risk of the
Borrower, unless such obligations can be charged to a contingent liability
facility granted to the Borrower.

If the Borrower maintains various current accounts, the current account debit
balance shall be the net amount of the combined debit and credit balances
(including accrued interest and fees) of such current accounts. The unused part
of the overdraft facility remaining after deduction of the above exposures shall
be available to the Borrower.

2.2   CONTINGENT LIABILITY FACILITY

The limit of a contingent liability facility shall always be reduced by the
obligations of the Borrower to HBU arising out of the use of such facility in
conformity with the purpose stated in the Credit Agreement insofar as such
obligations are not yet due and payable. The unused part of the contingent
liability facility remaining after deduction of such exposure shall be available
to the Borrower.

3     INTEREST AND FEES

3.1   CALCULATION BASIS OF DEBIT INTEREST

In calculating interest on debit balances in EMU currencies (which shall be
understood to include the euro) up to the agreed limit of the overdraft
facility, HBU shall apply the HBU Euro Base Rate. Until further notice the HBU
Euro Base Rate shall be the leading repo rate (the rate of the Main Refinancing
Operation) as determined from time to time by the European Central Bank (ECB),
plus a debit interest surcharge, subject to the minimum base rate stated in the
Credit Agreement. The HBU Euro Base Rate shall be increased by an individual
margin stated in the Credit Agreement. As soon as the ECB changes the rate of
the Main Refinancing Operation, or HBU changes the debit interest surcharge or
alters the composition or method of calculation of the HBU Euro Base Rate, the
debit interest rate shall be adjusted accordingly. In fixing the HBU Euro Base
Rate, the rate of the Main Refinancing Operation will be rounded to the nearest
0.10%. Rates ending with exactly 0.05% will be rounded up. HBU shall announce
changes in the debit interest surcharge as well as any alterations in the
composition or method of calculation of the HBU Euro Base Rate in at least three
national daily newspapers with a large circulation in the Netherlands. Interest
on debit balances in non-EMU currencies shall be payable at a rate to be
determined by HBU.

3.2   INTEREST ON OVERDRAFTS EXCEEDING THE AGREED LIMIT

Without prejudice to the provisions in 2.1 above, compensation to be determined
by HBU shall be payable in respect of the amount by which the debit balance of
the Borrower exceeds the limit of the overdraft facility.

3.3   PAYMENT OF DEBIT INTEREST AND FEES

Debit interest and fees payable by the Borrower shall be charged to his current
account as follows:

-     debit interest once every quarter;

-     fees at the times to be specified by HBU.

If the Borrower maintains various current accounts with HBU, HBU shall have the
right to charge debit interest and fees to one of these accounts.

4     CANCELLATION

Both the Borrower and HBU may cancel an overdraft facility and contingent
liability facility at any time.

<PAGE>

III   GENERAL PROVISIONS GOVERNING LOANS

1     AVAILABILITY

The following shall apply in addition to the provisions in 2 of the General
Provisions:

1.     HBU shall not be obliged to make the loan amount available if any of the
events mentioned in 5 below occurs;

2.    if the amount of the loan shall not or not fully have been drawn by the
agreed ultimate drawing date, HBU shall in its discretion be entitled without
any further instructions from the Borrower to make the undrawn part of the loan
available to the Borrower as of that date.

2     CALCULATION OF INTEREST

Interest shall be calculated on the basis of a 360-day year and the actual
number of days elapsed in any month.

3     REFIXING OF INTEREST

3.1   If a fixed interest rate has been agreed, HBU shall not later than two
weeks prior to an agreed interest refixing date notify the Borrower in writing
of the proposed - fixed or floating - interest rate for the subsequent fixed
rate period, without prejudice to the provisions contained in 3.3 below.
Agreement shall be reached not later than one week prior to the interest
refixing date. If the Borrower shall fail to respond to said notice from HBU not
later than one week prior to the interest refixing date, the Borrower shall be
deemed to have opted for the interest rate applicable to the shortest fixed
rate period stated in said notice. If HBU shall fail to give said notice within
the stated period, it shall nevertheless be at liberty to do so at a later date.
HBU shall then offer the Borrower either the interest rate which it would have
quoted on the basis of its prevailing interest rates had such notice been given
in time or, if this should be lower, the interest rate it is able to quote on
the basis of its interest rates prevailing at the time of such later notice.
Agreement on the interest rate shall be reached within two weeks after the
Borrower has received such notice from HBU.

3.2   If a floating interest rate has been agreed, the interest rate accepted by
the Borrower during the first two months of a calendar quarter shall apply until
the first day of the subsequent calendar quarter, and the interest rate accepted
by the Borrower during the third month of a calendar quarter shall apply until
the first day of the second following calendar quarter. Thereafter this interest
rate, or the interest rate subsequently refixed in accordance with the
provisions below, shall always apply for a period of three months. During the
remainder of the term of the loan, HBU shall refix the interest rate whenever,
in its opinion, having regard to money and capital market developments, the
interest rate as at the fifteenth calendar day in the third month of any
calendar quarter - or if HBU is not open for business on that day, the interest
rate on the preceding business day - differs 0.10% or more from the interest
rate then applicable pursuant to the Credit Agreement. The interest rate so
refixed shall become effective from the first day of the subsequent calendar
quarter. HBU shall notify such refixing to the Borrower in writing at least
eleven days prior to the first day of the calendar quarter. If the Borrower does
not agree to the refixed interest rate, the Borrower shall inform HBU not later
than one week prior to the interest refixing date. If the Borrower shall fail to
respond to the written notice from HBU not later than one week prior to the
interest refixing date, the Borrower shall be deemed to have agreed to the
interest rate quoted. If the Borrower shall so request not later than two weeks
prior to the first day of the subsequent calendar quarter or on an interest
refixing, HBU shall as from the first day of the subsequent calendar quarter
convert such floating rate loan into a fixed rate loan at HBU's interest rate
then prevailing.

3.3   If a loan is not denominated in an EMU currency (which shall be understood
to include the euro), the Borrower shall contact HBU by telephone before 10.00
a.m. (Amsterdam time) two business days prior to the agreed interest refixing
date. Business day shall mean a day on which banking institutions in the
Netherlands and the country where the currency in which the loan is denominated
is the national unit, are open for business. During, or immediately after such
telephone call, HBU shall quote the interest rate for the subsequent fixed rate
period. If HBU and the Borrower then reach agreement, HBU shall confirm the
interest rate to the Borrower in writing. If the Borrower shall fail to contact
HBU before the time indicated above, HBU shall have the right to refix the
interest rate on the basis of a one-year fixed rate period.

3.4   If HBU and the Borrower shall fail, or shall be deemed to have failed, to
reach agreement on the interest rate for and the length of the subsequent fixed
rate period, the Borrower shall be obliged on such interest refixing date to pay
all sums due and owing to HBU under the Credit Agreement. The Borrower shall not
be liable to pay compensation for losses sustained and income lost in respect of
such early repayment.

3.5   Upon the expiration of a period of not less than three months from the
date of the Credit Agreement, HBU shall notwithstanding the above provisions be
entitled at its discretion to refix the agreed interest rate if:

a.    the cost to HBU of funding or continuing to fund the loan is above the
level at the time when the Credit Agreement was entered into, and

b.    such increase is the consequence of credit restrictions, changes in
capital adequacy requirements or other rules and regulations (including
guidelines the observance of which is requested) of the Netherlands central bank
or of Dutch, foreign or international monetary authorities.

4     EARLY REPAYMENT

4.1   If a loan is denominated in an EMU currency (which shall be understood to
include the euro), the Borrower shall be entitled to make early repayments
without compensation for losses sustained and income lost provided all the
following conditions are complied with:

a.    the Borrower has given HBU at least one month's prior notice by registered
letter, indicating the amount and date of the intended early repayment;

b.    the early repayment shall coincide with a contractual repayment date or an
agreed interest payment date;

c.    the prepaid amount shall be at least EUR 500 (or its equivalent in any
other EMU currency, where applicable), subject to a maximum in any one calendar
year of 5% of the original principal amount of the loan;

d.    the Borrower shall prove to HBU's satisfaction that he is making such
early repayment out of his own resources. In all other cases the Borrower shall
be due compensation as determined in accordance with the provisions in 4.2
below.

4.2   If the Borrower wishes to make an early repayment in a manner other or an
amount higher than indicated in 4.1, he shall be liable to pay HBU compensation
for losses sustained and income lost together with such early repayment. In the

<PAGE>

case of a floating interest rate being applicable, this compensation shall be 1%
of the amount prepaid in a manner other than agreed or in excess of the maximum
agreed. In the case of a fixed interest rate being applicable, this compensation
shall be the difference between:

a.    the aggregate of the present values of the interest payments which
pursuant to the Credit Agreement HBU would have received in respect of the
amount prepaid in a manner other than agreed or in excess of the maximum agreed
in. respect of the period from the date of prepayment until the final repayment
date or the next interest refixing date (whichever shall be the earlier) had
such prepayment not been made, and

b.    the aggregate of the present values of the interest payments which HBU
could receive on interbank loans where the principal amount is comparable to the
amount prepaid in a manner other than agreed or in excess of the maximum agreed
and of which the term is comparable to the period referred to in

4.2   a. hereof,but in any event not less than 1% of the amount prepaid in a
manner other than agreed or in excess of the maximum agreed. The present value
of the interest payments shall be calculated at the interbank rate applicable on
the date of the prepayment. HBU shall give sufficient notice of the amount of
compensation to the Borrower.

4.3   Upon giving notice of an intended early repayment, the Borrower shall be
obliged to make such early repayment.

4.4   Early repayments shall be applied in reduction of the contractual
repayments in reverse order of their maturity dates.

4.5   If the loan is repaid on an annuity basis, i.e. by instalments consisting
of a decreasing interest component and an increasing principal component, HBU
shall refix the remaining term of the loan, so that as far as possible the
original instalments shall remain unchanged.

5    EVENTS OF DEFAULT

5.1   The outstanding balance of the principal amount of the loan together with
accrued interest and any other sum due from the Borrower under the Credit
Agreement shall be payable to HBU forthwith and in full without any demand or
default notice being required:

a.    if the Borrower fails to comply with or fulfil, at the time and in the
manner required, any obligation towards HBU whether arising under the Credit
Agreement or otherwise;

b.    if the Borrower fails to comply with or fulfil, at the time and in the
manner required, any obligation under any other loan or financing arrangement
with or any guarantee towards third parties;

c.    if the Borrower decides to cease practising his profession or carrying on
his business, to discontinue, sell, let or transfer title to the whole or part
of his business or practice, or is suspended, removed or dismissed from his
profession, office or function; if a licence, permit or registration which the
Borrower requires in order to practise his profession or to carry on his
business expires or is refused or withdrawn; if the nature of the Borrower's
profession or business in the opinion of HBU is changed in a material way; if
the Borrower decides to transfer abroad the practice of his profession or the
running of his business; if the Borrower acts contrary to any statutory
regulations with respect to his profession or business; if the Borrower ceases
to pursue the present corporate objects set out in his memorandum and articles
of association or loses his legal status;

d.    if the partnership agreement (maatschaps- of vennootschapscontract) is
terminated, or if there is an accession or departure of one or more partners, or
if there is a dissolution or winding up (liquidatie) or a decision or an obvious
intention to dissolve or wind up;

e.    if the Borrower dies, is placed under curatorship or otherwise loses his
legal capacity; if he takes up residence abroad, or changes the terms of his
marriage settlement; if any matrimonial regime of property governing the
Borrower is dissolved; if the assets of the Borrower are wholly or partly placed
under supervision (bewind);

f.    if the Borrower or one of his partners applies for a moratorium or other
judicial postponement of payment of debts, files a bankruptcy or winding-up
petition, is adjudicated bankrupt or wound-up, proposes an extrajudicial
arrangement or composition with his creditors or, when insolvent, transfers any
of his assets to his creditors (boedelafstand), or requests a debt restructuring
arrangement;

g.    if the whole or, in the opinion of HBU, a substantial part of the
Borrower's assets is taken in execution or attached by way of security and such
attachment is not lifted or discharged within 30 days after having been
effected; if the whole or, in the opinion of HBU, a substantial part of the
Borrower's properties is sold, encumbered, expropriated, confiscated, lost or
damaged;

h.    if the Borrower's legal structure is changed and/or the Borrower merges or
associates with one or more third parties or if, in the opinion of HBU, a
significant change - whether or not as a consequence of the transfer of shares -
has taken place in the control of the Borrower's business or practice or if the
memorandum and articles of association or the rules or regulations of the
Borrower are, in the opinion of HBU, amended to a significant extent;

i.    if the Borrower, without HBU's prior written consent, releases his
shareholders from liability to further calls on partly paid-up shares, if he
purchases his own shares, redeems his shares or makes a distribution from his
reserves, which shall include a decision or an obvious intention to do so;

j.    if any circumstances mentioned in b. to i. (inclusive) occur in respect of
a surety, a guarantor, jointly and severally liable debtor or a person who has
provided HBU with any other type of security for the loan; if the surety or
guarantor cancels or withdraws a surety bond or guarantee issued by him to HBU
on the Borrower's behalf; if a third party which has provided or has promised to
provide HBU with security for the loan defaults in the performance of any
obligation in respect of the security provided or promised;

k.    if any circumstances mentioned in b. to i. (inclusive) occur in respect of
one or more businesses or companies which are included in the Borrower's
consolidated balance sheet, or in respect of one or more businesses or companies
which have a controlling interest in the Borrower, or if any such business or
company defaults in the performance of any obligation towards HBU in connection
with credit and/or guarantee facilities granted by HBU;

l.    (in the case of a mortgage on any registered property other than referred
to in m. below) if the whole or any part of the mortgaged property is attached,
expropriated, declared unfit for occupation, listed as a national monument,
re-divided (opneming in ruilverkaveling), demolished, lost or damaged, if a
leasehold (erfpachtsrecht), a building right (opstalrecht) or a right to use an
apartment (gebruiksrecht van het appartement) is completely or partially lost,
terminated or cancelled, if the conditions governing a leasehold or a building
right are altered; the sub-division (splitsing) of the mortgaged property is

<PAGE>

terminated or the relevant deed or regulations are amended, if the leaseholder
or the holder of a building right fails to perform or acts contrary to any
statutory provisions with respect to the conditions governing the leasehold or
building right, if the owner or occupier of an apartment fails to perform or
acts contrary to any statutory provisions with respect to the right to use an
apartment or any provision contained in the agreement for sub-division or the
regulations;

m. (in the case of a mortgage on a ship) if the whole or any part of a mortgaged
ship is attached, is classified in a lower category, loses its national
registration or changes the same, is requisitioned, is the subject matter of
abandonment, is missing, laid up, broken up, wrecked or damaged;

n. if all or any of the goods, properties and other assets (goederen) provided
to HBU as security for the loan other than those referred to in l. and m. are
lost, destroyed or damaged or expire for any reason whatsoever;

o. if the Borrower has given HBU incorrect information or has withheld
information from HBU which it deems significant in connection with the
conclusion of the Credit Agreement;

p. if the loan is not used for the purpose for which it was granted, or if in
the opinion of HBU, it is clear that the purpose for which the loan was granted
has not been achieved or will not be achieved either wholly or to a significant
extent;

q. if any legislation or its interpretation is changed or a governmental action
is taken, which affects or may affect the Credit Agreement and/or the security
provided and/or the value thereof, and the Borrower and HBU have not within a
reasonable period to be determined by HBU reached a written agreement adjusting
the relevant provisions and/or security on such a basis that, in the opinion of
HBU, the position of HBU is not adversely affected.

5.2 The Borrower shall forthwith notify HBU of the occurrence of any events
mentioned in 5.1 b. to n. (inclusive).

5.3 If HBU demands repayment of the loan pursuant to the above provisions, the
Borrower shall forthwith pay HBU lump sum compensation for losses sustained and
income lost. Such compensation shall be due in respect of the full amount
repayable and be determined on the basis of the same method and principles as
specified in 4.2. Such compensation shall not be due if the demand for repayment
results from the death of the Borrower.

6  DUE DATES

6.1 If HBU has not received any sum due to it under the Credit Agreement on the
agreed due date, the Borrower shall be liable to pay HBU default interest on the
overdue amount as from the due date, without prejudice to HBU's other rights.
Such default interest shall be payable forthwith. Amounts in relation to which
no specific due dates have been stipulated in the Credit Agreement shall, for
the purpose of the above provisions, be payable on the day stipulated by HBU for
payment.

6.2 The rate of default interest shall be three percentage points above the
contractual interest rate per annum applicable to the loan. Default interest
shall be calculated on a monthly basis, part of a month being counted as a full
month. As regards late repayment of principal, the default interest rate shall,
as from the due date of such amount of principal, replace the contractual
interest rate then applicable to the loan.

7  PAYMENTS

7.1 The Borrower shall make all payments to HBU without any costs to HBU and
without any deduction or setoff. These payments shall be made on the due dates
at HBU's branch where the loan is administered, unless HBU has notified the
Borrower of another address for payment.

7.2 HBU shall be entitled, but not obliged, to debit all amounts payable by the
Borrower to HBU under the Credit Agreement to the Borrower's current account at
HBU on the agreed due dates. The Borrower shall be responsible for ensuring that
this debit will not exceed the amount available for payments and withdrawals
from such account.

7.3 Payments shall be applied as follows: firstly to costs and expenses
incurred, secondly to compensation for losses sustained and income lost and
default interest, thirdly to fees and commissions and interest, and fourthly to
principal.

<PAGE>

                        REPUBLIC OF THE MARSHALL ISLANDS
                                 MARITIME OFFICE

I HEREBY CERTIFY THAT THE WITHIN IS A TRUE COPY OF THE INSTRUMENT RECEIVED FOR
RECORD AND RECORDED IN THIS OFFICE IN BOOK PN 15 AT PAGE 418 ON SEPTEMBER 29TH
2004 AT 08:01 A.M. E.D.S.T.

VESSEL NAME "FREE ENVOY" OFFICIAL NUMBER 2161

                                        GIVEN UNDER MY HAND AND SEAL THIS 29TH
                                     DAY OF SEPTEMBER, 2004
[SEAL]
                                        /s/ William L. Gallagher
                                            ------------------------------------
                                         DEPUTY COMMISSIONER OF MARITIME AFFAIRS
                                         OF THE REPUBLIC OF THE MARSHALL ISLANDS

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